A Study on Expectations of Rural consumer

Towards Organized Retailing: A Review

ABSTRACT

Indian Retail Industry of Readymade Apparel is expanding aggressively. As a result, Indian

retailers preferred means of expansion to expand to other regions and to increase the number of
their outlets in rural areas. The contemporary situation in business world indicates the
significance of retailing of readymade apparel. Apparel sector generates1/5th of the total export
earnings and contributes 4 per cent to the GDP.Further,it employs 35.0 mn people (and is the
2nd largest employer in Indian Retail). Apparel retailers are poised to chase consumers in
small towns, besides lower operating expenses, while aiming for a balanced presence across
markets in a challenging economy. This study aims at contributing to the retailing research by
understanding and analyzing organized Retail business of readymade apparel in rural areas.
Finally, some useful implications for Apparel Manufacturers have been offered at the end.

Key Words: Retailing, Organized, Readymade apparels, Retail Business.

1. INTRODUCTION:
Retailing is a booming business in India and spreading rapidly throughout the country. So, it
is essential to know about the various aspects of the retailing especially the retail perspective of
the readymade apparel industry. Shopping has now become a celebration and occasion like a
feast Lifestyle and the concept of value for money is picking up. It is the combination of
changing demographic structure and psychology that is making the consumer indulge more. The
constant changes in business world reflect on a wide range of factors. These changes are due to
external factors such as changing markets and technologies; changing demographic structures of
workforce; changes in organizational contexts of work as well as changes in the structure of
work itself. The changing trends in the organized retail sector are aiding and abetting the growth.
The retail sector in India accounts for about 14% of GDP and over a quarter of the value added
in all services sectors. In terms of employment, the sector is the second largest employer (after
agriculture) providing over 10% of all formal jobs in the country.
A McKinsey report 'The rise of Indian Consumer Market', estimates that the Indian consumer
market is likely to grow four times by 2025.

1.1.1Evolution of Retailing in readymade garments in India:

According to the original article published in the Stitch Times, February 2010, the classification
of Retail Evolution in India

Initiation – Pre 1990s

Conceptualization – 1990 – 2005
Retail Expansion – 2005 through 2010
Consolidation and Growth – 2010 onwards

1.1.1Retail Initiation – This phase was essentially dominated by manufacturers establishing

their presence in Retail. Bombay Dyeing, the Raymond Group, the S Kumar’s Group.

1.1.2Retail Conceptualization – This time around it was not the manufacturer looking for an
alternative sales channel, but pure-play retailers who entered the retail market, to expand pan-
India, for instance Pantaloons, Shoppers’ Stop and Lifestyle.

1.1.3Retail Expansion –This is perhaps the most active phase of the Indian retail industry in
terms of growth, entry of new players and development of new formats.

1.1.4 Retail Consolidation and Growth – We are currently in this phase. The organized retail
sector witnessed 11% decline in sales in 2008. Considering the challenges faced by the industry
at present, retail chains are likely to focus on consolidations to cut costs and survive in the
market.
India has emerged the third most attractive market destination for apparel retailers, according to
a new study by global management consulting firm AT Kearney. It further says that in India,
apparel is the second largest retail category, representing 10 percent of the US$ 37 billion retail
market. It is expected to grow 12-15 percent per year. India has one of the largest numbers of
retail outlets in the world. A major retail developments even in tier-II and tier-III cities in India.
Here Lies the great Prospects for Rural Retailing.

1.2 Road Ahead

According to industry experts, the next phase of growth is expected to come from rural
markets, with rural India accounting for almost half of the domestic retail market, valued
over US$ 300 billion. Rural India is set to witness an economic boom, with per capita income
having grown by 50 percent over the last 10 years.

According to the Investment commission of India, the overall retail market is expected to
grow from US$ 262 billion to about US$ 1065 billion by 2016, with organized retail at
US$ 165 billion (approximately 15.5 percent of total retail sales). India is expected to be
among the top 5 retail markets in the world in 10 years.

• Number of shopping malls is expected to increase at a CAGR(cumulative annual growth

rate ) of more than 18.9 percent from 2007 to 2015.
• Rural market is projected to dominate the retail industry landscape in India by 2012 with
total market share of above 50 percent.
• Driven by the expanding retail market, third party logistic market is forecasted to reach
US$ 20 billion by 2011.
1.3Rural retailing: At a glance

Rural retailing consists of the sale of goods or commodities in small quantities directly to
consumers in ruraland semi urban markets. The Indian rural market with its vast size and demand
base offers great opportunities to marketers..

Rural India accounts for roughly 70% of the population. Almost 6, 27,000 villages are home to
790 million Indians today. At present 85% of the organized retailing takes place in India’s urban
areas. But the good thing is that the retail focus has already shifted to the rural areas.

1.4Few Facts about Rural India

According to the NCAER study, there are almost twice as many 'lower middle income'
households in rural areas as in the urban areas. At the highest income level there are 2.3 million
urban households as against 1.6 million households in rural areas

1.5Opportunity To The Marketers

The Indian rural market with its vast size and demand base offers a huge opportunity that
MNC’S cannot afford to ignore. With 128 million households, the rural population is nearly
three times the urban

1.5.1Large and Scattered market:

The rural market of India is large and scattered in the sense that it consists of over 63 crore

consumers from 5,70,000 villages spread throughout the country.

1.5.2 Major income from agriculture:

Nearly 60 % of the rural income is from agriculture. Hence rural prosperity is tied with

Agricultural prosperity. The rural bazaar is booming beyond everyone's expectation.. The high
incomes combined with low cost of living in the villages have meant more money to spend.
1.3 Need and Objective of the study

In this competition era Marketers have to be aware of the Rural Consumer’s needs and
expectations from the product. More specifically, the objectives of the study are:

 To analyze the Expectations of Rural consumers for Readymade apparels From

Organized Retailing
 To Study the strategies created by organized retailer to retain their Rural Customers
 To offer useful marketing implications for Apparel manufacturers

1.4Review of Literature

Lalwani (2010) in his study suggested that the current corporate world is all about making ones
presence felt in the cutthroat competition in the retail outlet of the product. The companies
striving to survive and grow in the huge competitive market The best possible way to measure
the potential is by making an investigation of various promotional schemes and advertising
modes and strategies floated by the company from time to time.

Krishan (2010) found that we have entered the 21st century at a time when the demography of
our population is changing significantly to drive organized retail growth. India now has a large
young working population with a median age of 24. Indians are now unapologetic about
spending lavishly on non-essential goods such as luxury watches, cars, and hi-tech products.
India's rural retail market is expected to grow by 29 percent to 1.8 trillion rupees by 2012 helped
by rising incomes .

The article published in “Insider Fashion (2010):states that the retail scenario in readymade
garments industry is unique in India. Much of it is in the unorganized sector.Comparing with the
unorganized garments sector, organized retail, today holds only a fraction (6%) of the market
share potential in India.
Sandeep (2010) in his article has suggested about understanding the buying behavior of the
consumers towards FMCG products in rural market.The Main objective of the article was to
understand the demand pattern of FMCG products in the rural market. In his findings he
suggests that the demand of a product is also affected by its life cycle.

Jindal ,President of ASSOCHAM : In his Research paper on found that the The size of
Organized Retail in India will exceed US$22bn mark from current level of about US$4bn with
its space requirement touching over 220mn sq. ft., by 2010, it has been stated that approx. 40mn
sq. ft. is currently generating a business of about US$4bn in organized retail.

According to the Jindal, the total retailing size in India is currently estimated at US$16bn of
which organized sector accounts for only 25% market share and remaining 75% is in the
unorganized sector.

Economic Times (2009), Article states that a new focus on the readymade retail sector has
attracted attention in recent days. Top exporters have introduced their own brands and are
aggressively positioning themselves within segments of the domestic market.

Bisht (2008) in her article has studied about a great success story of ITC with its groundbreaking
e-Choupal initiative, whereby local internet kiosks link farming communities with global
markets by providing information on everything from comparative crop prices to weather
forecasts.

Sharma(2006).in his article discussed about the meaning of Retailing and current scenario of
retailing in india.He also discussed about the key challenges which are faced by this industry
like location,merchandise, pricing, target audience. They also discussed about the tradional scene
of retail industry in india.According to him the retail industry in India is going through Second
gear means.
Forney (2005): Examined in his study that Emotion that encompasses affect and mood is
an important factor in consumer decision making. Typically, emotion is classified into two
orthogonal dimensions (e.g. positive, negative).

Conclusion

One can conclude from the above picture that the Rural Retailing has wide opportunities and
scope for the entrepreneurs to enter. . It offers an opportunity for a large player to build a Rs.
40,000 Cr retail business spanning multiple categories by 2015 (at current prices). It is a little
known fact that, while 25% of the rural population is not engaged in agriculture, it earns 50% of
the rural income. Definitely there is lot of money in rural India. But there are hindrances at the
same time.

There would be real revolution in the Indian Retail industry in next 10 years. Rural and semi
urbans incomes are also expected to grow much faster in future with the entry of many large
Indian players into the retail trade, things are certainly going favorable and the consumer can
look forward to have a much wider choice in shopping.

Rural India is set to witness an Economic boom, with per capita income having grown by 50%,
over the last 10 years, mainly on commodity price & improved productivity develpoment of
basic infrastructure, generation of employment, better information technology service are alo
bringing prosperity to rural household.

IMPLICATIONS:

• In order to capture the rural areas retailers should develop specialized &mature service
standards
• Retailers should develop emotional affinity with the customers beyond product and price
• Customer awareness level of New Entrants in Retail industry is very low, so with the help
of media they can capture the untapped market. It is better if they use advertise in local
language.
 • Brain storming session should be adopted in retail stores in order to motivate & Retain
their employees
• Pricing is the major element for rural marketing so cheaper price product is affordable for
rural people because Rural People are Very Price conscious.

• Quality standard is also very important part of rural market because some people are
quality oriented customer.
• Retailers should make effective Distribution channel and Make an opinion leader for
every village

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