Organized Retail Sector

Organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc.  These include the corporate-backed hypermarkets and retail chains, and also the privately owned large number of retailers, greater enforcement of taxation mechanisms and better labour law monitoring systems. It is not just a stocking and selling, but is more about efficient supply chain management, developing vendor relationships, quality customer service, efficient merchandising and timely promotional campaigns. It, however, constitutes a very little share of at around 5 per cent (Rs 500 billion) of the total retail market. According to the Retailers Association of India, the share of organised sector to the overall retailing market in India is expected to grow from 3 per cent to 20 per cent in the next 10 years. The KSA Technopak’s estimate is that by 2005, the organised retail sector would be employing in excess of 2, 50, 000 individuals directly and perhaps 8-10 times as many indirectly in the supply chain. The organised retailing has been successful in metropolitan cities so far, more so in the south and west India. It is expected that the tier II cities would take another 5 years to absorb modern retailing opportunities. Moreover, the case for Indian retailers to explore rural markets is also strong due to the size of rural population and agricultural income growth in last couple of years. A clear indicator of this potential is the share of rural market across most categories of consumption.