Q1. Identify the opportunities and the threats that the retailing industry in India offers to local and foreign Companies.
1) Indian consumer's behavior pattern has changed: Indian consumers are becoming more aware of what retailers are offering in India and in foreign Countries because of the TV, Internet and the ability of people to travel abroad easily. So people are not just ready to accept change but rather want these big, modern organized retailers.
2) Growth in foreign direct investment (FDI) in retail to 51% in India: As of now foreign companies are allowed to own 51% of their company in India making them majority share holders, this allows major foreign retail companies to start their ventures in India and rule completely over them. Previously they were unwilling to invest because they ...view middle of the document...
The amount of large organized retailers in these areas is very small.
5) Innovative use of technology: this provides innovative use of technology that helps in efficiency. It helps in coordinating activities, decision making in large organized retailers
6) The rural market is a very good market to venture into, there are about 720 million consumers in over 6, 00,000 villages. The rural consumers are eager to connect to the outside world and are willing to accept change.
1) Trained Manpower Shortage is a challenge faced by Organized Retail sector in India: large numbers of people don't have the necessary skill set for retailing. HR development for the retail industry is becoming better but not yet good enough owing to 98% of India having unorganized retailers and hence no experience.
2) Large number of mom-and-pop stores who run the retail market in India: These are easily accessible and provide services like credit and are more on a personal and one-to-one basis with the customer.
3) The uncertain political environment: Politicians have acted in favor of the unorganized sector by disallowing the setting up of large retail outlets in some states hampering the growth of the organized sector.
4) Unsuitable real estate Laws: The laws in some states prevent the setting up of large retail outlets. This is generally in poorer or smaller states which are not that developed.
5) Buyers psychology â€“ there is a wide misconception among middle class citizens that the modern retail outlets are more expensive and not affordable for them and hence they stay away from such places. Most Indian consumers are price conscious.
6) Large geographical size of India and the presence of traditional, fragmented distribution and retailing networks and erratic logistics leading to increase in cost this prevent retailers from Investing.