Retail in India - what is different

Retail is quite interesting as a business concept, especially in India. The whole concept is developing every day and at the same time the Indian consumer is quite different from her counterparts elsewhere in the world. India itself has grown fast, and the exposure of the urban Indian to Western methods has also been immense. Such a growth story, and I speak not just of the growth numbers or the speed of growth, but also the circumstances of such growth are unprecedented. And the beauty of retail is the fact that you get to seen an application of consumer behavior almost blatantly in everyday life. Shelf space politics, as I'd like to call it, product placement, loyalty programmes, discount schemes, sales, are all studied assiduously in terms of their efficacy and the impact of behavioral sciences on such decisions. And these may be research topics, but the beauty is that you experience these and can relate to the ideas much easily! A while back, when Ikea had initiated and killed plans of setting up shop in India, I'd put in a post on that plan - 'Ikea pulls out of India'. And that event was a clear example of how cultural and behavioral attitudes influence retail decisions in India. So, these posts here on Indian retail are going to present the retail industry as it pans out in India. I am sure, several years later, a look at the retail journey here would be worth an interesting read.

So today, I look at the way retail used to be early on in India. And I am going to talk mainly about the post-reform period post 1991, so that the relevance of foreign players and entry barriers also come into the picture.

The future of Indian retail is often discussed to a very great extent. The rapidly developing industry is studied with care, and based on past models that have panned out in other countries, people guess what the direction of Indian retail is going to be. For instance, take grocery retailing in India. Now, over the years, the Indian consumer has been used to the small mom-and-pop store around the corner for satisfying her grocery needs. The model was built on relationship, trust and knowing the shop keeper. To the extent that in school, till about 15 years ago, the word 'mall' was never in use in India. It was always grocer, green grocer, shop keeper and so on. Retail as a concept in India has several unique attributes that have defined Indian retail since the past. Shopping for the household was an errand run by the kid of the house to the nearby shop, and would be unplanned typically. Elaborate beginning of month shopping would be conducted with a long list, and the shopkeeper would have a person deliver the goods at home. In several areas, credit would be extended, and the outstanding amount would be settled at the end of the month. Such a format can still be seen in several parts of rural India and to some extent even in tier 3 cities in India.

Many other trends can be noticed, and you might find an example by looking around various localities in an Indian city. So much for an intro. So, next up, we can look at the face of retail in various categories. Retail in groceries, medicines, apparel, durables and so on.