The report also comments that with retail market growing at a fast pace, modern retail alone won’t be able to cater to the growing needs of the consumer. Currently, India has more than 12 million kirana shops (mom & pop stores) growing at 5-6% annually. Thus these neighbourhood kiranas are not likely to be affected by the rise of the modern retail, according to the study reported by Live Mint.
As incomes increase, Indians are likely to spend more. The expenditure on food and groceries has declined consistently from 40% in 2003 to 36% in 2008. In five years, this is expected further to decrease to 32%. The expenditure on eating out, entertainment and tourism is on the rise, however, according to a spokesman from Technopak.
In India, modern retail, still considered in its nascent stages, has had difficulty in working out a format for the consumer. Retailers focused more on opening stores rather and ignored sourcing and supply chain and the aspirations of each consumer segment according to the report
Those modern organised retailers who focused on the front-end seem to be in trouble as they are not driven by profitability but by the number of stores they could open. Many retailers have expanded rapidly without the right amount of capital structure in place. It takes 2-3 years for one store to break even and 6-7 years for the business to break even, says the spokesman.
From wine perspective, the retailers who are also in the food and grocery segment are interesting because as the laws for retailing of wines are relaxed, not only because of the growing clout of these big corporations, the wine availability as well as pricing will be beneficial to the consumer and the expansion in this segment of retail will add significantly to the consumption. As is well known, big supermarkets are able to get very low prices, decent quaffable quality and are in a position to pass on the cost benefits to consumer as they work on volumes, thus increasing the market even more. |