McKinsey on Indian Retail : "The Great Indian Bazaar"

The Great Indian Bazaar McKinsey on Indian Retail

McKinsey & Company recently released their report named `The Great Indian Bazaar: Organized Retail Comes of Age in India’. The report discusses various issues related to retail in India like future growth, real estate implication, supply chain issues, Human resource management, changing customers' demographics and tastes etc.

Fig. 1: Rising Income to increase consumerism growthFig. 1: Rising Income to increase consumerism growth

The country’s overall retail sector is expected to grow to $450 billion (Rs20.85 trillion) business by 2015. It is almost comparable to Italy’s current market size of $462 billion (among the world’s top 10 retail markets) and larger than Brazil’s current retail market size of $258 billion. If we go by another McKinsey report “The rise of Indian Consumer Market”, this consumer market is expected to be quadrupled by year 2025.

The consultancy major McKinsey's retail report entitled 'The Great Indian Bazaar' pictures Indian market as full of opportunities yet highly competitive in nature. It talks about uniqueness of Indian consumers which separates them from rest of world in some aspect. For example, Indians generally don’t prefer packaged vegetables and fruits as they associate them with lack of freshness, whereas in US, packaged vegetables are very popular. According to report, Global players looking to enter the Indian retail market need to customize their retail model rather than apply same store model which worked elsewhere.

Fig. 2: Customer Winning ChainFig. 2: Customer Winning Chain

When question of loyalty to one retailer comes, Indians are perhaps the smartest in seeking value themselves rather than relying on single retailer. This makes life of retailer more difficult in India. Also, shoppers in India place a lot of importance on convenience. Around 64% buyers surveyed said they do not mind paying extra for conveniently located stores, compared with 31% in China.

So Indian consumer habits and environmental factor will require retailers to adopt and evolve an approach that is distinct from the rest of the world and to customize their operations. To achieve success in the market, players would have to address real estate issues, create an efficient supply chain as per local condition, increase their share in consumer’s wallet, develop and retain talent, influence regulation to ensure healthy development of the sector. So innovation will key of success here.

Fig. 3: Supply Chain Efficiency will be important

Fig. 3: Supply Chain Efficiency will be important

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