Retail Industry : Boon or Bane ?

Published by MBA Skool Team, Published on July 14, 2011

The world is full of different products, high number of brands and a whole lot number of customers. Over the decades, a majority of the people have been able to lead a respectable life and have had a better standard of living. Due to better purchasing power, better incomes and liberal policies for foreign investors, people have a better access to quality goods and services. Gradually, the scenario of small market places is now being replaced with big branded retail chains. But there is one question which remains unanswered- Is the Retail Industry a boon or a bane?


Retail Industry

Retail Industry has changed the way people shop and purchase goods. The Indian market earlier comprised of weekly markets in towns, haats in villages and small Kirana shops in various localities. Gradually smaller shops like PDS outlets came into the picture alongwith co-operatives. But the face of the industry changed when retail super markets like Wal-Mart, Big Bazaar, Tesco etc came which have created a huge market for themselves with exclusive brand outlets, hypermarkets, supermarkets and departmental stores.

In India, the retail industry has been able to create a strong foothold due to a few major factors. Over the decades, people in the metros and cities have had high income opportunities owing to better jobs due to the growing IT sector, progressive service industry and with the arrival of MNC’s. Apart from that, the attitude of the people has also changed from being simply savers to spenders due to nuclear families, DINKS (Double Income No Kids) and multi income families. In India, the consumption expenditure is approximately 60% of India’s GDP. International exposure, better lifestyle & standard of living have also contributed in people accepting the retail culture. Also, due to the liberalisation of policies by the government, the market has become extremely competitive so as to provide good quality opportunities to the people.

The benefits of the retail industry can be analyzed from three main perspectives.

  • Benefits to the Customers: The customer has gained a lot from retail chains as it gives him better prices, more choices, better quality, value for time, easy accessibility and a fun filled shopping experience.
  • Benefits to the Producers: Retail Industry has provided a better opportunity to farmers as they get a better deal & fairer price. Retail chains also ensure lesser wastage, constant demand, impulsive buying and better logistics.
  • Benefits to the economy: The tremendous growth and acceptance of the retail industry has helped the economy as it has controlled black money, given employment opportunities, increased FDI inflows and boosted economic growth.

However, like every white has a black; every north has a south; every angel has a devil; similarly there are a few draw backs of the retail industry too.

It is said that retail industry would provide fairer prices to the farmer and smaller vendors can co-exist with the retail giants. But is this true?

The negative aspect of the retail industry can be understood by the following parameters-

  • Impact on customers- Retail industry lacks customer focused marketing and is gradually paying lesser attention to customer service. Also, improper operational management at retail chains leads to a bad experience and there are also questions about the quality and freshness of food products.
  • Social Implications- Retail industry is a big blow to the unorganized sector as it leads to unemployment as only skilled and qualified staff is required by the big retail brands. Also, the consumption pattern of the people has been hampered. The producers also suffer as retailers get a huge margin but the producers get very little for their contribution.
  • Economic Implications- The retail industry has resulted in the explosion of real estate prices, increased vulnerability for smaller domestic producers and also changed the costing strategy. Apart from this, excessive use to electricity, fuels etc have also had a negative impact on the environment.

The pros and cons of the retail industry are pitted against each other, and in this see-saw battle between the advantages versus disadvantages, it is very difficult to reach a final conclusion. However, whatever the final conclusion maybe, there is no doubt that the retail industry has completely change the way people go for shopping.

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