Challenges of the Organized Retail Industry

Published by MBA Skool Team, Published on June 25, 2013

The maximum market share in the retail sector of India belongs to the unorganized retail shops in each locality of India. India is a country where purchasing power of people varies a lot in terms of monetary value. Even the attitude of people purchasing retail products varies a lot. Hence understanding the consumer behavior of the people in India for the organized retail industry is of utmost importance.

The economic conditions of the people in India vary a lot. Majority of the people are daily wage earners and they purchase retail items on a daily basis and in very short quantities that is not being provided by the organized retail sector while the unorganized retail shops are able to provide. Moreover people of this segment, which is the most lucrative segment to target, are culturally shy to shop from the organized retail outlets because of the ambience. Therefore in order to grab the market share, this segment needs to be targeted as they comprise “The Bottom of the Pyramid”. To do so, keeping in mind the economic conditions, each retail items need to be provided in very small quantities as well. Also a learning process needs to be formulated to change the behavioral pattern of these consumers so that they feel free to purchase items from the organized retail outlets. The learning technique that can be very effective to target this segment is operant conditioning.

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Another important aspect of the customers of retail industry in India is the attitude towards purchasing of retail items. The unorganized retail shops provide retail items to their customers like unsecured loans. At the end of the month or after some weeks customers pay the full amount of the credit outstanding or partly. This facility is not provided by the organized retail outlets. As the customers of retail industry of India are used to display this kind of purchasing behavior, it is important for the organized retail outlets to develop a plan to provide this facility of financing to their customers to get hold of the maximum market share.

People in India are also likely to make a list of the retail items required for the household and just hand it over to the unorganized retail shops. The shopkeeper arranges all the items according to the list and makes the bags ready for the customer. The customer meanwhile does some other work and returns to the shop for the payment and getting the delivery. Some unorganized retail shops also even deliver the items to the customer’s house directly without charging separately for delivery. In this process the customers are made loyal to the unorganized retail shops. These aspects also need to be taken into consideration by the organized retail outlets to make a marketing plan. The distribution channels also need to be intensified even if it is a small space. The items wanted can be informed to the bigger outlets and delivery needs to be prompt.


This article has been authored by Pritam Mukherjee from Mayfair Business School


References: Market Study of Retail Industry in Kolkata, Respected faculty guide: Mr. Meghdoot Ghosh

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