Focus: Retail Sector
population. 35 per cent of India’s population is under 14
years of age and more than 60 per cent of the population is ITC Choupal-Saagar
estimated to constitute the working age group (15-60) till
2050. Two-thirds of Indian population is under 35, with the
Choupal Saagars offer a combination of services to
median age of 23 years, as opposed to the world median
rural India. These are Made-to-design agri-business
age of 33. India is home to 20 per cent of the global
hubs and they function as:
population under 25 years of age. This trend is projected to
1) ITC agri-sourcing centres providing farmers a
continue for the next decade, with the share set to reach its
transparent best price sales window.
maximum in 2010. The large proportion of the working-age
2) Shopping centres bringing a range of products
population translates to a lucrative consumer base vis-à-vis
comparable to urban levels of choice, and
other economies of the world, placing India on the radar as
3) Facilitation centres delivering a host of farm-related
one of the most promising retail destinations of the world.
services – training, soil testing, product quality
India has a vast resource base of talent and skilled labour.
certification, medical and clinical services, cafeteria and
This resource mainly dominated by English speaking
fuel station.
workforce can be engaged in the retail sector providing an
24 Choupal Saagar hubs are already in operation in 3
edge for incremental growth.
states, to grow to 100 by 2010.
Attracting Capital its virtual e-choupal as well with its physical infrastructure
The Government of India is progressively undertaking known as Choupal-Saagar has successfully formed a supply
reforms and liberalising the retail sector; thereby attracting chain in the form of a market place enabling the farmers to
significant foreign investments. The regulatory and sell their agricultural produce to the interested buyers. The
supervisory policies are being reshaped and reoriented to supply chain if formed and properly managed ensures well
meet the new challenges and opportunities in this sector. To structure price structure and is quite beneficial to not only
facilitate easier flow of Foreign Direct Investments (“FDI”) the producers but the consumer also as they get the
inflow, instead of having to seek Foreign Investment supplies at competitive rates. The existence and
Promotion Board (“FIPB”) approval, FDI up to 100 per cent development of warehouses and cold storage facilities
is allowed under the automatic route for cash and carry assumes an important role for ensuring smooth supply chain
wholesale trading and export trading. FDI up to 51 per cent operations. With the expansion of retail, supply chain will
is allowed, with prior Government approval for retail trade take on an increasingly important role. The segment
in ‘Single Brand’ products with the objective of attracting involving multiple intermediaries and lots of wastage during
investment, technology and global best practices and transportation and storage should be focussed on for
catering to the demand for such branded goods in India. This improving the supply chain.The end consumer is becoming
implies that foreign companies can now sell goods sold more demanding and time conscious, the need for just-in-
globally under a single brand, such as in the case of Reebok, time services is increasing. In retail, where competition is
Nokia and Adidas. However, retailing of multiple brands, intense and stakes are high, customer satisfaction is
even if the goods are produced by the same manufacturer, paramount. As the stakes in this sector is quite high, the best
is presently not allowed. Relaxation of FDI restrictions are systems using the state-of-the-art technologies supported
being vigorously pursued by the business and trade by professional expertise can make a huge difference to the
coalitions and are expected to fall in place over the next 3- supply chain management.
5 years.
The retail sector needs to be opened up for global Employment Opportunities
retailers so that fresh flow of investment can be derived and According to India Retail report 2007, organised retail in
this may help in scaling up and modernising farm practices. India has the potential to generate some 2.5 million direct
At the same the traditional form of retail also needs to be jobs through retail operation and over at least 10 million
protected as it offers self-employment to millions of people additional jobs in retain support activities including contract
in India. The segments should be clearly identified where the production and processing, supply chain and logistics, retail
reforms can be carried out and the supply chain can be real estate development and management etc by 2012.
smoothened and productivity is improved. This can also
lead to India becoming retail hub for many a products. Future Projections
Growth of organised retail is likely to have a positive impact According to the recent report by McKinsey &
not only on end consumers, but also on employment Company titled 'The Great Indian Bazaar, Organized Retail
generation, supply chain efficiency, agricultural practices, Comes of Age in India', India's overall retail sector is likely to
sourcing from India, etc. grow to US$ 450 billion by 2015. Another McKinsey report
'The rise of Indian Consumer Market', estimates that the
Supply Chain Management Indian consumer market is likely to grow four times by 2025.
The formation and improvement of supply chain is quite The Indian retail sector is likely to remain under pressure in
crucial for the success of the organised retail sector in India. the near-term largely due to slower growth rate and difficult
In case of perishable items like vegetable and fruits, the fund raising options, global research firm Macquarie says.
supply chain is quite small as the centres of production is Understanding the diversity of India is the key to the success
quite fragmented and located at number of places. ITC with in this sector.
Project Reporter 11 March 1, 2009
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