A Short Note On Unorganised Retail

Despite the emergence of organised retailing, unorganised retailing has dominated the retail landscape in India. Unorganised retailing, however, does not follow legal provisions. Many Indian retailers have established grocery shops, restaurants, pharmacy stores, handcrafted items, general stores etc. 

Currently, the Indian retail industry is run locally by owners lacking technical and accounting skills. These shop owners provide new products and a better shopping experience from traditional unorganised retailing to online retailing. One can say that a small Indian retailer is using a combination of both physical and digital marketing. 

What is Unorganised Retail?

The unorganised retail consists of small business operators who sell non-branded products on a lower scale. They sell goods in split quantities at a fixed location. Some vendors may be mobile within a small geographical area. An unorganised Indian retailer prefers not to use modern technology. Rather they hire employees as their salesman and helpers. However, they have a massive potential of managing trade and inventory quite well. 

The unorganised Indian retail industry runs outlets locally to deliver products in a few minutes at your doorstep. The small shops run on minimum internet usage, low-quality inventory and a small supply chain. Furthermore, the vegetable vendors, grocers, and local cloth merchants use formats of low-cost retailing. According to some surveys, the unorganised retailing industry accounts for 97% of shopping needs. 

The Indian retail market has a proportion of around Rs. 400,000 crore, whereas the organised retail market size is only Rs. 20,000 crore. There’s a vast difference between the two retailing industries. But both of them are known as the nation’s shopkeepers who contribute to the Indian economy.

India Retail Market

The Indian retail sector is one of the largest sources of employment for most Indian citizens, including agriculture; it has made a deep penetration into rural India. Hence, contributing to more than 13% of India’s GDP. It is often regarded as a highly fragmented sector. Organised retail, however, with better quality products, constitutes only 8% of the market. It is still at a nascent stage. 

India is estimated to touch the $100 billion mark in internet business soon. Hence, it is highly recommended that all retailers use technologies that link their customers to the factory. This, in turn, will generate more demand and supply for the products. From the year 2012 to 2020, the market value of total retail was about 12%. It is estimated that it will grow by 18% by 2025. Additionally, by the year 2030 Indian retail market is expected to emerge as one of the largest online markets. 

The food industry holds most of its share in the Indian retail market. About 49% of the total retail sector includes the Indian food processing market. 

Features of Unorganised Retailing

• The infrastructure of unorganised retailing is rudimentary. Their low cost operating structure makes them unable to use high-speed technologies. Moreover, due to the lack of specialised technical skills, consumers have difficulty receiving hi-tech services from Indian retailers. Their consumers often prefer to purchase products in fewer quantities.

• The most important feature of the Indian retail industry is its operations through low-content formats. The industry entails low capital cost and face difficulties in accessing capital funding from investors. Especially the retail stores in the rural areas without better infrastructure face such challenges.

• The Indian retail industry still follows traditional low-cost formats, thereby contributing less to the Indian economy. If the local merchants operate at a higher cost, they might find it easier to grow. They may use promotional tools such as digital marketing for lead generation.

• The accounting and legal provisions in the unorganised retail sector have no value. They generally run a family business. As a result, retailing in the unorganised sector is not a profit-oriented vocation. It’s just the easiest way to generate self-employment. Credit facilities are given to the customers while selling the goods. Hence, customers prefer to shop from local vendors. Generally, they are located in convenient locations and are easily accessible. This makes an individual visit their nearby stores even for minor purchases.

• The Indian retail industry consists of 55% clothing, 27% furniture, 27% pharmacy and 18% accessories market. Hence, the income levels of the vendors may vary. But it has gradually risen as consumers have shifted from branded products to local products.

The entry of multinational companies has also changed the income levels drastically. It has made a negative impact on the Indian retail industry. The local store owners need to match the high wage scale of the MNCs to retain their salesmen. They might have to compete with these multinational companies to remain in the dominant position in the market. 

Conclusion 

In this article, we studied the Indian retail industry. However, there have been a lot of modifications in the sale distribution, promotional ways, operational measures and income levels of the Indian retailers in the past few years. Still, there are several challenges faced by them even today. They lack standardisation, new products and government policies in their particular sector. Furthermore, the industry is providing employment opportunities to many people. People can bargain and buy products on credit.