8/3/2019 Retail Industry: The Future of Developing India

1/3www.customercentria.com

customer centriaThe Customer Engagement & Experience Company

Date: 05/12/2011

Retail

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8/3/2019 Retail Industry: The Future of Developing India

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The national debate over Foreign Direct Investment (FDI) in retail in India is heating up with each passingday. Even as opposing views clash from different centers of the society, FDI in retail is no doubt a matter of

contemplation, and cannot be rejected without a fair amount of thinking and reasoning. While the decision

makers battle it out on FDI in retail, this document presents a bird's eye view of the proposed move, and what it

means for the consumers, marketers, suppliers and the country

Row over FDI in Retail

Under the current regulatory regime, retail trading (except under single-brand product retailing FDI up to

51%, under the Government route) is not allowed in India. That explains why many international successful retail

giants are missing from the Indian retail scene. The currently proposed 100% FDI in retail sector has met a

considerable amount of both - acceptance and opposition from the various parties involved in the process.

Why India is a Retail haven?

The advantages of letting in unrestrained FDI in the retail sector

outweigh the issues attached to it. Similar successful implementations

in countries like Thailand and China, has proved that the move is an

advantageous one for the country. Even in these countries, the step

invited protests, but later it turned out to be one of the most significant

political and economical decisions with increased GDP and more job

opportunities.

poses a magnum potential for growth with so many consumers with different tastes and

cultures. A look at the to the GDP of various economies stands at:

20% for USA, 14% for Japan and 12% for India

India is a large emerging market, with increasing by 75% in last 3 years. The

in 20092010 has more than doubled to US$ 849 from US$ 348 in 200001.

India's market sizecontribution of retail industry

consumer spending power

per capita income

The Arguments

The biggest concern by most of the opposing society corners, features small traders and merchants, based in

villages and towns, due to FDI in multi-brand retail. But similar concerns in countries like China proved

irrelevant, as there was no bad impact noticed, with traders and merchants competing with equal zest and

success. In fact, the farmers will get better value for their produce, accompanied by less food wastage in transit.

Besides, almost all experts agree that FDI in the rapidly growing Indian retail will give a big boost to employment,

with the potential of creating a staggering 80-lakh jobs in the country. FDI implementation in retail also means

more organised players entering the scene, with more hiring not just in the retail sector, but also in associated

sectors like sourcing and logistics. Also expect new technology to enter the domain especially in rural areas, with

infrastructure also getting a major boost.

It's not all positive, but if handled well, FDI in retail seems to be about more pros and less cons.

www.customercentria.com

8/3/2019 Retail Industry: The Future of Developing India

3/3www.customercentria.com

Customer Engagement will witness a direct impact if the FDI in retail becomes a reality. There will be a paradigm

shift in the way consumers are managed and categorised, with competitive pricing leading to attractive offers and

new marketing strategies. Each brand will bring with it a unique consumer approach, user-friendly policies, and a

definite benefit in terms of reduced prices, and loads of new international brand making a foray into the Indianmarket.

Mr. C R Vinay, Managing Director, Customer Centria says, For home grown retail the challenge will not be in

communication but in matching the customer experience across customer touch points especially in stores.

Leveraging technology, data and analytics will be come ever more critical so as to be able to provide the relevant

mix of merchandise and service.

The move will also mean more innovation on the marketing

front. For e.g. The engagement strategy used by retailing giant

, where the company actually tapped on

the major problem of each shopper in South Korea 'hectic

schedules and no time to shop'. They pasted large hoardings in

busy subways each carrying the product, its description and an

assigned QR code, so people could actually shop by just placing

their mobile phones on the while they wait for the train

and the product gets delivered at their doorsteps. Such unique engagements promise to ease shopping

experience, reduce costs, enhance efficiency, boost revenue and delights customers at the same time.

The consumer class in India is set to grow from 50 million at present to . So the future

definitely looks as bright as the sun if FDI in retail is implemented.

Tesco in South Korea

QR code

583 million by 2025

What about the consumers

Vinay further hints, Global retailers however will face the challenge of becoming "Indian". Foreign does not

always mean better value. It also comes with a tag of price premium and some amount of intimidation. Today's

middle class Indian has choice and is more than happy shopping at the Kirana store and having merchandise

delivered home all the time. Global retail expects a certain level of independent self-service that we are not used

to. There in lies a critical challenge of an experience that can be not so friendly.

The decision over FDI in retail is bound to keep the nation on hook for some time now, with views and opinions

flying all over. Basis initial observations and foresighted benefits, the move definitely has the makings of a

winner. At the end of the day, it's the increase employment, superior logistics, better pricing and delightful

customer experience that acknowledges this decision.

Final Note