Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
To what extent Modern Indian Retail Market for
groceries affect conventional Retail Corner Stores
under perfectly competitive market structure?
________________________________________________________________
-
________________________________________________________________
Name:
Vatsal Patel
Subject:
Economics Extended Essay
Category:
The Economic Effect of Virtual Market
Year:
2017-18
Candidate Number:
Words Count:
Mentor and Special Advisor:
Ms.
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
Acknowledgement:
I, herewith submit this extended essay "To what extent Modern Indian Retail
Market for groceries affect conventional Retail Corner Stores under perfectly
competitive market structure?" with an immense sense of gratitude towards
all those who have helped me in various ways in this humble endeavor.
I am taking this opportunity to express my heartiest and sincere gratitude to
our teacher and mentor for her valuable guidance and expert advice from
time to time and for providing useful suggestions throughout this work.
I am indebted to all the members as surveyors, who extended their valuable
support for the successful completion of this study.
Vatsal Patel
IBDP Year II
NISV, VDR
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
Table Contents:
1. Abstract
2. Introduction
3. Indian Retail Market: Groceries
4. Inductive Analysis
4.1 Perfectly Competitive Market - Indian Retail Market
4.2 Short Run Scenario
4.3 Long Run Impact
5. Data Collection and Analysis
5.1 Demographic - Income Group Evaluation
5.2 Modern Retail Market vs. Corner Stores
5.3 Comparative Evaluation - Secondary
5.4 Comparative Analysis - Ground Zero (Primary)
6. Result and Analysis
7. Conclusion
8. Evaluation and Errors
9. Appendices
10. Bibliography
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
1. Abstract:
The Indian Retail sector has come off age and has gone through major transformation over
the last decade with a noticeable shift towards organised retailing. Favorable demographics,
increasing urbanisation, nuclearisation of families, rising affluence amid consumers, growing
preference for branded products and higher aspirations are other factors which will drive
retail consumption in India. Likewise Corner stores so called Kirana stores are the base of
Indian Traditional retailing or groceries in India. If there seems a shift in modern retailing
then the question arises that...
To what extent Modern Indian Retail Market for groceries affect conventional Retail Corner
Stores under perfectly competitive market structure?
The approach to investigate will be secondary market data as well primary research through
online survey and interviews. The same data will be categorized, analyzed and data will be
produced without any biased nature.
The data collection showed an evident effect of supermarkets on corner stores, but up to
certain extent. However, the analysis also conveyed positive prospects for supermarkets
and a situation for corner stores where they can convert themselves to superstores and
compete the giants.
It was concluded that though the supermarkets are increasing leaps and bounds but at
present there is no evident option for corner stores to fulfill the various needs of the Indian
population for daily needs of food and groceries.
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
2. Introduction:
India, the second largest populated country in the world with 1.34 billion people and
projected to be 1.53 billion by the year 2030 surpassing China.1 Can we imagine the
quantum of retail industry especially for groceries in India? Mammoth ! The trending Indian
retail market for groceries is perpetual with high growth rate, increasing demand-supply
potential, Policy support -FDI, demographic profile and will be more prolific with none other
than the introduction of simplified taxation system of "Goods and Services Tax - GST". The
retail market for groceries accounts for more than 50 percent of total revenues in the retail
sector in India.
Traditionally, groceries retail market comprises of unorganized sector including "Mandis,
Haats, Melas and especially Corner Stores; the so called Kirana Stores in India. However,
with liberalized economic policy and barrier free perfectly competitive market for groceries,
there was a emergence of larger chain stores, supermarkets and hypermarkets by the year
2005. Such an organized market for groceries is increasing by leaps and bounds, promoting
through huge economies of scale, branded quality products, sales strategies, highly skilled
human resources, excellence ambience, attractive offers and safe-secured environment for
consumers. Though traditional retail market has been deeply rooted in the groceries sector,
but changing living standards and high disposable incomes has motivated new openings for
various new entrants in the market.
The following research question and hypothesis has been developed in order to determine
the competitiveness of traditional and modern retail market for groceries in India.
"To what extent Modern Indian Retail Market for groceries affect conventional Retail
Corner Stores under perfectly competitive market structure?"
Considering the fact that about 70 percent of the Indian population are still inhabited in
rural areas, it can be hypothecated that "Retail Corner Stores" are still the main supply
source of groceries in India.
The main purpose of this extended essay is to analyze the research question and to
ascertain whether the stated hypothesis holds.
In order to justify the research question, inductive analysis under "Perfect Competitive
Market" is to be carried out based on short and long term impact of Modern Retail with
contemporary retail for groceries. Also, factors affecting the retail market, statistical data
analysis and comparative study of dual markets is to be presented using secondary as well
as primary data to avoid misrepresentation of information.
1
http://www.indiaonlinepages.com/population/india-current-population.html
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
3. Indian Retail Market: Groceries
Indian Retail Market is growing enormously due to healthy economic growth. Collective
efforts of Policy support, financial houses and FDI has made essay openings for new
entrants in the retail market. It was pre-nineties when manufacturers conceptualized their
own outlets and realized the potential of the market. In last decade mostly all the Indian
Corporate has substantially invested in groceries and merchandise sector.
As per Appendices 1, it can be stated that the main component in retail market is food and
groceries with 66 percent which consists of daily mandatory needs of food and household
supplies. However, the other sector still pertains below 10 percent which includes health,
comfort and luxury products.
Indian Groceries Market consists of organized and unorganized sectors. Organized sectors
consists of departmental stores, supermarkets and hypermarkets operating in major metros
and cities viz. Big Bazaar, Reliance Fresh and D-Mart to name a few. The end users are
benefitted as the supply chain is supported by well-organized quality products with less
numbers of middlemen.
Unorganized sector for groceries includes owner-manned traditional "Kirana Stores",
Mandis, Haats and other general stores round the corner of every street that almost covers
urban and rural India. It is generally family owned business where the quality of products
are not standardized and have lack of experience, exposure and education.
However, the modern Food and Groceries retail market, thrusting its potential market share
which is expected to grow at 20–25 per cent per annum. With the same growth rate, the
modern retail market is well poised to grow even triple its present size by 2020.2
4.1 Perfectly Competitive Market - Indian Retail Market
A perfectly competitive market is a market where there are large number of buyers and
sellers of identical products and neither a seller nor a buyer has any control on the price of
the product and so is the groceries retailing as well. As per appendices 2, Some of the Indian
FMCG companies who are the major suppliers to poise competitive retail market are ITC,
Nestle, Dabur, Hindustan Unilever Limited, Britannia, Parle Agro, Proctor and Gamble etc.
There are also regional suppliers which make the groceries market more upfront and sellers
mere price takers. The unorganized sector of retailing like Kirana stores, small general stores
play the major role for supply to the end users. There are 12 million Kirana stores in India
2
http://www.indiaretailing.com/2016/06/07/food/food-grocery/25-growth-potential-in-organized-fg-market/
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
translating into 10 stores per 1,000 Indians3. Also, along with these Indian groups of FMCGs
the government is considering permitting foreign supermarket players to open retail stores
but only for sale of ‘Made in India’ products. Although the current foreign direct investment
(FDI) policy permits overseas players to hold 51% stake in an Indian retail company4. Such is
the market for groceries where there are large number of buyer and sellers of
homogeneous products which can be regarded as perfect substitute for the products of the
other firms and eliminates the power to charge higher price than the prevailing market
price. Under these conditions there seems no barrier for entry of new retail giants to enter
the market seeking profitable opportunity MC=MR and also easy exist of the firms who has
just reached break-even TR=TC or where TC>TR.
As per Appendices 3, other than traditional Kirana stores and Modern retail market for
groceries, there exists a third tier to the market is E-Grocery Market in India. Further, this
sector adds to the perfectly competitive market for groceries. The main drivers of this
market is young population, growing internet and online shopping. Though, the market is
limited to metros only, definitely it impacts the overall sector.
As per Appendices 4, it can be stated that Modern Retail Market is spreading its roots down
the major cities of the country. Also, with improving living standards of the people, these
retailers have started penetrating small cities and towns with medium cap stores.
4.2 Short Run Scenario
As per figure 1:
In short run, under Perfectly Competitive Market, all the retailers in groceries sector will be
able to sell all the produce at a fixed price. The shape of the Revenue curve explains that
revenue will increase with each extra goods sold at constant rate.
3
http://www.business-standard.com/article/companies/kirana-stores-the-inspiration-for-big-retail-s-small-stores-bcg115091600023_1.html
4
http://www.livemint.com/Politics/tNTo0DQKfev0gfhyxnu4PP/Govt-may-ease-FDI-norms-for-multibrand-retail.html
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
As per figure 2:
It can be stated that all the groceries retailer will sell the homogenous products like branded
food products, grains etc at the same price and revenue from each new unit sold will be
same, hence Marginal revenue will be a flat horizontal line. Also, AR=MR=TR, because of
invariable price under perfectly competitive market.
As per figure 3:
It can be noted that the retailers in the market are mere price takers as D=S at price P. For
example, if the supermarkets tries to raise their sales by increasing or lowering the price of
the grains (Wheat), than either all the consumers would purchase from them looking to the
standardization of products or no consumers would purchase at all from them looking to the
variants already present in the other retail market. Also, the supermarkets would have no
incentive to sell grains at lower prices since supermarkets are already selling all the
produces they have stocked.
As per figure 4 A:
It can be stated that under perfectly competitive market all the groceries retailer viz.
Supermarkets, Kirana stores, Online stores, are making variable profits according to their
business capitalization. For example, Kirana stores in short run are affected with profit
marginalization in major city and posh areas where supermarkets and online groceries
prevails at a higher extent where MC>AC, while the remaining rural and developing areas
these Corner Stores makes a supernormal profits with AC=MC. On the other hand
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
Supermarkets and online groceries stores with its limited sourcing has made an influential
market share with substantial profit margin with its customer friendly stores and its
expansion is thrusting by leaps and bounds.
As per figure 4 B:
It can be said that in short run the Supermarket groceries may face short term loss or breakeven due to huge infrastructure, human resource capitalization and further developments
of new stores. On the other the Corner Stores who are trying to convert their Kiran Stores to
super stores may face the same scenario. However, in short run all groceries retails can
manage to overcome situation by taking the least TC to minimize the loss or raise its profits.
4.3 Long Run Impact
As per figure 5:
It is evident that in long run those retailers whose SRAC > AR (i.e. on curves at the extreme
left and right) are loss making and may choose to leave the sector or resize the quantum of
the business. For example, if supermarkets enters in rural area or less developed area where
the market is limited then it may have tough competition with local Kirana stores as they
provide quite cheap products on credit facility. So, supermarkets under rural or semi-rural
segment faces Short to long term deficit where AC>AR. This is the major region where the
Kirana stores would have no impact of supermarket in long run. While reverse is the
situation in major cities where consumers are lured to purchase from large retail
supermarkets with trendy products and here many Kirana stores run out of potential capital
and quantum of business is reduced to a larger extent and eventually concede.
However, if the Supermarkets enter the small cities and rural areas with resized stores, it
would able to obtain the break-even in small cities and in long run capture this small market
where its LRAC<AR, where corner stores would have tough competition to survive or have
to modify its corner stores into super stores.
According to the current market share, Kirana stores still have the most market covered
while it is expected that in long run supermarket and online groceries would have much
larger market share.
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
5.1 Demographic - Income Group Evaluation
As per Census 2011, there is an absolute increase in population in urban areas than in rural
areas. Rural population is 68.84% in comparison of 71.19 as per census 2001. The urban
population has increase to 31.16% with respect to 27.81% as per census 20015.
As per appendices 5, population as per census 2011, has increased and so has increased the
demand for food and groceries. As per the date it can be stated that the population has
increased in rural areas but in urban it has increased two fold. Here, the supermarkets and
hypermarkets are penetrating the core urban areas whereas the Kirana stores seems
struggling. However, the Kirana stores enjoy business in newly developing city area in a
short run demand supply chain, but as soon as the area is developed the supermarket
enters and affects the Normal Profit of the Kirana stores.
As per appendices 6, it can be stated that 89% of the population comes under the income
group of Rich-Middle class. Also, the percentage of urban rich-middle class is much higher
compared to rural areas. It can also be derived higher the income, higher is the
consumption. As per "Consumer Theory", it reveals the change in quantity and quality
demanded by the consumers.
As per figure 6, an increase in the income, with the prices of all goods fixed, causes
consumers to alter their choice of market basket. The extreme left and right indifference
curves belong to different individuals with different preferences, while the three central
indifference curves belong to one individual for whom the income-consumption curve is
shown. Each line represents one level of total consumption expenditure common to all its
points, its slope depends on the two goods' relative prices.
Hence, the supermarkets in urban areas will be benefitted with "Profit Maximization" by
increased quantum of production and sales, however, Kirana stores makes "Normal Profits"
in short run, while in the long run it may find it difficulty in maintaining "Long Term
Equilibrium" and would shut down and exit the market.
5
http://indiafacts.in/india-census-2011/urban-rural-population-o-india/
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
5.2 Modern Retail Market vs. Corner Stores
Indian landscape of retail focuses on conventional corner stores and modern retail market.
To compare and contrast number of firms and their components under perfectly
competitive market, it can be ascertained from the following example:
Let the price index be constant where P = K, because most of the groceries are branded and
packaged underlying the FMCG products.
Let the population of in a certain Urban Area be: 10000
Let the Quantity demanded in a certain urban area be Q = 10000 units
Let the number of supermarkets in any urban area be S = 10
Let the number of corner stores in any urban area be C = 100
As there is no barriers for entry or exit under retail market, the number of corner stores and
supermarkets may increase or decrease looking to the quantum of the business. The
supermarkets have higher average resource mobility with relative advantage of economies
of scale and Foreign Direct Investment, due to which the number of supermarkets,
hypermarkets are increasing in urban areas. Whereas, the corner stores are mostly
dependent on local market and lacks perfect information.
For every 10 supermarkets or equivalent there is 100 corner stores, hence for every 1
supermarket there are 10 corner stores. Rise in such supermarkets will lead corner stores to
exit from the market due to negative economic profit. However, in near future the retail
market would be under equilibrium when the number of supermarkets will increase to 15
and the corner stores would reduce to 50 for certain urban area.
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
Due to increase in tier I and tier II cities, there is increase in departmental and supermarket
stores. High level of consumption and improving standards of living has also increased the
use of branded and packed products amongst the cities. Many supermarkets are still
struggling to achieve positive economic profit and are working on normal profits. There are
also many instances where the supermarkets had short run shut down due to negative
economic growth. Likewise many Reliance Fresh stores have shut down in many areas
where the corner stores are predominant.
Supermarkets on a large scale have the technical efficiency of branding, billing and packed
products, while corner stores have its own ethical and social advantages. Supermarkets on
the other hand also procure productive efficiency and has also started local labels to
promote sales gaining larger market share in short run and in longer run it has been
targeted to achieve increased economic profits.
Looking to the above example, it can be stated that in the next level of retail market, the
supermarkets will have a greater impact on the corner stores in urban areas due to
attractive discount schemes, stores ambience and service front. Whereas the corner stores
are diminishing at a larger extent due to lack of marketing and strategy management.
5.4 Comparative Analysis - Ground Zero (Primary)
As per appendices 8, an online survey was taken on "www.surveymonkey.com" to
understand the choice of general people.
Total 56 surveyors participated in the survey and about 41 percent of the surveyors were
between the age group of 15 to 24, which shows that the survey will show how exactly the
young generation of the country prefer to purchase groceries. About 66 percent of the
surveyors reported that they visit supermarkets only once a month, while other 36 percent
visited the supermarkets more than once. This is a clear indication that during the month
many a times most of the surveyors must be visiting local corner stores for their daily and
unforeseen needs. Hence, 80 percent of the surveyors has confirmed visiting Kirana stores
more often than the supermarkets. Only 20 percent of the surveyors do not visit Kirana
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
stores because they must be very close to the supermarkets. According to the surveyors
there are about 5-10 Kirana stores around 77 percent respondents while there are about
11-25 Kirana stores around the area of 14 percent respondents. It can be stated that Kirana
stores are all over and for supermarkets it would be very hard to overcome them in near
future. However, it may still effect the quantum of business of the Kirana stores.
With respect to the quality of products, about 68 percent surveyors responded that the
products in supermarkets are more better than traditional Kirana or corner stores. However,
about 32 percent believe that due to the FMCG products sold everywhere there is not much
difference about the quality of products but felt that price could be factor. As supermarkets
purchase in bulk them are allowing more discount to attract customers.
Overall, under perfectly competitive market where there is free entry and exit of firms
under grocery sector, Kirana stores will have stiff competition from the giant supermarkets
but existence of such Kirana stores will never be questioned in near future.
As per appendices 9, interview with the owners of superstores and Kirana stores, it can be
stated that in the past few years, Indian Retail sector has seen tremendous growth in the
organised segment. Major domestic players have stepped into the retail arena with long
term, ambitious plans to expand their business across verticals, cities and formats.
The Indian retail sector is highly fragmented and the unorganised retail outlets that account
for around 95-96% of the total Indian retail industry. However, going forward, the organised
sector’s growth potential is expected to increase due to globalisation, high economic
growth, and improved lifestyle.
Although the growth potential in the sector is immense, there are obstacles too, that could
slow the pace of growth for new entrants. Rigid regulations, high personnel costs, real
estate costs, lack of basic infrastructure, and highly competitive domestic retailer groups are
some such challenges. An emerging trend in this segment is the virtual formats where
customer orders are taken online through web portals which are delivered at the door step
the very same day or the following day. This trend has been catching up with most of the
large sized retail chains that have their websites.
6. Result and Analysis
As per appendices 7, number of traditional outlets like haats, melas and mandis still
outnumbers of supermarkets and hypermarkets. Also the quantum of traditional business
sector is highly admissible and plays an important role in the supply chain of groceries in
Indian retail market. This segment still maintains more than 90 percent of sales in villages
and semi urban areas. Moreover, corner stores are also modernizing with its format of
super stores and multi-stores arena.
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
On the other hand, supermarkets are claiming huge response in urban markets 55.2 percent
per annum which is highly acknowledged by the end users. Whereas the growth rate of
traditional retail for groceries is only raised by 6.5 percent. The number of local shoppers up
to more than 0.5 kms has been nearly 80 percent while the shoppers residing closer to these
markets is nearly 90 percent. It is quite evident that modern retail sector for groceries is
booming and will raise its operation to more than 60 percent of market share by the year
2020.
However, traditional corner stores still covers the major retail business for groceries in the
country, but, it has to prolife the structure and advent to new features to resist in fast
growing modern retail sector.
7. Conclusion
In the past decade, the Indian marketplace has transformed dramatically. Investments in
various industries has become unlimited due to high purchasing power in the hands of the
consumer and the government's policies favouring the large-scale sector. Indian economy
rapidly progressed from being state-led to becoming market friendly.
The beginning of a new era for retail in India and the fact that post liberalisation, the
economy had opened up and a new large middle class with spending power had emerged,
helped shape this sector. The vast middle class market demanded value for money
products. The emergence of the modern Indian housewife who managed her home and
work led to a demand for more products, a better shopping ambience, more convenience
and one stop shopping. This has fuelled the growth of departmental stores, supermarkets,
and other specialty stores.
The Mahindra group is the fourth large Indian business group to enter the business of retail
after Reliance Industries Ltd, the Aditya Birla Group, and Bharti Enterprises Ltd. These
groups are focusing either on perishables, groceries and a range of products. At present the
new format stores cater mostly to households belonging to the higher income families. Also,
the catchments area for these modern stores has to be fairly large as the number of such
households is small in relation to the total population. This means that although large
number of people visits the store, the number of buyers average the bill amount is small.
Due to low sales, the bargaining power of the retailers with suppliers and manufacturers is
low this restricts their average gross margin.
On the other hand expenses involved in setting up and maintaining a modern for store tend
to be much higher than traditional store due to additional expenses on larger size, better
locations and sure ambience. Therefore if the returns on investment in the retail formats
have to be attractive, modern retailers have to develop strong supply chain that provides
them significant gross margin while delivering groceries at attractive prices to customers
and the modern retailers will need to eliminate middlemen and buy directly from suppliers
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
making use of the technology to control inventory. Manufacturing firms will also face
pressure from strong buyers on price, delivery and service terms.
Lower prices in turn will increase the attractiveness of modern formats and rapid growth in
the preference for purchasing from new format stores. Store ambience includes issues such
as lighting, cleanliness, store layout and space for movement. Modern stores can offer a far
better ambience compared to traditional stores.
Moreover, the laws are also getting more and more business friendly. Main rules regarding
FDI in retail and real estates are getting lesser and lesser which means entry of large no. of
players mainly foreign in the Indian market that will lead to a double-digit growth in this
sector. One more factor that helps in retail growth is the fact that means of entertainment
are less in India. So, people generally feel these retail stores or malls as a place to end up
spending amount on food and entertainment. So that means there is immerse potential in
it. Therefore everyone will keep this thing in mind and try to open up more avenues like this
where people can enjoy and spend some quality time.
8. Evaluation and Errors
While collecting material it is very important to minimize random uncertainties. To be
precise and reduce such uncertainties more secondary research and primary research
information should be carried out to decrease errors.
Personal surveys and interviews are the most prominent ways for primary research.
However, in this essay online survey was used and personal interviews were done to impact
the survey more precisely. Consumers on online survey can be questioned and may have
given formal responses than actual.
Another factor which can be accountable for errors may be the market place chosen was
urban and rural respectively where buyers notion is completely different because the urban
population is more drawn to supermarket purchase while the rural is 100 percent
dependent on Kirana or corner stores for their daily needs of groceries.
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
9. Appendices:
1. Retail Market Share in India: Data base January 20176
Market Share in
%
66.3
8.6
7
5.2
2.7
3.6
1.2
5.4
Retail Markets
Food and Groceries
Apparel
Jewellery
Consumer Durables and IT
Pharmacy
Furniture and Furnishing
Footware
Others
Market Share in %
Food and Groceries
Apparel
Jewellery
Consumer Durables and IT
Pharmacy
Furniture and Furnishing
Footware
Others
5%
3%
4% 1% 5%
7%
9%
6
https://www.ibef.org/download/Retail-January-2017.pdf
66%
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
2. Market Capitalization of Top 10 FMCG in India7:
3. Online Groceries Stores8
4. Indian Supermarket Chains9
7
https://www.slideshare.net/AyushSingh19/new-product-launching-strategies-of-fmcg-companies
8
https://www.slideshare.net/sidasterix/egrocery-opportunities-2014
9
https://www.economist.com/news/business/21625799-modern-food-retailing-has-struggled-win-customers-indias-old-fashionedmerchants-long
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
5. Census Info 201110
Persons
181 616 925
135 565 591
100 000 000
150 554 098
405 830 805
427 632 643
833 463 448
360 887 965
2001
2011
Males
200 000 000
0
2001
2011
0
0
2001
381 602 674
200 000 000
742 490 639
400 000 000
587 447 730
200 000 000
600 000 000
623 121 843
400 000 000
1 210 569 573
600 000 000
496 453 556
800 000 000
532 156 772
1 028 610 328
1 000 000 000
286 119 689
300 000 000
800 000 000
1 200 000 000
377 106 125
1 400 000 000
195 489 200
400 000 000
1 000 000 000
Persons
Females
Persons
2011
Males
Males
Females
Females
Urba
Total
Persons
2001
2011
1,028,610,328
1,210,569,573
532,156,772
623,121,843
496,453,556
587,447,730
Males
Female
s
Rural
Person
s
Males
Female
s
2001
2011
742,490,639
833,463,448
381,602,674
427,632,643
360,887,965
405,830,805
n
Perso
ns
Males
Femal
es
2001
2011
286,119,689
377,106,125
150,554,098
195,489,200
135,565,591
181,616,925
6. Income Groups11:
10
http://censusindia.gov.in/2011census/censusinfodashboard/index.html
11
http://www.livemint.com/Politics/VqSawm4kzDAChnUPwwNb4I/Middle-India-is-still-some-way-off-from-being-middle-class.html
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
7. Retail Market - Sales12
Type of Retail Outlet
Haats
Facts- Numerical
Average Sales per Day-Rs.2.25 lakh
Number of sales outlets per - Haat
300+
Number of Visitors per Haat- 4500+
Average Sales per Outlet-Rs 900
Villages covered by a Haat - 20-50
Annually held (Approx) - 25,000+
Outlets held at every mela at an
average - 800+
Average Sales per Mela-Rs 143 Lakh
At average exists - 6,800 catering to a
population of 1.36 Lakh
Melas
Mandis
INDIAN RETAIL MARKET
(Rs. Crore)
Retail
2006
2007
Segments
Clothing,
Textiles &
Fashion
Accessorie
s
Jewellery
Watches
Footwear
Health &
Beauty
Care
Services
Pharmaceut
icals
Consumer
Durables,
Home
Appliances
/equipment
s
Mobile
handsets.
12
113,500
131,300
ORGANIZED RETAIL
(Rs. Crore)
Growth
2006
2007
2007 >
2006 (%)
15.7
21,400
29,800
60,200
3,950
13,750
3,800
69,400
4,400
16,000
4,600
15.3
11.4
16.4
21.1
1,680
1,800
5,200
400
2,300
2,150
7,750
660
36.9
19.4
49.0
65.0
42,200
48,800
15.6
1,100
1,540
40.0
48,100
57,500
19.5
5,000
7,100
42.0
21,650
27,200
25.6
1,740
2,700
55.2
Growth
2007 >
2006 (%)
39.3
https://www.economist.com/news/business/21625799-modern-food-retailing-has-struggled-win-customers-indias-old-fashionedmerchants-long
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
Accessorie
s&
Services
Furnishings
, Utensils,
FurnitureHome &
Office
Food &
Grocery
Out-ofHome Food
(Catering)
Services
Books,
Music &
Gifts
Entertainm
ent
TOTAL
40,650
45,500
11.9
3,700
5,000
35.1
743,900
792,000
6.5
5,800
9,000
55.2
57,000
71,300
25.1
3,940
5,700
44.7
13,300
16,400
23.3
1,680
2,200
30.9
38,000
45,600
20.0
1,560
2,400
53.8
1,200,000
1,330,000
10.8
55,000
78,300
42.4
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
8. Online Survey on "www.surveymonkey.com"
Q1What is your age?
ANSWER CHOICES–
RESPONSES–
–
73.21%
41
15 to 24
–
8.93%
5
25 to 34
–
8.93%
5
35 to 44
–
3.57%
2
45 to 54
–
3.57%
2
55 to 64
–
1.79%
1
65 to 74
–
0.00%
0
75 or older
TOTAL
56
Q2How often do you visit supermarkets in a month
ANSWER CHOICES–
–
Once
–
Twice
–
Thrice
–
More than thrice
–
Responses
Other (please specify)
TOTAL
RESPONSES–
66.07%
37
17.86%
10
7.14%
4
8.93%
5
0.00%
0
56
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
Q3Do you shop from corner/street shops
ANSWER CHOICES–
RESPONSES–
–
80.36%
45
Yes
–
19.64%
11
No
TOTAL
56
Q4 How many corner/street shops are there near the area you live in
ANSWER CHOICES–
RESPONSES–
–
76.79%
43
5 - 10
–
14.29%
8
11 - 25
–
8.93%
5
More than 25
TOTAL
56
Q5Are products especially groceries are more better quality in Supermarkets
than Corner/Street Shop
ANSWER CHOICES–
RESPONSES–
–
67.86%
38
Yes
–
32.14%
18
No
TOTAL
56
Q6What do you prefer
ANSWER CHOICES–
–
Supermarkets
–
Corner/Street Shops
TOTAL
RESPONSES–
64.29%
36
35.71%
20
56
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
9. Interview 1: Mr. Deepak Bansal - Owner of Bansal Superstore - Karelibaug
Vadodara
He believes the fact that it is not easy to compete with the neigbourhood
kirana store. He even goes to the extent of delivering things that he does not
sell, like eggs and medicine, to ensure that he get his own business.
Kirana stores have a lot of benefits that established retailers don't have. First
of all location. What rents do they pay versus what established companies
have to pay? On the consumer side, they can deliver services, in terms of
somebody calls them and asks can you deliver six eggs? The guy runs and
delivers six eggs. That's not something that the big established firms can
provide." It's not easy to open a 1,50,000 square feet store in India. That kind
of space is not available.
Interview 2: Mr. Kalpesh Barot - Owner of Kiran stores - Karelibaug Vadodara
(just 300 meters from Bansal Superstore)
People in India don't have the conveyance to go and buy bulk goods, bring it
and store it. They don't have the conveyance and they don't have the big
houses. So it doesn't work, up to that extent. People has to depend on Kirana
stores for their daily needs. The kirana stores also provide goods on interestfree credit to their customers - something that no big retailer can afford to do.
Vatsal Patel, IBDP Year II, NISV
Eco. Extended Essay 2017-18
10. Bibliography
1. https://www.slideshare.net/akhilkumar1/conventional-retailing
2. https://www.economist.com/news/business/21625799-modern-food-retailing-hasstruggled-win-customers-indias-old-fashioned-merchants-long
3. https://www.economist.com/news/business/21625799-modern-food-retailing-hasstruggled-win-customers-indias-old-fashioned-merchants-long
4. https://www.slideshare.net/2510sandeep/comparitive-study-of-big-bazzar-andkirana-store
5. https://econguru.wikispaces.com/Extended+Essay?responseToken=0d7fcb774719da
d66788f0dc7ee709ff2
6. http://www.businesstoday.in/magazine/features/neighbourhood--kirana-shop-isspiffing-things-up-anyway/story/205827.html
7. http://www.ncap.res.in/contract_%20farming/resources/3.%20p.g.%20chengappa.p
df
8. http://www.careratings.com/upload/NewsFiles/SplAnalysis/Indian%20Retail%20Ind
ustry%20-%20June%202017.pdf
9. http://info.shine.com/industry/retail/7.html
10. http://www.indiaretailing.com/2016/06/07/food/food-grocery/25-growth-potentialin-organized-fg-market/
11. http://wazir.in/wp-content/uploads/2016/03/Wazir_Food-Grocery-Retail.pdf
12. http://vle.du.ac.in/mod/book/view.php?id=12859&chapterid=27553
13. https://web.stanford.edu/group/FRI/indonesia/documents/foodpolicy/chapt4.fm.ht
ml
14. https://www.economist.com/news/business/21625799-modern-food-retailing-hasstruggled-win-customers-indias-old-fashioned-merchants-long
15. https://www.intelligenteconomist.com/market-structure-perfect-competition-longrun