Dr. Pradeep Salgaonkar outlines the history of retailing in India, right up from small ‘kiraana’ shops to online stores
I recollect, in my younger days, I sometimes accompanied my mother to Mapusa for shopping. We would take the bus from Guirim Cross bus stop or walk our way through the fields, by the side of the river to Mapusa. There used to be only a few famous shops selling all possible items of necessity to the people. It used to be a delight to observe the shop keepers tie the grocery items in paper cones with thread and hand it over to the customer. These pieces of thread all put together, would then be used by us as the string for flying kites during kite flying season. The Mapusa market was the main source, serving all the surrounding villages, and people thronged to Mapusa, especially on Friday, which was the market day.
Presently, the main shops that dealt with day to day requirements of people like groceries have undergone a transformation. There are hardly few shops dealing with grocery items today. Some of these shops have been converted and different kind of business is running from there. There are large numbers of clothing, fashion, phone, and phone accessories shops spotted in the market. The needs of people and the way people shop have changed. However, although the structure of this market and the nature of businesses have changed drastically over period, even today, the Mapusa Friday market remains very popular among locals as well as tourists from all over India and abroad. Even today one gets the glimpse and flavour of the age old traditional Friday market.
It is bound to happen that the local market structure evolves with evolving overall retailing structure in the country. Retailing as a business sector in India has evolved and grown manifold over the decades.
Tracing the evolution of retail in India
The word ‘Retail’ is derived from a French word ‘Tailler’ (in terms of tailoring), with the prefix‘re’ and the verb ‘tailer’ meaning ‘to cut off, break, divide’. Put simply, retailing means breaking the bulk to serve individual end users.
The barter system of trade is considered to be the oldest form of retail trade and it dominated for long, remaining the most acceptable form of transactions for necessities between two individuals. The history of retail in India could be traced back to one such event, that dates back to 1672 AD, where a one-day cattle trading fair called ‘Nauchandimela’ started in Meerut city of UP. In present times, the ‘Nauchandi Mela’ is held as an annual fair by the Municipal Corporation of Meerut at Nauchandi Ground, starting from the second Sunday after Holi. The fair stretches for about a month and attracts large crowds for entertainment and commerce. Just like ‘melas’, the emergence of ‘Haats’ and ‘Mandis’ was also seen everywhere. These formats of retail business have always been a part of the Indian retail landscape and will continue to be so for many more years in most parts of the country.
As society progressed, retail was dominated by peddlers, hawkers, small vendors, neighbourhood ‘kirana’ stores, mom-and-pop stores, sole clothing outlets, and consumer durable stores in a nearby town. In 1939, the Public Distribution System came in existence, and as we know it is present till date. Post-independence i.e in year 1956, the Khadi & Village Industries (KVIC) was established to provide impetus to rural retail. The concept of co-operative stores took off in a big way in India and today we witness many successful businesses operating under the co-operative stores format.
In 1980s, when the economy partially opened up, the Indian retail industry underwent a real change. Till now the Indian retail was an unorganised sector. The emergence of big retail chains in India was witnessed in the textile sector. Bombay Dyeing, S Kumar’s and Raymond established their stores to retail fabric. Others who set up their own retail chains were Reliance with Vimal showrooms and Garden Silk Mills with Garden Vareli. Subsequently, the likes of Madura Garments, Arvind Mills etc set up showrooms for branded menswear in organised retail format in India. The departmental store format arrived in India with independent retail stores like Akbarally’s, Vivek’s and Nalli’s. Titan launched its retail showrooms, and the organized retailing further started strengthening its grip in the Indian market.
In 1991, post liberalisation, FDI and FII in the retail space increased, and the curbs that were once imposed on the sector, were eased. Exclusive retail outlets started emerging on Indian landscape. In 1995, retail outlets such as Music World, Planet M, Crossword, Food World etc started operations in India. Later the large retail formats like supermarkets, hypermarkets, and shopping malls, came into operation. The Mall culture really started building, especially in the metro cities in India. This format was basically for providing everything under one roof to the consumer with best of the class shopping experience.
Present day retailing
The retail industry and retail businesses, since then have only seen an upward trajectory with changing formats having tremendous growth potential. It is divided largely into organised (departmental stores, supermarkets, hypermarkets, malls etc.) and unorganized sectors (‘kirana’ stores, ‘paan-beedi’ shops, general stores, chemists, hawkers, etc.). The unorganised sector still dominates the Indian retail landscape with about 89-90 percentage stores, while the organised sector constitutes about 9–10 percent stores. There is a long way ahead for the organised retail to grow in India.
Several studies have proven that the Indian retail market is one of the top emerging markets in the world and is a preferred retail destination globally. India has the highest per capita retail store availability in the world, majority of which is in unorganised sector. As per A.T. Kearney’s 2021 Global Retail Development Index (GRDI) report, India ranks 2nd in terms of potential for retail business globally, with total retail sales of about 1,163 billion dollars. It employs about 35 million employees currently and is expected to generate 25 million new jobs by 2030. More than half of these new jobs will be based on integrated offline and online models. Retail industry contributes about 11-12% to India’s overall GDP.
Higher disposable incomes, urbanisation, changes in middle class lifestyle, technological advancements, increased digital connectivity and supporting infrastructure, are some of the factors that support India’s retail sector, and it is expected to grow to about 1.4 trillion dollars by 2026.
Online retail space
The online retail and e-commerce market have grown many folds in last few years, with the covid-19 giving a big fillip to this format. This market at present is valued at 41 billion dollars, and is expected to grow at about 24 to 25 % until 2025.
Advancements in technology, ease of internet connectivity, digital convergence, and blended formats have caused a permanent shift in consumer behaviours and expectations. Omni channel solutions are experiencing rapid adoption by both consumers and retailers’ alike. Physical retailers are partnering with online marketplaces such as Amazon and Flipkart. For example; IKEA is offering click-and-collect service, beauty e-tailer Nykaa has launched international brands on the Nykaa Global Store, and many more.
With growth and increase in demand comes competition. India’s online grocery space is growing in importance and competitive activity with players such as Amazon, Flipkart, BigBasket, Grofers (now Blinkit), Jiomart, and others battling for their share. Swiggy, an online food delivery company, has also introduced Instamart, a 30 to 45-minute grocery delivery service. Local retail chains too are experimenting with online shopping apps and free home delivery formats.
Once ‘nice-to-have’ technologically advanced features, such as augmented reality (AR), Virtual Dressing Rooms (VDR) and Interactive Mirrors (IM) have become ‘need-to-have’ tools for catering to digitally savvy consumers. Examples of Caratlane and Lenskart already offering virtual try-ons are important eye openers to many in the space.
Though the history and evolution of Indian retail is very romantic, the future seems to be equally potential, dynamic, and competitive. The retail space is no more the same what it was a decade ago. The newer generations are tech savvy with different capabilities, expectations and needs and enjoy ‘experiences’ as a necessary ‘core product’ associated with any product or service. Thus its retailers’ challenge, irrespective of the format in which it operates, to grab the attention of this HoHo (Hop on Hop off) customer and convert her to a paying customer. The future for Indian retail is great provided the retailer knows to woo the customer.
The writer is Founder Director, Saldots Academy, corporate trainer and facilitator. He is former Chairman, Goa Management Association. Email: pradeepsalgaonkar@gmail.com
