CHALLENGES OF RETAIL MARKETING IN MADHYA PRADESH
Paras Malviya1, Amrita Sahu2
1Research Scholar,
Department of Commerce,Bhopal School of Social
Sciences, Bhopal
2Professor,
Department
of Commerce,Bhopal School of Social Sciences, Bhopal
ABSTRACT
Due to the introduction of numerous new
businesses, the Indian retail industry has become one of the most dynamic and
quick-paced sectors. The key attractions for global retail behemoths trying to
enter additional markets are India's sizable middle class and its mostly
untapped retail market, which will aid in the country's retail industry
expanding more quickly. In contrast to other states, Madhya Pradesh receives
equal support from both urban and rural areas for the expansion of consumption.
The current study is based on secondary data and has analysed challenges faced
by retail marketing in Madhya Pradesh. All the related factors challenge the
retail marketing has been analysed and suggestions has been framed top solve
those issues. The study can prove to be significant for the existing retailers
and the prospective one too. The Qualitative analysis suggests the ways to
resolve the challenges that are being confronted.
Keywords: Indian retail industry, Retail marketing,
Quick-paced sectors, Marketing channels.
INTRODUCTION
The
French word "retaillie" which means to cut off a portion or to break
a bulk, is where the English word "retail" first appeared. Any
business entity whose sales volume is mostly from retailing is referred to as a
retailer or retail store. Selling products or services to end users for
non-commercial, personal usage is referred to as retailing. As old as trade
itself is the beginnings of retail. The first type of trading is barter. The
sale of goods or commodities directly to consumers in small lots or separately
through the mail, at a specific department store, boutique, or kiosk, or in
person may fall under the category of retail trade. Retail services such as
delivery may also fall under this category. The contracting authorities could
be a person or a business. Smaller quantities are sold to end users through
trade, or "store," purchases of goods or products made in bulk by
manufacturers or importers, either directly or through a wholesaler.
The gap
between a product's maker and the real consumer has widened as
industrialization and urbanisation have progressed. Many goods in our world are
produced in one nation and sold to a market in another. The majority of
producers now use middlemen to deliver their goods to ultimate consumers rather
than selling their goods or services directly to customers.
A
retailer must stay on top of not only the constantly shifting expectations and
desires of the consumer, but also the competition, advancements in technology,
and the socioeconomic environment of the country in which it operates. Along
with being innovative, marketing has evolved over time.
The
main goal of contemporary company is to create money while satisfying
customers' requirements and wants. Thus, marketing in the current era is now
focused on the consumer. Every business must therefore first determine what the
customers want, how much they want, at what price, and when they want it.
Numerous factors, including population growth, a rise in the number of
households, an increase in disposable income, a change in attitudes towards
life, the advancement of technology, the expansion of marketing channels, and
the expansion of mass media, have contributed to the growth of the modern concept of marketing.
THE
INDIAN RETAIL SECTOR
Due
to the introduction of numerous new businesses, the Indian retail industry has
become one of the most dynamic and quick-paced sectors. In
addition to contributing about 10% of the nation's GDP, it also provides over
8% of all jobs. India is the fifth-largest international retail market in the
world. In the 2019 Business-to-Consumer (B2C) E-commerce Index published by the
United Nations Conference on Trade and Development, India came in at position
73. India is the fifth-largest international retail destination in the world
and is ranked 63 in the World Bank's Doing Business 2020 report.
The
key attractions for global retail behemoths trying to enter additional markets
are India's sizable middle class and its mostly untapped retail market, which
will aid in the country's retail industry expanding more quickly. The
spending power of urban Indian consumers is rising, and branded products in
areas including apparel, cosmetics, footwear, watches, beverages, cuisine, and
even jewellery are progressively becoming popular for use in business and
leisure. According to a recent estimate by the Boston Consulting Group, the
retail industry in India is predicted to reach a staggering US$ 2 trillion in
value by 2032. (BCG).
RETAILING
IN MADHYA PRADESH
With
the highest per capita income in the nation—nearly three and a half times the
average of India—excellent infrastructure to support and promote new
industries, a high employment rate, and the highest per capita income in the
nation, Madhya Pradesh is quickly rising to the top as a preferred location for
the retail sector. All shops have a great opportunity to take advantage of this
state's enormous consumption potential.
In
contrast to other states, Madhya Pradesh receives equal support from both urban
and rural areas for the expansion of consumption.Customers and this
distinctive trait point to organised retail's enormous potential as the
preferred option for Madhya Pradesh's second-tier cities, semi-urban areas, and
rural towns, which are a veritable goldmine of business opportunities for the
state's merchants. Additionally, there are many opportunities for expansion in
the major cities of Jabalpur, Bhopal, Indore, Gwalior, Sagar, and Rewa. Huge
investments in supply chain logistics, processing, cold chains, and contract
farming will be made in the state by significant retailers, whether they are
international or Indian to enter the food retailing market.
To
bolster its food retailing division and build an organised base for agriculture
and milk production, Reliance is preparing to make a major entrance into the
farm and dairy industries.
REVIEW
OF LITERATURE
There
doesn't appear to be any literature on the specific causes of the retail
sector's expansion and development. Individual researchers include Reardon et
al. (2003), Hu et al. (2004), Mutebi (2007), Reardon and Hopkins (2006), and
Reardon and Berdegue (2007). Other researchers include CAIT (2007), Global
Retail Development Index (2005, 2006, and 2007), Deloitte- Stores Report
(2007), and Reardon and Hopkins (2006). (ICICI Property Services-Technopak
Advisers Pvt. Ltd., 2007). The research groups that look at the retail industry
are (NRFSTE, 2008), (outlook2008), and (KPMG2009). The globalisation of the
retail industry is examined in (CAIT 2007), (Deloitte- Stores Report, 2007),
(Reardon and Hopkins, 2006), and (Reardon and Berdegue, 2007). The Global
Retail Development Index looked at the rankings of the nations in the retail
industry in 2005, 2006, and 2007.
Researchers
have looked at the expansion of retail in various nations as well as how large
retail conglomerates affect smaller merchants.Researchers have looked at the
expansion of retail in various nations as well as how large retail
conglomerates affect smaller merchants. On the amount of success attained by
the retail companies in the case of the Indian market, and the factors
contributing to it, however, little research has been done. With regard to the
businesses operating in the Indian market, the current study will look into the
aforementioned causes.
(Mutebi,
2007) The paper assesses Southeast Asia's retail industry (Malaysia, Indonesia,
and Thailand). According to reports (ICICI Property Services-Technopak Advisers
Pvt. Ltd., 2007), the retail industry is expanding in India. The Chinese retail
market is examined by (Hu et al. 2004). Reardon et al. (2003) investigated both
the impact of policies and demand side factors on retail. The Indian small
retail sectors are the subject of the (NRFSTE, 2008) report. The KPMG 2009
report examines the expansion of the Indian retail industry. Report from
Outlook 2008 illustrating the effects of multi-brand commerce in India. The
effect of the huge retail giants on small merchants is revealed by the (CAIT
2007) report.
(Mihir
Dash and Sam Chandy, 2009) Researchers have studied the growth of retail in
many countries as well as the impact of major retail conglomerates on smaller
retailers. However, little research has been done on the level of success
reached by retail enterprises in the instance of the Indian market, and the
factors influencing it. The study investigate the aforementioned factors in
relation to the companies that operate in the Indian market.
(Mukesh
Chansoriya and Neha Pachori, 2019)This study's goal is to determine how the
opening of organised retail stores will affect unorganised retail, farmers, and
consumers. Finding out how much the growth of the retail sector has affected
Madhya Pradesh's economy is another goal of my research. The study examined the
evolving trends in the Indian retail market, paying particular attention to
Madhya Pradesh. It also examined the effects of organised retail on customer
behaviour in the state of Madhya Pradesh with an eye towards new retailers
looking to enter the sector. The government benefits from this study since it
allows them to better understand the retail sector's growth and stimulate
investment within, which promotes economic expansion. With the use of
questionnaires that customers and retailers both fill out, data is gathered.
The statistical tools employed for examination included mean, median, standard
deviation, regression, kurtosis, and skewness. The study showed that the retail
industry in Madhya Pradesh is evolving, with many new retailers opening
profitable stores and other major investors prepared to invest there as well.
Organized retail has a bright future in major cities, but it has struggled to
make headway in smaller towns
RESEARCH
DESIGN
The
research paper is based on secondary data as to analyse the overall prospective
of retail marketing challenges it was more preferable to conduct the study
based on the same using the already collected details. Secondary data has been
obtained from a variety of sources such as government websites, academic
journals, industry reports, and market research firms. The collected data has
been analysed as per the requirement of the study. Descriptive analysis has
been done on all the challenges prone to retail marketing in Madhya Pradesh.
Suggestions thereafter has been included to suggest the ways to retailers to
cope up with the persistent issues.
OBJECTIVES
1. To study the challenges faced by major retail giants of M.P.
2. To frame the potential solutions to overcome the challenges faced by the
retail sector.
3. To frame an evaluative understanding of the retail sector in M.P.
LIMITATIONS
1. The
study is based on secondary data, whose trustworthiness on the collecting
agency's work ethics.
2. Due to
time constraints limited aspects could have been covered.
DISCUSSION
AND ANALYSIS
India
is the fifth-largest international retail market in the world. India placed
16th in the FDI Confidence Index (after US, Canada, Germany, United Kingdom,
China, Japan, France, Australia, Switzerland, and Italy). The third-largest
country in terms of e-retailers is India (only behind China and the US). By
2030, it is anticipated that Direct-to-Consumer (D2C) shipments will total to
2.5 billion. In the next ten years, the penetration of online used automobile
transactions is anticipated to increase by 9x. Corporate giants
including the Piramals, Tata, the Rahejas, ITC, Godrej, S.Kumar's, RPG
Enterprises, and The Future Group (formerly PRIL) with their massive retail
chains Crosswords, Shopper's Stop, Pantaloon, Piramyd, etc., have already made
significant plans to revitalise the retail sector in Madhya Pradesh.
McDonald's, a retailer of fast food, has spent over US$ 175 million, for
instance, developing its back-end logistics and setting standards in farming,
processing, distribution, and retail. The global players will be more likely to
source from India for the foreign markets once the processes are in place and
they gain trust.
Table 1: Revenue of Companies and %
year ROE
|
S.No |
Retail Company |
Retail Division |
Revenue (Cr) |
5yr Avg. ROE |
|
1 |
Avenue
Supermarts Ltd |
Retail
– Department Stores |
24339.27 |
15.89237 |
|
2 |
Future
Retail Ltd |
Retail
– Department Stores |
6560.87 |
-16.5235 |
|
3 |
Aditya
Birla Fashion and Retail Ltd |
Retail
– Apparel |
5322.32 |
-1.19569 |
|
4 |
Trent
Ltd |
Retail
– Apparel |
2794.56 |
3.409738 |
|
5 |
Spencer’s
Retail Ltd |
Retail
– Department Stores |
2481.47 |
|
|
6 |
Future
Lifestyle Fashions Ltd |
Retail
– Apparel |
2327.08 |
-11.5786 |
|
7 |
Shoppers
Stop Ltd |
Retail
– Department Stores |
1973.2 |
-56.16 |
|
8 |
Competent
Automobiles Company Ltd |
Retail
– Speciality |
1211.76 |
19.02805 |
|
9 |
V-mart
Retail Ltd |
Retail
– Department Stores |
1096.5 |
13.87907 |
|
10 |
Aditya
Vision Ltd |
Retail
– Speciality |
749.7 |
29.07552 |
(Source:Indiancompanies.in)
Retail
marketing in Madhya Pradesh faces several challenges, including:
·
Low consumer awareness: There
is a lack of awareness among consumers in Madhya Pradesh about the latest
products and trends in retail. This makes it difficult for retailers to attract
and retain customers.
·
Limited infrastructure:
Madhya Pradesh is a large and sparsely populated state, with many areas lacking
basic infrastructure like roads and electricity. There is a limited retail
infrastructure in many parts of Madhya Pradesh. This includes inadequate road
networks, limited internet connectivity, and a shortage of warehousing
facilities, which can make it challenging for retailers to operate effectively.
This can make it difficult for retailers to transport goods and reach customers
in rural areas.
·
Competition from unorganized sector: The
unorganized retail sector is prevalent in Madhya Pradesh, which poses a
significant challenge for organized retail. Unorganized retailers often offer
lower prices and have a more personal relationship with customers. Madhya
Pradesh has a thriving network of local markets, known as haats, which sell
everything from fresh produce to clothing. These markets are deeply embedded in
the state's culture and can be tough competition for retailers trying to
establish a foothold.
·
Low purchasing power: Madhya
Pradesh is a relatively low-income state, which can make it challenging for
retailers to sell high-end products. Retailers need to find a way to balance
their product offerings to cater to the diverse income segments in the state.
·
Price sensitivity: Madhya
Pradesh is a relatively poor state, and many consumers are highly
price-sensitive. This can make it difficult for retailers to sell high-priced
goods and can also limit the profit margins they can achieve.
·
Cultural diversity: Madhya
Pradesh has a diverse culture with a range of regional and linguistic
differences. Retailers need to understand these differences and cater to the
preferences of different customer groups.
·
Language barriers: Madhya
Pradesh is a linguistically diverse state, with many different languages spoken
by its residents. This can make it challenging for retailers to communicate
effectively with all of their customers.
·
Seasonal fluctuations: Retail
sales in Madhya Pradesh can be highly seasonal, with demand varying
significantly throughout the year. Retailers need to be prepared for these
fluctuations and plan their inventory and marketing strategies accordingly.
·
Limited availability of skilled workforce: Madhya
Pradesh lacks a sufficient number of trained and skilled workers in the retail
sector. This can make it difficult for retailers to find and retain quality
employees.
·
Low digital penetration:
According to a report by the Internet and Mobile Association of India (IAMAI),
Madhya Pradesh has one of the lowest internet penetration rates in the country.
This can make it challenging for retailers to reach customers through digital
channels.
SUGGESTIONS
·
Overall, the challenges faced by retailers
in Madhya Pradesh require a tailored approach to marketing and business
strategy. Successful retailers in the state will need to be adaptable,
innovative, and sensitive to the needs and preferences of their customers.
·
As a large and diverse state in India,
Madhya Pradesh presents a unique set of challenges for retail marketers. Here
are some suggestions that retailers in Madhya Pradesh may adopt to address the
forementioned issues:
·
While digital marketing may not be as
effective in Madhya Pradesh as it is in other parts of the country, retailers
can still use social media and other online platforms to reach customers.
However, they may need to supplement this with more traditional marketing
tactics like print ads, billboards, and in-store promotions.
·
Retailers in Madhya Pradesh may need to
invest in their own transportation infrastructure, such as fleets of trucks, to
reach customers in remote areas. They can also partner with local businesses
and community organizations to improve access to basic services like
electricity and internet connectivity.
·
Retailers can differentiate themselves
from local markets by offering unique products or services that are not
available in these markets. They can also focus on creating a more convenient
and comfortable shopping experience, such as by offering air conditioning or a
wider range of product options.
·
Retailers can address price sensitivity by
offering competitive pricing and promotions, such as buy-one-get-one-free deals
or seasonal discounts. They can also consider offering financing options or
layaway programs to make their products more affordable for customers.
·
Retailers can overcome language barriers
by hiring staff who are fluent in multiple languages or by using translation
services to provide marketing materials and customer support in a range of
languages. They can also consider offering in-store signage and displays in
multiple languages to make their stores more accessible to all customers.
REFERENCES
1. Chansoriya
Mukesh and Pachori Neha (2019), Impact of Organized Retail on the Economy of
Madhya Pradesh, International Journal of Management and Humanities (IJMH) ISSN:
2394-0913, Volume-3 Issue-10, Pp 13-18 June 2019
2. Dash
Mihir and Chandy Sam, A Study on the Challenges and Opportunities Faced by
Organized Retail Players in Bangalore (July 14, 2009). Available at SSRN: https://ssrn.com/abstract=1435218 or http://dx.doi.org/10.2139/ssrn.1435218
3. Yadav
Rajesh K., Verma Manoj, Singh Shriti, Impact of organised retail on
neighbourhood kirana stores: A case Study of Malwa region in Madhya Pradesh,
World Scientific News 46 (2016) 1-18, EISSN 2392-2192
4. Kushwah
Bharat Singh and Gupta Neelu, A Comparative Study of Customer Perception
towards Organized and Unorganized Retailing in Madhya Pradesh, ‘Research Journey’
International E- Research Journal, Impact Factor - (SJIF) – 6.261, (CIF) -
3.452(2015), (GIF)–0.676 (2013), Special Issue 167 (A)- Innovation for
Competitive Advantage, UGC Approved Joural, ISSN : 2348-7143, March-2019