Super Markets in India - Retail Sector and Its Importance in Our Economy

Supermarkets

Today India is shining on the world map. It enjoys the privilege of being one of the fastest growing economies. This robust and sound economic growth which has made India a cynosure among developing countries is sustained by retail sector to a large extent.

RETAIL SECTOR AND ITS IMPORTANCE IN OUR ECONOMY

Retail sector is a market for people of all classes whether rich or poor. Retail sector to a large extent comprises of small time traders, pavement vendors, small store owners and the like. They cater to the demands of both the affluent as well as low income groups by providing a variety of goods and services at affordable prices.

Retail sector is also a major source of income and livelihood to a large section of population. It is a broad economic forum that provides new avenues of employment opportunities and entrepreneurship to the youth as well as to the vast uneducated and unskilled workforce of our country. Thus retail sector is indispensable in our economy.

Till now small time traders operating in open markets had enjoyed monopoly in this sector. But today their unrivalled and undisputed position is being challenged by the emergence of a new business enterprise-the supermarkets.

SUPERMARKETS-A RETAIL OUTLET FORNEW CLASS OF CUSTOMERS

Supermarkets are newly established market phenomenon in our country which came into existence after Liberalization. These provide a variety of goods and services under one roof. These have received immense customer response in a very short span of time.

After Liberalization, the markets of our country were opened to global competitiveness. Our economy was exposed to an unprecedented level of opportunities. Tremendous FDI inflow and outsourcing to Multinational Companies have generated a lot of capital in the economy. At the same time to compete and assert ourselves in the global market our economy adapted to new methods of working which aim at maximizing efficiency of production processes through technological and with minimum investment. So the goods and services sector such as manufacturing and IT which could cater to these new demands received a major thrust in our economic planning. The new found capital was utilized in creation of IT parks, SEZ, infrastructure development and for industrial expansion. All this helped in generation of massive employment opportunities among the skilled youth and educated middle class. So, now the capital has passed on into the hands of the middle class. As a result their purchasing power also increased. With this new found buying power there has been a drastic change in the tastes and preferences of consumers from price-linked to quality and value linked product and services. At the same time there has been a dramatic shift in the cultural trend among people especially among generation-Y and middle aged groups who have been exposed to western ideology in the wake of Globalization. Today joint family has been replaced by nuclear family as a result of industrialization, globalization and liberalization. People aspire to lead a life of comfort and luxury. Both husband and wife work for higher earnings. This has increased the pace of life and essence of value of time. This lifestyle demands services that keep up with the pace and offer convenience and value. This is where the supermarkets come in. Their concept of providing all quality goods and services at the same place fits proudly into this newly formed culture. So, supermarkets cater to the needs of the newly rising urban middle class.

The success of supermarkets threatens to shatter the age-old foundation of our retail sector governed mostly by small time traders and shop owners.

SUPERMARKETS-A THREAT TO UNORGANISED RETAIL-MYTH OR REALITY

Supermarkets tend to exploit the principle of comparative cost advantage. The enhance the sale of their products by offering quality and branded commodities at discount rates and also by the introduction of several new incentive schemes to attract the customers. Any small retailer in the vicinity of supermarket offering inferior products with higher prices will face immense competition from it and find it exceedingly difficult to survive his business in the market.

Availability of and access to credit and capital help the supermarkets to implement and exploit technological benefits which remain far from the reach of small store owners mostly on the account of lack of sufficient credit. This helps supermarkets to gain an upper hand over the small retailers. Availability of huge financial resources also help supermarkets to offset any initial operating costs and losses. As compared to supermarkets the capital required to set up a small retail shop is very small as well as its operating costs are also low. But a small store owner lacks the requisite capital necessary to survive in the market in the event of heavy losses.

Small store owners obtain their commodities for sale mostly from distributors of wholesale markets at a bargained price. The small retailers