Quantum jump in retail outlets

There has been a big quantitative expansion in retail outlets in India in recent years. According to the Census of retail Environment-96 (CORE 96) conducted by ORG-MARG , the number of retail outlets stocking fast moving goods (FMCG) has jumped to 5.13 million in 1996 from 3.36 million in 1990, an increase of 52.67%. By the year 2000, the number has gone up still further to over 6 million. A total of 5.13 million shops translate into 5.55 shops per 1,000 consumers, the highest for any country in the world. Another interesting point is that the rate of growth of retail outlets has generally outstripped the rate of population growth.

The reasons for the massive growth and the continuing spurt are many. In the first place, the Indian retail landscape is dominated by small independent outlets, which belong to the less than 500 sq ft category. In fact, small outlets contribute to as much as 96% of the total retail sales. The sharp rise in per capita consumption of consumer products in recent years has contributed to the spurt in the number of such outlets. They now cater to a smaller consumer base compared to what they used to cater in the past. This has given birth to more stores. Secondly, the number of products and brands in the marketplace has risen too steeply for existing stores to have shelf-space to stock them all. New stores have sprung up to fill this gap.

High density in urban areas:

Outlets in urban areas have grown more than those in rural areas. While 25 shops out of every 100 were urban in 1978, their number rose to 35 by 1996. As a result, the density of shops in urban areas has soared from 4 to 7.6 per 1,000 persons. In contrast, the increase in rural areas has been only from 3.6 to 4.8 shops per 1,000 persons. According to the All India Census of Retail Outlets carried out by the Asian Information marketing and social research Pvt Ltd (AIMS) in 1996, retail outlets stocking branded and packaged fast moving consumer goods (FMCG) in urban India, numbered 2.1 million. It implies one shop for every 125 urban residents. This means that one out of every 25 or 31 families in urban areas is engaged in retailing, assuming a retail outlet is essentially a family enterprise. According to a survey by ORG-MARG, more than 400,000 shops in urban India sell goods worth over Rs. 40,000 per day and over 40,000 shops sell goods worth more than Rs 1 lakh per day.

General stores on the rise:

In India, for a long time, a large chunk of the retail outlets were grocery shops. This pattern has been changing in recent years, in both urban and rural markets. Now, in urban India, 14.40% of retail outlets are general stores, 17% are paan-plus shops, 6.31 % chemists, 5.80% food outlets, and 4% Cosmetics stores. Rural outlets are also becoming more sophisticated and include general stores and chemists. However, the rural outlets still have a larger proportion of grocers.