RURAL RETAIL: AN EMERGING CONCEPT OF RETAILING

By: Ms. Sweta Sharma

(Assistant professor) Vidya Bhawan College for engineering and technology

ABSTRACT The word retail has a very small meaning, it means to cut or to break the bulk, however the term Retail Management is not a small concept, it has a very broad meaning and a wide framework. When we say that Retailing is dynamic, it simply means that it is progressive in nature, it keeps on changing itself with the emerging trends. There are various elements that are working as the forces for retail dynamics. One such force is rural retail. The retail business in India accounts for Rs 7400 billion with about 1200 million retailers.90percent of retail shops are kirana stores .Rural India has about 3.7 million shops spread over 063 million villages , with an average of six shops per village with an average sale of Rs 5000 only. In recent years, rural markets have acquired significance in countries like China and India, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of the green revolution in India, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has taken shape. Also rural market is getting an importance because of the saturation of the urban market. As due to the competition in the urban market, the market is more or so saturated as most of the capacity of the purchasers have been targeted by the marketers. So the marketers are looking for extending their product categories to an unexplored market i.e. the rural market This paper basically aims to show that what are the emerging trends in rural retailing, how the organised retailing can be successfully brought in the rural market, what precautions should be taken into consideration by various firms while entering the rural market, what are the shifts in the retail patterns that have taken place in the rural market INTRODUCTION There may be a slowdown in urban retail, but `Bharat' is still shining for retailers. The next phase of growth is expected to come from rural markets with rural India accounting for almost half of the domestic retail market, which is valued over $300 billion. Rural India is set to witness an economic boom, with per capita income having grown by 50% over the last 10 years, mainly on account of rising commodity prices and improved productivity. Development of basic infrastructure, generation of employment guarantee schemes, better information services and access to funding are also bringing prosperity to

ruralhouseholds. In rural markets, consumers are practical and price sensitive. Even though consumers at the bottom of the pyramid do not seem to have predictable income (which affects purchasing dynamics), the rural market proved to be surprisingly loyal. Given that an overwhelming majority of India's population lives in rural areas, retailers are fast penetrating the hinterland. Rural India is experiencing the same changes as urban India changing consumer preferences and consumption patterns, increasing exposure to different lifestyles and products, and increasing purchasing power, different shopping patterns. As much as Rural India presents a great opportunity to retailers, there are still many challenges that have to be overcome CROSS SECTIONAL VIEW OF RURAL RETAILING Retailing in rural areas was been done by many market linkages , however a shift in the retail format of the rural market has been observed in the recent years, this change has been discussed in this section When we bifurcate the rural retail, we come across its two major cross sections, they are:  The unorganised segment of rural retail  The organised segment of rural retail

THE UNORGANISED RURAL RETAIL The unorganised segment of rural retail consists of traditional channel of distribution system consisting of haats, melas, shandies, kirana stores. There are 47,000 haats and 25,000 melas, which function as the economic, social and cultural nerve centres of rural India. MART undertook the first comprehensive study of these traditional fora for the Government of India in 1995. The objective was to understand the types of products sold, profile buyers, track sales achieved at these haats and melas and corroborate the frequency, location and duration of these marketing fora. The data-rich, path breaking report also provides guidelines to enable poor producers, supported by various government programmes and NGOs, to use haats for product marketing purposes. The report has helped put haats and melas firmly on the marketing maps of corporate.

HAATS:Haats are periodic markets. Periodic markets mean that people assemble at a particular place at least once a week in order to buy and sell products. Haats operate in a weekly cycle. They may vary in the intensity of their transactions depending upon the season but they seem to have a fairly stable periodicity. They serve the village in which it is located and also the surrounding village. Each haat caters to the needs of a minimum of 10 to maximum of 50 villages from where averages of 4000 persons come to buy a range of daily necessity and services MELAS:India is a country of melas. Over 25,000 melas are held every year all over the country. It is seen that 5,000 of these are commercial melas, 2,000 are cultural melas, while the majority of 18,000 are held with religious significance. Exposure of a companys product at the 500 big melas should be sufficient enough to generate product awareness in the rural market. Statistics reveal that the number of visitors per mela is approximately 7.5 lakhs. The largest such mela is held once every 12 years called the Maha Kumbh mela and attracts close to 2.5 crore people. The average sale per day at a mela is Rs.25 lakhs. The efficiency of this system of distribution is evident from the fact that melas have been used for over 1,300 years and have continued to remain popular inspite of India going through so many rulers, invasions and conflicts. This speaks volumes of the rigidity and strength of this rural marketing system

MOBILE TRADERS
SMALL TOWN MARKETS

VILLAGE RETAILERS

RURAL RETAIL
INNOVATIVE OPTIONS

NEW INITIATIVES

HAATS AND MELAS

Importance of traditional forms of retailing Corporations and advertising agencies have started working in the rural area with a different approach as compared to urban areas, like puppet shows in Punjab, Folk media like Ragini in Haryana for communicating qualities of Virat cement, Pala and Daskathia in Orissa for

promoting safe electricity consumption and tooth pastes of Colgate Palmolive, Baul songs in West Bengal for advertising insecticides are some of the examples. Britannia has entered in to the rural market by participating in rural melas and displaying its down market brand Britannia Tiger Biscuits. These rural melas and weekly haats and melas have become more popular medium of rural advertising by the media planners. Through this arrangement they can break the saddle of scant geographical distribution of customers in rural markets as people of number of villages assemble together to participate in the fair. It is a good ground for brand awareness building, trial sales and sampling. It provides a wider audience at a fairly low cost. Companies like HUL, Titan and Colgate Palmolive use festivals like Rathyatra, Kumbh mela, and Onam for brand promotion. These companies are following a typical media schedule and are always in a march from one place to the other with our festival calendar and a collapsible arrangement of the exhibition setup. Companies can also use popular forms of entertainment like puppetry, nautanki, ragini, bhangra, qaualli and traditional dance shows to increase the brand experience. The companies can develop a story line relating to the brand and show the characters using the brands for their advantage and even the dresses of the characters can be that of the brands packaging.

Problems of unorganised market Where unorganised retail disappoints is in that the goods sold are often spurious and there is no guarantee of quality for many of the goods being sold be it agri-inputs, FMCG etc. The typical shop is cluttered and congested with limited variety and few national brands. Many of the goods are sold at prices higher than the maximum retail price with shopkeepers giving goods shortages, transportation costs etc. as rationale What these stores ended up doing, according to Pradeep Kashyap, the director of MART, is make shopping for the rural consumer a hellish experience. This despite the fact that the rural market represents... a considerable business opportunity. Technopak estimates that the size of the Indian retail market is at present around USD 300 billion with the rural-urban split in the ratio 55 45. The rural market consumes about 53% of FMCG, and 59% of durables in India

THE ORGANISED RURAL RETAIL The rural retail scenario is changing and the need for developing professional practices is well recognised. Rural retail includes fast moving consumer goods, durables, agricultural inputs, and vehicles such as tractors. The rural retail market forms about 40 percent of the total size of the retail market in India. However as far as the organised part of rural retail is concerned the scenario is not satisfactory. The penetration of organised retail is very low. Approximately ,10000 out of the 0.6 million of the villages in India have access to organised retail services .Owing to the low density of shops per village , uneven concentration of the shops and very small size of the retail outlets, multiple tiers of distribution have become necessary , as a result the distribution has become inconvenient and costly affair. Despite of several such difficulties the organised retail is still making massive efforts to penetrate in the rural market. As organised retail in rural India awaits the arrival of Reliance Retail, current majors like ITC, Godrej and DSCL are expanding their retail operations by setting up more stores, entering new states and offering newer product categories. A shift from selling agri-inputs will help these stores target the non-farming segments. It is a little known fact that, while 25% of the rural population is not engaged in agriculture, it earns 50% of the rural income. When organised retail first made its presence felt in rural India, it wasnt a pure retailing operation targeting the rural masses. Companies like DSCL and Godrej who had significant agri-business interests, set them up to meet the needs of farmers in a stores catchments area. A typical agri-input store would have a catchment area of around 100 villages spread over 20-25 kms. Says Ashik Hamid, associate director, Technopak, These stores are... one-stop shops meant to meet the occupational needs of farmers by providing agri-inputs and fertilisers. These stores, like DSCLs Hariyali Kisan Bazaar, ITCs Choupal Saagar etc. tend to be located in small towns that function as procurement hubs where the farmers come to sell their produce. Their earnings are tapped then and there, by getting them to combine their visit with shopping. These stores tend to target farmers with all sizes of holdings, We build our offerings for everyone, from the farmer owning 20 acres to the one owning 200, says Rajesh Gupta, business head, Hariyali Kisan Bazaar, It wouldnt be done any other way as there is a similarity on the application side, everyone needs the same inputs.

While organised retail centred on these stores, unorganised retail revolves around the local village shop and the haat. Shops are usually present in villages with a population of more than 500 people.... They stock more product categories than what similar urban shops would, but there isnt much variety offered within a category. Haats are weekly mobile supermarkets that are spread over 2-3 acres of land, with more than 300 stalls, selling anything from animal feed to local medicines. Problems of organised rural retail One practical problem they have had to face is the shortage of manpower. Runaway rates are high with employees from urban areas leaving their jobs after being stationed in these rural stores. The long-term solution to this could be the training of unemployed educated rural youth to man these stores. These stores also have an image problem in that some of them are perceived to be expensive. The stores are so urban in their ambience, that rural people find it intimidating, says an expert. Their advertising imagery doesnt make it easier. A billboard outside one of these retail stores, for example, had a happy urban family dressed in Western clothes. This may have meant to be aspirational.. in nature but wouldnt really appeal to a rural audience. RURAL RETAILING- A PARADIGM SHIFT The focus of this special issue of paper is a very vibrant and potential segment of retailing i.e retailing in rural sector. It is in the context that organized retailing is emerging not only in urban area but there is a trend of planning deeper and wider penetration of rural network in Rural India, which has been prompted by greater recognition of the potential of rural market especially in the FMCG & consumer durable sector. At present, Rural India accounts for 55% of the total retail market and it will grow by $ 90 billion in the next 5 years. The fact is that nearly 70% of Indias consumers are in rural areas and more than half of the national income is generated by rural India. That is why it is said The economic growth may have come from urban India, it is rural India that will now lead the way. Today more than 50% of FMCG & consumer durable products are sold in the rural market. Over the last two year FMCG sales in rural India has grown 14%, while the growth in urban India has been only 8%. More than 50% of all new mobile phone connections and 40% of all vehicles are sold in rural India Though Indian rural market is widely scattered, about half of Indias rural population lived in just one sixth of 6, 00,000 villages. This means that an organized retailer can target 50% of

rural population by reaching out just to about 1,00,000 villages. It is worth mentioning that potential in rural retailing are continuously deepening and widening on account of Impact of Green Revolution on Prosperity and Purchasing power in rural areas, Record Govt. spending in development plans and infrastructure in rural sector and a never before reach of telecom & media services, Rapid growth of prosperous rural area situated at state and national highways Increased aspirations for Two wheelers, Colour TV, Refrigerator, mobiles. Packaged foods, branded shoes and readymade garments, fairness creams, etc. We will have to admit that no doubt the rural sector has wide potential for rural retailing, there are enough challenges also such as fragmented consumer base, limited infrastructure, strong regional influence on consumption and communication, diverse pace of development in different rural areas vast number of languages and cultural differences across Indias hinterland, etc

INITIATIVES TO EXPLORE RURAL POTENTIAL During recent past a number of initiatives have been taken to explore rural potential, viz 1 Establishment of 1200 multipurpose retail outlets in rural sector( DCM Haryali, ITC Chaupal Tata Kisan Kendra, Aadhar etc. ) & 2700 Kisan Seva Kendra by IOC 2 Significant share of rural sales in total sales Hindustan Uniliver Ltd.50%, Colgate 50%, Godrej 30% 3. Designing of products according to specific need of rural sector (LG Sampoorn TV, Samsung- Guru Mobile chargeable by solar energy, Tide Natural a 30% cheaper version of Tide Detergent by Proctor and Gamble) 4. Inclusion of NGOs and self help groups in Channel of Distribution (HUL-Shakti Project, Tata Teas Gaon Chalo, TTK Prestige NGO involvement 5 Change in advertising strategy Substitution of National level Brand Ambassadors by Regional Brand Ambassadors, language and display more suitable to rural audience, Use of rural folks by Coca cola I would like to make it clear that we have to analyse and evaluate various issues so as to Explore Rural Potential rather than to Exploit Rural Potential. In this context we will have to consider that a) How emerging dimensions in retailing can contribute to the prosperity of rural sector? b) How unique examples of traditional retailing in Rural India such as Haats (Weekly

markets), Mandi (Agri-markets) & Melas (Fairs) can be transformed with a purpose to make them more

organized and value-added system in rural retailing? c) How various Ps of Marketing Mix be re-designed in accordance with the need of requirements in rural areas? d) How corporate giants can be motivated to shoulder the concept of social responsibility in rural areas? e) If FDI is allowed in rural retailing, how their entry can be tied up with their role in infrastructural, educational and environmental development in rural sector? f) How unique tradition of existing Customer Relationship Management be maintained in

organized retailing? g) How the opportunities to explore rural potential can be tapped with Built for Rural India concept of rural retailing? CONCLUSION In conclusion it can be said that while considering the retailing prospects in rural market ,the main factors that effects the creation of demand in rural market must be taken care of . According to a survey conducted in rural market, the biggest factor responsible for the lack of demand is Income Factor. High promotion undoubtly increases the sales in rural market as it makes the rural customer aware and up dated about the new range of goods in different regional languages. Rural market has the wide opportunity for retailing because most of the consumers prefer retail shops for shopping and moreover they are satisfied with the products offered and their prices. Range or quality of product, appropriate prices, place of the retail store and promotional strategies have their great impact on the sales and retail growth. It can also be said that though organised retail is a new entrant in the rural market and also it lacks penetration in the market in the present time however it would not be wrong if we say that with little effort made by the various organised retail firms they can successfully survive and even grow in the rural market. There are also various ways to increase the penetration in the rural market .There should be retail outlets like Big Bazaar and Subhiksha Appropriate prices should be charged to increase the sales. Range and quality of the products should be available according to the customer preferences.