Magazines Archives - 2007 November

India’s rural retail sector shows promise
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INDIA’S rural retail market can expect a 29% growth to Rs1.8 trillion (US$45.3 billion) within the next three years, boosted by rising incomes and evolving consumption patterns. In addition, village households are also expected to grow to 153 million in the next three years, from 135 million in 2001-02, with more families focusing on commercial farming.

A report released by the Confederation of Indian Industry and YES Bank indicated that the rural per capita income in India is expected to double to Rs14,000 by 2012. “India’s rural markets are growing at double the rate of urban markets. The total number of rural households is expected to rise, giving a tremendous push to the rural retail opportunity,” said Somak Ghosh, president of corporate finance and development banking at YES Bank.

However, the country’s poor infrastructure, unorganised marketing and distribution to about 50% of the rural population, as well as product pricing, continue to challenge retailers’ entry into the market.

The report highlighted that companies looking to foray into the rural retail sector, should consider the venture as “a long-term commitment”, stating that this would lead to a more organised rural retail environment that could create jobs, improve efficiency in agriculture and control migration among the rural community.

Corporations have already earmarked rural areas as drivers for their organisation’s growth. One company, the Godrej group, which currently has 31 rural stores under its banner Adhar, has disclosed plans to open up to 1,000 by 2012. Another retail chain, Triveni Khushali Bazar, has plans to open up to 80 stores by next year and 200 by 2009. Likewise, Indian Oil Corp, which currently runs 1,400 rural retail units at its fuel stations, is also planning to establish up to 3,000 units over the next five years.