Retail marketing strategy for Reliance Industries limited - exploring the food and grocery segment

Abstract

The Indian economy is on a bull run. Over the last decade, India has registered an average Gross Domestic Product (GDP) growth of 6%. Per capita income has increased at about the same rate during the last five years. In the fiscal year 2004-05, the economy recorded a growth of 6.9%, based largely on the developments in the services sector and trade. The economy today is strong and vibrant owing to the progressive liberalisation of government policies, increase in foreign direct investment, increased global competitiveness, and investment in infrastructure and growth in domestic as well as international demand for Indian goods and services. A survey says India ranks fourth in terms of Purchasing Power Parity, after the USA, China and Japan. The services sector continues to drive the economy, accounting for almost 50% of the GDP. The Indian software and IT enabled industry is expected to contribute 20% of incremental GDP growth between 2002 and 2008. There is great confidence in India’s potential to sustain a period of high growth. India’s GDP growth is predicted at 7.3% in the current year and in the range of 6.5% to 8% in the next five years. According to the widely discussed Goldman Sachs report of October 2003, over the next 50 years, Brazil, Russia, India and China - the BRIC economies - could become a much larger force in the world economy. “India could emerge as the world’s third largest economy", as India has the potential to show the fastest growth over the next 30 to 50 years. The report also states that “Rising incomes may also see these economies move through the ‘sweet spot’ of growth for different kinds of products, as local spending patterns change”. To keep the momentum going, the Government has recently proposed various policy initiatives, including the promotion and enhancement of FDI in various sectors that were hitherto restricted. The rising levels of foreign direct investment and interest shown by global companies suggest that this strategy is succeeding and that no global player can afford to ignore India any more.Retail is identified as one such area that will soon be opened for Foreign Direct Investment.The retail opportunity in India is exemplified by a large and fast growing economy and rapid urbanization leading to 300 million of its population classified as middle-class. This Indian middle class has displayed uninhibited acceptance of self-indulgence. A World Bank survey says India ranks fourth in terms of Purchasing Power Parity, after the USA, China and Japan;India presents an exciting and promising landscape for retailers.