Segmentation of retailers

Abstract

Indian retail environment is dominated by 15 mn independent outlets which consist of small kirana shops, general stores, chemists, footwear & apparel shops, paan and beedi (small corner shops) and roadside vendors in pavements or with hand carts. This format largely represents the unorganised sector. Some of the industry reports such as Business Monitor International (BMI) and Confederation of Industries estimate that this unorganised fragmented market still accounts for about 95% of the country’s grocery retail sales. Most of these 95% stores are smaller than 50 sq. ft. But the organised retail is only set to grow both on account of influx of foreign players and domestic companies expanding their presence in the retail industry. All of the major domestic conglomerates, such as Reliance Industries, the Tata Group and the Aditya Birla Group, have maintained ambitious expansion plans in 2013-17. The unorganised market needs to be looked at from a new lens and at the same point understand the nascent but growing modern organised retail. Both these formats exhibit different features and provide different benefits to the consumer. Many times the consumer catered is exactly the same. Thus with the changing scenario in India on account of different factors such as changing consumer demands and taste , change in government policies, increase in foreign brands and retail players coupled with the ever increasing middle class, it is imperative for manufacturers to look and reach the consumer in an effective and efficient way. The basic need of segmentation of customers arriving out need to effectively communicate a heterogeneous group of consumers and get them respond differently to different marketing stimuli. Today’s retail industry in India is as diverse as the complex and diverse Indian consumer. This mix of retailers is going to be even more diverse in the future. Thus from a manufacturers perspective it becomes extremely important that they not only segment their consumer but their customers i.e their distributors and retailers. With this study we intend to formulate a basis for segmenting retailers in the FMCG space. Most researchers acknowledge these and other related benefits of applying segmentation approach. However, considering its relative importance as a marketing activity (especially with the advent of the marketing concept as a business philosophy) retail market segmentation as a concept is a significantly under-researched topic in both the USA and Europe. This observation is even more applicable within the highly competitive retail food industry.