The future of retail in India with emphasis on consumer durables: A Delphi study approach to develop scenarios

Abstract

Indian Retail Industry is highly fragmented. Over 14 million retailers were estimated to be operating in India in the year 2009, with the majority being unorganized sector. Since the opening of Indian economy in 1990s, large manufacturers such as Tata Group and Reliance entered organized retailing. Many consumer appliances companies also launched retail chains, some independently and some as joint ventures. This changed the face of retailing in India, with a shift from small private outlets offering a narrow range of basic products to large retailers offering integrated home solutions. In retail industry, there is an increasing shift towards easy to use sophisticated technology and on offering a wide product range under one roof. Before 2007, Metros were major source sales of consumer appliances, with the products targeting only the urban population needs. Because of recession which reduced the disposable income of middle class urban workers, durable goods retailers and manufacturers had shifted their focus towards suburban and rural areas. The penetration of domestic consumer appliances in these areas is significantly lower than urban areas. Moreover, as the government implemented its Sixth Pay Commission recommendations in 2009, the disposable income of government employees increased. In its economic stimulus package, the government also reduced excise duty on consumer durables from 10% to 6%, thus making these products more affordable. Presently consumer appliances market in India is worth Rs. 297,285 million with a YOY growth rate of 13.3%. It has been growing very fast because of the changes in the political, economic, social and technological environment. In such a rapid changing environment a firm needs a perceptual ability to see ways to create and improve capabilities and to recognize opportunities for applying capabilities in a value generating way. Thus our study aims to understand how the consumer durables segment of the retail sector will develop over the period of the next 10 years till 2020 using a scenario building approach. This study aims to facilitate an advanced understanding of the future competitive environment as well as to provide an insight about the key skills and technology to be developed by the firms in India to tap the potential opportunities. Our study aims at fostering interaction between retail and consumer durables experts including executives of various retail companies, consumer appliances companies, strategy consultants and academics to create an understanding of the state of the retail industry in India at present and especially to develop a clearer picture of retail industry towards the end of this decade.