What are the major challenges of Indian Retail Industry?

The major challenges of Indian Retail Industry include:

1. Location: Right Place, Right choice “Location” is the most important ingredient for any business that relies on customers, and is typically the prime consideration in a customer’s store choice. Locations decisions are harder to change because retailers have to either make sustainable investments. When formulating decision about where to locate, the retailer must refer to the strategic plan:

  1. Investigate alternative trading areas.
  2. Determine the type of desirable store location
  3. Evaluate alternative specific store sites

2. Merchandise: The primary goal of the most retailers is to sell the right kind of merchandise and nothing is more central to the strategic thrust of the retailing firm. Merchandising consists of activities involved in acquiring particular goods and services and making them available at a place, time and quantity that enable the retailer to reach its goals. Merchandising is perhaps, the most important function for any retail organisation, as it decides what finally goes on shelf of the store.

3. Pricing: Pricing is a crucial strategic variable due to its direct relationship with a firm’s goal and its interaction with other retailing elements. The importance of pricing decisions is growing because today’s customers are looking for good value when they buy merchandise and services. Price is the easiest and quickest variable to change.

4. Target Audience: “Consumer the prime mover “”Consumer Pull”, however, seems to be the most important driving factor behind the sustenance of the industry. The purchasing power of the customers has increased to a great extent, with the influencing the retail industry to a great extent, a variety of other factors also seem to fuel the retailing boom.

5. Scale of Operations: Scale of operations includes all the supply chain activities, which are carried out in the business. It is one of the challenges that the Indian retailers are facing. The cost of business operations is very high in India. To become a truly flourishing industry, retailing needs to cross the hurdles:

  • Automatic approval is not allowed for foreign investment in retail.
  • Taxation, which favours small retail businesses.
  • Absence of developed supply chain and integrated IT management.
  • Lack of trained workforce.
  • Low skill level for retailing management.
  • Intrinsic complexity of retailing – rapid price changes, constant threat of product obsolescence and low margins.

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