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Will entry of foreign players in retail change market dynamics?

Publish Date: 24 Nov 2012, 05:43 PM
Last Updated: 24 Nov 2012, 09:09 PM
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Prospect of retail giants in India
Prospect of retail giants in India

New Delhi: Since the inception of human civilisation in the world, buying continues to be a natural process. People are dependent on the marketplace to meet their demands. Since very beginning when the market were not organised, people used to buy stuffs from the local shops. As the requirements of people went up, the market also adapted itself to fulfil the demand. With constant innovations, human life has simplified and houses need more products. But one also tends to argue that if the buying is a natural process then why do we need branding?

Earlier, people were dependent on the local shops to buy products. They used to decide the products on the basis of trust on the shopkeepers or own ability to ascertain quality and value of the product. In those days, only handful of local players would rule the market. People were left with no options but to buy the products available in the markets. The vintage of shops and their reputation were the criteria to make the buying decision but somehow products were also pushed as per the benefit of shopkeepers.   

Contrary to that, the situation has changed drastically in the modern era. Now, the retail giants made their presence felt in all the markets in the world. The customers have become more informed and aware of the products. Companies have started to believe in creating pull and doing business as per the needs of the customers. Retail stores are selling almost anything under the sun. The procurement, supply-chain and logistics processes are getting more efficient.

Wholesale transactions are done on a much large scale than never before which is also helping to sell products at cheaper rates. As well, with more number of players in the market, companies are left with no options but to fulfil the needs of customers. Price war is popular and has become a common practice in retail sector. As well, getting customers loyal to the company is becoming top priority for the retail giants across the globe.

It is obvious that more marketing practices are being adopted to woo the customers who always look for reasons to be loyal to the company.

RETAIL GIANTS IN INDIA

However, when we compare the retail markets of India to rest of world, it is evident that it is passing through a phase of transition. Both retail stores and local shops are currently operational in the markets. The retail stores had faced tough resistances.

Amid the stern opposition, the government is eager to open the market for big foreign players. It is being said that with bigger players coming into the market, the small shopkeepers will be overpowered and unemployment will rise. However, some experts are of view that more employment will be generated through entry of retail giants into Indian markets. Better opportunity will be in the areas of procurement, supply-chain and logistics.

Now with the kind of uproar political parties are creating over FDI in retail, it has become interesting to see how the battle will unfold and which retail giants are entering the Indian markets. The foreign retail giants have shown their eagerness to enter one of the biggest markets in the world. Currently, middle-class is battling with inflation and the time will tell how the price war will unfold and whether it will work in favour of customers or not. It has also been seen in the past that a retail player succeeds in one market, while fails in other. The demographics and consumer behaviour change drastically from the one country to another.  It is for this reason many companies prefer to enter the market in a joint venture with local company. As far as Indian market is concerned, it is very versatile and different from the west. The foreign players making their foray on their own will have to do lots of market research to understand the Indian consumers.

But one thing is sure that in an oligopolistic market where more number of players battle, it is somehow going to benefit the customers.

Ashish Ranjan/JPN

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