Primarily this involves studying unorganized retail. These include your neighborhood convenience store (popularly called the Kirane-ki-dukan in north India); or the hardware shop at the corner of your street selling everything from bathroom fittings to paints and small construction tools; or the slightly more organized medical store and a host of other small retail businesses in apparel, electronics, food etc.With retail growing in India at a breakneck speed, there are plenty of statistics available on this sector:
- The retail sector in India is worth USD 394 billion and is growing at the rate of 30% annually
- The sector is highly fragmented with 97% of its business being run by the unorganized retailers like the traditional family run stores and corner stores.
- The sector is the largest source of employment after agriculture, and has deep penetration into rural India generating more than 10% of India's GDP
These are huge numbers, by any standard. And the statistics and analysis surely point us in the direction of the rapid growth, modernization and of course innovation that is going to sweep this sector in the near future.
However for the purpose of the next few blog posts, I am going to move away from the statistics and focus my attention on the people who make up this industry.
The obvious entities of this eco-system are the ‘dealer’ the ‘retailer’ the ‘contractor’, the ‘distributor’ the quintessential ‘small-time businessman’ (There are a few women too in family run businesses, but its still a strong hold of the businessmen).
Apart from this there is the ‘government’ with its policies and the ‘company’ that is a critical entity producing the products and a host of entities on the manufacturing end.
It is interesting to note that analysts predict that even by 2013, 84% of retail in India will continue to be unorganized. If innovation is to be applied here, then it becomes critical to understand:
- What will keep the % of unorganized business so high?
- What are the fundamental assumptions behind the terms organized and unorganized, that are locking us ?
- Why will organized retail not be able to create a significant dent in this sector?
- What mindsets hinder or enable innovation within the entities of this sector?
- What are the potential breakthrough sensitive areas – that need innovation?
- Current approach to Innovation – is it based on applying urban ‘American’ concepts of suburban growth to this sector? How limiting are the current mindsets?
- Therefore what could be some new radical directions in innovating this sector?
I will be exploring these areas and more in a few days…. stay tuned.
