1_1_3_WRJEB RURAL RETAIL.pdf

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Bioinfo Publications 8

RETAIL ENTREPRENEURSHIP: A THEORETICAL FRAMEWORK FOR INDIAN RURAL

RETAILING

MEHTA A.

Christ University, Hosur Road, Bangalore-560 029, Karnataka, India.*Corresponding Author: Email- [email protected]

Received: September 25, 2012; Accepted: November 15, 2012

Abstract- A striking feature of India, and not just rural India, is the diverse and varied profiles of customers & consumers but every aspectof their lives from birth, to education, to marriage, to livelihood is influenced by the deeply imbedded Indian traditions & culture. Indian rural

marketers & entrepreneurs have been able to understand, to identify and to utilize these cultural diversities and traditions. According to thisyears Global Retail Development Index India is positioned as the leading destination for retail investment. The rural retail sector in India iswitnessing a huge revamping exercise as traditional markets make way for new formats such as departmental stores, hypermarkets, su-permarkets and specialty stores along with fully customized services & products. Over the last two decades the state & central govern-ments in India have been able to exercise far more independence in decision-making than in the pre-1980 period. This paper can be usefulto rural entrepreneurs, rural retailers & academicians interested in getting insights of Indian rural retail industry for doing direct and indirectbusiness in the Indian rural retail sector, This paper studied & proposed a theoretical framework for the changing paradigm of the Indianrural retail markets and suggests some ways in overcoming the roadblocks in Indian rural retailing.

Keywords-Entrepreneurship, Indian SMEs, Marketing, Sales, Rural India, Rural Retail.

World Research Journal of Entrepreneurship and BusinessISSN: 2320-5709 & E-ISSN: 2320-5717, Volume 1, Issue 1, 2012

Introduction

By the year 2011, 1200 hypermarkets and 3000 supermarketswould function across India. Retail, which will be rapidly transform-ing the Indian landscape during this period, would be attracting aninvestment of as much as US $ 25 billion, more than 12 times thatwas invested during the last one decade. Most of this growth isestimated to come from greater than 1000 tier II towns of India.The McKinsey report (2007) on the rise on consumer market inIndia predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as SouthKorea or Canada today, and almost four times the size of todaysurban Indian market and estimated the size of the rural market at$577 Billion. Many rural development efforts have focused onbuilding high-growth venture capital businesses, while ignoring theneeds of small retail and lifestyle operations that comprise a majori-ty of rural businesses. Lifestyle business entrepreneurs typicallystart businesses to provide a source of income or to support a de-sired interest or lifestyle [53]. Although the number of independent-ly owned, rural businesses has increased in the past 10 years,there is still a critical shortage of entrepreneurship in many ruralcommunities [25]. Prof Ramkishen Y. In his book ' New Perspectivein Rural and Agricultural Marketing: Case Studies' discusses

through various case studies, product lifecycle of rural product andhow they differ from urban products. He has also discussed stand-

ardization and grading systems in India and their relevance in ruralmarkets.

Fig. 1- India Population Pyramid 2008-2020

The market research report The Indian Retail Sector - An Outlook(2005-2010) analyzes the greatly divided Indian retail market andthe trends in its business. Issues such as foreign investment re-strictions, modern merchandizing in India, logistics and paymentterms for distribution, role of channel members and growth trendsin different regions are discussed. The market research report fur-ther analyzes the sustainability of the Indian retail sector and on

Citation:Mehta A. (2012) Retail Entrepreneurship: A Theoretical Framework for Indian Rural Retailing. World Research Journal of Entrepre-neurship and Business, ISSN: 2320-5709 & E-ISSN: 2320-5717, Volume 1, Issue 1, pp.-01-15.

Copyright: Copyright2012 Mehta A. This is an open-access article distributed under the terms of the Creative Commons Attribution License,which permits unrestricted use, distribution and reproduction in any medium, provided the original author and source are credited.

World Research Journal of Entrepreneurship and BusinessISSN: 2320-5709 & E-ISSN: 2320-5717, Volume 1, Issue 1, 2012, pp.-08-15.

Available online at http://www.bioinfopublication.org/jouarchive.php?opt=&jouid=BPJ0000063


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a quantum jump in the incomes of farmers in the country. Initiallythe impact of green revolution could be seen only in the prosperousagricultural states of the country but now slowly its influence hasspread across the country with the increase in irrigation. Non-farmactivities either keep the poor falling into deeper poverty or are

advantageous in lifting the poor above the poverty line. Keepingthis in view, it becomes imperative to identify the strengths andweaknesses of the non-farm sector in India to focus on, in order toalleviate poverty. The strengths and weaknesses of rural non-farmsector in India as highlighted by Mukherjee and Zhang (2005) havebeen discussed below. The most significant bottleneck in generat-ing higher levels of rural nonfarm activity in India is the quantity,quality and reliability of infrastructure. For example, the World BankInvestment Climate Survey for India indicates that power outageswere one of the most serious obstacles to the development of thenonfarm sector.

Although corrective steps are now being taken, increased infra-

structure remains the most important priority for the future. Toachieve a sustained growth rate of 8-9 percent, the investment ratehas to be stepped up from the current level of 24 percent to nearly35 percent over the next decade, with investment directed at therural sector. The characteristics of the rural areas, low populationdensity and spread out population, difficult topographical and cli-matic conditions make it difficult to provide telecommunication ser-vice of acceptable quality by traditional means at affordable prices.But with the development of new appropriate technology like wire-less technologies have been accepted that it is possible to over-come these difficulties. Wireless technology has been proposed tobe the first viable infrastructure to rural and underdeveloped areashave therefore recommended that villages near a larger town can

take advantage of the fiber backbone; a remote village can be con-nected via VSAT link. From the fiber backbone, a point-to-point orpoint-to multipoint WiMAX link can be used to connect one or morevillages near the town, thus enabling WiMAX to distribute locallyamong all rural community groups in a given village using longdistance Wi-Fi technology The technology angle to providing tele-com services has been not been given much attention as it hasbeen written on by many authors and the focus of the current paperis marketing issues related to marketing if telecom services. In therural areas, lack of education leads to labor being stagnant in agri-culture, or moving to casual work occupations in the nonfarm sec-tor, and not to salaried employment with higher wages and bene-fits. Together with lack of technical skills, there is little incentive for

rural firms to invest in technology, leading to low levels of laborproductivity in the rural manufacturing sector compared to urbanmanufacturing. It is not true that only cheap brands sell in ruralmarkets. Usha found that the sale of its economy models was fall-ing sharply in rural areas. Farmers prefer Usha's premier Centurybrand, though it is priced 20 per cent higher.

Regulation of the small-scale sector constitutes an important as-pect of nonfarm development policy in India. In the initial stages,capital investment restrictions were imposed to protect the small-scale sector, especially in rural areas, from predation by large in-dustry. Reservation of products for the sector was initiated to cre-ate a domestic market and quantitative restrictions imposed toprotect them from competition from imports. At the end of the1990s, however, these very policies have become detrimental to

the dynamism of the small-scale sector, especially in the rural are-as. Capital investment limits have discouraged economies of scale,and concessions offered to small industry have created adverseincentives against re-investment. Several official reports have rec-ommended a substantial increase in the capital investment limit

(from the present level of around $200,000) to make better use oftechnology and improve productivity. The pricing issue is closelyrelated to issues of positioning and packaging. As competition inrural markets is generally with the unorganized sector or against aproduct category, price is a critical factor in consumer choice. Inrural markets, low price alone is not sufficient. The price has to beconvenient for both the consumer and the retailer. The absoluteamount is important. Prices of Rs. 1, Rs. 2 and Rs. 5 are favoredbut not Rs. 3, 6, 7 and 9. Cadbury's chocolate at Rs 6 and Relish atRs 3 did not succeed and had to be withdrawn. To maintain theabsolute price, it may make sense to decrease volume instead ofincreasing price. The absolute amount is more important than thecontents.

Proposed A to Z Theoretical Framework for Indian Rural Re-tailing

1. 4 As of Indian Rural Retailing.......

Accountability & Agency Theory,

Accessibility & Adoptability

Advertizing & Awareness

Affinity Marketing & Empathy,

2. 4 Bs of Indian Rural Retailing......

Branding & Commitment,

Behavior and Attitude Benchmarking &,

Business Intelligence & Business Process Management

3. 4 Cs of Indian Rural Retailing.......

Communication, Coordination & Cooperation

Controlling,

Cost Engineering,

Competency Building & Skills Development

4. 4 Ds of Indian Rural Retailing......

Decentralization,

Diversity, Dedication,

Decision Making

5. 4 Es of Indian Rural Retailing.....

Efficiency & Effectiveness

Employment

Enthusiasm

Entrepreneurship,

Environment

6. 4 Fs of Indian Rural Retailing.....

Feedback,


Retail Entrepreneurship: A Theoretical Framework for Indian Rural Retailing


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Forecasting,

Feasibility &Flexibility

Focus

7. 4 Gs of Indian Rural Retailing....

Goodwill,

Guarantee,

Globalization,

Grievances,

8. 4 Hs of Indian Rural Retailing....

Health, Safety & Security

Honesty, Morale & Ethics,

Human Resource,

Horizon Scanning

9. 4 Is of Indian Rural Retailing.....

Integrality, Intermediaries & Institutionalization

Innovation & ideas,

Input & Infrastructure,

Information & Internet

10. 4 Js of Indian Rural Retailing...

Just-in-time (JIT)

Joint Venture

Joint Demand

Judo Strategy

11. 4 Ks of Indian Rural Retailing... Knowledge & Kickoff meetings,

Kotlers six marketing audits

Key Account Management (KAM)

Key Success Factors (KSF)

12. 4 Ls of Indian Rural Retailing....

Loyalty & Retention,

Leadership,

Liberalization & Local Language/Culture

Learning & Education

13. 4 Ms of Indian Rural Retailing.... Motivation,

Management,

Mission,

Media Marketing

14. 4 Ns of Indian Rural Retailing....

Networking & Nero Marketing,

Negotiation,

Nature(Green Management),

Niche Marketing

15. 4 Os of Indian Rural Retailing....

Opportunity,

Organizational Development & Change (ODC),

Objectives,

Output

16. 4 Ps of Indian Rural Retailing....

Policy & Strategy,

Product, Pricing, Place & Promotions

Participations & Performance ,

Packaging & Segmentation

17. 4 Qs of Indian Rural Retailing....

Quality,

Quantity,

Quotation,

Qualitative & Quantitative Research

18. 4 Rs of Indian Rural Retailing....

Revenue & Profitability,

Relationship Marketing

Resource & Risk Management,

Rural Culture & Response Rate

19. 4 Ss of Indian Rural Retailing.....

Standardization & Six Sigma,

Specialization,

Simplification & System Development Life Cycle (SDLC),

Sensitivity & Socialization20. 4 Ts of Indian Rural Retailing.....

Technology,

Training,

Team Work,

Targeting & Test Marketing

21. 4 Us of Indian Rural Retailing.....

Unity,

Unique Selling Proposition (USP),

Unique Users

URL (Uniform Resource Locator), an HTTP22. 4 Vs of Indian Rural Retailing.....

Values,

Vision,

Village & Value Engineering

Viral Marketing

23. 4 Ws of Indian Rural Retailing....

Welfare & Warranty,

WBS (Work Breakdown Structure)

Wisdom & Wants,

Word of Mouth & Wow factor




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24. 4 Xs of Indian Rural Retailing....

X-Efficiency

Xenology

Xylography

X Theory

25. 4 Ys of Indian Rural Retailing....

Yield & ROI,

Youth Market

YTree

Y Theory

26. 4 Zs of Indian Rural Retailing.....

Zero Base Budgeting & Zero Base Accounting

Zero Defect Policy

Zero Sum Game

Z- Score & Z Theory

Conclusion

In order to assess the impact of growing organized retail on differ-ent aspects of the economy, the Indian Council for Research onInternational Economic Relations (ICRIER) was appointed in 2 bythe Ministry of Commerce and Industry, Government of India tocarry out a study on organized retail focusing on the following is-sues:

Effect on small retailers and vendors in the unorganized sectorkeeping in mind the likely growth in the overall market.

Effect on employment.

Impact on consumers.

Impact on farmers and manufacturers.

Impact on prices.

Overall impact on economic growth.

Indian Council for Research on International Economic Relations(ICRIER) has been asked by the Ministry to analyze the aboveissues in the context of a growth scenario of 7-10 per cent per an-num in the next five years and in the light of practice in other fast-growing emerging market economies. A recent Stanford Research

Institute study suggests rural communities have several strengthsincluding low cost of doing business, high quality of life, ongoingimprovement of education, and growing levels of entrepreneurshipand small business development. The U.S. Small Business Admin-istrations Office of Advocacy recognizes that thriving small busi-nesses and associated lifestyle amenities are the nucleus of sus-tainable rural communities. In a retail business setting, performa-tive actions could be a range of behaviors aimed at enhancingbusiness performance such as competitive strategies, marketingstrategies, management strategies, business leadership behaviors,and a host of related actions. In contrast, institutional actions reflectstrong and established rules of acceptable social conduct. For ruralbusinesses this could include behaviors such as community sup-

port, community involvement, and community pride and commit-

ment [42]. Some rural communities have effectively refocused andadapted to the internal and external pressures of the last few dec-ades. These communities have responded to adversity quickly, andin doing so, protected the economic and social well being of resi-dents [49].

Rainey, Robinson, Allen, and Christy (2003) emphasize that effec-tive rural economic development programs must enable communi-ties to understand global economic forces, analyze their problems,and identify opportunities. They further suggest using local resi-dents as resources to organize and become involved in communityproblem solving. Rural communities must look for ways to createsynergies and enhance collaborative efforts. These observationsparallel state level issues and needs identified throughout ruralAmerica. Economic development initiatives highlight needs forentrepreneurial development and the creation and retention of jobsand businesses. Iowa, for example, is continually seeking ways todevelop and enhance the economic climate of its rural communities

in the face of agricultural and global market change. Today therural market offers a vast untapped potential. Development pro-grams in the field of agriculture and related activities such ashealth, retailing, education, communication, rural electrification, etchave improved the lifestyles of village population. Rural India,which accounts for more than 70 per cent of the country's one bil-lion population (according to the Census of India 2001), is not justwitnessing an increase in its income but also in consumption andproduction.

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1_1_3_WRJEB RURAL RETAIL.pdf