India Retail story is a promising one and has gained momentum riding on increased disposable income and fueling growth in demand even from Bottom of Pyramid (BoP) consumers. As per RAI & EY Study "Globally, India is among the top 10 retail markets.
India Retail story is a promising one and has gained momentum riding on increased disposable income and fueling growth in demand even from Bottom of Pyramid (BoP) consumers. As per RAI & EY Study “Globally, India is among the top 10 retail markets.
In 2013, the Indian retail sector was estimated at $520 billion, by 2018, the Indian retail sector is likely to grow at a CAGR of 13 per cent to reach a size of $950 billion. ”The report further adds “Organized retail penetration is expected to increase from 7.5% in 2013 to 10 per cent in 2018 at a robust CAGR of 19-20 per cent during the same period.
This will be driven by a combination of demand, supply and regulatory factors, which are expected to be the growth engines of the Indian consumer and retail market." It is interesting to note that India is also one of the most favored retail destinations for global retailers.
An analysis by CBRE, from its 2013 edition of “How global is the business of retail?” on leading retailers that entered various key markets across leading geographies around the world revealed that New Delhi was among the top 20 cities that witnessed the highest level of retailer activity.
Getting Ready for the Big Leap!
Indian Retail is steadily growing and with the largest population of youth in the world and the rise in the upwardly mobile consumers, it is poised for a big leap. Sample this: in 2012 over 160 million people in India, that is greater than the entire population of Russia, belong to the middle income group who are one of the key contributors to retail market.
This number is expected to increase to 267 million by next year, if National Council of Applied Economic Research (NCAER) is to be believed.
Indian households earning more than Rs 250,000 ($5,579) per annum are expected to grow by about 70 per cent from 2010 to 2015, while the number of households earning more than Rs 1,250,000 ($27,896) per annum are expected to double during the same period, the Council further claims. If these numbers are any indication, Indian retail story is all but begun!
As we see rise in disposable income, we also see rise of new territories for Retail. Growth of retail in tier II and III cities in India has been phenomenal. The purchasing power has been more democratized and consumers with high disposable income in non –metro cities crave for big brands. They not only show more inclination to shop for aspirations but demand to be treated differently from the masses.
With rapid market expansion and an eager consumer base hungry for more, India is a Retailer’s dream. However, no opportunity comes without its challenges.
Huge Market: Higher Diversity
Indian market is as diverse as its people and customs. The retail sector is seeing growth in both online and brick and mortar formats. While the consumer base for retail in India is expanding and share of organized retail is on the rise, the market is getting highly competitive and margins are under pressure.
With increased penetration of internet and mobile technology, consumers are more informed and are able to exercise the power of choice. The average consumer today has come a long way from limiting his expenses to bare essentials and is now splurging on aspirations.
This change in consumer behavior has brought in new unexplored opportunities for retailers promising high returns. However, with the consumer being spoilt for choice, the game belongs to one who is able to connect and engage the consumer for long, building loyalty and gaining referral.
Big Data for Big Gains, Sure.But, How?
Staying engaged with the customers is one of the biggest challenges that Retailers in India are faced with, along with the pressure to improve bottom-line. Millions of customers leave behind peta bytes of data at every touch point every minute. The challenge lies in converting this treasure trove into real profit.
As per a recent survey by Qilck in India, the top three reasons for adopting Big Data Technologies are:
1) To improve productivity across their organizations
2) To improve understanding of customers, their needs, and purchase patterns
3) To increase business revenues and profitability
4) It is not that Indian Retailer is new to the advantage of Big Data and Analytics (BDA), as per NASSCOM Indian Big Data market is growing at 83% annually and is expected to reach USD 1 Billion by 2015, with Retail playing a major consumer. However the ability to adopt BDA technologies by Indian retailers is challenged on many fronts.
In terms of technology, the two major challenges are:
Accessing and analyzing large volumes of data
Most of the Indian retail is focused on improving bottomline with hard pressure on margins. All the effort is largely focused on investments that improve supply and sales. The IT infrastructure has not got adequate attention and the data is either not captured or captured haphazardly in various legacy systems.
Harmonising this disparate set of data with stored in multiple and diverse systems pose one of the biggest challenges. Make sense of this data is another story altogether. It is an uphill task for most retailers to set up systems to access, analyze and report structured outcomes for business transformation.
Managing the growing variety of data
As per the study on Big Data and Enterprise Mobility in India, by Ernst & Young, “Over the next decade, digital information in India will grow from 40,000 petabytes of data to 2.3 million petabytes, twice as fast as the worldwide rate.
The diversity of data sources is also rapidly changing with data from social media, proliferation of video surveillance, audio/images and machine generated presents a technological challenge in capturing, storing and analyzing information in order to discover meaningful relationships between seemingly unrelated, large and complex data sources.” Obviously managing such a vast variety of data and making sense of it is a seemingly huge challenge to an average retailer.
At the enterprise level, the Retail business, no doubt is pressed to improve profitability and improve its customer base. As perThe Pulse of Indian Retail study by RAI, “There is a growing emphasis within retail organizations to assess the impact of major business decisions on cost and revenue levers, given that top agenda of retailers is to improve profitability.”
The Hadoop Advantage that No Retailer Can Afford to Miss!
Hadoop, the most agile and easy to adopt Big Data Technology is what the doctors’ prescribe for the average Indian retailer. With Hadoop the Indian retailer can hit the ground running, gain all the advantages of BDA without incurring huge investments and time.
Some of the key advantages of Apache Hadoop are:
1) It provides easy and faster big data adoption and gets you up and running in weeks
2) Provides faster analysis and access to actionable insights
3) It is economic and scalable and is built to handle data complexity
4) It is a proven and tested across the globe with unmatched advantages bringing profitable business transformation
5) With Apache Hadoop advantage the Indian Retailer can join the league of the world’s most advanced retailers and derive benefits across all critical business aspects, such as Supply Chain, Merchandise Planning, Customer
Engagement and Personalization as well as Detecting and Plugging fraud.
The article is written by Shankar Murukutla, Sales Director South Asia & India, MapR Technologies
Disclaimer: The opinions expressed in this article are the personal opinions of the author. IndianRetailer is not responsible for the accuracy, completeness, suitability, or validity of any information on this article. All information is provided on an as-is basis.
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