Comparative Analysis of Retail Management Functions in India and Australia

The study is focused towards the effective analysis of the comparative retail management functions of India and Australia. The study revolves around differences in retail market structure, the estimation of the size and profitability of the industry, the challenges faced by the industries and the cultural aspects.

Running head: RETAIL MANAGEMENT
RETAIL MANAGEMENT
Name of the Student
Name of the University
Author Note

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Executive Summary
The study is focused towards the effective analysis of the comparative retail management
functions of India and Australia. The Australian retail industry has a current growth rate of 3.7%.
The Indian retail market is one of the emerging retail markets in the world. Thus understanding
the comparative significance of the retail industry of these two countries become very much
important towards the growth and development of the world retail business. The study revolves
around differences in retail market structure, the estimation of the size and profitability of the
industry, the challenges faced by the industries and the cultural aspects. The study has
incorporated all the important aspects of the retail sectors of the two countries.

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Table of Contents
Introduction......................................................................................................................................3
Overview......................................................................................................................................3
Background of the retailing systems of the countries..................................................................3
Section 1: Differences in retail market structures............................................................................3
Section 2: Comparative estimation of potential size and profitability............................................5
Section 3: Analysis of the potential problems.................................................................................6
Section 4: Consideration of the cultural aspects..............................................................................7
Conclusion and Recommendations..................................................................................................8
Recommendations............................................................................................................................8
Innovation in marketing:..........................................................................................................8
Fusion of Ecommerce marketing and traditional retail:..........................................................8
More employee value......................................................................................................................9
References......................................................................................................................................10

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Introduction
Overview
The study is focused towards the effective analysis of the comparative retail management
functions of India and Australia. The study is focused towards the essential analysis of the
various aspects that are related to the retail markets of two different economies. In this case the
retail market industry functions of Australia would be compared with the retail market industry
of India. Some of the important areas that are covered in the study are differences in retail market
structure, the estimation of the size and profitability of the industry, the challenges and the
cultural aspects. The ways in which these factors determine the functioning, growth and progress
of the retail industry of the countries.
Background of the retailing systems of the countries
The Australian retail industry has a current growth rate of 3.7%. The Australian retail
sector can be segmented into some important division categories. These are product, distribution
channels and market dynamics. The retail sector of the country is further boosted by the fact that
the country has a highly urbanized population. Apparel and Footwear markets are leading the
retail sector of the country. The larger market players are Aldi, Metcash, Woolworths,
Wesfarmers and Big W.
The Indian retail market is one of the emerging retail markets in the world. It is estimated
to be currently worth 672 Billion US dollars as of 2017 (Çifci et al. 2016). It forms over 10% of
the total GDP of the country. It is expected to grow to 1200 billion US Dollars by 2021. It
provides 8% of the employment in India. The sector has the potential to significantly affect the
retail market economy of the world, given the size of the population.
Section 1: Differences in retail market structures
The retail market structure in India is aloof from the experiences of a progressive
development owing to the rapid globalization and liberalization. This is majorly due to the lack
of Foreign Direct investment (hereafter, FDI) in the Indian sector of the retail market. This is
increasing with the new government in power as it fears loss of employment opportunities with
the traditional retail market getting affected. It is stated that promotion of FDI in India could be a
mixed blessing as it would help the domestic players as well as create a negative impact on a

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player that is expected to be short-lived by weakening it over the time. Unrestrained FDI could
eradicate the disadvantages associated with it, automatically. A retailer remains the final seller of
a commodity and the last link to connect an individual consumer to the manufacturer. In this
process, the retailer remains the last person to sell the goods at a margin of profit
(Careratings.com, 2019). With the ideas of programs like ‘Make in India’, the government is
trying to produce finished or manufactured goods instead of importing them from the leaders of
trade in the international market like the United States (hereafter, U.S.), United Kingdom
(hereafter, U. K.), Japan and so on (Makeinindia.com, 2019). The Indian infrastructure remains
the second largest producer of vegetables and fruits in the international market. However, it
remains very limited when it comes to the cold-chain infrastructure. The lack of integration in
these cold-chains and fragmentation in the market of cold chains affects the storage of the
horticultural goods, which are perishable as they require enough time to reach out to their distant
markets. Dominance of the intermediaries who increase the value of the products and thereby,
the pricing, leading to the creation of lesser profit margins for the retailers and a higher or less
discounted price for the consumers. Due to this, more and more numbers of offline and online
retail supermarkets are coming into the market with the availability of local as well as imported
brands with good discounts. The improper Public Distribution System (hereafter, PDS) is another
problem with customer ultimately paying an added premium price for wastages and other
shortages (Dfpd.gov.in, 2019). The PDS is a system managed and controlled by the Central
Government of India through an organization named Food Corporation of India (hereafter, FCI)
that ensures distribution of subsidized food grains and fair priced shops to cater to the
economically much weaker sections of the society. The presence of multi-brand retails stores and
supermarkets are predominant in the cities and metropolis. However, the situation of rural; India
is potentially much weaker in this case.
In case of the Australia the retail market structure remains invariably different. With the
advent of globalization, the retail market structure in Australia has changed considerably from
the early 2000s (Xu, 2019). It is majorly due to the emergence of the Australia as a developed
and most powerful economy and advanced technology that comes into the use. Market
concentration along with increasing competition has brought in the internet or online market.
However, some of the trade restrictions of the government has reasonable affected the Australian
retail market. In exchange, the country imported a huge amount of economic goods from China.

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In this situation where tariff rates were doubled or increased more than what was feasible for an
average household can afford. This has already disturbed living conditions by increasing the cost
of living (hereafter, CLI), reducing the purchasing power parity (PPP) of a consumer. It does not
rest there, the change in trade factors were no more benefitting the retailers in the Australia as a
portion of major consumption goods were imported from China and Vietnam and an increase in
the tariffs, increases the price of the products to an extent that the price of these economic goods
become exorbitant. The presence of supermarkets is very much predominant in the Australia
with enough cold-storage facilities. These infrastructures will also suffer as the exports by
Australia has been reduced due to some of the reverse tariffs that have been imposed. This,
thereby, affects the growth of the economy in the country with a serious situation recession
making its way to the economy.
Section 2: Comparative estimation of potential size and profitability
The market structures of the two countries vary in some of the most important areas. In
Australia, there are around 140 thousand retail businesses. The retail industry accounts for 4.1 %
of the GDP of the country as well as 10.7% of the employment of country (IBISWorld 2019).
There is significant competition within the retail sector of the country. The retail industry is
mostly concentrated in the hands of the grocery and house items sector. The larger players are
Woolworths, the Wesfarmers and Aldi. The retail sector of the country is significantly large as
the greater part of the grocery industry of the country is concentrated within the large retail
market. There is high competition in the retail market of the country and the larger retail chains
own the online retail shops. This has led to the growth of both online retail and the large retail
shops. The current revenue growth rate of the county is 1.1% and is estimated to grow to 1.2%.
With the annual revenue being 576.3 Billion AUD, the profitability of the Australian retail
market is significant.
The retail industry of India is expected to grow from 672 Billion US dollars to 1200
billion USD in 2021. Online retail is set to grow at a 31% rate. One of the most profitable sectors
in the retail market of the country is estimated to be the luxury sector. Like Australia, the retail
industry of India is dominated by a few larger market players. The investment in the retail sector
of India has doubled to become 180.18 million US Dollars (Pradhan, Panda and Jena 2017).
Traditional retail sector is estimated to hold 75% of the share of the retail market. The country

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now has some of the fastest emerging retail giants in South Asia. These companies are Reliance
trends, Aldi, Spencer’s, Big Bazar, Dmart and other companies. The retail sector is dominated by
the companies such as Shopper’s stop, Reliance Retail, Future Group and Croma. The retail
market is growing in India as a result of the growth in spending power of a large portion of the
population. Similarly, the growth in lifestyles of the people have been responsible for the growth
of the retail businesses. The retail market trends in the country provide a positive growth rate
despite current market setbacks due to issues within the economy.
Section 3: Analysis of the potential problems
There are some important issues that are affecting the retail market of the world
presently. Some of these important issues are also affecting the retail sectors of both India and
Australia causing significant impact on the market.
One of the important challenges that affects the Australian retail market presently is
employability. The retail sector of the country has a high turnover rate that makes operations
very difficult. It is important to view this as a significant challenge as it can slow down the pace
of the growth of the industry. Another important factor is the constant change in the demand and
mindsets of the consumers. There is a global economic pressure at the given time with potential
customers saving their money at a record rate. At the same time the impact of online marketing
has been far greater on the retail market of the country (Venkatesh, Rathi and Patwa 2015).
There is a significant decline in the customer service and the customer experience. This has led
to consumers believing their retailers less and frequently changing their retailer preferences. The
digitization of the Australian retail stores are causing retail organizations to spend more while
getting low returns. At the same time the taxation of the Australian government is not helping the
retail chains. In essence a large number of factors are limiting the growth of the retail sector of
the country.
The changes in the consumer demands are greatly affecting the retail sector of the
country. The consumers are increasingly becoming more and more demanding in terms of value.
However, in the growing retail industry of the country, value is becoming a major concern. The
industry hence, is facing a tough situation dealing with the various problems that are emerging
from the disintegration of the economy of the country. Government policy of India is not helping
the retail sector of the country. Especially, after the introduction of GST people are more

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concerned with their spending capacity. This is greatly working against the favor of the larger
retail outlets of the country. The specialized retail outlets are facing significant issues as the
constant shift of the consumers to the online retail markets are working against their favor. The
lack of properly skilled labor and high turnover rate is another significant problem facing the
retail industry of the country. The industry fails to retain qualified individuals within itself.
Section 4: Consideration of the cultural aspects
The cultural aspects are to some extent different but similar in regards to some of the
global market. The cultural aspects are very important in regards to the generation of interest and
the development of buying habits among the people.
In the Australian context, the cultural factors are influenced by the highly westernized
view of life. The festivals of the country are very important in determining the buying drives of
the customers. The customers are much more educated in terms of the product value and quality.
They are very much technologically literate and use the same towards determining the value of
the products that they want to buy. The customers today demand products, which are aligned to
their culture. The retail in order to meet the needs of these customers have to adapt their products
to the culture of the host markets. This need to adapt marketing strategies to the cultural needs of
the customers require the retail chains to challenge immense capital, which affects the financial
base of the retail companies concerned. The Australian audiences are more focused on going on
shopping sprees at festive times like Australia day, Christmas and Easter. At the same time many
secular festivals are held in the country that attract a fair amount of retail buying behaviors from
the customers.
There are many more festivals that are held in India than in Australia. India is a
multicultural country with festivals of the Hindu, Muslim, Sikh and Christian communities
celebrated together. This provides the retailers with a large number of festive occasions to
promote their product offerings. The value of the retail marketing is generated in this way. The
people are more concerned about buying commodities, clothing and other important items before
the festival times. This is the major trend across the entire country. The largest festival of India is
Diwali that normally takes places around the time of October-November. Hence, people are

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more focused towards increasing their retail buying at this time. However, at the same time some
of the regional festivals also guide the spending habits of the people. Normally, this causes retail
outlets located at different parts of the country to engage in more promotion at different times.
The festivals like Eid and Dussehera are also important times for the entire retail industry of the
country.
Conclusion and Recommendations
It can be concluded that Indian and Australian retail companies are facing several
challenges. The challenge stem due to the rising income inequalities in both the countries,
reduction in customer spending towards retail purchase and competition from foreign retail
companies. Thus, it is evident from the discussion that the retail companies based in Australia
and India should take steps to counteract these challenges. The companies operating in the two
countries are different in the values that the offer to the consumers. However, a significant
finding is that in the recent years there has been significant westernization of the Indian
customers. The Australian customers are focused on spending more towards value products. The
Indian customers are also focused on spending more towards various products. However, it can
be seen through the recent developments that the Indian customers are more inclined towards
buying branded product. The Australian retail audiences are more focused towards gaining better
value from the innovative companies.
Recommendations
The following are the recommendations, which can be to the retail companies housed in
India and Australia:
Innovation in marketing:
The retail companies of India and Australia should bring about innovations in alignment
to the cultural preferences of the customers in these countries. This would enable them to
differentiate them from their international counterparts. Marketing innovation is required in both
the countries to develop a more product and quality centric management.
Fusion of Ecommerce marketing and traditional retail:
The retail companies in India and Australia should market their products on ecommerce
portals. This would boost their revenue generation. Fusion of e-commerce and traditional retail is

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required to enhance the prospects of coexistence of the two revenue streams. In this regards the
organizations would have to optimize both their traditional retail as well as the e-retail activities.
This would improve the scope for providing the right kind of services.
More employee value
It is important that the retail enterprises in both the countries pay more attention to the
employee value of the organization. Providing more value to the employees would reduce greatly
the turnover risks.

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