Retail Management: Structure, Potential, and Challenges in India and Australia

This article explores the retail industry in India and Australia, including the structure of the market, potential size and profitability, and cultural aspects impacting retailing. It also discusses potential problems facing the industry and offers recommendations for improvement. Course code and college/university not mentioned.

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

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Table of Contents
Introduction...................................................................................................................2
The structure of retail market in India...........................................................................3
The structure of retail market in Australia.....................................................................3
Potential size and profitability of retail industry in India................................................4
Potential size and profitability of retail industry in Australia.........................................6
Potential problems facing the retail industry in India....................................................7
Potential problems facing the retail industry in Australia..............................................8
Cultural aspects impacting retailing in India.................................................................9
Cultural aspects impacting retailing in Australia.........................................................10
Recommendation and Conclusion.............................................................................10
Reference List.............................................................................................................12

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Introduction
The retail sector is booming in the recent times in the Indian and Australian
market due to the increase in the rate of economy. The decisions of the major
businesses are also being affected due to these markets in a positive manner. The
Australian retail sector accounts for almost 4 percent of the total Gross Domestic
Product (GDP) and the retail market that is present in India accounts for almost 13
percent of the GDP. The Indian retail sector is organized and unorganized as well
comprising a total of almost 6 million outlets and stores. The retail sector is also
diverse in nature with respect to the competition, size and the different types of
goods in which they are dealing (Garg & Garg, 2013).
The Future Retail Limited is one of the largest supermarket chains in India,
which offers different varieties of products to its customers at a cheaper price so that
it can help in providing them with a better quality of life. The company is present in
more than 250 cities in the Indian subcontinent and has more than 500 million
customers who are loyal to the brand. It also provides products and services to more
than 30,000 entrepreneurs and manufacturers who are dealing with small, medium
and large business enterprises across the country ("India Leading Retailer, Million
Square Feet Retail Space – Pantaloon", 2018).
The Woolworths group is one of the largest retail chain in the Australian
market and has been serving the customers for a long period of time. The products
that are offered by the company are priced in a competitive manner, which has
helped them in gaining an advantage in the market. The company also caters to
more than 400 million customers and has its retail business scattered in all the major
parts of Australia. This has resulted in improving its quality of services towards the

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customers so that they can have a better experience with respect to their purchase
(Woolworths.co.za, 2018).
The structure of retail market in India
The Indian retail sector is divided mainly in to the organized and the
unorganized sector where the unorganized sector is mostly prevalent. The
unorganized sector is inclusive mainly of the local carts and the vendors that are
lined up on the pavements. This is the most prevalent sector and around 98 percent
of the retailers fall in this category (Shaha & Shinde, 2013).
The organized sector constitutes of the licensed retailers who are registered
under the law and pay the income tax on the level of profit that are being done by
them through the sale of goods. This sector is mainly backed up by corporate
houses and the retail chains. It is inclusive of the in-store retailers where the sales
are done from a fixed point. This helps in attracting the customers towards the stores
due to the use of the showrooms for the brands. It also houses different brands that
help the customers in selecting their own brands according to their power of
purchasing (Deshpande, Gaddi & Patil, 2014).
There are discount stores as well that help in providing the goods and
products to the customers at a greater amount of discount. There are convenient
stores as well as shopping malls through which the customers can purchase the
products that they require. This helps them in providing them with a variety of choice.
The Future Retail Limited is located in many shopping malls and falls under the
organized sector where the customers can get their products at a cheaper and
discounted price. This helps them in increasing the level of loyalty among the

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customers by providing different outlets that are located in all the major places
(Khare, 2013).
The structure of retail market in Australia
The Australian sector has around 140,000 businesses that constitute of the
retailing business. It is mainly diversified through the size of the business along with
the format and the competition that are present in its sector. Most of the retail
business are in the organized sector, as the owners have the license to carry on with
their retailing. It provides the products that are needed by the customers through the
discounted stores and the hyper marts so that it can address the needs of the
customers. The planning regulations are complex in nature that helps them to be
competitive in the market (Sutton-Brady, Kamvounias & Taylor, 2015).
Woolworths is one of the leaders in the retailing business in the Australian
market due to its connection with the customers with respect to competitive pricing
strategy. This has helped them in gaining the trust of the customers with respect to
the products that are being offered. The major competitors of the company are Aldi
and Tesco but they do not have the infrastructural facilities that are present in
Woolworths (Burch & Lawrence, 2013).
Potential size and profitability of retail industry in India
There are different factors and macroeconomic forces that has resulted in the
rise of the retail sector in India. These factors are as follows:
 The country is one of the fastest growing economies in the world and consists
of a population that is considered second largest next only to China. This has
resulted in the consumption of products and services on a global manner to
increase by 3 percent. The country is also ranked among the top 10 countries

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with respect to the Household Final Consumption Expenditure (HFCE) (Bharti,
2014).
 The per capita income of the country has also increased by 4 times at the
beginning of 2000 where it was around $450 and in 2015 it was around
$1590. This has allowed in the increase of disposable cash in the hands of
the consumers, increasing their spending capacity.
 The growth with respect to consumption has also been affected due to the
increase in the population and has not been only limited to the income to be
limited in the hands of the consumers (Garg & Chauhan, 2015).
Apart from these factors, there are drivers that has led to the increase in the
retail sector in an organized manner. These factors are as follows:
 There has been an increase in the the nuclear families along with the urban
consumers who are young in nature. It has been seen that more than 47
percent of the consumers fall under the age group of 25 years and has been
predicted that by 2020, India would become the youngest country. This has
increased the rate of urbanization due to the increase in the level of work
force. The increase in the nuclear families have been over 13 percent, which
has also created a demand of higher rate of consumption (Kaura, 2013).
 There has also been an increase in the rate of aspirations, as most of the
Indian consumers have upgraded themselves to brand rather than depending
on the loose products. They are willing to pay more for the convenience and
the services that are being offered by the branded products. This has led to
the shift in the demographic structure, awareness with respect to trends
acknowledged in a globalized context and the need to use better products so
that living standards can be improved.

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 There has also been an increase in the digital media across the country and
more than 13 percent of the population has been using the smartphones. This
has result in an increased search of products on the internet so that they can
purchase it. The level of maturity has also increased among the consumers
due to the rise in the internet usage with respect to the branded products and
services (Priya & Harikumar, 2013).
 There has been leniency with respect to doing business in the Indian
subcontinent as well due to the change in the regulations. This has resulted in
increasing the level of entry for global brands with a high amount of
investment. It has resulted in creating ancillary services as well such as back-
end job processes and logistics divisions. The 12th Five Year Plan that is from
2012-2017 has seen that 37 lakh crore rupees was invested for developing
the network for distribution. This had resulted in increasing the retail sector in
India (Khare, 2013).
Potential size and profitability of retail industry in Australia
The retailing business in Australia has increased the level of convenience
among the consumers, as most of the good and products that are being purchased
are in a smaller quantity, which has reduced the packaging size to a great extent.
The stocking services are also provided by them so that it can help the consumers in
maintaining large quantities of stocks at their place. The retailers also provide
services that are with respect to the product operation. The consumers can also get
financial service through shopper cards and credit arrangements as well. This has
resulted in increasing the retail sector in the Australian market as well (Price, 2016).
There are different factors as well that has affected the cost of the retail
products in the Australian market, which is the gross margin for the retail products

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have increased due to the increase in the middlemen for the products to be delivered
to the customers finally. This has led to the increase in the points of distribution that
has affected the profits and cost of the products. The gross margin of the product is
also inclusive of the cost of operations that are being included in the different stages.
This has resulted in increasing the cost of the product before being delivered to the
customers (Price, Bailey & Pyman, 2014).
The retail companies Woolworths and Wesfarmers that is present in Australia
are among the top 250 retail companies in the world. This is due to the fact that the
model of customer experience has resulted in expanding their market. The other
companies that are present in the country have also started to increase its strategies
so that it can result in attracting more number of customers. This is due to the fact
that the new companies who are entering the Australian market are prepared in a
better manner with respect to the marketing strategies so that they can increase the
rate of penetration in the market (Azizul Islam & Jain, 2013).
Woolworths have been operating in the Australian market for a long period of
time that has resulted in gaining the trust of the customers. This has also increased
the demand among the customers with respect to the store. All the major products
are available in the store and at a cheaper price that has helped in gaining a
competitive advantage in the market. The changes in the technology have helped in
shaping the retailing industry in Australia in a positive manner. Additionally, the
companies are also taking the preferences of the consumers so that the competitive
pressure can be decreased in the retailing sector (Graham, Brinsmead & Hatfield-
Dodds, 2015).

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Potential problems facing the retail industry in India
There are however many problem in the retail sector that is present in India.
This is due to the fact that there was a lack in the execution policy that was
envisioned by the retailers. The survey that was conducted by PriceWaterhouse
Coopers in India had highlighted the issues as follows:
 There are challenged with respect to the infrastructural facilities, as the plans
to expand the business has been limited due to the lack of the retail spaces.
The major reason for these infrastructural failure was the improper location of
the outlets, higher rate of rentals, parking insufficiency and the store layout for
the operations were also improper in nature (Kaura, 2013).
 Another major challenge was the capital access, as there was lack in
providing proper direction on the Foreign Direct Investment (FDI) within the
retail sector. This led to the delay in the process of implementing the process
towards the non-conglomerate retailers and the capital that was needed for
the growth of the retail business.
There was another factor that posed as challenges for the retail business that
is the execution of the strategies, as the retailers wanted to increase the speed of
action. The challenges that was inclusive of this were the strong suppliers who have
a strong margin in the retail sector. Another major failed execution was the
customers who were conscious regarding the value of the products. This resulted in
increasing the pressure on the price, which had an impact on the size of the
transaction to be smaller in nature (Rathi & Lee, 2015).

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Potential problems facing the retail industry in Australia
The Australian retail market also faces certain challenges that poses danger
to the future of the retailers. These challenges need to be addressed in a proper
manner so that it can help in sustaining the retail sector for the future. These
challenges would result in providing customers with a better level of experience in an
efficient manner by decreasing the cost to a great extent and building a sustainable
model of business. The other challenges for the retail sector are that they need to
understand the customers in a proper manner (Xia et al., 2013). This is a major
challenge, as without having a proper knowledge regarding the needs and demands
of the customers, the retail businesses would not survive in the competitive
Australian market. The data of the customers need to be analysed with the use of
the latest technology so that it can provide all the information that is needed in
keeping up with the demands of the customers. This will help the companies in
understanding the type of products and services that needs to be offered so that it
can increase its level of sales in the market (Jie, Parton & Cox, 2013).
Another major challenge is that it has to address the factor of customer
experience as well, which will help in easing the rate of transaction between the
customers and the retail business. The use of the internet and other technological
factors will help in changing the standards of the customer experience (Pricey, Bailey
& Pyman, 2014). Another major challenge for the retail business in Australia is that
they need to provide an Omni channel so that the business can be integrated. The
integration of the business in different online platforms and mobile channels will
allow in increasing the rate of penetration of the company in the market as well. The
traditional methods of doing retail business needs to be removed from the strategies

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so that it can take the help of the latest technologies that are available for accessing
the needed resources (Xia et al., 2013).
Cultural aspects impacting retailing in India
The cultural factors constitute a set of ideologies and values that are present
within the community, individuals or within a particular group. The culture within India
helps the retail companies and especially Future Retail to understand the behaviour
of the consumers so that it can provide the necessary items to them. The effect of
culture plays a significant role in determining the decision of the consumers
regarding the products and services that they want to purchase (Gawankar, Kamble
& Verma, 2013).
India is a land of diverse culture where the retail companies need to consider
the opinion of all the religion. This helps them in serving to a diverse religious group
so that the companies can increase its level of sales. An example of this is that in
some religion eating beef is prohibited where as in other religions they are allowed to
do so. This can be seen when visiting a Future Retail store that it is separated from
the rest of the meat products so that it does not hurt the sentiments of a particular
culture (Bharti, 2014). Another example is that the wine stores are situated within the
stores but in a different location so that it does not hurt the sentiments of a particular
religious sect. This helps in balancing the neutrality between all the religions so that
diversity can be maintained. Another major factor is that the Future Retail stores tries
to cater to the needs and preferences of people belonging to different statuses so
that equality can be maintained within the store. This helps the company in catering
to the needs of the customers belonging to the different segments (Shaha & Shinde,
2013).

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Cultural aspects impacting retailing in Australia
In the Australian economy, it can be seen that the purchasing habits of the
consumers are very diverse due to the fact that Woolworths offer the goods and
products that are in accordance with the needs of the customers. This helps in
catering to all the needs and different income level consumers as well. The company
also sees that the quality is met in a proper manner, as customers from different
backgrounds rely mostly on the standards of the products that are being provided by
the company (Wardle & Chang, 2015) Most of the customers who are living in
Australia are mostly Christian in nature and it also supports people from other
religious backgrounds as well such as Hindus, Muslims and others. The company
caters to the needs and preferences of the minority group of people so that their
standard of living can also be improved. Most of the people try to live separately from
their families after they have attained the age of 18 years, which makes it possible
for the company to cater to their needs. The concept of family meetings are
prevalent in the country on the weekends, which brings the entire family together and
they enjoy cooking and eating together. These factors are also considered by the
company (Cummings, 2016).
Recommendation and Conclusion
Thus it can be recommended that the Future Retail Limited in India has been
serving its customers by providing them the products and services according to their
needs and preferences. The company carries out market surveys so that they can
gain a better knowledge regarding the choices of the customers. This helps them in
serving its more than 500 million loyal customers in a proper manner. The
consumers belonging to different religious sects are also purchasing the products

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from the company, as the company addresses the ethical issues in an efficient way
so that the sentiments of the people are not hurt.
Woolworths on the other hand has been serving the Australian customers for
a long period of time and is accustomed with the major trends that are followed by
them. The economy is using the latest technologies so that it can provide a better
platform to the retail company in increasing its reach in the market. This helps them
in understanding the differences that are present among the customers so that it can
be addressed properly.
Thus it can be stated that both the companies take in to consideration the
difference and problems that are present in their respective countries so that they
can understand it and serve the customers in a better manner. This will help in
understanding the demands of the customers so that they can be met in an efficient
manner.

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