Comparative Study of Retail Markets: India and Australia

This report provides a comprehensive comparative analysis of the retail sectors in India and Australia. It begins with an executive summary highlighting key differences, such as India's growing retail sector versus Australia's mature market and the challenges posed by e-commerce. The report then delves into the structural differences in retail markets, examining the formats of stores, including hypermarkets, supermarkets, and department stores, and the shopping trends prevalent in each country. It further estimates the potential size and profitability of the retail industries in both nations and analyzes the potential problems facing the sector, such as the impact of e-commerce in Australia and government policies in India. The report also considers the cultural aspects impacting retailing and concludes with recommendations for navigating the evolving retail landscape. The study highlights the growing importance of omnichannel retailing and the need for adaptation to remain competitive.

Running head: RETAILING IN INDIA AND AUSTRALIA
“Retailing in the Asian Pacific Region”
Name of the student:
Name of the university:
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1RETAILING IN INDIA AND AUSTRALIA
Executive summary
The study conducts a comparative analysis of the Australian and Indian retail
sectors. The study finds a few of difference between the two countries in terms of
retailing trends. India is a growing country in regards to retailing sector whereas
Australia has a matured and organised retail sector. The study finds that the
Australian retailers are facing the challenge from e-commerce retailers. It is due to
the fact there is need to show an urgency towards the omnichannel retailing. The
retail sector in India does not have a favourable government policy for FDI. This is
the reason why global major retailers like Wal-Mart, Tesco and others are yet to
enter the Indian retailing industry.

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Table of Contents
1. Introduction...............................................................................................................3
2. Differences in the structure of retail market in Australia and India...........................3
3. Estimation of potential size and profitability of retail industry in Australia and India6
4. Analysis of potential problems facing the retail industry..........................................7
5. Consideration of cultural aspects impacting retailing...............................................9
6. Conclusion and recommendations.........................................................................10
Conclusion..............................................................................................................10
Recommendation....................................................................................................10
References.................................................................................................................11

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1. Introduction
Retail industry has been one of the potential industries for both in developed
and in developing countries. This report covers a comparative discussion about the
kind of retailing being practiced in Australia and India. Comparison will be made
considering various factors such as structural differences of retailing sector in India
and Australia, size and profitability of the sector, potential problems for the industry
in both countries and impact of cultural aspects on the retail industry.
Formats of retailing industry is more or less the same; however, there are
evident differences in regards to trending changes. For example, the hyper market
concept in India is a booming sector whereas in Australia it is not. Some of the
popular and emerging names in hypermarkets in India are Big Bazaar, Lulu
Hypermarket, D-Mart and Metro Cash & Carry (Lavania and Dixit 2017). In Australia,
the story is different and hyper markets have flopped. These have a very minimal
presence in Australia with Costco being the only hyper market. Kaufland is planning
to come up with two hypermarkets in 2019 (Battilani, Balnave and Patmore 2015).
Both Australia and India differ to each other in respect to the format of shopping
being largely popular. In Australia, supermarket, discount and convenience stores
are the most loved formats of shopping (Price, Bailey and Pyman 2014). On the
other hand, department, hypermarket and supermarket stores are the most popular
choices in India.
The main purpose of this report is conduct a comparative study of retiling
format and trends in Australia and India.
2. Differences in the structure of retail market in Australia and India
This section of the study tries to identify the difference in structures which the
retail markets in India and Australia follow.
Australia
The basic difference between the different formats of stores is mainly in
regards to shopping spaces and number of products being stocked. Considering
supermarket stores, the structure of retail market in Australia can be understood.
Stores are generally made spacious to allow customers more space to roam around
and easily check their required products. The Australian retail industry is mainly

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dominated by retail giants Woolworths, Wesfarmers, Coles, Aldi and others.
Woolworths and Coles have long ruled this industry and nearly formed a duopoly in
the market. However, Aldi now with its innovative business strategies is giving
competition to both Coles and Woolworths.
All Woolworths, Coles and Aldi are working intensely towards enhancing the
shopping experience for consumers. For example, Aldi is now considering bigger
shopping areas for its every new store. It is to allow customers more space to roam
around and find products easily. Woolworths and Coles are widening up shelves
being used to keep grocery related products. The purpose behind this change is to
keep groceries fresh. In addition, these supermarket stores are also considering the
inclusion of ready-to-go foods to ensure customers who runs with busy schedules
and want to spend only a little time being in stores, they could get foods in no time.
One of the purposes for the change is to create reasons for shoppers to feel like
visiting supermarket stores which is recently being affected from the online shopping.
Moreover, facilities have also been added to support a fast preparation of foods, so
that, wait time against orders could considerably be reduced (Zakaria et al. 2014).
Aldi in particular is creating waves by adapting to innovative strategies. One of
such strategies is the inclusion of ‘Shallower Shelving’ and the improved refrigeration
system to keep foods fresh for a longer span of time (Ausfoodnews.com.au 2018).
The benefit of using ‘Shallower Shelving’ is that it can be easily rearranged.
Additionally, it also provides a wider space to keep foods like ready-meals, so that,
freshness of foods could be retained longer (Ausfoodnews.com.au 2018). With all
these changes, supermarket giants in Australia are attempting to keep customer
coming to brick and mortar format of stores, which is getting affected, from the online
shopping.
On the other hand, products as such wine and alcohol are generally being
sold in department stores. These are not being sold in supermarket stores.
Supermarket stores mainly sell products such as varieties of fresh groceries, general
goods, ready foods and others (Price 2016).
India
Hypermarket which is not so successful in Australia is doing exceptionally well
in India. Big Bazaar and Metro Cash & Carry are two of hypermarkets that are

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hugely popular across metro and major cities in India. Customers throng to these
stores to on a daily basis. Big Bazaar also have stores in other formats as well such
as in discount, department and grocery store formats. Customers can shop varieties
of products such as groceries, foods, private label brands, dairy items, clothes,
mobile phones and much others from these stores (Pradhan, Panda and Jena 2017).
Supermarket stores as if HyperCity offers a variety of products such as listed below
(Pradhan, Panda and Jena 2017):
 Furniture items
 Consumer durables
 Apparel
 Furnishings
 Toys
 Fruits
 Fresh Vegetables
 Groceries
 Electronic Goods
 Household items
 Stationaries
 Pharmaceutical and healthcare items
Both hypermarkets and supermarkets are made spacious to accommodate more
inventories and allow a much easier roaming around to consumers. The location for
these stores are either the city areas or the areas away from population. City areas
are easily connected to popular places. Hence, chances of footfalls will be
maximum. Areas that are picked apart from populated areas are good for those
who have their personal conveyance. These areas are picked to grab spacious
areas and that city areas are nearing to saturation (Nimbrain and Kant 2015).
Department stores like Spencer’s are smaller in store areas from
hypermarkets and supermarkets. Department stores unlike the supermarkets and
hypermarkets, offer only a limited products like fresh fruits & groceries, flour, rice,
dal, beans, rice, coffee, tea, beverages, packaged food, drinks & juices, biscuits,
confectionary items, chips, snacks, chocolates, poultry, mutton and others
(Bhatnagar and Verma 2016).

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Supermarkets and hypermarkets in India likewise in Australia strives to
innovative strategies to be continually engaged in enhancing the shopping
experience of consumers. With regard to the innovation, customers are offered a
more convenient browsing experience in stores. They are also provided with a
faster checkout facility. Customers can make payments through a variety of modes
available to them. In addition, these stores also provide baby strollers, wheelchairs,
drinking water and the option for free home delivery. These strategies are being
adopted to provide a better shopping experience to consumers. ‘Wednesday
bazaar’ is also a strategy to attract a bulk footfalls towards discounted offers. To
improve the checkout speed, a program called ‘Gati’ is being introduced. In addition
to this, few specially categorised people are provided with priority based checkout
tokens. These people are senior citizens, loyalty program members and people that
require special cares. To make it hassle free, a number of payment systems have
been introduced such as Future Pay, dedicated digital wallet and other wallets
being tied with other firms like MobiKwik (Naidu and Naidu 2016).
The above discussions shows that there are very a few differences between
retailing sectors in Australia and India. There are differences in shopping trends as
hypermarkets is not so successful a concept in Australia; however, in India, it is a
booming concept. The number of inventories are more or less the same across a
variety of shopping zones both in Australia and in India. In addition, Indian retail
market is still largely dominated with other versions of shopping like smaller shops
along the street areas and in old day’s markets. Kirana stores are the evergreen
shopping preferences for many people in India especially to those in rural areas.
The model used by Kirana stores is so successful that they do not even have fear
of losing their customers in the hands of supermarkets and hypermarkets. Their
ability to understand the local needs and the customer base they have is
unmatchable with any format of digital stores in India. Interestingly, these Kirana
stores are digital-resistant and extremely resilient (Thehindubusinessline, 2018).
3. Estimation of potential size and profitability of retail industry in Australia
and India
India

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The retail sector in India has emerged as a dynamic and fast-paced industry
due to the growing participation from several local and global major players in the
form of supermarkets and all. The total consumption expenditure will expectedly
reach close to US$ 3,600 billion by 2020 (Ibef.org 2018). The industry contributes by
10% to the Gross Domestic Product (GDP) of the country. It accounts for a close to
8% in terms of providing and creating employment opportunities. India ranks the fifth
in terms of being the world’s largest destination for the retail. The market size is
expected to increase by 60% and touch US$ 1.1 trillion by 2020. Traditional trade is
expected to grow at 10% per annum (Ibef.org 2018). Google and Paytm malls are
set to acquire a 7-10% stakes in Future Retail. A long-term outlook for the industry is
rather positive due to rising incomes, entry of foreign players, favourable
demographics, and increasing urbanisation (Ibef.org 2018).
Australia
The Australian retail industry has been able to maintain a good growth until
recently it was being affected from a rising popularity of e-commerce retailing. There
are positive trends for the online shopping, which means that the likes of Amazon will
be benefited from it. The retail sector is expected to grow at a CAGR of 2% (Deloitte
2018). A sudden rise and downfall in the retail industry is a common phenomenon in
Australia. A fluctuating behaviour of interest rates does also affect the profitability of
traditional retailers. There is an increment in retail sales by 2.6% during the fiscal
year 2017-18 (Deloitte 2018). An increasing disposable income and high net worth of
individuals, and the growing consumer loyalty in major brands are driving forces of
brick-and-mortar retailing in Australia. Profits continue to hold up significantly despite
the challenging business environment in Australia (Deloitte 2018).
4. Analysis of potential problems facing the retail industry
Australia
One of the biggest problems that the retail industry in Australia faces is the
access to a large-scale data. E-commerce websites such as Amazon has access
to mountains of data which allows the company to customize its products according
to customers’ demands. The way Amazon does it is hardly possible for brick-and-
mortar format of stores in Australia. Traditional shopping zones like supermarkets,
department and discount stores are lagging behind to amazon in terms of innovative

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technologies. Amazon effectively uses these technologies to bring advancement into
its supply chain operations. Moreover, it effectively fulfils customers’ demands in
real-time (Pulker et al. 2018).
Customers’ roadmap to purchase is another problem that the retail industry
faces. E-commerce sites such as Amazon can easily look into the stages being
followed by customers in their whole journey for shopping (Price, Bailey and Pyman
2014).
Retailers have failed so far in offering an omnichannel experience. An
omnichannel way is the recommended format of shopping for a majority of
consumers. It means an integration between online, mobile channels and in-store
shops. Customers’ preferences for shopping is dynamic in nature which encourages
to look for a multiple number of ways for shopping. It is due to this fact that different
forms of shopping had come to the existence. Now, consumers shop through
varieties of modes like offline, online and shop through dedicated mobile-based apps
(Shankar et al. 2016). Millennials now represent a substantial portion of total
consumers (McDonald 2015). These Millennials are very selective with their
shopping preferences as they most of the time use online sites to shop. One of the
reasons of not visiting to stores on a frequent basis is the busy schedules which
these Millennials are packed with at their academic institution or at workplace.
Considering that Millennials represent a major portion of the entire consumer base in
Australia and their inclination more towards the online shopping, it is a critical
situation for traditional retailers. They must do something to offer an integrated
model which provides an omnichannel way of shopping to these potential consumer
base (McDonald 2015).
India
A lack of retail space is one of the challenges which the retail industry in
India currently faces. An increasingly growing real estate rates is putting huge
pressure on the organized retail sector of India (Lavania and Dixit 2017).
Considering the limited availability of retail space, a further expansion of reputed
retail stores may be resisted.
A shortage of skilled manpower is another challenge that the Indian retail
industry faces. Workers are mostly untrained and low in selling skills, which is

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affecting the overall customer service experience (Lawrence and George 2018). As a
result, service quality is of average standard. In addition, employers have no other
option than to retain such low-skilled workers. This significantly affects the overall
profitability of the Indian retailers.
The Indian government policy towards foreign direct investment (FDI) is
a major problem. Most of the FDIs are being allowed for just one brand shops. The
strategy has produced unfavourable circumstances for global retail giants for
entering the Indian retail sector. Retail giants like Tesco, Metro AG and Wal-Mart
have no more ways than to follow a franchise agreement and the cash & carry
wholesale trading to enter the organized retail industry in India (Kaushal and Pathak
2015). There are stiff competition between global and local retailers for discounted
rates. This is why discounting has become an accepted practice. This is also
affecting the net profitability of the Indian retail sector.
Inventory management is also a major problem for Indian retailers. It is not
that difficult to manage inventories for largest selling goods as it is for not so popular
items. For these items, it is difficult to guess how the market will behave. The longer
these items stay in shelves and warehouses, the more the revenue is impacted from.
5. Consideration of cultural aspects impacting retailing
Australia
Smartphone has now become a preferred shopping tool. There are a many
customers who prefer shopping from their phones. This culture will definitely impact
the Australian retail industry as Millennials now occupy a larger consumer base and
that they prefer shopping significantly from their phones. Australian retailers are
under pressure due to an increasingly growing demand for an omnichannel retail. It
is because Millennials represent a major portion of the Australian consumer base
and that they like shopping with multi-channels such as mobile-channel, mobile-
based apps and online shopping. Demands for a more personalised service
experience is growing. Retailers operating at a large scale of area are less effective
than local shops in terms of understanding a diverse range of people that seek for
local, contextual and personalised experiences. There is a need to have a large-
scale of data. Additionally, such data must also be appropriately analysed to make a
good use of it (Wardle and Chang 2015).

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India
Youth population is growing in India. People of this age group are exposed to
different forms of media, which are influencing their mentality towards how to live a
life. An easy access to jobs in BPOs and other avenues soon after graduating is
resulting in an increased income for Millennials. Hence, the youth population is able
to spend on apparel, accessories and electronics (Anushan, Selvabaskar and
Alamelu 2016).
Growing urbanization is also influencing the lifestyle of people living in major
cities of India. People, in particular, those living in major cities are heading to a
westernised culture. Supermarkets, hypermarkets, convenience stores and others
have furthered the westernised thought of Indian people (Anushan, Selvabaskar and
Alamelu 2016).
6. Conclusion and recommendations
Conclusion
To conclude, the retail industry faces a set of challenge and opportunities as
well both in India and Australia. The Australian retail industry has been an organized
sector for a long span of time. However, it now faces the challenge from changing
consumer behaviour, which more demand an omnichannel retailing. Indian retail
sector is still an expanding industry due to the changing culture of Indian consumers
and their spending capability. Indian people have an influence of the westernised
culture on their shopping behaviour. Indian retailing also faces a number of
challenge such as the unfavourable government policies for the ‘Foreign Direct
Investment (FDI)’. One of the major differences between the retailing industry in
India and Australia is a fact that Kirana stores are still the most loved shopping
formats for a larger population in India. It is just for the last two decades that major
cities have started to respond to modern retailing formats such as supermarkets. It is
due to an increasing urbanisation of major cities in India.
Recommendation
There is a need to show a welcome attitude towards an omnichannel retailing
in order to put a strong fight to the growing e-commerce retailing in Australia.

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A favourable retailing policy for major global players is required to promote a
growth in the Indian retail sector.