Electronic copy available at: http://ssrn.com/abstract=1435218 Electronic copy available at: http://ssrn.com/abstract=1435218 1 A STUDY ON THE CHALLENGES AND OPPORTUNITIES FACED BY ORGANIZED RETAIL PLAYERS IN BANGALORE MIHIR DASH 1 SAM CHANDY ABSTRACT Even though Indian retailing is hailed as a huge sector in India, in reality, it is not so rosy when compared to the retail scenario in developed and other developing countries. Indian retail is still in the infancy stage, with the retail revolution gaining momentum in India only in the late 1990’s, and there are a number of challenge factors which need to be overcome and a number of opportunity factors which need to be leveraged upon, if organized retailing is to flourish the way it ideally should. This study revolves around the opportunities and challenges faced by organized retail players in Bangalore. It was found that organized retailers see competition from the unorganized sector as their biggest challenge, followed by competition between organized retailers and the inefficiency of distribution channels, internal logistical problem and retail shrinkage, while unorganized retailers see organized retailing as their major challenge, followed by cost of operation, logistical problem, competition between other kirana retailers and inefficient distribution channels. It was also found that organized retailers see Bangalore’s growing middle class as their greatest opportunity followed by large number of earning youth customers, Bangalore having people from all over India, proportionate increase in spending with earnings and India’s booming economy, while the kirana retailers see Bangalore having people from all over India as their biggest opportunity, followed by Bangalore’s growing middle class, India’s booming economy, large number of educational institutions in Bangalore and proportionate increase in spending with earnings. Thus, the study found that the major challenges as well as opportunities of organized and unorganized retail are almost the same. This means that mitigating the challenges and leveraging on the opportunities could benefit both sectors. Keywords: retailing, organized and unorganized retailing INTRODUCTION: Already known as the sunshine sector in India, retail is all set to make tremendous growth. The retail sector in India can be broadly classified into the organized and the unorganized retail sectors. The unorganized retail sector typically consists of small-time family-run retail outlets popularly known as ‘mom and pop’ stores or kirana stores. The organized retail sector typically consists of large retailers with large numbers of outlets, product assortment, customer convenience, and so on. The organized retail industry in India is estimated to be an impressive US $360 billion as on March 2008. Retailing as a whole contributes almost 10% of India’s GDP, and employs almost 8% of India’s employable population. However, the retail market in India is the most fragmented in the world, as indicated in the 2007 CRISIL report. Only 5% of the entire retailing business in India is in the organized sector, and this share is expected to grow to 15-20% over the 1 The first author is a senior faculty at Alliance Business Academy, 19 th Cross, 7 th Main, BTM Layout, II Stage, Bangalore-560076, and can be contacted by phone on +91-9945182465, or by email at mihirda@rediffmail.com. The other author is a research scholar at the same institution.