International Journal of Latest Technology in Engineering, Management & Applied Science (IJLTEMAS) Volume V, Issue XI, November 2016 | ISSN 2278-2540 www.ijltemas.in Page 39 Retailing Shift in India- Driving the Rural Growth in Food & Grocery Retailing, Formats and Models to Penetrate Smaller Towns and Villages Vinod Basupattad 1 , Manish Kothari 2 1, 2 Assistant Professor, Dr. D.Veerendra Heggade Institute of Management Studies and Research, Dharwad, India Abstract:- The vast opportunities offered by the India’s retail industry have caught the world’s attention. The major global retailing giants and homegrown retailers are looking at this opportunity for consolidating their position in the potential consumer space. But this opportunity is laced with challenges like policy hurdles, diversified consumer habits, cultural differences combined with infrastructure bottlenecks. India’s retail growth is expected to be driven by increasing disposable incomes, favorable demographics, changing lifestyles, growth of the middle class segments and a high potential for penetration into urban and rural markets. However, the vast rural India is yet to be conquered by organized retail players. It offers tremendous growth prospects but this opportunity comes along with greater challenges. This paper examines the present retail formats, players, retailing structures, space and explores the existing business models of retailers in all with focus on Food and Grocery Retailing to tap the potential in smaller towns and villages. Keywords: Retail Management, Retail Economics, Rural Marketing, Haats, Franchisee Models. Rural Retailing, I. INTRODUCTION 1.1 Overview of the Indian Retail Industry The Indian economy is expected to grow at 7.5 per cent in FY 2016-17, as per the forecast by the International Monetary Fund (IMF 2015) and India may be the next promising growth engine in the sluggish global economic scenario. The present government is looking at progressive and phased economic reforms in various sectors bringing a positive impact on several sectors in the economy. And retailing is one of the sectors which will enjoy the benefits with these reforms. The Indian retail market is in its nascent stage, there are over 15 million mom-and-pop stores in India and unorganised players accounted for 92 percent of the market during 2015. But the retail sector in India is emerging as one of the largest sectors in the economy and the total market size is estimated to be around US $.600 billion, thereby registering a CAGR of 7.45 per cent since 2000. As per BCG Retail 2020 report, retail industry is expected to grow to US $.1.3 trillion by 2020 of which the organised retail is expected to account for 24 per cent of the overall retail market by 2020. 1.2 Food and Grocery Retailing in India Source: Deloitte Indian Retail market – Opening more doors (2013) Figure 1.2 Estimated growth of rural FMCG market II. ORGANIZED RETAILING FORMATS IN INDIA Indian retailing industry is one of the fastest growing markets in the world due to rapid economic growth. Retailing is one of the pillars of the economy in India and accounts for 10% of GDP. The increasing income levels in urban and rural economies have propelled the robust consumption and thereby pushing growth in retail business. Consumer expenditure is estimated to be US $.3.6 trillion by 2020 vis-à-vis US $1.25