Challenges of retail industry
Challenges
• Underdeveloped supply chain: India is the 7th largest country in the world and catering to people across such a vast region is difficult, leading to complexities in merchandise and inventory management. Long intermediation chains would increase the costs by 15 per cent. Inadequate and insufficient supply chain existing in India‘s retail sector is a major deterrent to the growth of this market. There is a strong need for retail to concentrate on developing a back‐end solid chain support especially for perishable products to help reduce wastages which is estimated to be at 40% of national produce. Lack of cold chain infrastructure in India poses storage threat and acts as a major challenge for the retail sector. Due to India‘s complex tax structure and large geographic spread, companies have developed regional distribution and re‐distribution networks. Retailers need to work closely with the suppliers and try to shorten the supply chain network to save both time and money.
• Real estate hurdles: Location of retail outlets are indispensable for their success and issues pertaining to procurement of suitable real estate is another major challenge this sector faces. Finding suitable properties in central locations is difficult due to fragmented private holdings, infrequent auctioning of large government owned lands and litigation disputes between owners. Rent also plays a very significant role as it forms around 6‐10% of the total expenditure and can easily convert a profitable store into a loss making one if not decided upon carefully. Available spaces in most big cities are easily interchangeable between commercial and retail use, which makes their availability even scarce. Difficulty in retail planning, especially relating real estate issues, is a major impediment for this market in India.
Inadequate general and specific infrastructure: Information technology implementation and digitization of services will make transfer of goods easy and an
• Underdeveloped supply chain: India is the 7th largest country in the world and catering to people across such a vast region is difficult, leading to complexities in merchandise and inventory management. Long intermediation chains would increase the costs by 15 per cent. Inadequate and insufficient supply chain existing in India‘s retail sector is a major deterrent to the growth of this market. There is a strong need for retail to concentrate on developing a back‐end solid chain support especially for perishable products to help reduce wastages which is estimated to be at 40% of national produce. Lack of cold chain infrastructure in India poses storage threat and acts as a major challenge for the retail sector. Due to India‘s complex tax structure and large geographic spread, companies have developed regional distribution and re‐distribution networks. Retailers need to work closely with the suppliers and try to shorten the supply chain network to save both time and money.
• Real estate hurdles: Location of retail outlets are indispensable for their success and issues pertaining to procurement of suitable real estate is another major challenge this sector faces. Finding suitable properties in central locations is difficult due to fragmented private holdings, infrequent auctioning of large government owned lands and litigation disputes between owners. Rent also plays a very significant role as it forms around 6‐10% of the total expenditure and can easily convert a profitable store into a loss making one if not decided upon carefully. Available spaces in most big cities are easily interchangeable between commercial and retail use, which makes their availability even scarce. Difficulty in retail planning, especially relating real estate issues, is a major impediment for this market in India.
Inadequate general and specific infrastructure: Information technology implementation and digitization of services will make transfer of goods easy and an