Factors |
Description |
Implications |
Barriers to
FDI |
�� FDI not permitted in pure retailing
�� Franchisee arrangement allowed |
�� Absence of global players
�� Limited exposure to best practices |
Lack of
Industry
Status |
�� Government does not recognize the
industry |
�� Restricted availability of finance
�� Restricts growth and scaling up |
Structural
Impediments |
�� Lack of urbanization
�� Poor transportation infrastructure
�� Consumer habit of buying fresh foods
Administered pricing |
�� Lack of awareness of Indian consumers
�� Restricted retail growth
�� Growth of small, one-store formats, with
unmatchable cost structure |
High Cost of
Real Estate |
�� Pro-tenant rent laws
�� Non-availability of government land, zoning restrictions
�� Lack of clear ownership titles, high stamp duty |
�� Difficult to find good real estate in terms of location and size
�� High land cost owing to constrained supply
�� Disorganized nature of transactions |
Supply Chain
Bottlenecks |
�� Several segments like food and apparel reserved for SSIs
�� Distribution, logistics constraints – restrictions of purchase and movement of
food grains, absence of cold chain infrastructure
�� Long intermediation chain |
�� Limited product range
�� Makes scaling up difficult
�� High cost and complexity of sourcing & planning
�� Lack of value addition and increase in costs by
almost 15% |
Multiple
Legislations |
�� Stringent labor laws governing hours of work, minimum wage payments
�� Multiple licenses/clearances required |
�� Limits flexibility in operations
�� Irritant value in establishing chain operations;
adds to overall costs |
Customer
Preferences |
�� Local consumption habits
�� Need for variety
�� Cultural issues |
�� Leads to product proliferation
�� Need to stock larger number of SKUs at store level
�� Increases complexity in sourcing & planning
�� Increases the cost of store management |
Availability of
Talent |
�� Highly educated class does not consider retailing a profession of choice
�� Lack of proper training |
�� Lack of trained personnel
�� Higher trial and error in managing retail operations
�� Increase in personnel costs |
Manufacturers
Backlash |
�� No increase in margins |
�� Manufacturers refuse to dis-intermediate and
pass on intermediary margins to retailers |