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.
This section of the study tries to identify the difference in structures which the retail markets in India and Australia follow.
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 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).
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 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):
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).
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).
India
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).
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).
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 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).
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 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.
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).
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).
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.
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.
A favourable retailing policy for major global players is required to promote a growth in the Indian retail sector.
References
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