Is Organized Retailing a Threat to Small Retailers? Perceptions of Retailers and Consumers

The retail sector in India is witnessing an upheaval with the introduction of new formats like departmental stores, hypermarkets, supermarkets and specialty stores. Considering the size of the industry and the tremendous growth potential, almost every major Indian business house is either getting into retail space or consolidating and expanding their presence. The turbulence and the competition are enhanced by a number of environmental challenges such as customer demographics, personalized procurement and changing regulatory focus. This is posing a great challenge to the traditional retail industry. Even though the modern retail industry is expanding at a rapid pace, India’s traditional local store known as “kirana” is the dominant player accounting for more than 80% of FMCG sales. The purpose of this research paper is to understand how traditional retailers perceive the challenges and their response to the changes that are taking place. Will they be able to find an innovative way to retain their customer base while competing with the highly sophisticated and organized retail formats or will they surrender and finally disappear. It also attempts to look at consumer’s perception on the threat faced by the traditional retailer. The study is exploratory in nature and reports the findings of the survey in Indore city.