Opportunities of the Western Retailers in India
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The retail industry in the western countries have reached a point of saturation and there is no way of expanding. In this backdrop the retail giants are trying to make their mark in the retail market of countries that still have untapped potential of expansion. India happens to be one of them. AT Kearney has constructed the Global Retail Development Index which has helped the western retailers to identify the countries in which investments could be made.
Opportunities in India have attracted the western retailers like Wal-Mart, Euroset, Supervalu who have plans to enter as single branded retailers . In gauging whether to enter, the companies keep into account the timing factor, that is whether the consumers are ready to accept the products that are offered by them. It is highly possible that there are potentials in the market but the consumer preferences are skewed against the products that are offered.
Certain parameters have been included in the construction of the Global Retail Development Index and given weightage which have been shown in the following figure.
Table1: Parameters in the Construction of GRDI
Parameters
Weightage
Country Risk
25%
Market Attractiveness
25%
Market Saturation
30%
Time Pressure
20%
Each of the parameters may be explained as under.
Country Risk:
Country risk arises from political risk, poor debt management, low credit ratings and access to bank finance. Country risk also have their origin from business risk arising from terrorism, corruption and violence.
Attractiveness of Market
This is measured by retail sales per capita. If the score is zero in this parameter, then it clearly hints to a highly underdeveloped retail sector. On the other hand a cent percent score would indicate that the retail sector has reached the point of saturation. Weightage is also given to population, urban population and business efficiency. The more the population and urban population more will be the prospect for growth. By business efficiency we mean the quality of infrastructure. Higher the quality of infrastructure, higher will be the ease of business operations.
Market Saturation
To understand the market saturation level, importance is to be given to the share of modern retailing, number of international retailers, the sale of retail per urban inhabitant and the market share of the top retailers.
Time Factor
The time factor as measured by CAGR has a weightage of 20% in the construction of GRDI.
