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Mayank Premi

Mayank Premi is Co-founder & Director at Beacon.

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How Retail-Focussed Startups are Driving Efficiencies in the Indian Retail Ecosystem

Retail, in India, is earmarked for an exponential growth in the near future. Ensuring that this growth trajectory sustains will require the benefits to be disseminated to everyone involved.

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$600 billion – that is how much the Indian retail industry is currently worth. To put this number into context, consider this: the combined GDPs of Luxembourg ($57.8 billion), Denmark ($257.14 billion), Finland ($224.71 billion), and Iceland ($14.48 billion) total up to around $554 billion. These eye-popping numbers serve to underline just how much of a business opportunity the country’s retail industry represents. The growth potential is even more; industry projections estimate that the retail sector will almost double by the end of this decade to reach a valuation of $1.2 trillion.

Challenges before Indian retail, and their purported solutions

But retailing in India has had its fair share of problems. Of the 13 million retailers that call the country home, a vast majority belong to the unorganised space. This fragmented nature of retailing in India gives rise to several issues such as inefficient supply chains, delays in order procurement, and unutilised inventory etc. The market penetration through traditional retail is also something that most brands face issues with, particularly in light of the evolving consumer buying preferences and the choices available to them. Consumers, on the other hand, often end up complaining about the non-availability of their preferred brands in their neighbourhoods. All this contributes to making the traditional retailing approach unviable in today’s day and age.

Multiple models have been introduced in the Indian market to address these concerns over the last decade or so. Modern trade came about to replace the traditional retailing model with completely modernised stores holding inventories with over 10,000+ SKUs. E-commerce sought to provide a direct connect between consumers and brands. Hyperlocal marketplaces sought to integrate the benefits of online retail with the reach and convenience of offline channels, while customised channel programmes were launched by brands to generate better traction through their premium outlets. Several technological interventions have also taken place in the recent past. We now have point of sale (PoS) solutions modernising departmental stores by implementing software solutions for managing inventories and tracking purchase patterns. Solutions like sales force automation are helping to optimise on-ground performance of the field teams through digitisation, while distributor management systems (DMS) are helping brands bring all their distributors onto a single platform. Other solutions, such as mobility and analytics, are also being adopted and implemented by retail players.

Too many cooks: Why multiple models have failed to address retail market gaps

Despite these measures, the challenges faced by the Indian retail industry have, by and large, remained unaddressed. Why? Because a lot of players looking to optimise the country’s retail landscape end up oversimplifying the problem. Believing the current situation to be unsolvable, they go about trying to create an alternate ecosystem which is aimed at replacing the current mode of retailing. 

What they discount, however, is the fact that India is a large and complex market resistant to sweeping changes. The dynamics and requirements of the country’s economy are vastly different from other international markets, which is why globally successful business models like modern retail, e-commerce, and hyperlocal are still struggling to find their feet in the country. Moreover, the fragmented nature of the retail ecosystem allow for certain unique bottom-of-the-pyramid efficiencies which get lost as organisations scale up.

Inclusivity as the solution to the retail conundrum

The way forward, then, lies not in the impossible twin task of eliminating intermediation and replacing the market estimated to be worth INR 25 lakh crore – the real play will be in promoting inclusive growth for all key stakeholders. This is where retail-focussed demand sensing & aggregation players like Beacon Analytics step into the picture. 

Leveraging cutting-edge tech tools, they drive unparalleled efficiencies in the retail market by facilitating real-time interactions between various stakeholders. Their disruptive approach has been optimising retail operations pertaining to production, inventory management, demand sourcing etc, adding greater value to all stakeholders in the FMCG and retail supply chain. Big brands are able to penetrate deeper into regional markets by reaching out to a much larger number of retailers, including mom-and-pop stores which comprise a significant portion of the Indian retail sector. Retailers, on the other hand, are able to accurately identify their consumer demand patterns and are able to stock their shelves with products that will find most traction. Distributors, too, benefit from optimised inventory, thanks to swifter movement of goods. This provides for a solution that is not restricted to players at the top of the retail pyramid, but is applicable for the entire ecosystem at large.

Retail, in India, is earmarked for an exponential growth in the near future. Ensuring that this growth trajectory sustains will require the benefits to be disseminated to everyone involved. The sum is greater than its individual parts, at least as far as Indian retail goes, and inclusive growth will be pivotal in driving the industry on to uncharted heights.


Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house


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retail startups Indian Retail Ecosystem

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