Impact of Organized Retailing on the Unorganized Sector
Mathew Joseph Nirupama Soundararajan Manisha Gupta Sanghamitra Sahu
INDIAN COUNCIL FOR RESEARCH ON INTERNATIONAL ECONOMIC RELATIONS
Foreword The retail sector is expanding and modernizing rapidly in line with India’s economic growth. It offers significant employment opportunities in all urban areas. This study, the second undertaken by ICRIER on the retail industry, attempts to rigorously analyse the impact of organized retailing on different segments of the economy. No distinction has been made between foreign and domestic players, in analyzing the impact of the increasing trend of large corporates entering the retail trade in the country. The findings of this
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One of the rather suprising findings of the study is that low-income consumers save more than others through shopping at organized retail outlets. This is a result of targeted discount shopping. It is also seen that farmers gain considerably from direct sales to organized retailers, with significant price and profit advantages as compared with selling either to intermediaries or to government regulated markets. Large manufacturers have also started feeling the competitive impact of organized retail through both price and payment pressures. Yet, they see the advantages from a more efficient supply chain and logistics that accompany the growth of organized retail. The extensive empirical evidence marshalled and analysed by ICRIER researchers will hopefully provide a solid basis for policy in this sector. Based on the empirical evidence and analysis that have been extensively peer reviewed, the study makes a number of policy recommendations that have a bearing on both the unorganized and organized segments of the retail sector. The two most important recommendations in my view are: first, for the government to facilitate the emergence of a “private code of conduct” for organized retailers in their transaction with small suppliers; and, second, a simplification of the licensing and permit regime to promote the expansion of organized retail.
I would like to express my appreciation to the