Why Indian Supermarket is One of the Biggest Franchise Businesses?

Why Indian Supermarket is One of the Biggest Franchise Businesses?

India has the second highest population in the world, counting up to 1.3 billion people. Out of which, at least five hundred million reside in urban areas and some in smaller towns. Today, even small towns in India, which might not be considered urban, have a sizeable population of people living above the poverty line and some even relatively rich. Due to the increase in the number of this middle class or rich population, many retail and food and beverage chains have expanded to smaller towns too.

Supermarket chains are also included in the fast-growing segments of retail franchises. The Indian retail market is one of the fastest growing retail markets in the world. India is currently the fifth largest retail market in the world. It is expected to increase by 60% to 1.1 trillion US Dollars by the year 2020. By then the Indian supermarket segment is expected to increase to reach 180 billion US Dollars, which is about a triple of what it is now. India has a high inflow of foreign direct investment in retail at 1.42 billion US Dollars. With the increasing www.frantastic.in 1

demand, this number is only going to increase. Supermarkets are one of the most in-demand retail stores right now. Let's see why are supermarkets are so in demand.

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1. Increase in Disposable Income As mentioned above, the available disposable income is one of the main factors driving consumerism. The disposable income per individual has been constantly increasing as has been the number of individuals with disposable incomes. This increase provides people with the opportunity to spend their money on products or services they would like to. The more purchasing power people have, the more they will spend on purchases, which benefits the supermarkets, where people can buy multiple types of products under the same roof.

2. Demand for Standardization Today's consumer is educated, aware and demanding. With the advent of international franchise chains and online retail, they now have global awareness about products and quality. Consumers want the best products, the freshest products, and standardized products, which clear standard tests. Earlier most consumers would make most of their household purchases from an unorganized segment of individual sellers. Consumers had major concerns regarding quality, the freshness of products and pricing while buying from this unorganized sector. Shopping at a supermarket gives them the comfort of knowing that all their purchases are either branded or are being supplied following standard procedures for quality and the pricing is also standardized, this helps the consumer not to have to worry about the quality or about being cheated or taken advantage of.

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3. Multiple Verticals Supported by Supermarkets As we saw earlier, a supermarket provides the consumer with products and services, which otherwise would be bought from various individual sellers. For example, supermarkets offer grocery items, fresh produce such as fruits, vegetables, poultry or seafood produce, bread and dairy items, household items, spices, cooking utensils, etc.

The list is practically endless with some chains even supplying furniture, electrical appliances, digital products, apparels, stationery, office supplies and more. This really reduces the effort for the consumer while making their monthly or regular purchases. Since all these are items needed regularly or by most, having the option of buying all in one store visit is a big factor, especially for busy working individuals or families.

4. Supermarkets are a Sign of Luxury Even now many people might associate shopping at supermarkets to luxury and compared to buying from individual sellers, it actually is.

Customers get the luxury of buying everything they need under the same roof with well-packaged products.

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We saw why supermarkets have been a success in India, let's now also look at why do individuals or organizations invest in supermarkets.

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1. High Demand One of the main reasons is the high demand for supermarkets all over the country. Businesses only invest in ideas, which would grow to be successful, revenue is what ultimately drives success and having an existing demand helps. The number of supermarkets currently is still very low compared to the vast unorganized segment of retailers catering to the majority of the population. Supermarkets want to convert as many customers as they can and we can already see the shift in the consumer habits of the urban and smaller town customers.

2. Availability of Suppliers The large farming and manufacturing sector in India ensures that the retail industry always has enough supply to satisfy market demand.

The availability of cheap suppliers helps retail supermarket chains.

They do not have to worry about any shortage of suppliers when there are so many suppliers willing to compete and offer products at cheap rates. Farmers are paid a very small portion of the actual retail sales and hence, these suppliers tend to come very cheaply.

3. Availability of Resources India has resources for cheap when compared to other countries.

Human resource, which is one of the costliest resources in the west, is available in abundance here. A large number of people available for jobs in the retail sector makes the sector more attractive to investors.

Even other resources are much cheaper in India than in other countries. Supermarkets require infrastructure and staff. Both these major resources can be easily acquired in India without it costing as much as in the west.

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4. Impact of a Household Brand Supermarkets offer a large variety of products and services. People from all age groups and families shop at supermarkets. Supermarkets have the opportunity to create an umbrella brand which encompasses many verticals and has a greater chance of registering familiarity with customers. Once a brand is recognized and when people begin to trust and accept a brand, that is when a supermarket can really utilize the advantages of the impact of a household or an umbrella brand. Like many supermarkets do, they can expand to producing their own products under their brand. They can include more verticals or even venture into online retail.

5. Ease of Entering the Market The people today are aware of supermarkets and upcoming supermarkets do not have to spend time or money in creating awareness about their industry segment. Acceptability from people towards supermarkets drives the increase in the number of existing and upcoming supermarkets.

The market of Indian supermarkets is on the rise and is expected to grow even faster in the coming years. All investors should be looking into this sector as it has very high potential mostly because of the high demand for quality products from the customers. Supermarkets are a part of the new rising India and have already been embraced and accepted by the people.

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