Contribution of Organized Retailing to Agricultural Distribution System: Prospects and Challenges

Like many developing countries, India’s organized food retailing is undergoing a rapid transformation. There are many issues in organized retailing, which make India a special case among developing nations, in terms of market share, demographic profile, market development, market potential, pricing strategies, floor and back-office management and the crying need for a healthy public policy. Organized retailing started in India in 1990s. The country is witnessing a high growth rate of 30–40 % per annum in organized retailing in Tier I and Tier II cities. This explosion of organized retailing has resulted in domestic and international players to focus more on rural areas, which comprise about half of the domestic retail business in India. The present chapter focuses on how organized retailing can strengthen the country’s agricultural distribution system. The chapter analyses the problems and perspectives related to value chain, retail infrastructure, distribution infrastructure, retail policies and regulations, foreign direct investment and technological competencies. The chapter begins by explaining the process of evolution and various stages of development of organized retailing concerning the agricultural distribution system. It also compares the success story of retailers in India vis-à-vis some of the retailers in countries such as the USA, China, Germany and the UK. Finally, the chapter empirically investigates the relationship between the growth of organized food retailing and GDP along with investments, retail space, costs, margins, reduction in wastages, swifter movement of goods, etc.