Retailing In The Asian Pacific Region: A Comparative Analysis Of India And Australia

Retail market in India and Australia

Retail sector is mandatory for every country because it has a great impact on the profitability and economic development. Retailing is becoming an intrinsic part of people’s daily lives. The main purpose of the report is to discuss about the role and significance of retail sector in India and Australia. A comparison between Australia and Indian retail industry has been shown in the task briefly. The retail sector is quite good and powerful as compared to the Australia. The paper further outlines that how retail sector faces various issues and challenges in India and Australia. The potential size, growth and structure of retail industry in both the countries also are presented in the paper. The impacts of cultural aspects on retail industry also have been explained in the task. More detail of the report is discussed below.

Retail may be defined as a process of selling consumer products and services to the customers through various distribution channels to maximize profitability globally. Retailers identify and analyze the needs, preferences and choices of the customers through an effective and unique supply chain management (Price, 2011). Retail marketing refers to a range of activities and processes undertaken by a retailer to encourage sales and awareness of the organization’s products and services (Helena Chiu, Fang and Tseng, 2010). Retail market plays a significant role in each and every company because it helps in providing ample of consumer products and services across the globe (Sandilands, 2018). On the other hand, it is noted that retailing in Australia experienced a favorable performance. Despite a weak success and growth in wages, the country is achieving success and growth in retail sector (Sutton-Brady, Kamvounias and Taylor, 2015). Wesfarmers, Coles and Woolworths are successful example of retail sector in the country. The retail industry is one of the biggest Australia’s employers employing and engaging 1.2 million people in 2009-2010 (Australian government productivity commission, 2011).

Differences in the structure of retail market in India and Australia 

It has been analyzed from the various analysis that structure of retail market is quite different in Australia and India. The structure of Retail market in India is categorized in two parts such as organized and unorganized sector (Pantano, 2014). The unorganized sector is major and biggest sector that may help to attract and retain the maximum number of customers globally. The divisions of retail sector have been discussed below.

Unorganized retail sector: It entails various local kiranas, hand cart and vendors on the pavement etc. This industry comprises about 98% of the total retail trade but foreign direct investment is predicted in the retail sector to minimize the employment in the unorganized sector and expand that in the organized one (Economywatch, 2010).

Differences in the structure of retail market in India and Australia

Organized retail sector: In this sector trading is derived by the licensed retailers who have registered themselves to sale and income tax as well. The organized retail sector includes retail chains, and hypermarkets. The private biggest business enterprises are also comprised in the organized retail sector. The organized retail industry is further subdivided into instore retailers.

Instore retailers: This type of retail format is well known as the mortar and brick format. The fixed point sale outlets are included in the instore retailers. In India, the supermarkets are generally self service retail stores who offer commodities and consumer products at reasonable prices (Economywatch, 2010).

Apart from this, the retail format in India could be divided into the modern and traditional forms. The traditional forms entail street markets, multiple brand stores, Kiranas and Kiosks. On the other hand, the modern formats comprise department stores, hypermarkets and specialty chains. In today’s modern world, the trade parks and forgo retailing are also going on. Trade parks are generally business complexes that encourage international trade and business whereas forecourt retailing is done by the oil corporations to maximize and enhance their revenue and outcomes. They do not render fuel but also provide other services to its customers in the competitive market.

In the contrast, organized and unorganized retail market is not undergone in Australian market. The structure of retail industry is quite different in Australia. There is no specific structure of retail industry in such country (Fernie and Sparks, 2014). The retail industry is constantly maintaining its momentum, carried by social and economic development and expansion. The key elements in the growth and success of the retail industry are increasing population, rapidly economic growth and rising population. The retail sector in the country would explore and expand at a CAGR of 2% over 2013-18 (Mordorintelligence, 2018). The success and growth of the retail sector in Asia pacific in Australia in second lowest. Australian market is quite flexible for retail sector as compared to India. Along with this, sudden downfall and rise in the retail industry is common in the country. In 2013, the general size of retail market is $11USD in Australia (Mordorintelligence, 2018). During last few years, the low interest rates have given a relief to supermarkets in the country. The purchasing power of customers and income level was increased due to low and poor interest rates.

Retail market structure and concentration in Australia

Retail market structure and concentration in Australia

The potential size is large and wide for retail industry in both the countries. The Indian retail sector is one of the dynamic and effective sectors due to the entry of various players. The total consumption expenditure is predicted to reach around US$3,600 from US$1,824 billion by 2020 (IBEF, 2018). The retail market in India is predicted to maximize by 60 percent to reach US$1.1 trillion by 2020, on other hand, some other factors also like income, and consumption also have been increased in the country. While whole retail market is estimated to grow and rise at 12 percent per annum and further formulated retail market contributed 7% of the total retail sector and unformulated and unorganized retail sector contributed rest of 93% of the sector. The online retail also has been grown by 23% in 2017. India is estimated to be a fastest and leading e-commerce market, carried by healthy investment in the retail sector and quickly maximize the internet users in the global market (Sathish and VenkatramaRaju, 2010).

On the other hand, luxury retail market of the country is estimated to rise to US$ 30 billion by the end of 2018. The size of the dynamic and modern retail sector in India is estimated to each near US$ 11.25 billion in 2019 from US$ 13.51 billion in 2016 (IBEF, 2018). It is seen that private equity companies and wealth organizations are investing money in Indian retail sector to each US$ 800 million in 2017. With favorable demographics factors, the retail sector in India has been able to attract and retain maximum target audience in the global market (IBEF, 2018).

After the various studies, it is reported that India has acquired a considerable position and brand name in global retail rankings. It is seen that India’s around $670 billion retail market is still unformulated and unorganized with approx 93% thus, it may affect the progress and success of the industry widely (Tandon, 2018). Mumbai based supermarket like D-Mart is continuously growing and maximizing its profitability in a hassle free manner.

On the contrary, the various studies explicate the condition of Australia and estimate the growth and success of its retail sector. The retail market in the country has been observing high growth and success over the past few years and designing to be one of the biggest and unique competitive markets at international level. In today’s era, the consumers of the country are becoming more demanding and stylish, there are favorable and unique signs to be positive about the ample of opportunities being generated in the changing global market. The main key retail vendors in Australia are Woolworths, Wesfarmers, ALDI stores, Metcash and JB Hi –Fi (Prnewswire, 2016). Internet retailing is well known and ongoing in Australia to attract maximum people in the market. Apart from this, grocery retailers are stronger and unique rather than non-grocery retailers over the past few years. It is analyzed that Wesfarmers was the biggest and fastest retailer in the country in 2017 having various retail channels. The company’s value and sale is highly carried by its strong and dynamic performance in various channels like stationers, home, garden specialist and mass merchandisers. It has been found that Australia is one of the biggest concentrated food retailer industries across the world (Prnewswire, 2016).

Potential size and profitability of retail industry in India and Australia

The above mentioned diagram shows that there are four major players in the country who control 98% of the market (The conversation, 2013)

The Indian retail is the largest retail industries across the globe and has appeared as the most unique and effective industry (Sathish and VenkatramaRaju, 2010). The Indian retail sector is estimated to nearly double by 2020 from 2015. But there are various challenges or problems the retail industry entertaining in India that has been discussed below.

• It is noted that Indian consumers are satisfied with only essential and effective requirements. There is no space for unnecessary luxuries, requirements and needs. The multiple attractive and unique malls, stores and supermarkets are fueling the needs, wants and desires of the Indian consumers. It may affect the profitability and returns of the retail industry in Indian market.
• There is stiff and high competition in organized retail sector in India which could affect the sustainability and effectiveness of the industry adversely.
• Opposition to FDI from small traders may affect retail sector in the country (Tyagi,  Singh and Agarwal, 2017).
• There is high shortage of retail space in downtown and central locations which is becoming a major challenge for retail sector in India. The retail sector is further facing ample of opposition from politicians, and traders therefore the government has to originate a separate and unique policy for the industry.
• Trained and skilled workforce shortage is a major challenge entertaining the retail industry in India. The Indian retailers are failed to find trained and qualified staff for the stores and malls. Along with this, they have to pay more for retaining them in the workplace. This brings down the profitability and revenue of Indian retail sector.
• Changing in the choices and preferences of the consumer is another major concern for retail sector in India. It also affects the buying behavior of the consumers and becomes a cause to reduce the outputs and returns of the firm (Akhter and Equbal, 2012).
• One of the vital issues that undergoing in Indian retail market is inventory management. Shortage of inventory may affect the revenue of retailers adversely. Along with this, most of the consumers are not willing to pay online which minimizes the sale and profit of the companies in Indian market.
• VAT and various taxation issue is also a biggest challenge for Indian retail sector (Tyagi,  Singh and Agarwal, 2017).

In the contrast, Australia retail companies also are facing enormous challenges while selling the retail products and services to the customers across the world. Some of the major issues which are being dealt by retail companies in Australia have been elaborated below.

• There is high and intense competition among the retail companies in Australia which could impact on the revenue and performance of the retail industry in the country. Times are complex thus the customers are saving their money widely so investing money is down and further very few people are visiting at the stores (Theretailsolution, 2018).
• Online is a biggest serious threat to current retailer. Due to online presence, people do not prefer to go in the market for buying consumer goods and products, they buy the products through online channels.
• Customer experience and service are also going decline that affect the performance and effectiveness of retail sector in Australia (Theretailsolution, 2018).
• It is seen that retail sector in the country is facing disruption. The expectations and needs of the customers are growing and technology is changing buying behavior of the customers across the world.

It is measured that globalization has changed the way people behave, action, think and do business. There are various culture aspects such as language, actions, identity, validity, experience, history and space. All these culture aspects may influence the income level of the customers in Australia and India. Acquiring western look, changing lifestyle, cultural habits, and increasing awareness may put direct impact on the growth and targets of retail industry in India. There is hectic lifestyles of Indian consumers which could also affect the long term mission and vision of retail sector in the country. Stiff competition is major factor that directly puts various impacts on the income level of the Indian consumers. Along with this, people from upper class in India have a tend to invest money on luxury retail items on the other hand, middle class people would find it hard to invest huge amount on the luxury items. Thus, it affects the mission and targets of Indian retail companies (Pookulangara and Koesler, 2011).

On the other hand, culture aspects also affect the consumer’s level of income in Australia. The culture of Australia is unique and dynamic, carried primarily from Britain but also affected by the effective and unique geography of Australia. The social and cultural factor such as customer, values, beliefs, religious and income level also affect the purchasing power of the Australians. Apart from this, Australia is a diversified country thus, retail companies can take ample of opportunities by selling the consumers products in the global market. It is analyzed from the various studies that retail companies can boost and augment their profitability and outputs in Australia. The demographic factors such as income level, religion, education and average size of a family could also have a direct impact on the retail industry in Australia. Thus, both the countries need to focus on the cultural aspects while selling the products widely (Ozdemir and Hewett, 2010).

Analysis of potential problems facing the retail industry in both countries

Some of the suggestions to handle and overcome the retail industry issues in both the countries have been detailed below.

• It is stated that Indian and Australia should analyze and identify the potential target audience to earn maximum returns and revenue in the competitive market.
• Eating habits of the customers, lifestyle, technology and buying behavior of the customers shall be considered by both the countries so that they enhance and uplift revenue of retail industry.
• Australia should focus on the plans, policies and strategies of the Amazon and Lidl to augment outputs and returns of the retail industry. On the other hand, Indian retail industry must focus on the prices of the retail and consumer products so that they can increase and enhance the sale of retail products.
• Promotional and advertisement strategies shall be used by retail companies in both the countries in order to promote and enhance the retail products.
• Cross cultural dimensions must be used by both the countries to promote and enhance retail business globally. This model further helps in eliminating cross cultural issues in both the countries.

Conclusion 

It concludes from the above mentioned study that retail sector is essential for both the countries such as Australia and India. This sector helps in increasing GDP of the country and further necessary for economic growth and development. The above analysis indicates the significance and role of retail sector in two countries like Australia and India. In today’s globalization world, the retail sector is facing several challenges that may impact directly on the income level and actions of the customers. The above mentioned study also concludes that how ample of cultural aspects affect the profitability and growth of retail industry in both the countries. It is concluded that Australian retail sector is more powerful and dynamic as compared to the Indian retail sector because there is no shortage of skilled and talented workforce in Australia.

References 

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