Retail Marketing in Rural India – Factors in Favour and Strategies

Retail industry now accounting for 10% of the country’s GDP undergoes dynamic changes boosting its growth still further. The sector grows impressively leading to production of wide range of products and services. Rural markets provide great scope for marketers due to increased revenue and purchase power of the rural population in India. The rural income is expected to increase faster due to government policies supporting agriculture and the earning population that has temporarily moved out of rural villages to cities for employment in non-agricultural sectors. Technology in agriculture has helped to produce quality crops and the market is ready to give high prices for such products. Around 60% of the students in the colleges are first generation graduates who have moved out of their villages for tertiary education. Thus the life style, likes and preferences of the rural population keeps changing. However the huge rural segment is much different from that of the urban segment and the marketers need to approach with sustained efforts and special models. The highly fragmented rural segment’s needs are majorly filled by unorganized family run Kirana stores and Maligai shops. The share of organised retail in the country has risen by 60% and the same is expected to have impact on the rural market as well. The paper focuses on the growth of retail market in India, the emerging factors in favour of rural retail and suggests strategies for rural retailing. Keywords-Rural Retailing, Factors in Favour, Marketing Strategies for Rural Segment


INTRODUCTION
India is one of the most attractive destinations for retailers across the world.Healthy growth of economy, favorable demography, increasing number of high net worth individual (HNI), changed consumer tastes and preferences, growing urbanization are key factors made India the 5 th largest global destination for retail space.The information era has enormously increased customer awareness effecting rapid evolution of retail industry.Apart from the quality and the price, experience is expected to be key brand differentiator in retailing and the ones do will be ahead in the race.Demand for quality products and purchase power to increase customer expenditure to USD 3600 billion by 2020.With improved internet and mobile penetration there is increased level of awareness in the rural market which constitute 88.3% of Indian population.However the rural base accounts only 40% of the total consumption currently.With the increasing purchase power and other factors the trend is expected to change rapidly.The paper aims to study the current trends in retailing in India and the favouring factors for the organised retailers to tap the maximum potential of the rural market.Further the paper also suggests strategies for rural retailing.

II. OBJECTIVES OF THE STUDY
1. To study the retailing scenario in India 2. To study the trends of rural retail and the challenges 3. To study the factors that play in favour of rural retailing 4. To suggest rural retailing strategies

III. LITERATURE REVIEW
India continues to be the land of promise for consumer businesses with the expenditure on consumption growing steadily at a healthy 15%.India is topping Nielson consumer confidence Index for several quarters.India"s robust economic growth and rising house hold incomes in the country are expected to increase consumer spending ability.Spending is likely to occur in food, apparel, household, transport and communication segments.Indian share of global consumption is also forecasted expansion more than twice its current level (to 5.8%) by 2020 ( PwC& FICCI-Massmerize Report 2016).The Indian retail industry has been seen as a potential goldmine for investors from all over the world and a latest research has rated India as the top destination for retailers for an attractive emerging Copyright © 2018.IJEMR.All Rights Reserved.
retail market ( Sriram, Suresh Chandra Padhy, Simit Agarwal, Niranjan Diwan Jan 2008) According to Morgan Stanely growth is being driven by a combination of rising internet penetration, a drop in data access cost, a shift to smart phones and flow of credit to consumers and microenterprises.(Indian Online Retail Report 2018) Due to rise in the usage of smart phones and its related penetration in the launch of 4 G networks, it has been found that the Indian online market is expected to grow very fast and rapidly close to USD 190 billion by 2025.Due to the impact, e-commerce platform attracts more number of customers predominately from major metropolis center in India There is a huge potential and scope for E-retailing in India where in it will grow more than that of thousand fold in the next upcoming hears with the high reach of USD 78 billion by 2020.And this country has high emerging internet -habituated consumer base which will comprise for 180 million web users by end of 2020 (Sriram, Suresh Chandra Padhy, Simit Agarwal, Niranjan Diwan, Jan 2008) There is huge potential in Tier II, III markets (ShilpiModi, Director, Vedant fashions, India retailing.com).Rural families do not like to cut their expenditure and wedding, pilgrimage, construction and consumption.Rural consumers have more aspirations.Today this segment of buyers consume large variety of products both durables and non-durables.(Sivanesan 2014) A survey by the National Council for Applied Economic Research (NCAER), India"s premier economic research entity, recently confirmed that rise in rural incomes is keeping pace with urban incomes.The average rural income has gone up to 63 to 64% by 2001 -2002 and touched almost 66% in 2004-05.Rural India also accounts for sales of USD 1.7 billion for cars, scooters and bikes and over one billion dollars of durables.In total, that represents a market worth a whopping USD 27 billion.It is no wonder that even MNCs have cottoned on to the idea of a resurgent rural India waiting to happen.(Malick, Jothikrishnan 2014)

IV. RETAILING IN INDIA
Retail -India"s largest industry accounts for 11% of the country"s GDP and nearly 80% of the employment.The industry has evolved as one of the vibrant and fast paced industries with several factors encouraging the entry of many players.Nowadays, consumers are exposed to ocean of information though social media print and electronic media and retail stores have become more conscious about quality and health.This much influences their choice of products and services.Indian retail sector has seen stable growth since the last decade due healthy economic growth and the eventual rise in purchasing power and consumerism.The above changes are also mirrored in the AT Kearney Global Retail Development Index 2017.The report also projects India as the most attractive destination replacing China among top 30 developing countries.These markets are attractive today and expected to have future potential for growth.Movement from unorganised to organised trade, penetration of internet and mobile communication in tier-II and III cities coupled with improvement in operations and business models are expected to play vital role in propelling growth of Indian retail.The liberalization of FDI policy is expected to attract global retailers, which will further drive the growth of organised retail in India.
The Government of India, has repositioned the Indian retail sector to attract investments.Currently, FDI under Single Brand Retail Trading (SBRT) is permitted to the extent of 100% and FDI under Multi Brand Retailing Trade (MBRT) is permitted to the extent of 51% with Government approval and conditions.While the FDI policy for SBRT has received encouraging response, the FDI policy for MBRT has been slow to attract the international retailers.The Government of India seems to be working toward relaxing some aspects of the FDI policy, which could boost more international retailers to invest in India India Online Retail report 2018 states that the digital economy in India is projected to reach USD 4 trillion by 2020.According to Forrester, India is the fastest growing online retail market in the world and industry experts say explosive online retail growth is ahead .According to a recent report by financial services firm Morgan Stanley Online retail in India is assessed to grow over 1,200% to $200 billion by 2026, from $15 billion in 2016.By then, Morgan Stanley expects India to have 475 million online consumers, up from 60 million in 2016.Morgan also predicts online retail will account for 12% of India"s total retail market, from just 2% last year.Rural Indian population constitutes 88.3 % of the total population (2011 Census).The main source of income for the rural population is Agriculture and the income is seasonal.With diversified topography, culture and religion the geographically scattered market had not been an encouraging the organised retailers to enter.The factors like low income, poor connectivity to the world, low standard of living, and pattern of consumption hampered the marketers to enter.

V. RETAILING IN RURAL
Before a decade the literacy rate was abysmal and the media that were effective ware only radio and television.Many households did not have television and only meager percentage of literate population reached print media.Now every house hold has television and the literacy rate is also increased significantly.State government schemes also helped every household to get one free television.State of Tamil Nadu also has been giving one laptop for every student in higher secondary school.These initiatives have improved the internet penetration.The market players had to understand the cultural nuances, language intricacies, consuming patterns etc.Now with all the companies have strong research division understanding the consumption pattern and consumer psyche is more and reaching them is better.
Credit facilities and banking facilities were not sufficiently available to the rural population.The villages are much scattered and they speak different dialects.So reaching they add more to the cost for the marketers.Less penetration of smart phones and internet kept this population much away from the products in the market and the new trends.Now the 60% of the tertiary education population is first generation graduates from rural India.The youngsters moving out of the villages for education and to the cities for jobs bring the new trends to the remotest villages.Global jobs also have speeded this process.The global trends are now in the innermost lanes of Indian villages.
Infrastructural facilities did not reach many villages.The villages had only mud roads which were unusable during rainy seasons.Rails also did not have stations in remote villages.The seasonal agricultural products also found it much difficult and costly to move out of villages.The warehousing corporation of the states did not have their network in these villages.These difficulties made storing and distribution of merchandise much difficult.Getting effective sales force is also was necessary to promote the products.With improved training and development departments training the sales force with global outlook and local roots has become much easier now.
Kiranasin rural areas required only limited investment and space and have been operating for decades.These Kiranas have fine understanding of the consumption pattern and preferences of the people in the specific localities.These Kiranas have limited stocks and thorough understanding of the likes and dislikes of the consumers in the locality.The owners of Kiranas have strong customer relationship built over decades enabling them to have a strong base of loyal customers.The consumers also are extremely comfortable with these Kiranas and patronise them.
Around 1997 HUL entered the rural market by partnering with the local stockists and sharing revenues with them.This turned out to be a successful strategy and HUL reached villages with less than 2000 people.The merchandise was passed on to the redistributors who in turn identified "Star sellers" in the local market and ensured that these sellers stock sufficient products.HUL"s project "Shakthi" also took its products to the blind ends of the lanes of villages.The Self Help Groups of the villages created awareness and promoted the products as home team.The strategy of appointing local sellers and local marketers enable HUL to penetrate the villages which were away from the international players.Through Operation Bharath HUL introduces Close-up, Ponds, Clinic plus and fairness creams in sachet understanding the buying habits of the rural segment.
Britania has an estimated market share of 38% and 30% of its revenue is from rural market.Understanding the consumer behavior of consuming tea two to three times in the villages the company launched Tiger biscuit from Rs 1 sachet.
In the year 2000 ITC"s E-Choupal benefitted 4 million farmers in 40000 villages.It is the largest internet based initiative in rural India; Through computer the farmers can get the daily closing prices on local government mandated markets.They also can trace global pricing trends and get to know new techniques in farming.Through "HarGaon" and "HarAangan" campaign Hero Honda reached 100000 Indian villages by selling an average of 16000 bikes per month.
Coke brought down the average price from Rs 10 to Rs. 5 and this closed the gap between soft drinks and the other local drinks like tea, Buttermilk etc. Coca Cola doubled the number of outlets to 1,60,000 in 2003 from 8000 in the year 2001 increasing penetration from 13% to 25%.

VI. FACTORS FAVOURING RURAL RETAIL
The changing profile of the rural consumers is expected to change the trends of retail marketing in India.A report of IBEF states Indian appliances and consumer electronics is expected to reach Rs. 3.15 trillion in 2020 from 2.05 trillion in 2017.Currently the major share of the durables market is the urban market.The market is expected to increase at 9% CAGR.
Demand for consumer electronic goods and refrigerators are likely to witness demand increase in the rural market in the coming years and there is lot of scope for growth for these products in rural market as the government has invested significantly in rural electrification and infrastructure and further investment plans are on cards.The S & P BSE Consumer Durable index has grown at 20% CAGR in 2010-17.Changing life style, easier access and growing awareness about the products have driven the growth in the consumer market.Copyright © 2018.IJEMR.All Rights Reserved.The table 2 notes that major chunk of the population of the country is still lives in rural India and this segment cannot be neglected any more.
Table 3 explains that electrification of rural segment is nearly 100 percent as per 2011 census.By now100 percent electrification would have been reached.Due to various poverty -eradication programs of the government, the number population below poverty line had come down significantly over the years.To total population below poverty line has come down to 21.9% in the years 2011-"12 from 45.3% in the year 1993-"94.The rate of poverty percentage has reduced to almost half in nearly two decades time and the pacing is more now.5 shows the investment in roads and percentage to total length of roads, The length of rural roads laid has been significant since 2013 -14 and it is all time high in 2015-"16.The percentage rural roads to total length of roads is highly significant (70.23).This reveals the government"s commitment to develop rural infrastructure and this will surely make rural segment an attractive destination for marketers.7 that that the internet users between the age group 15-24 is 42% in rural India where as it is only 31% in urban area.Marketing and promotions through internet will reach this segment better and designing effective strategies for internet population is going to be a serious agenda to reach rural population.8 shows top countries in the world by net additions.China tops in the world by 53 million following by India with 16 million additions.Whereas the internet market has saturated in many other countries and in a few it is in negative integers.This shows that a big size of population in India has become netizens which further will change their level of awareness about the global products and trends.The same will also drive the marketers to effectively plan their on-line strategies.
The rural Fast Moving Consumer Goods (FMCG) is expected to grow at a CAGR of 17.42% to USD 100 billion during 2009-25.Dabur generates over 40-45 per cent of revenue from rural market.HUL"s 455 of revenue is from rural sales while the revenue of the other companies is 30 -35% from rural areas.
A report of Economic times says nearly 40% of the branded goods are sold in rural Indian where the purchasing power depends on farm outputs.The rural India was expanding twice the urban growth until 2015.However the pace slowed down due to poor monsoon.Now that India had a good monsoon we expect the earlier pacing to catch up .The government"s plans to augment rural development has encouraged many consumer durable companies to bet on rural market.With the GST implementation settling down now companies expect the rural market"s growth will be back on track, Indian finance Ministers announcement of schemes like 150 per cent increase in minimum support price for crops, additional allocation for food processing and liberalization of agricultural exports will support farming.These initiatives are expected to increase the disposable income of rural population whose main activity is farming.To counter the effect of demonetisation the Finance Minister of India has announced incentives woven around farm infrastructure and credits for rural low income segment.
As depicted in Fig; 1

VII. STRATEGIES FOR RURAL MARKET IN INDIA
With the substantial rural market yet to be considerably explored, the marketers cannot keep away from it any longer for the various environments changing around.Designing marketing mix strategies appealing to the rural consumers is indispensable.Penetrating rural market may consume time nonetheless it will pay dividend in the long run.
Understanding the rural market: Market researches help to understand the market potential, consumer behaviours, consumer spending patterns, purchase potential, media of communication, and sources of consumer influence, local communities and demography.Product: Tradition and culture is deep rooted in village consumers.They are used to consume food fresh from fields.Introducing and making them accept packaged food manufactured in big factories with additives and preservatives may not much appeal to them.Winning confidence of the customers by communicating about the quality of the product is essential.Instead of introducing food products which are completely new for them introducing variants in the food already consumed by Copyright © 2018.IJEMR.All Rights Reserved.
them is a good idea.Or else introducing the new products with the tradition touch in it is fine.Designing cross -cultural and cross national product may be successful (foreign food with national touch in every market).The rural may not be interested in luxury food products.The basic food products and snacks are ideal to start with.The change of preference shall be smooth from national to cross national and international food items.
While penetrating the companies shall market the indigenous food with slight variant will enhance penetration and win acceptance.Next level shall be cross national and then directly the international foods.In fact the transition is a big exercise and it could be done with a lot of patience and ones who do will earn perennial loyalty of the rural customers.The rural markets can only be tapped by this gradual transition and they are much different from the urban market that is instantly ready for international foods.As colleges have around 60% of first generation graduates this approach shall bring in the transition smoothly and this youth segment will be loyal to the products for decades.
The same is the case with apparels and other products as well.The marketer who sustains the traditional and cultural richness of every country is much appreciated.The companies respect the sentiments of the nationals and in turn the customers return loyalty.It is also deemed to the corporate social responsibility of the companies to help the nationals to preserve their culture.The multinational and transnational brands cannot take the countrys" culture and traditional values for granted.The "Thai revolution" by the college students and the youth of Tamil Nadu revealed to the world the deep rooted values for their culture and tradition.
The product design and the literature need to be simple to use.
The products that suit the rural households will have better reach instead of pushing the same international models into their households.The packages to less costly and simple.As there is much awareness about shunning the use of plastics is increasing the packaging material that supports the environmental concerns wins consumers.The packages shall be small to reach all the customers.A few companies have successfully penetrated using sachets and smaller packages.Marketers need to sell the products that the customers want and cannot sell the products they produced.As the consumers" purchase power is low penetration pricing would help the product to reach masses.Consumption basket pricing and psychological pricing also will work in rural market.However by segmenting the rural market pricing strategies shall be decided in tandem.Distribution: The companies need to identify the star sellers who have excellent customer relationship and educate them on the products.Winning suchKirana and Maligai shop owners is primary step.Attractive incentives will make them to promote the products.As these shop owners have been there for generations, they serve as reliable brand promoters.These owners have strong customer relationship for decades and the rural customers trust the products promoted by them.
Rural areas have two or three potent influencing groups (Women, Men and Youth clubs) and they influence the buyers in their villages.The products shall also be sold at their places during grand meetings.Marketers can effectively use these clubs.Direct selling is yet another effective marketing strategy.However the salesmen recruited from out of villages may not understand the nuances of the customer tastes and preferences and stay as outsider.The salesmen recruited from the respective village will do better job.However training shall be given to better understand the Vision and Mission of the company and for selling the products.
The local weekly fairs can be pragmatically utilised for selling selective products.These are the places with large and regular gatherings and the product awareness is created among the villages masses.Regular promotions attract the regular visitors of the fairs and selling is effective.Every village in India has one or two grand festival in a year where almost the entire village population gathers and the products shall be sold in such locations.Retailing need to extend to these areas initially until the buying behaviours are shaped till marketers attract them to the shops.
A statistics about India"s internet users reveal that about 75% of the rural population between the age group of 15-34 use internet whereas it is only 57% among urban population.The rural population is around 80% of the total population of the country.It means the country"s internet using youth population is more in rural area and this is further increasing.If promotions for the products bought by this age group is done effectively in the media orders also be placed on-line.This is a very potential distribution channel for the youth population of India.
Artificial Intelligence (AI), Internet of things (IoT), Robotics, Drone delivery, Cloud services, Facial recognition, Augmented and virtual reality will soon have strong impact as the youth population using internet is more in rural India and they are keen to adopt new technologies.Promotion: Now almost all households have television in rural india.TV media eliminates literacy problems and is also the visuals are more effective than the other media.While designing advertisements, the marketer must ensure that the village consumers are able to relate to it and accept the product.The village jargons and practices shall be used in the advertisement and the same has good reach among village populace.Radio has better presence than TV in rural areas in India.The strategy of TV applies for radio as well.Puppetry and stage dramas also shall be efficiently used.
Village festival and club gatherings are the places well planned strategies will work.Village influencers are to be identified and they serve as trustful ambassadors with robust relationship with fellow villagers.Lucky draw, price coupons, freesgifts, interactive games will also be effective during festival seasons in the rural market.Copyright © 2018.IJEMR.All Rights Reserved.
Negative word of mouth will spread like fire in villages.So customer dissatisfaction if any need to be addressed instantly.If there is any defect in the product or service the consumer may be replaced with new product and a gift.
If youth segment of the rural India are to be tapped by the promotions in internet and social media will have better reach as already mentioned the internet using youth population in India is much higher than the urban population.Customer relationship: The owners of Kiranas and Maligai shops in rural areas still cover the major size of the rural market.Their customer relationship stays as the pivot in building large and loyal customer base.They live as sons of the soil and fine neighbours for these rural consumers participating in all the events in the villages.To reach rural populations marketers need to design effective customer relationship strategies.
Quality product and good services during and after sale begins weaving a healthy customer relationship.Product modified to fit into the rural needs and market will earn rural customers" appreciation and loyalty.They can understand the product variant as they are well connected to urban market.
Being sensibly part of life of rural market is a good strategy.Sending birth day and festival wishes through phones to customers, gift coupons during festival season, after sales services, product education etc. help to build strong customer relationship.
The marketers through identifying the problems specific to the village can help to address the same along with the villagers as a part of their corporate social responsibility.
Women and girl children health awareness programs, village specific disease awareness and eradication camps, water conservation initiatives, partaking in Clean India and Digital India initiatives, Youth skilling programs etc. will develop strong relationship with the rural consumers.

VII. CONCLUSION
A Financial express report notes that rural households contribute nearly 50% of the GDP.40% of telecom contribution, 50% of two wheeler sales.30% of four -wheeler sales and 40% of FMCG sales come from rural market.Modern retail is expected to reach 25% of total retail sales.E-Commerce is expected to double its share of total retail in next five to eight years.Marketers are understanding and evolving to the changes and responding pragmatically.With more use of internet the shopping experience is going to be exception especially in rural market.With many factors encouraging the marketers entering rural areas, rural markets are the heavens for all the marketers for years to come.

Table 2 :
Decennial (pop) in Crore by Gender and area during 1991-2011

Table 3 :
Number of Towns and Villages Electrified

Table 5 :
Road network by categories (in km)

Table 6 :
Mobile subscriptions in India (in million)

Table 7 :
Mobile internet user demographics-

Table 8 :
Top Countries by net additions Q1 2018

Fig 1: Factors favouring rural retailing Social factors:
, there are factors Social, Legal, Economic and Technological that encourage rural retailing