RURAL RETAIL CHANNEL

MANAGEMENT

Retail is defined as a set of activities involved in selling

goods or services directly to final consumers for their
personal non-business use.(Kotler)
Retail Store is defined as any business enterprise whose
sales volumes comes primarily from retailing(Kotler).
Retail Mix is the mix of variables including
price,location,communications,merchandise,physical
attributes,services and personnel.
Retail is primarily classified into two sectors:Organised and
Unorganised.
The organised retail sector has a single organisation having
large formal retail stores providing wide varieties of goods
in a host of locations.

The unorganised retail sector has small retail outlets with

limited variety at single location.

In China,organised retail segment accounts for about 20% of

overall business,in Thailand ,it is around 40% of overall
business while in Malayasia, it accounts for nearly 50% of the
total business.
INDIAN RURAL MARKET

In India, only 2% of the entire retailing sector,is in the

organised sector according CRISIL.

There are more than sixty lacs retailers in the country.

More than 1.5 crores people are. engaged in this business.

According to McKinsey & CII,the retail business was around

Rs.13,50,000 crores in 2010 and is growing at a rate of 11-12
% annually.

Retail is contributing 14% to GDP & employing 7% of the

total work force.

Much of the re tail business is handled by local kirana stores.

INDIAN RURAL RETAIL MARKET

Of the 33 lakh retail outlets in India in 1999,majority 2.1

million were in rural areas.
Seven Indian states accounted for 76% of the country's
total retail outlets,184 districts accounted for as much as
69% sales.
In villages,retailing is a part time activity,and a retail outlet is
opened in a part of the house.
The maintenance costs for retail outlets in villages is low
with maximum expense incurred on travelling &
transportation.
In the 6,38,000 villages,penetration into rural areas is
facilitated through the wholesaler,semi-wholesaler,arhatia &
merchant network through 3000 odd towns,5000

Wholesale assembly markets and about 25,000 haats.

The reason for such a large number of rural outlets is that

retailing
is
probably
form
of
disguised
unemployment/underemployment.

Since the agricultural and manufacturing sector both are not

able to provide reasonable paying jobs, therefore,the rural
population opens a small shop or store.
STRATEGIES
FOR
RURAL
RETAIL
CHANNEL
MANAGEMENT:
a) Understanding Retailer's BehaviorIn order to develop ability to influence the retailer to stock &
promote their products,an organisation requires identifying
the manner in which he performs retailing.
b) Mega MarketingOrganisations need to plan & implement integrated effort for
managing the rural retail channel.eg-United Phosphorous
Limited,realised that capital cost of spraying equipment was

Out of reach of small farmers & most rural retailers.It

arranged for ank loans for retailers to purchase application
equipment & demonstrated to them as to how they could earn
additional revenue by renting this equipment.Thus the
organisation could sell more pesticide;retailer could earn both
margins on sale as well as revenue from rent.
c) Ensuring Availability:
d) Provision of Credit:

By
selecting
financially
strong
distributors
&
stockists,organisations can ensure provision of credit to rural
retailers through these channel partners.

These channel partners can decide the quantum of credit to

be offered to different retailers on the basis of their local
understanding of the market.

Companies can have a tie-up with banks & financial

institutions for provision of credit to their distributors,so that
they can buy the goods from the companies in even larger
quantities.

e) Provision of Quantity Based Discount for Distributors:

By offering quantity based discounts organisations can

motivate distributors to initially lift the stocks in good
quantities and then take efforts to take these goods &
services to the rural market.
f) Provision of Van Subsidy for Rural Distribution:

Organisations can provide van subsidy to the distributors

who operate vans to distribute products in rural areas.These
subsidies can be linked with the sales volume generated by
the distributors on mileage basis.
g) Placement of company staff with the Distributors:

Staff members can be selected locally so that they can build

up personal rapport with the retailers.

They can conduct formal & informal researches at the

retailer & the consumer ends.

They can also inform the company on a periodic basis the

moves of the competitor in their territory.

h)Appointing Rural Sub-Stockists:

Organisations can appoint sub-stocists in larger villages.

These sub-stockists,on the basis of their in-depth knowledge

of adjoining villages can distribute the goods to retailers in
smaller, interior & adjoining villages in a cost-effective
manner.

They can employ very cost-effective transportation means to

distribute the goods & can serve the retailers on a regular
basis.
i) Exclusive Distribution Network for Rural Sector