Traditional Retail in India

Regardless if it is a small town or an urban area populated by millions, tiny, usually open-air shops line neighborhood streets throughout India. They sell fresh fruit and vegetables, groceries, clothing, tires, household goods and even appliances.

Traditional retail refers to these thousands of small, mostly family-owned retail businesses. They are also referred to as the “unorganized” retail sector. The “organized” sector refers to large, modern regional and national retail stores.

The Indian retail industry is the world’s fifth largest, and accounted for 12 percent of GDP (gross domestic product) in 2009. Approximately 97 percent of retail businesses are traditional.

Through the centuries, Indians have purchased goods from small local vendors, entrenching this style throughout the country. Only recently have urban shopping centers been opened that offer goods at large “chain-type” stores. These continue to be rare in rural areas.

Supporters of traditional retail note several benefits—buyer proximity, personal service and monthly credit. Even though it is small, traditionalists understand their customer base and only stock goods suitable for them.

Indians debate which side—traditional unorganized or national organized—will prevail. One such analysis entitled “Indian Retailing—Will it be Traditional or Modern” states, “Modern retailing may take away a sizable share from traditional retailing but will never close down the opportunities of selling certain categories in specific denomination for the traditional retailers.”