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Expanding the Shopping Cart or Improving Its Contents: A Study on “Modern” Retail in India

Author

Listed:
  • Roy Devesh

    (Division of Market, Trade and Institutions, International Food Policy Research Institute, Washington, DC, USA)

  • Joshi Pramod Kumar

    (NDO, International Food Policy Research Institute, New Delhi, Delhi, India)

  • Karandikar Bhushana

    (Department of Agribusiness, Gokhale Institute of Economics and Politics, Pune, Maharashtra, India)

  • Joshi Shwetima

    (Department of Economics, University of Texas, El Paso, TX 79902, USA)

  • Sonkar Vinay Kumar

    (Division of Market, Trade and Institutions, International Food Policy Research Institute, New Delhi, Delhi, India)

Abstract

Several factors (including rising incomes, urbanization, a young population, and more women in the labor force) have influenced retailing in India in recent years, with the emergence and rapid spread of supermarkets being the most dramatic change. Without disputing the high growth rates of organized retail in the food sector, in this study we test whether supermarket growth is associated with greater demand for nonprice attributes such as food safety and customization of products. Using on-site surveys at supermarkets in three Indian cities of different population sizes and income levels, and using ordered models for consumer choice, we find that nonprice attributes remain subordinate to price for consumers in supermarkets. At the same time, rising import penetration in supermarkets creates an outlet where some consumers can satisfy their demand for nonprice attributes that are not provided by domestic products. The fact that such attributes are not demanded of domestic products and that imports fill in to provide these nonprice attributes implies that demand pull for back-end development is weak in Indian food retail. This is important, because a command approach by the government to induce back-end development will work only if enforcement is strong, which seems unlikely.

Suggested Citation

  • Roy Devesh & Joshi Pramod Kumar & Karandikar Bhushana & Joshi Shwetima & Sonkar Vinay Kumar, 2014. "Expanding the Shopping Cart or Improving Its Contents: A Study on “Modern” Retail in India," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 12(1), pages 159-180, January.
    • Handle: RePEc:bpj:bjafio:v:12:y:2014:i:1:p:22:n:1
    DOI: 10.1515/jafio-2013-0012
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    References listed on IDEAS

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    1. Mathew Joseph & Nirupama Soundararajan & Manisha Gupta & Sanghamitra Sahu, "undated". "Impact of Organized Retailing on the Unorganized Sector," Indian Council for Research on International Economic Relations, New Delhi Working Papers 222, Indian Council for Research on International Economic Relations, New Delhi, India.
    2. Kumar, Anjani, 2010. "Milk Marketing Chains in Bihar: Implications for Dairy Farmers and Traders," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 23(Conferenc), November.
    3. David Roodman, 2011. "Fitting fully observed recursive mixed-process models with cmp," Stata Journal, StataCorp LP, vol. 11(2), pages 159-206, June.
    4. Mathew Joseph & Nirupama Soundararajan & Manisha Gupta & Sanghamitra Sahu, 2008. "Impact of Organized Retailing on the Unorganized Sector," Macroeconomics Working Papers 22167, East Asian Bureau of Economic Research.
    5. Mathew Joseph, 2008. "Impact of Organized Retailing on the Unorganized Sector," Working Papers id:1672, eSocialSciences.
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