PESTEL ANALYSIS- POLITICAL- • Liberal policies of the Indian government make it easier for foreign retailers to compete with Indian retailers thus increasing the competition . Indian government has given signs of dropping its traditionally protectionist stance and opening up its retail market to greater overseas investment. In 2007 it eased restrictions on foreign investment, allowing overseas retailers to own 51% of outlets as long as they sell only single-brand goods. Government realizes the need of foreign investment to provide the infrastructure – the warehousing, distribution and processing operations – that are needed to upgrade India’s chaotic retail industry. An estimated 50% of the country’s fruit and vegetables rot by the roadside before they reach market. • Many politicians still feel they have a duty to protect the livelihoods of the small shopkeepers they represent. • Due to the Indian government structure, the political condition vary from state to state due to the dominance of the state government There are 170 reliance fresh stores across the country but the reliance retail is facing political instability in the state like Kerala, west Bengal, Jharkhand and Uttar Pradesh. In these states they have introduced reliance supermarkets. Economic- • Retail industry employs 8% of the working population. Currently the share of retail trade in India’s GDP is around 12 per cent, and is estimated to reach 22 per cent by 2010. • Indian government has estimated the value of retail sector to be increased to 2,00,000 crore and will generate around 12 million retail jobs in the coming years. According to Government of India estimate the retail sector is likely to grow to a value of ` 2,00,000 crore (US$45 billion) and could yield 10 to 15 million retail jobs in the coming five years; currently this industry employs 8% of the working population. • retail trade also has a sky rocketing effect on the real estate prices. Markets, wholesale sales and retail form one axis of the economy, while productive sectors like agriculture, textile, and industries form the other. • The recent increase in inflation together with high interest rates is an unfavourable indicator for the retail sector and can hinder the growth of the sector.
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Social – cultural • Rising income of the middle class offers good opportunity for consolidation of consumer base and the sales amount per customer • Increasing health consciousness of people and need for good quality products is favourable for the large retail chains • Still large chunk of the middle class has the perception that retail chains like reliance are costly and haven’t switched from conventional shops to retail chains • However the life style of the consumers is constantly changing and more and more consumers are becoming regular costumer’s at the retail chains like Reliance Fresh
Technological • Technological innovations are making it easier to collect , store and analyse sales data thus making research and decision making better • The increasing influence of social media in consumer buying decision can be tapped • The internet medium can also be increasingly used to get consumer feed- back , increasing brand awareness and maintaining consumer relations Environmental- • Use of environment friendly practices in operations is necessary due to the increasing environment sensitivity in India Use of polybags is not feasible in the long term so alternatives should be found as is being done by food chains like McDonalds which use paper bags Legal- • Slow legal process and paper work time can lead to greater wastage of time in setting up and operating retail stores • Loop holes in the legal structure can encourage unethical practices in the industry thus is a deterrent The first of their format is Reliance Fresh, a convenience store. These stores, range from 2,000 to 5,000 sq feet, provide customers with a variety of fresh fruits, vegetables, staple foods and other products in a world-class ambience.
They aggressively partnered farmers by following a farm-to-folk strategy to ensure fresh fruits and vegetables at affordable prices. They chose Hyderabad to test waters, as the city offers real estate at a price that does not quite pinch. They selected the cream crowd from pioneers in organized retailers to head the organization. With such a strong foothold, they ventured and their cash counters clicked Rs 3. 5 to Rs 6. 5 lakh per day and some outlets at prime locations are averaging Rs 5 lakh per day.