What we witness today is a mad rush of companies from all over the world setting up organised formats- retail, health care, cars etal-in India. The action so far has been concentrated in areas where there are large gaps in the infrastructure or areas where there has been lots of wastage in the supply chain. Investments required to plug the gaps and to reduce wastage has been high but the returns have been equally rewarding.
These formats have been able to provide an assurance of better quality, at a cheaper rate along with a pleasurable experience. The result: Consumers have welcomed it with open wallets creating a win win situation for everyone- the producer, the marketer, the consumer, and the government.
The unorganised sector because of its nature is unable to match the service and assurance of the organised format. Its competitive capabilities are further stunted by the presence of a large number of subsidiaries between the consumer and the producer.
Looking around-from the shops where you buy groceries and vegetables to the shops where you buy books and computers-every sector in India is deliciously unorganized. Thus, in every sector that we look around, there can be a chance to bypass the bypass the inefficient system and create a single tier system in the market- i.e. there is a single entity between the consumer and the producer.
But, the fact that runs against our assertions is that the unorganised sector is still very strong in most of the pockets of India. The the two biggest reasons that come to my mind for the strong hold of the sector are:
Its ability to serve the needs of different stratas of consumers (big, medium and small)
Its accessibility at the last mile
Another reason that is equally important is the ability of the format to provide a human touch- a sort of customised personal experience.
Another very important reason for the thriving unorganised sector is the tax saving, and pirac that is possible in such formats.
The question is it whether it is really possible to jump from unorganised to the organised sector in all cases? If not, when does it make sense?
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