Over the years, it has become fashionable to talk about the business opportunity offered by those at the bottom of the (economic) pyramid. Many national and international seminars have been conducted to highlight this hitherto undiscovered gold-mine. Any challenge to the business rationale for pursuing such a market is considered heretical and almost blasphemous.
Under the assumption that it is the responsibility of all business managers to generate the optimum (and certainly a minimum acceptable) rate of return on financial investment, and that any deployment of tangible financial and management resources for the explicit purpose of chasing a business opportunity must have at least a theoretical (and subsequently, practical) probability of generating the desired return on capital, there is a strong case for very objectively examining the potential of this bottom-of-the-pyramid market before proceeding any further. In India’s context, the estimated discretionary retail consumption in 2009 will be about US$436 billion (about Rs 18 lakh crore) out of the US$$720 billion (about Rs 31 lakh crore) of private consumption. Of this, about 45 per cent (US$196 billion or about Rs 850,000 crore) is urban, and the balance is rural. By 2013, both rural and urban retail markets could be as much as US$290-300 billion each (and the total Indian retail market over US$600 billion), i.e. an increment of almost US$200 billion in additional consumption at current prices over next five years compared to 2008. Of this, modern retail, which currently is less than US$15 billion (about Rs 65,000 crore), may touch US$95-100 billion by 2013, i.e. almost Rs 400,000 crore. Food & beverages, of course, accounts for almost half of this retail consumption, though, both in absolute terms as well as percentage terms, other product and service categories will substantially increase in the coming years. Check the link for detail