Rural Retail Outlet Location as a Decision Problem

Retailing as a business proposition has been highly appreciated in the emerging economy like India. In the light of rural development and capturing the rural market, many firms are willing to open the retail chain in rural areas of the country. Today retailing in general has become the most lucrative segment for business entities to enter in. Due to high competition in urban retailing and lower margin firms are looking for volume and lesser competitive market which has led them to enter into rural retailing. The country is moving ahead with promising kind of growth rate and sustained support from agricultural GDP, the rural urban divide is vanishing day by day. Today business firms see rural retailing as equi-opportune kind of investment as urban retailing. In many cases they see the advantage of first mover. Because of limited demand and buying capacity of rural market, firms operate on small margin and such scenario deters the new market entrants. In the arena of retailing business the decision for outlet location has always been key decision of strategic importance. Being the very old kind of decision problem, its nature in context of urban retailing there are many models available in the research domain for solving the location problem. But these all model are framed in context of urban retailing and these are being used also by companies at different levels. Mainly three kinds of models are in practice for determining the optimal location of retail outlets, (a) Circular trade area (b) Spatial interaction model or gravity models and (c) Location allocation models. This paper has attempted to come up with solution to location decision problems faced by business entities willing to enter in the rural retailing market