Retailer is the last channel partner of any distribution chain. Retailer plays a very important role in the sale of manufactured goods or service. The customer provides a lot of insights at the retail point on the products and services sold by different manufacturers. These insights are very essential in the development of new products. In the case of large manufacturers, they have different sources of customer insights and product strategies to come out with new innovative products and move up in the market. But for small and medium suppliers/manufacturers, with limited resources and information, it is not easy. In such situations, retailers play a very important role in providing insights to these small and medium suppliers/manufacturers and help them in making alterations to the existing products, developing new products or introducing their existing products in new markets. This brings in the need for exploration and validation of various parameters that define efficiency in modern retail. The modern retailer can always pose challenges to small and medium industries/suppliers in making onerous trade agreements, including credit limit, credit period and sale-or-return, which squarely place the burden of funding the retailer’s business on the small and medium enterprises (SME)/supplier, and so on. Unless there is a mandate of better payment terms, the evolution of modern retail can spell an end to barely alive Indian SMEs. As part of this study, small and medium suppliers/manufacturers were interviewed for various parameters that would have an impact on their innovation capabilities. With the help of analysis, it is proved that there is a significant impact created by these large companies on their innovation capacities. Unless there is a mandate of better payment terms and knowledge sharing system, the evolution of modern retail can spell an end to barely alive Indian SMEs.

Modern retail, suppliers, innovation, channel partners, manufacturers, enterprises

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