Despite the emergence of a large scale organised retail industry, the unorganised retail market is the most significant mode of retailing for the major population in India. Today’s Indian retail industry is evolved from the traditional unorganised retailing. The unorganised retail consist of small retail stores operating on the lower scale with slight or no standardisation and selling goods in split quantities to the local consumers within a small geographical area. Unorganized retail stores do not use any technology or maintain processes in their businesses. However, they have a huge potential for growth and development in India. This paper outlines various aspects of the organised and unorganised retailing and further analyses their operating structure, sale distribution, promotional tools, factors for store functioning and income differences in India. In this research, the primary data is collected using a survey of 150 small scale retailers from Pune. The results of the paper shows the impact of shopping malls on small grocery shops and further elaborates on the challenges faced by them. This study provides the suggestions based on the analysis of data collected from the small scale retailers to improve their sales, developing credit facility, providing home delivery and capitalising on long term relationships with the customers.