Big Retail Brands

Big “Retail” Brands…Big Trouble “Retailing”

…Rohit Goel

Big “Retail” Brands…Big Trouble “Retailing” … Rohit Goel

Retail…the

new economic engine driving across the country’s GDP growth rate at a commendable 8-9 per cent shall soon experience certain very radical restructuring given the sprouting state of affairs, and to be explicit… the not so favorable ones. This paper aims to underscore the major problems being faced by the face of the Indian Market in the Global Economy as the most attractive market for retail investment.{Source: AT Kearney's Annual Global Retail Development Index (GRDI)}. The Indian retail market, which is the fifth largest retail destination globally, according to industry estimates is estimated to grow from the US$ 330 billion in 2007 to US$ 427 billion by 2010. Industry readers and practitioners are perhaps in high spirits and glad about their predictions for the past semi-decade analyzing the investment trends in retail by MNC’s as well as other companies of Indian origin. But what was unpredicted was human as always is… the predictions and analysis did not take into account the qualitative or the intangible factors besides certain concrete ones. Let us focus one by one on the very possible and prevalent factors that are the impetus for the state of “retail” affairs. To acquaint ourselves with the challenges faced by the retail sector let us mark the most critical issues that pose the challenge: 

The Organized Retail Sector is not so “Organized”

Retail is India’s largest industry, accounting for over 10 per cent of the country’s GDP and around 8 per cent of the employment. These figures illustrate the magnitude of business activity that this segment contributes to the country’s economy and also highlights the potential that this sector veils only if it were to be a little more “Organized.” The problem therefore is not and has never been the volume of the business activity that the sector involves in but as research data indicates, organised retailing comprises only 2.8 per cent of the total retailing market(currently at $312 billion) and is pdfMachine - is a pdf writer that produces quality PDF files with ease! Get yours 1 now! “Thank you very much! I can use Acrobat Distiller or the Acrobat PDFWriter but I consider your product a lot easier to use and much preferable to Adobe's" A.Sarras - USA

Big “Retail” Brands…Big Trouble “Retailing”

…Rohit Goel

estimated at around US$ 8.7 billion. The market size at the same pace and parameters is however anticipated to grow up to US $ 70 billion by the end of this decade. But the major challenge prevails to be the colossal task of restructuring the sector and hoeing out the unorganized elements such as our very own and very famous kirana stores, paan shop, mom and pop stores et al. 

A dilemma as to what is “retail-able”.

The problem is not that the who’s who of the retail industry do not know what product is retail-able, the problem lies in the fact that they exactly know what is NOT “Selling,” with genuine researches intimating that 77 per cent of the total retail sales hail from the food & groceries segment. The lack of diversification till lately was a major cause for the losses borne by the Retail Giants. However an aloft trend in this arena was reflected with Kishore Biyani’s (Future Group) and Ambani’s (Reliance Retail) act of launching the first few retail outlets exclusively for the “other segments” like electronic goods and footwear to name a few. With only 23 per cent of total retail sales that make up of the “other segment” there certainly is a very massive potential that this segment also embraces. The act will not only mitigate losses borne by the retailers in any segment but also help building a “reach & recall” element in the market. So for every small (and big) need there is a “Reliance” that fulfills it. One must realize that the 'wet market' (i.e. fresh food available through hawkers) element of the “food and groceries” segment is and can be extremely vulnerable to the markets foible and varying tastes marring large volumes of business and thereby sales. Addressing this inadequacy is perhaps really critical. 

Lack of IT support to the entire sector per se.

Information Technology that undoubtedly forms the backbone of an economy and is sure to drive a country’s growth effortlessly from one laurel to another is a vital accomplice responsible for the steadiness of the retail sector also. IT not only ensures a smooth process of Supply Chain Management across the various verticals involved but also aids in the options available for merchandising-an important factor in Retailing. Virtual Malls online are not yet a thespian in our economy but definitely ensure smoother and faster turnovers in all senses which are pdfMachine - is a pdf writer that produces quality PDF files with ease! Get yours 2 now! “Thank you very much! I can use Acrobat Distiller or the Acrobat PDFWriter but I consider your product a lot easier to use and much preferable to Adobe's" A.Sarras - USA

Big “Retail” Brands…Big Trouble “Retailing”

…Rohit Goel

beneficial equally to the business and the consumers. IT and digitization of Services will generate easier payment options and ensure more satisfaction and less customer grievances thereby contributing to the “Indian Mindset Change” which does not favor the “Retail Set-Up” of tomorrow and the coming future. 

Buying Behaviour that is deep rooted and very Indian.

“Paas waley sharma ji ki dukaan se wahi 5 rupees wala namak le aayo.”{Get the same Rupees 5 salt from the adjacent Sharmaji’s Shop} This is a very common dialogue that is exchanged in almost every household in India and I am sure each one of us is able to connect well to this. The idea is that this dialogue is not just a communication but a mirror of our “deep rooted Indianess” w.r.t our buying behaviors. Paas waley sharma ji ki dukaan denotes that not only is the retail outlet close to the house but the person who owns or runs the shop is a person well known to the lady of the house. This develops a sense of security with regard to affirming the purchase decision. Are any of the mega stores willing to give this sense of security to any buyer however frequently he/she visits the same mega store for purchasing necessary commodities like salt/oil etc? None of the new age stores will be able to do that. Kirana stores can continue to guarantee this factor because they have been there for years together before other options of buying were available. Even their forefathers guaranteed the same to our grandparents… and this factor makes the buying behavior with regard to the retail items very deep rooted and cynical. Interesting to note is the factor that “we” Indians are used to connecting brands with pricing very strongly. For example if Tata Salt was available at Rs. 5 sometime back each one would remember it as “5 rupees wala namak” and the fact that the shop beside my house has it! The notion that the big stores have everything that’s expensive still plays a major role in preventing the common man from entering the huge malls or retail spaces and then of course there is no “Sharma ji” to listen to my problem in any of these malls so I better pick it up from the shop close by. Organised retail outlets can overcome this problem by employing eligible local peoples who can interact in vernacular language and win the confidence of people.

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Big “Retail” Brands…Big Trouble “Retailing” 

Hindrances from the Parties/Individuals/Sects etc. vulnerable.

…Rohit Goel

Government/Political make the sector

“BSP Zindabad…Reliance Murdabad” were the cries when Reliance opened up its chain of “Reliance Fresh” outlets across the state of Uttar Pradesh. States and parties favoring a particular corporate entity for vested interests has been an ongoing trend in the country post independence but what Reliance witnessed in UP was a result of an even ulterior motive. The idea was to instill in the state farmers a sentiment of insecurity with Reliance stepping in their territory of Retail… the perishables (fruits and vegetables). The farmers were made to look at Reliance and their likes with a feeling of suspicion, cynicism and threat. The result being mobs attacking the outlets and the outlets closing down whereas the political party in power strengthening its hold on the weak farmer section that forms a near majority of the states vote bank, leaving the state and its customers deprived of the benefits of the “new age retail.” UP as a state is a perfect example of how easily a positive trend in Retail was stalled to the tunes of a political whim. Similarly sects of shopkeepers and outlets getting affected with the entry of the major players in the retail market, lobby against constructive drifts in the market and thereby stall the superior consumer position that this style of retail has in the offing. 

The “Human Resource Crunch”

The Retail Sector may be very lucrative for investment by MNC’s and its development may, over a period of time change notions in the consumers mind as the trend is witnessed already in the metros. However the industry has not been able to pose itself as one of the very rewarding careers to the available and employable talent pool. The reason being that like any other establishment the senior and middle level management requirements are scant however the requirement of front line shop people is in excess and the industry has not been able to strike the right balance with regard to this demand and supply. Albeit the qualifications entailed for such opportunities is very basic ranging from under graduation to a graduation at the most, yet the eligible pool does not seek an employment in this sector simply because it has not been marketed as a promising career at that level and currently broadcasted as an option pdfMachine - is a pdf writer that produces quality PDF files with ease! Get yours 4 now! “Thank you very much! I can use Acrobat Distiller or the Acrobat PDFWriter but I consider your product a lot easier to use and much preferable to Adobe's" A.Sarras - USA

Big “Retail” Brands…Big Trouble “Retailing”

…Rohit Goel

with meager growth opportunities. The retail industry according to recent reports is growing at a rate of 100 percent. Kishore Biyani's Future Group i.e. the Big Bazaar chain of retail outlet alone provides employment to more than 18,000 people and is planning to expand its employment base to 34,000 by June 2008. If we add to this the foray by mega players like Reliance and Bharti-Wal-Mart then the fear can surely turn into a misperception. What we need is a universal PR activity declaring this career option an equally viable option to the aspirant pool as any other vocation.

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