Sunday, May 3, 2009

" IS INDIAN RETAILING A TITANIC which has already hit the iceberg ?

A reader of the blog has posted this query and would like to share my views regarding the title -

First, Corporate Retail like any industry is going through the typical adolescent phase. Like all teens, who want to be an adult but are still young adults at best, Retail in India is still finding its feet.

The moot point is is there any any success formula which was missed out? I dont think so. Please consider the following facts -

  • Most Corporates who entered Retail have a wealth of experience in manufacturing and a few in some services. Retail is a very different ball game. It is the true example of 'Think Global Act Local'. And, this is easier said than done.
  • Yes, several expat managers flooded Indian Retail to help set up this industry. The reality is that India and Indians are not easy to understand. At best we can be managed! I remember when a foriegn retailer opened a hyper in Mumbai in 2003, they had a huge section of home improvement, inlcuding an entire run of paints. Do you think that the Indian managers would not have pointed out that this category does not sell like this?
  • Lastly, if one were to do a search on Linked In for Indian Retail, there would be hundreds of profiles today. Only a handful would have deep enough retail experience that spans more than even a decade.
So, what do we have;
  • A booming economy
  • Money to invest in an exciting new industry
  • Lots of people pulled from various industries.
Mistakes were bound to happen. Then came the slowdown. Demand dropped, funding dried up, debts became an issue, working capital was tight.

The good news is that this has made everyone sit up and start trying to correct their mistakes. I am not for a moment saying that everything is now fine and its full speed ahead. But, at least realisation has dawned that Retail is not as easy as it looks. It is not complicated, but requires tremendous attention to detail and focus on the basics.

In Retail it is always a chicken and egg story. Do you build scale, aggregate volumes and then put in a supply chain or do you invest in a supply chain and then work towards aggregationg volumes by opening stores. There is no right and wrong answer to this.

Today most operators have built scale and are focussing on building up supply chain capabilities. It should work.

Lastly, why this reaction to the current issues in Indian Retail? Firstly, it was over hyped and closely followed. Secondly, unlike in a manufacturing plant where the initial issues remain known only internally, in Retail, everything is visible to everyone.

I dont think this has hit an iceberg or its on the way down. Anyways, we are all going to be around and lets see if my understanding of Indian Retail has enabled a proper prediction.


puresunshine said...

As an observor and a student, I would also like to point out that Indian retail expanded too much too fast. I agree with you that decoding the Indian consumer, the various markets, is indeed a task. And that's where the challenge lies. Any retailer, who loves this field, would surely love to solve this puzzle! Get to understand your consumer, her needs and only then you can connect. The present period surely is the perfect time to take a pause and spend time in observing, studying the Indian market and the people around. The key, i feel, is customizing right for the market.

Saurabh Saksena said...

A case of too many cooks spoiling the broth. Too many guys out there who have not understood retailing and either cut-pasted a model to India, or want to bask in the sun.

Think Indian retailing the way we have known it, has changed and will continue to. Small-time neighbourhood retailing is back with a bang, promising warmth, customer care, and credit!

Informative article, Rajesh- your experience will help students of retailing (like myself) more, if you could illustrate more and more examples.


Srikanth said...

hai rajesh
your observations are quite interesting. In fact I worked in a senior position if Lifestyle retailing in dubai for 12 yrs than attemped something on my own in Hyderabad India which did not work out and i am back in dubai for last 3 years on employment. Retailing looks easy but not so. Especially Indian market is very tough to penetrate and getting customer loyalty is very difficult. That is because the basic upbringing qualitites, environment and state of mind of the consumer which is variant and always visulaises with a doubt in mind. The mentality of i should not be duped or fooled overtakes every thinking and so there is bound to be these problems. It would be revolution to change the mindset of people and it may take decades to change. It is belief that keeps the life going on and that this the reason for retail being successful in developed customer. We cannot blame that for the situation in India because the resources are limited and options plenty and for the customer disbelief to vanish the overall economy has to improve and in the same scale the disposable incomes are to inrease among the people and should be sustanable.
Since my thinking is that of a retailer all these amuse me and arouse my senses and keep my self kicking.

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