“Club of Knowledge Hunters”

Retail industry? India does not have one really

Posted by superstar23 on November 4, 2008

The retail industry in the United States, Canada, Europe, Australia and Latin America is about forcing the customer to come to its outlets owing to lower prices, fully functional websites which allow you to buy the smallest of items on the shelf and optimum use of logistics and ERP software. On the other hand, retail in India is about no web presence, juggling real estate lease costs and sourcing cheap knick knacks.

How many times in India, have you boasted about buying from your favourite retail outlet? If you have done that even once, rest assured you can be sure that what you are shopping from is not a retail outlet at all. The qualities of a retail outlet are very simple. It has to offer you goods (and not services) at the lowest prices available in the vicinity . You cannot really compare the price of T-shirts between what you buy in Bangkok and in Bangalore, really.

But you can definitely look for a better price between New Delhi and Meerut or Moradabad. If the friendly neighbourhood grocer is charging you the maximum retail price that is printed on the product and the local retail outlet is doing the same except for accepting payments through credit cards and having the near asleep doorman in a uniform startling you with an impromptu good evening, albeit poorly pronounced? A retail outlet is not a premium shopping centre like Harrods, which you flaunt to the less priviledged. It is a supplement to your friendly neighbourhood mom and pop store and not an upgrade to it.

Why should the customer go into a retail outlet and spend his hard earned money? Have our retail czars pondered over this problem? If the customer wants an air-conditioned environment then he can buy an air-conditioner and fix it at his house. Does he want all he would like to buy at one place? Is that the value of a shopping mall or large retail outlet? Well, for one thing, the builder of a mall or a retail outlet company can never guarantee that he will stock all the brands with him or even all the relevant brands with him. After leasing the building, it is the relationships that the mall or the retail outlet develops with various brands that determine the outcome of the outlet.

For instance, CEO of JHS Svendgaard, Nikhil Nanda had commented to FINANCIAL TIMES that he was in talks with most retail chains as they all wanted to tie up with a single oral health products company. JHS Svendgaard fitted the bill amazingly and all other brands would be shown the door. If that is the equation then as a customer I would not get a particular brand of toothpaste such as Colgate, Dabur Red or Himalaya Dental cream and may not want to buy the brands that Svendgaard produces, even if they are being supplied to Wal-Mart .

A retail company needs a lot of homework and many account managers where they have to service with great care both the customer and the supplier. The Toyota adage that your stakeholder is your customer too is not any truer than it is with retail companies.

Have you ever been obliged to visit a retail outlet which incidentally also sells all its items on the net? Was any low price scheme made available, which is not with the local grocer? Do you visit your retail outlet for variety, aggregation or just for the air-conditioning or the fancy carry-bags ? If the answer is no, then it is not a retail outlet by definition. The sorry state of affairs of retail outlets in India can be attributed to their concentration on making profits from the first store that they open and first item they intend to sell. A true retail chain has to open at least 50 outlets in at least 10 cities to gain the advantage of economies of scale. Bulk buying from the manufacturer will ensure low prices to the customer who buys from the shelf. However, one or two outlets as pilot projects are an exercise in fallacy and will never qualify as retail outlets at all.

Take Nik-Nish in Calcutta, the Home Store and Femella in New Delhi and Pantaloons all over the country. You come across the few exceptions to the rule. These companies although saddled by lack of professional management in the beginning have solved that minor glitch and swiftly appointed the right people for the right jobs.

Moreover, they have gone ahead and discovered new roles and new passions among employees where they can excel and take the mandate of the corporation forward.The answer lies in marrying technology and experience.


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