Back to the Indian Retail Scenario, one aspect in which our organized retail differs from those in the advanced economies is the physical size of their set-ups. The Malls in UK and US are much larger in size and the area that they end up covering is many times more than the average mall in the country. One of the major constraints that we have is the availability of space in urban centers and if we were to locate the malls at some distance from the main heart land of the city we would find it difficult for consumers to come because of the lack of personal transport.
The other trend one can observe in the market place is the slow shift from the commitment to large formats to much smaller formats. Initially most of the players were bullish of the larger hyper mart formats but now most of them have started talking about operating much smaller formats. Though reliance with the opening of reliancemart a 1,65,000 sq ft hyper mart in Ahmedabad is bullish and plans to open over 30 such marts by the year and expand it to 500 by 2010 across the country. But with its retail plan coming unstuck in many states it is to be seen if it would be able to stick to it's expansion plans.
The largest player in the organized retail Pantaloon Retail is also planning to come-up with 1500 200sq ft no-frills KB fair Price shops in the next two years across the country.They propose to provide branded products at 10% less than the mrp and 20% off on the local brands, which is similar to what has been Subhiskha's proposition for a long time. Subhishaka the predominaltly south based chain has always followed the low-frills small shop size format. Spencer's Retail has it Spencer's daily which is small format and the bigger Spencer's hyper mart.
My feeling is that as with most new initiatives be it retail or telecom, we cannot copy what had worked in other countries and try to plant it in into India, we have go through the tough trial-and-error process to understand what would work for India and suitably adapt and change. And whoever is able to master the art sooner would lead ............
There is a good article written by Sunil Jain in Business standard on the 'Big Retail's Blunders'
Great insights sir. But don't you feel that we are entering a cycle in India where we are changing into what the western world was say 15 years ago.
ReplyDeleteI agree on the points of customizations specific to region but the general trend seems to indicate so.
The entry of low cost airlines, retail.... the list is endless.
Praveen
Sec D
i just think that the current scenario in India is something unique in itself....there are more than 10 million shopkeepers at present in India.... it is true dat kirana stores will survive( at least 60% of those now) even though the Big players enter into the market but the hue n cry which will take place due to the displacement of the rest 30-40% will be the test period for the industry...if the government can come up with definate, concrete plans for the kirana store shopkeepers then the protests will sudside....... which in a way will be very beneficial for the retail sector
ReplyDeleteIt might sound a bit middle of the path kind but i believe that the upcoming indian retail industry carrries the advantage of hindsight.
ReplyDeleteThe Inidan Managers have the advantage of knowing what went wrong earlier inthe retail booms of countries like US and UK. Not only this but the rate at which the sector is experioencing growth, leads me to believe that it is under a sort of time squeeze or fast forward mode.
the end result is still unknown but like most conventional sectors I predict a consolidation to occur, as and when the companies gain critical mass or biggies enter the reatil sector and find their feet.
Partha
Sec D
yes, to a large extent i would agree with praveen when he says that we are following the western world, but there are certain significant differences, because of issues related to the way our cities are designed and the existing retail structure, the Indian consumer and his buying habits, the model which has worked there has to be adapted and that is what i feel is happening in terms of retailers going in for smaller size of shops... some what in lines of what partha is saying that we can learn and not repeat mistakes done by others.
ReplyDeleteAnd consolidation in the retail would happen as would happen in any emerging industry, initially there were more than 200 car manufactures in the US and after ford launched model T most of them closed shop...
Concerns for the small retailer is driven by the employment it generates and the fact that the people who work in the mom-n-pop stores are low skilled and finding them alternate source of employment would mean significant cost and effort in training them, and would the GOI be able to do it is big question mark... But unless it is tackled we will have many more Oct 10 protests against organized retail....
ReplyDelete