Monday, October 1, 2007

Is the Honeymoon period in Indian Retail over????

Till now we have been only reading about the positive and good side of the Indian retail revolution, but now on we can slowly see the problems and issues being faced by the retail industry, and if one were to list a few of the not so positive the news items on the retail scenario in the country,

Reliance Retail sacks 400 employees in West Bengal

Reliance Retail to shelve UP, Orissa Plans
RIL wobbles in UP
Metro Faces Protests in Bangalore
Pantaloon retail expansion slows down due to high rentals

Though the first few case of problems which RIL is facing in UP might seem to be a isolated case with a single company and the second one relating to with only one aspect of the retail industry, but in my opinion these are just indicators of the problems which the retailers would face in the near future and would impede the speed with which the expansion would take place. The worrying factor is the implicit support of various state governments to the protests aimed at the organized retail, with their eyes on the forthcoming elections...

Second issue is the issues related to high rentals which are being charged by the Mall developers and the problems it is causing for retail chains which are expanding. Though there has been talks about developing a revenue sharing model, but it still in the development stage and more work needs to be done on that .

It is very important that these issues be sorted out in the next few months and the right signal sent to investors and companies anxious to make and entry into retailing. Outcome of these issues and the reluctance of the central government to move on the opening up of FDI in retail is that it is making India a less attractive destination for world-wide players and they would be more reluctant to enter the country...........

It seems we are on our way to move out of the initial honeymoon period and now need to get down to deal with the harder issues .....

UPDATE: `Quit Retail` movement gains mass base, rally on Oct 10



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