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Modern Retail: Profit through Partnership

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Mega mergers and consolidation are the buzz words in Indian Retail. In view of the sector’s exponential growth in all corners of the country, many new players have either collaborated with the biggies or are looking at aligning with the more established players to turn around or break even.

Modern Retail: Profit through Partnership
A partnership between retail and key solution providers out by engaging all stakeholders including brands, supply chain providers, and solution providers is the best way forward

This is because the challenges for brick and mortar stores remain formidable in light of the large-scale migration of consumer traffic toward e-commerce set-ups. Very few players in Retail have reported a real break-even so far even though some of them have been running more then 50+ stores for over five years now. A few of the success stories so far reported are from Reliance Retail, Metro, Future Group, Vishal, and D Mart, which have seen positive earnings in the past few quarters.

With e-commerce in a booming phase, new milestones are being achieved by all the major players in this space. Online companies like Flipkart, Snapdeal and Amazon are reporting sales of Rs. 1 billion a day. Flush on the growing sales numbers and their expanding market share, each of them are now expanding their categories and reach by the day to cater to the mounting aspirations of consumers.

Growing beyond apparel, fashion, consumer electronics, footwear, etc, these players are now turning their attention to the food and grocery segment as well. But alongside these e-commerce giants, many new players are also emerging on the horizon with each one promising faster and better services and quicker delivery of grocery, fruits, vegetables, meats and other assorted items.

With so much of new developments taking place so fast, the very concept of the grocery retail business is getting redefined. The future seems to belong to the virtual players who are racing ahead with their online models and faster modes of delivering service. All these changing dynamics of doing business are forcing retailers to introspect on the way forward and think up new ways to capture growth and profitability.

With my considerable experience in FMCG retail, and in new concepts for the business alongside a good number of successful cases to fall back on, I personally feel that partnership between retail and key solution providers is the best way to take things forward. Of course, this has to be worked out by engaging all the stakeholders like brands, supply chain providers, solution providers, etc.

The partnership approach has worked wonders wherever it has been tried at various levels. For instance, brands have enormous knowledge of the categories that they operate in, and their vast store of knowledge and expertise can be an invaluable contribution for store operators and retailers. Most brands would love to partner with retailers to offer them the benefit of the indepth knowledge they have about consumer behaviour, which would help retailers to better streamline their merchandising plans and operations.

Recent initiatives taken by some leading retail chains like holding festivals such as confectionery mela, cooler and air conditioner fair, summer fest and back-to-school programmes in various categories, in partnership with brands, is a vivid example of a win-win combo, wherein everyone right from consumers to the brand owners got the benefit of focused activity and the retail chains generated much above their normal sales.

Most brands are keen to invest with modern retailers but look forward to visibility in the system to take corrective actions as and when required at any levels – right from the warehouse to store shelf – and that is what I think is the best way forward for growth and profit. With increasing challenges from online players, it’s time to optimise the investments in all the variable factors such as stock at godown to stock at shelves and in transit so as to get the maximum returns on the capital deployed in the business. Collaborate and prosper – that should be the winning mantra.