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South India retail in focus at The Shop

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Customer focus is the key to retail success, cohered retail experts on the first day of South India’s first mega retail event, The Shop, an Images Group event organised under the auspices of India Retail Forum (IRF). The event was held in Bangalore on May 30-31. This is the third of a series of Images regional retail forums, the first of which was held in Kolkata last year.

The event took off with retail stalwarts Bijou Kurien, president & chief executive, Lifestyle, Reliance Retail; Kodandarama Shetty, CMD, Viveks; and Bhaskar Bhat, MD, Titan Industries Limited, addressing the inaugural session. The focus was on South India’s Rs 250,000-crore retail landscape.

In his inaugural address, Kurien, officiating as the conference chairman, highlighted the various key elements that differentiate South India from the rest of the country and present retailers with unique challenges and opportunities. Higher literacy rates, lower population growth rates, and higher levels of urbanisation offer tremendous untapped potential for retailers in South India. Kurien also emphasised that the diversity in language and ethnic and cultural practices, as well as higher price and brand sensitivity of customers induce retailers to adopt distinctive retail strategies for different parts of the South.

Kurien highlighted that South India has always been at the forefront of the retail revolution, with several firsts – examples include the largest toy store, Kemp Fort; the largest film city, Ramoji Film City; and even the first mall of the country, Spencer’s Plaza in Chennai. The way forward for the retail sector in India, he said, should be a growth model that is inclusive of unorganised retailers as well.

Kodandarama Shetty reiterated the huge potential that South India offers to retailers, giving the example of Viveks – the company achieved a turnover of Rs 100 crore in just 105 days last year, which is a stark contrast to the fact that its first Rs 100 crore turnover landmark was achieved only after 30 years of operations.

Good retail, Bhaskar Bhat emphasised, is a judicious blend of information-led customer management and an attitude to serve. South India, by virtue of its high literacy levels, brand loyalty, and quality consciousness, offers huge potential for retailers. He said that backend information management and technology has an important role to play in the growth of the retail segment. Therefore, this is one retail function where the South, by virtue of its developed technology industry, can significantly contribute to the retail industry.

The inaugural session was followed by a panel discussion on “Retail Space”, and the relationship between developers and retailers. Subhrangshu Pani of Trammel Crow Meghraj was the moderator. Experts on the panel included Mahesh Khaitan, Salarpuria Developers; Tim Eynon, Prozone; Tan Ngoranga, Satyam Cinemas; Paul Merrifield, Aditya Birla Retail; Vijayant Chhabra, Archies; Kaushik Mukherjee, My Dollar Store; Dippankar S Halder, Spinach; and Kunal Sachdev, Hidesign.

Retail representatives on the panel outlined the issues associated with mall retailing that they face with various developers – among these, change of layout, fluctuating prices, and compromises on significant promises made at the time of signing the deal. The need of the hour in this sector, as explained by the various developers on the panel, is for developers to understand the needs of retailers and sustained communication between the two parties.

Tim Eynon said that there were two kind of developers in India at the moment, namely, the local developer who has been involved with residential properties and is merely looking at mall development to cash in on the retail boom, and the other who genuinely understands the retail environment and the specific needs of each retailer. It is important for retailers to work with those developers who understand the retail sector and are prepared to work towards meeting the needs of each individual tenant.

Paul Merrifield suggested that it is advisable to build a mall around consumers, that is, to first identify the kind of consumer profile that the mall intends to cater to, and then bring the right retailer to serve that consumer profile. This kind of speciality retailing will help to solve the many problems that developers and retailers are facing in India today. Addressing a query on Indian brands vs international brands in malls, Kunal Sachdev reiterated Merrifield’s point by saying that in the coming years, the kind of consumer targeted by the mall will be the key factor in deciding whether an Indian retailer will feature in it or an international one.

In conclusion, Subhrangshu Pani emphasised that the relationship between retailer and developer can benefit from constant communication between the two parties, increased professionalism, and understanding of the retail space and requirements.

Explaining the relevance of ‘The Shop’, Amitabh Taneja, Images Group head, said that South India has long been acknowledged as a pioneering base for organised retail in India. However, it is now time to move up the chain, with more advanced retailing practices that will integrate it with some of the world’s best practices in store operations, management and vendor sourcing. The Shop can emerge as a nodal point for such information and business opportunities to meet each other.

The crucial topic of retail design and shopfit was expounded upon by a expert panel that included Sanjay Mehra, NIKE; Fazle Naqvi, LMG Brands; Partha Dutta Gupta, Barista; Shantanu Saha, IDIOM; ASC Shekhar, Featherlite; Ashvini Kumar, Samsung; Syed Kashif Akhtar, Havelock AHI WLL (Bahrain); and Peter Baker, H&B Stores, Dabur. The session was moderated by Rahul Kalhan of Magnum Design.

The experts on the panel reiterated that shop and retail design is a surrogate for brand experience and that it is a silent salesman and an important factor in motivating buying. Sanjay Mehra highlighted the Nike experience by stating that companies and brands do not just sell a product; in reality, they sell a story and an experience for the customer. Partha Dutta Gupta highlighted the importance of providing customers with an overall superior experience. The panel concluded the session by highlighting the need for both localisation and standardisation across the linguistically and culturally diverse segments in India.

The discussion on merchandise and vendor management was led by Rajan Malhotra, Big Bazaar, and the experts on the panel included John Wilcox, Hypercity; Munish Hemrajani, Big Apple; Sarang Kanade, Spencer’s; Jay Gupta, The Loot; Arun Sirdeshmukh, Reliance Retail; and Aloke Banerjee, Total Home Expressions.

Rajan Malhotra stressed the importance of retailers evolving merchandise management systems that would be scalable and able to evolve over a period of time. Agreeing with his observation, John Wilcox added that it was important not to over-analyse the market and understand the customer profile in order to optimise one’s services and offerings. Malhotra explained this in the context of the Big Bazaar model for the demand-and-supply cycle – first, create the demand, and the supply will follow. In India, he added, the supply chain is extremely strong and while analysts talk about huge wastages in the supply chain, at the grassroots level it is seen that there is very little wastage as Indians find innovative uses for most things. Further, the panel concluded that private labels and brands are equally important for any retailer, and that private labels are a way of growing category penetration.

The first day concluded with the session on services in retail. The lead speaker for this session was C Gopalakrishnan, managing director, N Supermarket. The experts on the panel included Ronojoy Sengupta, Bata; Uday Sharma, SafeExpress; Mohit Oberoi, Polaris Retail Infotech; and Sumit Ray, Home Solutions Retail.

The panellists were in agreement that the concept of services has changed over the years, and today, customers expect faster turnover time and improved levels of service from all retailers. In order to ensure that customers get what they expect, there are three major aspects that need to be kept in mind – logistics, which includes transport, government taxes, restrictions, etc.; human resources, high quality of front-end staff, highly motivated staff who will exude their own passion for the job and thereby influence customers; and IT, automation of key backend processes, checkout time, etc. The panel also addressed the issue of attrition and poaching in the industry, and stressed the need for companies to spend time and money on training and retaining their retail staff.

The first day’s proceedings were wrapped up with the formal release in Bangalore of the retail visionary Kishore Biyani’s book “It Happened in India”. The book, which has earlier been issued in Mumbai and New Delhi, relates to the Big Bazaar philosophy.

Day II of The Shop saw intense discussions among CEOs and top executives of well-known retail chains, on South-based retailers going national as well as the moot point of southern markets being really different from the northern ones.

The first session focused on South-based retailers and their success stories. The panel comprised BA Srinivasa, Viveks; VP Harris, Witco; A Mahesh Raju, Digital Shoppe; Hemanth Bothra, Trust Chemists; and C Gopalakrishnan, N Supermarkets. The session observer for this discussion was Raman Mangalorkar, principal, AT Kearney.

The session focused on the success stories of each of the panelists, who started out in a small way in one city and then over the years expanded to multiple locations and multiple cities in the region. On the question of expanding their businesses to other regions in the country, namely North India, most of the panellists reiterated that their expansion plans to other parts of the country will take place once they have studied the markets, consolidated the supply chain, and have a trained sales force in place. Expansion plans are clearly on the cards for each panelist, with N Supermarkets aiming to open 60 to 70 stores over the next five years in the South, Viveks planning to go national with 100 more stores across the South and West over the next five years, and Witco planning to open five more stores in Bangalore and entering the Hyderabad market.

The second session for the day focused on the major lifestyle stores in South and their perspective of the North-South divide. The session panellists included Dilip Kapur, Hidesign, who was also the lead speaker for the session; Chitranjan Dar, ITC; CK Venkatraman, Tanishq; Mahesh Rao, Carbon; Thorsten Allenstein, Triumph; and Shumone Chatterjee, Levi’s. The session observer for this discussion was Harish Bhat, Titan. Other participants in the discussion were Jay Gupta, The Loot; Venkatramani K, Peter England; Tim Eynon, Prozone; Sanjay Luthra, Mattel Toys; and Rajeev Merchant, Portico.

The session opened with Dilip Kumar outlining the Hidesign expansion strategy that highlights the key differentiating factors of the brand such as craftsmanship, materials, and ecological value by use of vegetable tanned leather. The panellists differed in their viewpoints on the southern market vs the northern market. The general consensus was that westernised fashion brands do not require a change in strategy for different markets, whereas brands that compete in the traditional or ethnic market space need to customise their merchandise, pricing strategy, and marketing communication strategy for each market. What also emerged from this session was the fact that most retailers see the gap between the North and the South narrowing, and retailers would need to keep that in mind.

Explaining the relevance of The Shop, Amitabh Taneja, Images Group head, said that South India has long been acknowledged as a pioneering base for organised retail in India. However, it is now time to move up the chain, with more advanced retailing practices that will integrate it with some of the world’s best practices in store operations, management and vendor sourcing. The Shop can emerge as one of the nodal points for such information and business opportunities to meet each other.

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