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India Retail Forum’08 – Day 3 at a glance

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The three-day retail extravaganza ‘India Retail Forum 2008’ that was held at The Renaissance, Mumbai came to an end witnessing the who’s who of the retail fraternity on the podium in successive sessions.

In the session entitled ‘Partners in Progress – Retailers Association of India’ in the first half of the concluding day, the forum witnessed retailers and thought leaders debating, consolidating and collaborating their thoughts on where the industry has gone wrong and what needs to be done for future growth.

The session ‘Real Estate and Retail’ saw the panel discussing various issues faced by both the real estate developers as well as the retailers. Collectively voicing the need of relooking and maintaining the partnership between both the industries, the panel members were of the opinion that the challenges faced by both the industries needed to be addressed together. The session concluded with the panelists agreeing on a list of challenges that plague both the industries today, including the MRP regime, consumption of energy, property tax and most significantly catering to the consumers needs. Lobbying with the government was also one of the consensus that came out from the panel discussion.

In various sessions, these leaders not only pointed out the weaknesses of retail industry but also listed some promising fields of opportunities and have given mandate to bring retail to a great height.

Opportunities:

As said by BS Nagesh, chairman, Retailers Association of India (RAI) and managing director, Shoppers Stop: “There is a great opportunity in the Indian consumer market. Even if the modern retail market does not succeed, it still does not stop any retailer from capturing the market share which is expected to grow.”

Elaborating the retail story which is yet to unfold, Bijoy Kurien, president and chief executive officer, Reliance Lifestyle Holdings, said, “We are still not in the era of USA where the market has already saturated. You can still get your customers, make profits, though it will be scrunched. However, everyone can still grow by leaps and bounds.”

Presenting an overview of the retail industry in India and Asia and forecasting the future of retail in India, Loh Wai Keong, senior vice president, CapitaLand Retail Ltd, said, “India currently is the fourth largest economy and is all set to become the third largest by 2013, leaving Japan behind. There will be around 300 million middle class consumers by 2013 and the organized retail market share will reach 10 per cent of the total market share. By 2025 it will grow to 24 per cent of the total market share as compared to the current 3 per cent.”

Setbacks:

Kishore Biyani, chief executive officer, Future Group, took on the issue of expensive real estate saying: “The more expensive the mall, the less customers will come there as no customer is willing to spend more.” He cited Mother Teresa’s quote in context of reaching out to the consumers, “Give till it hurts”.

While Ajit Joshi, chief executive officer and managing director, Infiniti Retail Ltd, in context of EMI said: “We see growing profits and an increased trend in EMI. The issue is not margins but costs. The biggest challenge is the illogical rentals and one of the solutions to lower costs is to have an efficient back-end.”

Sadashiv Nayak, chief executive officer, Food Bazaar, highlighted the key challenges faced by the food and beverages sector. According to him, though most of the distribution channels in India have evolved, the MRP regime is restricting the growth model. Therefore, the brands need to partner with the retailer so that products across categories can be made available under one roof, which will in turn cut down the manpower cost.

Raghu Pillai, president and chief executive officer – operations and strategy, Reliance Retail reiterated: “The major challenges today in the retail sector are the availability of retail space, infrastructure, technology, skilled manpower; legislative policies, licensing and supply chain management.”

Care to be taken:

Ashok Bhasin, managing director, Wadhawan Food Retail, while commenting in the round table discussion on ‘The challenges of executing Indian retail’ said: “The profile of Indian consumer has changed enormously and he or she should not be underestimated. The consumer is ready for change, however, the retailers must be sensitive to customer needs and customize the offerings accordingly.”

Tarun Joshi, chief executive officer, Brandhouse Retails, said: “In the fashion and lifestyle sector, the customer is forever seeking change. It is a hygiene factor in this sector, which every brand has to cater to”.

Citing an example of how tailoring shops are gradually fading out and the demand for ready-to-wear garments has increased, he further added, “In the case of luxury brands, space is the biggest challenge and joint ventures between international brands and mall developers or Indian retailers are not a long term solution.”

Commenting on the workshop entitled ‘Non stop retailing and retail benchmarking’, Gibson Vedamani, chief executive officer, RAI, explained: “Strategic benchmarking and operational benchmarking are the two ways that can help the retailers in benchmarking their business.”

He further elaborated: “Strategic benchmarking means looking at the various factors like store formats, store positioning, customer retention and location, whereas operational benchmarking are the footfalls, conversion ratios, operating parameters, basic rates (revenue and expense) and resource planning. Apart from this, performance benchmarking is also an important criterion for benchmarking a particular business.”

He said, in India, benchmarking is not essential but it is necessary.

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