The opportunity that modern retail sector provides is gigantic and the stakes are high. Although the challenges are immense and so are the rewards, but can anyone ignore the fact that many of the global retailers have made it to the Fortune 500 list and Walmart is an epitome example for the same. Retailing today is one of the largest private industries in India and the second largest employer after agriculture. For this special annual edition of IMAGES Retail, in the following few pages, we bring you the views of dozens of modern retailers about the challenges and opportunities facing the Indian retail industry and what needs to be done to unleash their true potential.
In 1869, the Mumbai Crawford Market could be said to be the first form of shopping centre in India; then in 1874, the Hogg Market was developed in Calcutta (now called as Kolkata). Now known as the New Market, it was designed by an East Indian Railways Architect, R.R. Banya, and named after the municipal commissioner of Calcutta, Sir Stuart Hogg. A decade back, retail dwelled in the 10×10 sq.ft. small shops of Chandni Chowk, Johari Bazaar or Crawford Market ruled by fancies of the shopkeepers. Not to forget the haat bazaars, open markets and mandis was the place to be. The smell of fresh vegetables and fruits laid out on wet jute matt attracted shoppers every morning with bags to fill. A shopper could just wait outside the shop for a few minutes practically bargaining for every paisa to be spent on the products; they could not cross the wooden barricade to touch or analyse the products or make comparisons with other alternatives. Charminar or Dawat basmati found place only in select premium shops in the city. One could not find any branded commodities on the shelves and the product packs did not have any price labels, although some products like Volfarm Ketchup, Nirma washing powder or Vicco Vajradanti cream did have a manufacturer suggested retail price (MSRP) pre-printed on the packaging. There are still markets in some parts of India that are yet to taste or experience the glamour of retail. The retail shops sourced their products from a chain of middlemen who marked up the product as it moved from the farmer or producer to the consumer.
Statistically, over 14 million outlets operate in the country and only 4 per cent of them are larger than 500 sq.ft. (46 sq.m) in size. India has about 11 shop outlets for every 1,000 people. Family-run businesses, which lacked the scale to procure or transport products at high-volume wholesale level, limited to no quality control or fake-versus-authentic product screening technology; they had little or no training on safe and hygienic storage, packaging or logistics, no after-sales support or service cash transactions, and no products return concept.
Then the Government of India entered into the so-called retail in rural India via franchisees called Khadi Bhandar purely to safeguard farmers from the whims of producers and middlemen. These stores serve as outlets for products made by the village industry, such as Khadi, matchsticks, incense sticks, decorative items made from wood and earth, ‘ahinsak’ (non-violent) honey, ‘ahinsak’ leather items, etc.
The concept of shopping centre came into existence in year 1869, with Mumbai’s Crawford Market and Kolkata’s New Market earlier known as Hogg Market, in the year 1874. The underground shopping complex, Palika Bazaar, in New Delhi was established in the late 1970s and mini malls cropped up on the Bengaluru Brigade Road in the ’80s. The effort to bring in retailing by manufacturers like Raymond, S. Kumars, Bombay Dyeing and Grasim came in 1980s through dealer network pioneered by DCM Group and Bata. Titan introduced the concept of organised retail and established a number of showrooms for premium watches.
Until the 1990s, regulations prevented innovation and entrepreneurship in Indian retailing. But the pure retailer approach came to the fore in 1999 with the establishment of Ansal Plaza in New Delhi and Crossroads in Mumbai. India in 1997 allowed foreign direct investment (FDI) in cash-and-carry wholesale businesses with prior government approval, which was later relaxed and made automatic in 2006. During 2000 to 2010, Indian retail attracted about US$ 1.8 billion in FDI, representing a very nominal 1.5 per cent of total investment flow into India.
Until 2010, intermediaries and middlemen in India dominated the value chain, hence making margin norms and pricing of produce ambiguous. This, in turn, led to the stagnation of growth and innovation in Indian retail industry.
Between 2000 and 2010, consumers in select Indian cities had gradually begun to experience the quality, choice, convenience and benefits of organised retail industry.
Until 2011, the Indian central government denied FDI in multi-brand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail was limited to 51 per cent ownership and a bureaucratic process.
Eventually, in November 2011, the government announced retail reforms for both multi-brand and single-brand stores. These market reforms paved the way for retail innovation and competition with multi-brand retailers such as Walmart, Carrefour and Tesco, as well single-brand majors such as IKEA, Nike, and Apple. The announcement sparked intense activism, both in opposition and in support of the reforms. In December 2011, facing pressure from the opposition, the Indian government placed the retail reforms on hold until it reached a consensus.
In 2012, India approved reforms for single-brand stores welcoming anyone in the world to innovate in the Indian retail market with 100 per cent ownership. However, it imposed the requirement that the single-brand retailer source 30 per cent of its goods from India. The government continues the hold on retail reforms for multi-brand stores. In the same year IKEA announced its intentions to invest US$ 1.9 billion in India and set up 25 retail stores. Finally, the Government of India announced the opening of FDI in multi-brand retail with 51 per cent FDI in the same, subject to approvals by individual states under legal compliance.
A Wall Street Journal article claims that fresh investments in Indian organised retail will generate 10 million new jobs between 2012 and 2014, and about five to six million of them in logistics alone; even though the retail market is being opened to just 53 cities out of about 8,000 towns and cities in India.
City-wise growth & penetration of retail
According to a report on the retail potential of Indian cities, by real estate consulting firm Jones Lang LaSalle (JLL) India, the next 13 emerging tier-II and -III cities after the 7 metro cities, witnessing growth in retail market potential and maturity are Ahmedabad, Chandigarh, Surat, Amritsar, Nagpur, Vadodara, Coimbatore, Ludhiana, Lucknow, Jaipur, Indore, Kanpur and Raipur. Tier-III cities are emerging as attractive destinations for retail real estate primarily due to development of infrastructure and increasing purchasing power of consumers in these markets, according to JLL. Excellent infrastructure, increasing per capita income, fast growing per capita expenditure and consumption, and the growing number of migrants from many parts of the country due to rising job opportunities, are key drivers for the high market potential in these cities.
According to JLL, while Ahmedabad, Chandigarh and Surat have already emerged as high potential markets, cities such as Kanpur, Amritsar and Raipur are also slowly moving up in their market potential and retail maturity index. Apart from Ahmedabad and Chandigarh attaining high retail attractiveness in 2013 as against 2011, the growing office market is another important factor that has led to retail development in the two cities. Ahmedabad has seen a significant shift across all real estate sectors in recent years, especially in the retail sector but Chandigarh still surpasses Ahmedabad in terms of mall stock and thus has a higher position in retail maturity. Surat has increasing retail mall supply and its fast growing industrial sector is giving a boost to retail space development. In retail mall development, Jaipur is ahead of Ahmedabad and close to Chandigarh.
Cities like Mumbai and Delhi have witnessed an influx of big-box, fast-fashion and high-end retailers. Other leading cities such as Bengaluru, Pune and Chennai have also seen reasonably good absorption of retail spaces on the back of high consumerism supported by strengthening IT-ITeS sector and the strong auto, manufacturing and biotech sectors.
Organised retailers are increasingly turning towards these smaller cities to set up their stores.
There is increasing focus on profitable growth in the sector by majority of retailers focusing on transformation of existing operations rather than introducing new formats.
According to IMAGES Retail Research Team and as mentioned in India Retail Report 2013 (IRR), retailers are expecting existing formats to deliver a like-to-like growth of around 10 per cent this year.
Leading retailers seem to be driving the dual themes of expansion and internal improvement for sustainable growth expecting that customer sentiments will improve, and will provide further impetus to the growth of the organised sector in the coming years.
According to a survey on CFOs in ‘Pulse of Indian Retail Market’ by E&Y and Retailers Association of India, globally India is amongst the top 10 retail markets. In 2013, the Indian retail sector was estimated at US$ 520 billion and was among the largest employers in the country. By 2018, the Indian retail sector is likely to grow at a CAGR of 13 per cent to reach US$ 950 billion.
The Indian retail sector is set to grow rapidly with a gradual shift towards organised retailing formats. Organised retail penetration is expected to increase from 7.5 per cent in 2013 to 10 per cent in 2018 at a robust CAGR of 19–20 per cent during the same period. This will be driven by a combination of demand, supply and regulatory factors, which are expected to be the growth engines of the Indian consumer and retail market.
Food and grocery is the largest category within the retail sector today followed by the apparel and mobile segment. While food and grocery modern retail has slowed in recent years, last fiscal the growth rate fell below double digits for the first time in India. According to market tracker Nielsen, modern retail, which accounts for 7 per cent of total sales, slowed to 8 per cent growth in 2013 from 32 per cent in 2012. In comparison, grocers, who contributed 72 per cent to overall FMCG sales, grew 9 per cent, with chemists and even ‘paan wallahs’ expanding faster despite a higher base.
India has about one million online retailers–small and large–who sell their products through various e-commerce portals. The online retail industry in the country touched US$ 12.6 billion in 2013, according to a recent report by the Internet and Mobile Association of India (IAMAI). The FDI inflows in single-brand retail trading during the period April 2000–March 2014 stood at US$ 106.66 million, as per data released by Department of Industrial Policy and Promotion (DIPP).
The Indian online retail industry is witnessing an upward swing and has attracted a cumulative funding of US$ 1,650.5 million since 2009. Out of the total funding, 65 per cent has gone to horizontals and 25 per cent to fashion and apparels including jewellery. Flipkart and Myntra, who are now a single entity (though they will operate differently), have together garnered 40 per cent of the total funding invested in Indian e-commerce so far, according to Juxt Data in the India Brand Equity Foundation (IBEF) report.
Government initiatives for 2014
Other than approving FDI in single- and multi-brand retail, recently, the Competition Commission of India (CCI) approved the proposal of Tesco buying 50 per cent equity in Trent, which is the first ever FDI proposal in multi-brand retail trade.
The Confederation of All India Traders (CAIT) has signed a Memorandum of Understanding (MoU) with eBay to train domestic retailers to use the online market space as an additional tool for expanding their business. The agreement will enable Indian traders to export via eBay to 201 countries and sell at 4,306 Indian locations.
Tracking performance of major retail chains in India such as such as Big Bazaar of Future Group, Reliance Fresh of Reliance Industries, Aditya Birla Group’s More, Bharti Retail’s Easyday and Tata-owned Star Bazaar all posted double-digit sales growth, reflecting their growing popularity among shoppers despite economic slowdown.
In the last two years, most retailers have been consolidating their operations by closing, relocating or rationalising unprofitable stores. Mounted with huge inventories from previous seasons, retailers had to sell stocks at huge discounts to cover the huge cash crunch. Despite not opening a single store last year, Trent Hypermarket recorded a 21 per cent increase in total revenue to `801 crore last fiscal and a loss of `72 crore. Aditya Birla Retail added just three hypermarkets and two supermarkets under the More brand and posted a 10 per cent sales growth with a 5 per cent decline in losses as it shut over a dozen unviable stores. At the same time, there has been more focus on profitability and employee management per square foot apart from better inventory planning unlike the carnage we saw last year when retailers had to sell stocks at a huge discount.
Future of retail: 2014
Favourable demographics, increasing urbanisation, nuclear family concept, rising affluence amid consumers, growing young and working class, growing preference for branded products and higher aspirations are the key factors driving retail consumption in India. Other than the demand related factors mentioned above, regulatory initiatives for the expected roll-out of the goods and service tax, supply related factors like rapid real estate and infrastructural development, easy availability of credit, innovative physical and online channels, increased service orientation, etc. are all driving growth in the Indian retail industry today.
Where on one side the city of Mumbai saw the rise of mini-modern stores like Sarvodaya supermarket to meet the needs of the modern consumer, it also saw the closure of Kds Lowprice Supermarket due to operational and sourcing issues. Stores like Apna Bazaar, who were one of the few government-owned subsidised retail stores in the city, have transformed to adopting modern practices to meet changing consumer needs.
A comparison of long-term trends and a study of shopper behaviour reveal that the number of shoppers who visit modern trade on a regular basis has doubled over a five-year period. According to a study at Nielsen, today, over a fifth of shoppers (21 per cent) claim that they spend more on modern trade than traditional trade compared to just 12 per cent five years ago.
The study also maps that one of the key attitudinal and behavioural changes noticed is more ‘deal-seeking’ behaviour amongst the emerging Indian shopper. The proportion of shoppers actively seeking offers in the stores they frequent has shot up from 39 per cent to 54 per cent marking a sudden affinity for promotions at a time when shoppers are price sensitive. Retailers too have succeeded in creating ‘deal-weeks’ as annual events that cater to a growing breed of bargain seekers.
Today, an estimated `1 in `6 spent on FMCG products is spent on items that are on offer. Deal seeking is now combined with a growing preference for bulk packs acting as an important strategy to neutralise the impact of rising prices.
As Indian retail gets more and more organised, various retail formats are emerging to capture the potential of the market. Some of them include:
- Mega malls
- Large and small supermarkets
- Departmental stores
These are a few formats that are flourishing both in the big and small regional markets.
Retailers saddling with complex challenges in 2014
Pricing is a complex topic in current retail in India. It is often poorly executed as retailers take a short-term view of events. There have been multiple pricing structures (regular, promotional prices, channel- and market-based pricing) with multiple item relationships (sizes, brands, and categories) spread over stores in different geographies. Majority of times prices are set keeping in mind competitor pricing instead of the consumer’s willingness and ability to pay.
Studies have found that 54 per cent of marketers already have invested in Big Data solutions, and 9 out of 10 marketers plan to do so in 2014. Retailers are still struggling to understand how to put historical data in use and adopt predictive data to understand what the customer will want in the future. Mining customer data and deriving relevant, actionable insights from them through the development of sophisticated modeling techniques is aimed at today and years to come.
Understanding how your customer expects to be ‘spoken with’–whether through an app on their smartphone as they shop in your store or via an instant chat on your website–has continued to challenge retailers well into 2014.The brick-and-mortar stores are trying to leverage every opportunity they get to engage customers and build loyalty in order to compete with the latest move of online channels going the brick and mortar way to create more touch-points. Innovative technologies, such as smart shelves, Wi-Fi hot spots, point-of-sales (POS) systems, virtual storefronts and endless aisles, are some of the many tools being used to engage customers both in store and elsewhere.
The customer’s need for speed has grown in 2014. The ‘always connected’ consumers expect fast answers to questions or requests. And businesses have already started responding to the requests via live chat, SMS alerts, 24/7 hotlines, and social media and many more ways.
According to the survey on CFOs in ‘Pulse of Indian Retail Market’ by E&Y and Retailers Association of India, at the store level, the top two focus areas in 2014 for retailers are driving revenue growth and inventory management. Furthermore, cost rationalisation features as the third most important area.
Inventory management has been a top concern for CFOs this year, thanks to the economic slowdown and piles of inventory lying in retail warehouses. This is also largely driven by the vagaries in the Indian supply chain such as low fill rates, long lead-times and ordering cycles, and lack of process orientation. These result in high inventory holding, low turns and high investment in stock.
At a company level, profitability features as the top priority for retailers. This is largely expected to be driven by improving supply chain, efficient buying and merchandising, and keeping other corporate costs in line with the scale of business.
For department stores, improving customer service seems to be a bigger focus area than improving supply chain.
For hyper markets, department stores’ as well as specialty stores’ talent retention seems to be a joint third most important focus area at the store level.
The other challenges include high operating costs, complex regulatory frameworks, inflation, etc.
The dramatic shifts in India’s retail landscape have created an unprecedented view of what the future shape of consumption in India will look like. Driven by a surge in the number of Indian shoppers experimenting with new formats, modern trade has firmly secured its place in the Indian marketplace. However, the opportunity to grow even further is tremendous. What it takes to make a dream retail scenario in India, is what players and brands need to focus on now.
The road ahead
India remains a largely untapped and unorganised retail market, with several international retail players yet to commence operations in the country. India holds a substantial advantage over other emerging retail destinations owing to its strong domestic consumption and low rate of market penetration by overseas retailers. The country’s new middle class is increasingly becoming brand conscious and willing to spend on quality goods, a trend that is creating numerous business opportunities for mid-range international brands. How will retail emerge in the Indian market in years to come can be gauged from the key factors below:
Growth in e-tailing
E-commerce is expected to be the next major area for retail growth in India. E-commerce companies are increasingly going beyond digital marketing and tapping into offline customers. With this growth in the e-commerce industry, online retail is estimated to reach US$ 70 billion by 2020, from US$ 0.6 billion in 2011.
Aspiring middle class
With a population of 100 million, the tier-II and -III cities in India are larger than countries such as Germany and the UK. The retail sector in the small towns and cities here will increase by 50 to 60 per cent pertaining to easy and inexpensive availability of land and demand among consumers. According to an excerpt by PwC, mentioned in India Retail Report-2013,(IRR) it is estimated that by 2021, approximately 67 per cent of Indians will still live in rural areas. R&C companies engaged in localising products for the Indian rural market (price-points, packaging, SKU size, promotion, etc.), are likely to reap benefits from this segment.
Increased purchasing power
The share of spending for miscellaneous goods and services such as non-institutional medical expenses, consumer services, and savings for education is expected to increase from 15 per cent in FY 2010 to 23 per cent in FY 2021.
The opportunities in food and grocery retail are immense, given that it constitutes about 69 per cent of the country’s total retail market, according to panel members at the seventh Food and Grocery Forum India.
Changing population demographics
According to an excerpt by PwC, mentioned in India Retail Report-2013, (IRR), India’s working population is expected to be 117 million over the next decade as compared to China’s four million.
In the following decade, from 2020, the former will add 98 million to its workforce, while China will contract 51 million.
Omni channel retailing will be the norm
Both online and offline retailers will continue to realise the need to connect with users on multiple channels and touch-points simultaneously or even interchangeably. Shoppers today, and in days to come, will expect cross-channel inventory visibility. Synchronised customer care experience and mobile commerce usage will increase integration of offline and online analytics. There will be increased in-store view and buying and viewing online. In addition, collaborative shopping carts, marketplaces, flexible payment options, etc. will also emerge.
Technological integrations will increase
Technology will be even more integrated in brick and mortar stores. In-store mobile devices like tablets and smartphones can be used in several ways including receiving payments, demonstrating products, offering more information, and encouraging social sharing. Studies anticipate that major retailers will implement immersive experiences with the use of large, interactive displays that are meant to fully engross customers to the point end to end. Such practices are already being followed in western markets with brands like Nike and Gucci taking the lead.
When a manufacturer is selling 1 kg of clarified butter, the customer needs to verify the weight while the manufacturer needs to ensure that the exact weight or content promised has been delivered. But why does the customer need to know the weight or measurement of the readymade garment they are buying? Clothes are not sold by kilos! “There is a constant harassment by the Department of Technicalities by laying down a bunch of rules without measuring their applicability in the concerned segment,” says Manohar Chatlani, CEO, SOCH. The policy-makers should observe long-term and economy-friendly policies to enhance the growth of industry as well as of the economy. According to Vaibhav Singhal, MD & CEO, Savemax, the government should tighten the GST VAT system as it suffers from many shortcomings, which create problems with organised sector failing to compete with the unorganised sector. Avnish Kumar, Director, Neerus comments: “The government should introduce FDI in every industry in India with single-window clearance. It will help pump in more money in the market and will balance the country’s demand and supply situation in retail.”
Mehul Thakur, Director, Viva Group feels the Indian government should also regularise policies on e-commerce so that both brick-and-mortar and e-commerce operate in harmony. “Some of the archaic policies in the ‘Mandi’ system need to be relooked by making mandis more professional and removing cartelisation within them. It should introduce better policies for investment in supply chain and logistics that will make transporting goods both cost-efficient and timely,” says Jitendra Chauhan, CMD, Jade blue.
According to Himanshu Chakrawarti, CEO – The MobileStore: “We need simplification on the procedural front, required to open a new shop. Smoother and speedy movement of approvals, licenses and inspections will help timely opening of new outlets, faster expansion, iron our operational and procedural concerns, thus our allowing them to reach-out to a larger number of consumers.”
Adding further, he says: “Goods and Service tax (GST) is one of the most awaited reforms from the government. GST introduction will bring-in immense simplicity on the tax front, which is always useful for inventory movement. With a simplified national indirect tax mechanism, we can bring-in a lot more efficiency in inventory handling, storage and logistics. This will also simplify the service tax administrative mechanism for our value added services.”
According to Ashik Hamid–Senior Vice President–Food, HyperCITY Retail (India) GST Rollout, single window licensing and simplification of labor laws are few of the important issues that government should swiftly act on.
“ Clarity on FDI in single-brand retailing. The ambiguous position of the government on the matter isn’t doing much for ‘Brand India’ in terms of the global retail space,” says Arjun Khurana, MD, Bottega di Lungavita (BDL).
One of the most important policies which should be implemented to help the retail industry is allocating land for retail area or shopping malls by the urban planning department in order to reduce the cost of retail space.
Jubliee Hill Road, number 36, in Hyderabad can be compared to the streets of London, which are a prime example of urban planning. Thakur says: “We should plan cities with more space towards open design, green patches, taking cue from western countries in developing townships, design energy efficient and green malls to reduce carbon footprint, design store designs which consume lesser energy with more environment friendly products.” Sharing similar views, Harkirat Singh, MD, Woodland says: “Urban planners should aim to minimise litigation disputes, and look for sustainable and better waste management measures.” Even Shah of V-Mart feels better intra-city connectivity, availability of broadband connectivity followed by adequate and consistent power are things one dreams for the retail industry in 2030.
Consumers and retailers both advocate that authorities of urban development and housing development in line with concerned municipal corporations should finalise the road map of land and road for the masses.
According to Hamid from Hypercity, development of Infrastructure, creation of retail and entertainment zones with tax benefits and allowing retails to operate all days of week and 24*7 should be the focus area for urban planner in order to develop retail in the country.
“Cities in our country need to be planned as per the “mixed-use” pattern of planning. This kind of urban planning carefully integrates residential, retail, institutional and cultural spaces into the same area making life simpler for citizens and boosting profits for the retail sector.” says Khanna from BDL.
A mall developer or a management strategy builds on the basic idea of interdependence between the mall and the retailer. It focuses on the business benefits that can accrue out of collaborated business management between the mall developers and the retailers. “This is not to say that the association between these two parties does not exist in the current scenario, but this collaboration has not been formalised and it is rather sporadic in nature. It is important for mall developers to share the burden, this is to say the mall and the retailer should work out a strategy where the mall focuses on not only driving customer traffic, but also works towards enhancing the overall experience while the retailer focuses on the delivering a good variety of products,” says M. Rahman, Sr. Manager – Marketing, GKB Lens.
Kumar of Neerus thinks: “The promises made by developers 5 to 10 years ago were plans for building around 1,000 malls and all retailers had committed to around 300–500 stores but now the scenario has changed where maybe there are 100 malls for 30–50 stores.”
“All the new age mall developers are taking care of the demands and needs of their retail tenants as well as of the mall visitors. I, believe a good and spacious parking is the need of the hour and malls are working on it too. Also, timely marketing initiatives and festive events that take place in a mall are giving the extra zing, bringing in more footfall and eventually leading to better sales for the retail tenants,”says
Dharmesh Patel, Director, Options.
Developers should come up with malls that comply with energy–efficient design and have a lower carbon footprint. It should not be overbuilt, but with proper research and planning to cater to the catchment areas. So far the dream of 2030 is concerned for Chauhan, developers should work to enhance viability of project development and use the latest technology and architectural know-how while developing urban or rural region.
According to Kumar: “The same goes for builders as well. Once the builder comes out with a new space then, while leasing it, they should give an opportunity to the newer brands who have been operating in oblivion till now.” Singh from Woodland believes the focus has to shift on environment-friendly construction to develop innovative retail spaces by working in tandem with the architects. The entire focus should be on functionality for the customers to make shopping experience more convenient and pleasant.
“To provide a one-stop solution infrastructure in form of Malls to support the complexes with ancillary facilities like parking space etc.” says Bharat Agarwal, Director, Clay Craft India.
Retail model/Format/Experience planners
The scenario of retail has been undergoing a transformation over the last decade and the market of retail terminology is more driven by shoppers, consumer satisfaction and happy experience. “To make a one-stop purchase destination and to deliver that wow experience, techno-crafts can help complete our dream theory of 2030,” says Chauhan.
Shah from V-Mart feels players and brands should be able to create affordable fashion stores targeting middle and aspirational group society, more technologically equipped convenience stores (24*7) and more of hardware formats (DIY). Singhal wishes to focus on retail‘tainment’ with special focus on better products, and prices to deliver a complete experience. According to Kumar: “Retailers, who own standalone stores, are able to deliver a completely different environment and experience whereas for other retailers it is either about franchising, private equity or diversifying.” On the other hand, Chatlani feels there is a growing trend towards ‘brick-and-click’ combinations and this is the only model that will survive in the future. There are tremendous synergies when one has both the formats.
“ To provide a transparent retail format with the help of technology–processes and transaction should be of minimal paperwork and effort.” says Agarwal from Clay Craft.
“To create brands at all levels and for all segments and to understand that big is not always best–that optimum is more relevant, that not one solution fits all markets and all products, and that service is the only lasting factor that will bring back the consumer,” says Rahul Mehta, MD, Creative Group.
The vital and crucial part of Dream 2030 is retail merchandise. Chatlani believes: “The success of a store is 80 per cent dependent on merchandising. A thing well bought is half sold. From outsourcing to reaching the end users would be a testing time for retail merchandisers. Effective retail merchandising has a significant positive impact on sales. Proper pricing, right quantity and the display of those products can contribute to sales, and lends to the shopping process a pleasant experience. Merchandisers should be able to make quick alignments to changing customer trends, lowering inventory using technology and better forecasting of fashion trends.”
Singh from Woodland insists that Dream 2030 can be fulfilled by creating effective store designs that stimulate all the five senses for better shopper engagement and trained store staff.
Retail pricing planners
Transparent pricing and policies have been under deep scanner in the Indian retail scenario. Keeping the price-points in check and considering the influx of international brands and e-commerce players, the focus has to shift towards value-based pricing strategies for customers. According to Kumar: “Prices tend to fluctuate. For instance, if you look at any automobile or any car, what happens is that the pricing would either be `1,000 expensive or cheaper. The pricing for a standard product is always reasonable and kept at a margin, but it fluctuates even for the man-days being put by the weaver of the cloth.”
According to Chauhan: “The pricing factor should be logically calculated to enhance the trust and faith in pricing offers. One should value the relationship with consumers as a part of services.”
Today’s educated, tech-savvy consumers bear no resemblance to their predecessors. Going shopping now entails an on-the-go, mobile experience with heightened expectations: store pickup, two-day delivery and the ability to return online purchases to the closest retail store. It’s not just about boosting sales; it’s will be about providing consumers a personalised, seamless shopping “experience” that accommodates cross-channel purchases and no-nonsense return options with a fully developed and integrated retail ware house and distribution system.
Logistics and raw material managements are key role in the area of retail sector developments and consumer satisfaction. Timely deliveries and the speed with which the consumer’s demand is catered to, will be a major challenge. But shah feels A centralised warehouse, In house logistics and cluster based expansion strategy where the distance between 2 stores should not be more than 100 km should be the focus to make dream 2030. Thakur says along with speedier and safe deliveries reducing overheads cost in logistics by developing newer platforms will be the game”.
Retail HRD planners
Motivation and human relation value would be the thrust of HR planners to protect the unorganised and organised human resources. Trends point out towards maximum efforts being put by retailers on training and educating youngsters between 18–28 age group and directing them to the right direction to obtain maximum job data on positive direction. At Woodland, the major focus to realise the dream will be on skill development of employees on a regular basis to ensure low levels of attrition, offering good growth and career progression options. All this in turn works towards developing robust performance management systems to keep the employees motivated and acknowledge their efforts.
Nikhil Ranjan, CEO, William Penn, believes: “What can turn around the face of retail is implementing flexible working hours for retail staff so that they can be more productive and pursue alternate interests or careers.” According to Kumar: “The company cannot afford to miss any single person who is fit for the job and that is what we expect from HR planners in dream 2030.” Thakur suggests retailers should aim at creating multi-skill learning curriculum for ground staff, which will lay the foundation for different skill-sets. The focus should be more on in-house training and development programmes, to source staff locally, etc.
Chakrawarti from The Mobile Store says: “With the higher attrition rates and low employee engagement that we see in this industry, it is an increasingly daunting task for retailers to get access to a readily deployable pool of well trained staff. The overall industry would benefit with more focus on affordable vocational courses on retail that are challenging enough to create future ready talent and yet be a viable career option. Inventory management is the key to the success of any retail business. Plugging the shortage of talent pool with the right analytical skills that are needed in this area will be of great benefit.”
Hamid, opines: “Currently, there are very few training centres and these mainly focus on Store Operations training. The industry needs a lot more of these. There is a need for more specialised training institutes.”
IT has been gaining more traction with changing times. Technological integration with various retail functions to provide a seamless shopping experience will be the focus in the coming years.” Patel from Options, believes: “IT is the building block of new age retail and if its not at place then everything will fall apart. IT can help us in improving our inventory management, SCM and logistics. IT is mandatory for the smooth functioning of retail.” Singhal dreams of 2030 retail to focus on standardisation of retail systems so that the packages can be used directly off the shelf like the current accounting systems. This will reduce huge investments in the development of new systems. Faster deployment of familiar systems will also increase the company’s efficiency and reduce losses due to creation of processes. Ranjan says: “A system that recognises the customer’s preferences and hence theirs requirements when they walk into a retail store is what will make a difference in the coming years.” Shah feels: “Big data analytics, predicting customer needs and integrated social mapping of customer will be the key focus areas in dream 2030.”
Going shopping now entails an on-the-go, mobile experience with heightened expectations: store pickup, two-day delivery and the ability to return online purchases to the closest retail store. It is not just about boosting sales but also about providing consumers a personalised, seamless shopping ‘experience’ that accommodates cross-channel purchases and no-nonsense return options with a fully developed and integrated retail warehouse and distribution system.
Logistics and raw material managements play a key role in the area of retail sector development and consumer satisfaction. Timely deliveries and the speed with which the consumer’s demand is catered to, will be a major challenge. But Shah feels that a centralised warehouse, in-house logistics and cluster-based expansion strategy where the distance between two stores should not be more than 100 km should be the focus to make dream 2030. According to Thakur: “Along with speedier and safe deliveries, reducing overheads cost in logistics by developing newer platforms will be the game changer.”
Manufacturers & suppliers
“Besides styles, quality and numbers, the manufacturer has to master in delivering the products on time. In the past few years, retailers have been stuck with excess stock leading to long periods of EOSS, which affects the bottom-line in the long run,” says Chatlani. According to Singh: ‘sustainable manufacturing’ is the key word. The government should facilitate a seamless integration of local manufacturers in the international markets with relaxation in duties and taxes, etc. in order to generate more inflow of money. According to Chauhan, procurements and proper planning with vision of latest taste and prevailing market up-gradation would surely act as growth driver. Singhal feels a few other points of focus will be investment and modernisation to reduce costs of manufacturing, standardisation and palletisation of products, and efficient packaging.
No economy can grow without micro balance eco-friendly academic criteria and the implementation of the same at the right time. Hiring techno crafts and proper utilisation of funds would lead to development of world-class technical institutions and organisations, and a positive step towards Dream 2030. According to Singh, such academies should be developed which recognise retail as a full-fledged subject and provide specialised courses in colleges to students, introduce the various aspects of retail in school-level curriculum and organise regular workshops on retail, e-commerce and cognate subjects for the employees.”
Chatlani believes: “The Education system has to equip personnel not only theoretically but practically as well. Focus needs to be shifted to developing communication and soft skills.” According to Kumar: “People are very broad-minded about relocating and this is the biggest advantage India has, as it can source multiple talents from across the country.”
However, there are a few challenges that the industry faces which need to be dealt with in order to realise the complete scope of growth in the Indian market.
FDI not being allowed in the retail sector may put off many brands. But franchise agreements circumvent this problem. Along with this, regulations and local laws besides real estate purchase restrictions pose additional challenges.
Despite these challenges, many international brands are thriving in the Indian market by finding solutions around these issues. A company that plans to enter the Indian market at this juncture can definitely look forward to great business if it analyses and puts efforts on all parameters. With good planning and timely implementation that connects with the Indian consumer, any brand can go far ahead in the Indian retail revolution.