India's retail industry

"OH Dear ! Oh Dear ! I shall be too late !"
So muttered the white rabbit just before he plunged into wonderland, with Alice in pursuit. Similar utterances have been escaping the lips of many Indian retailers, as it was confirmed that new players are entering the warland.
Hence the rush , as many new retailers head down the rabbit hole, searching for their own adventures in warland.

So, here is some news :
Gitanjali Group(famous for its jewellery stores) to invest Rs 100 crore in Luxury Connexions and Luxury Malls
Wills Lifestyle(clothing retail) to increase stores to 100
Dabur India plans tie-up with kirana store
Mahindra & Mahindra may tie up with British grocery giant Tesco
Godrej to launch 20 speciality boutique stores by 2010
Spencer to open 1,000 stores by 2009
RPG Group for Rs 1,000 crore expansion
Subhiksha stores touch 1,000
Future Group to open 225 Big Bazaar stores
Bharti Retail to have supermarkets and hypermarkets; will partner with kirana stores through franchise
Reliance Mart in Bangalore and Gujarat; 169 Reliance Fresh stores; may buy 13 per cent stake in France's Carrefour

Total retail space: 1 million sq. ft in 2002; 40 million in 2007; 60 million sq. ft in 2009

The warland is just heating-up. As a footballing metaphor goes ' the final whistle is still some way off and the match may well go into extra time'. Similarly, I believe that even the India retail war will go a long way, may even end in penalty shoot-outs.

Monday, July 23, 2007

Hypermarket and Supermarket

Note : The information is taken from Wikipedia.

Hypermarket :
In commerce, a hypermarket or multi-department store is a superstore which combines a supermarket and a department store.The result is a very large retail facility which carries an enormous range of products under one roof, including full lines of groceries and general merchandise.When they are planned, constructed, and executed correctly, a consumer can ideally satisfy all of his or her routine weekly shopping needs in one trip.
Hypermarkets, like other big-box stores,typically have business models focusing on high-volume, low margin sales. Because of their large footprints — a typical Wal-Mart Supercenter covers 150,000 square feet (14,000 m²), a typical Carrefour 210,000 square feet (19,500 m²) — and the need for many shoppers to carry large quantities of goods, many hypermarkets choose suburban or out-of-town locations that are easily accessible by automobile.

Supermarket:
A supermarket is a departmentalized self-service store offering a wide variety of food and household merchandise. It is larger in size and has a wider selection than a traditional grocery store and it is smaller than a hypermarket.
The supermarket typically comprises meat, produce,dairy, and baked goods departments along with shelf space reserved for canned and packaged goods as well as for various nonfood items such as household cleaners, pharmacy products, and pet supplies. Most supermarkets also sell a variety of other household products that are consumed regularly, such as alcohol (where permitted), household cleaning products, medicine, clothes,and some sell a much wider range of non-food products.
The traditional supermarket occupies a large floor space on a single level and is situated near a residential area in order to be convenient to consumers. Its basic appeal is the availability of a broad selection of goods under a single roof at relatively low prices. Other advantages include ease of parking and, frequently, the convenience of shopping hours that extend far into the evening. Supermarkets usually make massive outlays for newspaper and other advertising and often present elaborate in-store displays of products. Supermarkets are often part of a chain that owns or controls (sometimes by franchise) other supermarkets located in the same or other towns; this increases the opportunities for economies of scale.

Tuesday, July 17, 2007

Coming Soon

Coming Soon : Is retail , next IT ?

Friday, July 13, 2007

Book and Battle

I recently read the book ' It happened in India' and the story is about making of a monster - Big Bazaar and its parent retail company Pantaloon retails. The book is written by founder of the group himself , Mr. Kishore Biyani.
The book has impressed me in many ways :

The contents are straight forward. I dont see any masala being added to it.
Also it is written in pure business english. Apart from few unknown words(1 or 2), the book can be read by a 15 year old reader.
The book is sold at Rs.99 and so anybody can afford it.

My takings and conculsions from book are many :

To win the battle of retails, chains have to Indianize their store, Indianize their thinking and Indianize their approach to customers.
Plan in advance on where to setup the store and study the neighbourhood to fix the commodities to be sold at the store.
No two stores in India will be same. Customise -> Customize and -> Customize !
Indians love offers, so once in a while open the shop with as many offers as possible.

A Buddhist maxim says - "Your enemy is your best teacher". So other retailers have to learn from Big Bazaar and prepare for war, cos few battles are without oddities.

Monday, July 2, 2007

The piper at the gates of dawn - II

SD's retail tale for Vishal Megamart looks as shown below :

Net-net , the store needs to maintain itself and will reap the benefits in near future. It tailors to various needs and I loved the store cos it had some good features.

the GOOD :

Store has in-house cafeteria and small refreshment section.
Buns and other bakery products are prepared fresh and at the location.
First store where I have seen the sports section.
Outside store , VMM has allowed Mehandiwallah to use some space. So till dad/husband shops, girls can get mehandi on their hands.

the BAD:

Store needs to be better managed.
The floors are so big that people don't understand the exact location of each section.
The ground floor, with everyday groceries, has to have some shelves to keep the items.

the UGLY:

Clothing section is on wrong floor and totally mismanaged.
The grocery items are kept in cardboard boxes and it looks nasty !

Net-net, I believe there is lot of scope for improvement for Vishal megamart. Overall rating stands at 6.5 out of 10

Monday, June 25, 2007

The piper at the gates of dawn

Couple of weeks back, news flashed on my PC "Public issue of Vishal Retail has received tremendous response from investors. Overall, the issue oversubscribed 81 times."
And few months back, when Vishal Retail issued details about its IPO it made no news. People still did not know about the company and only few had seen its stores. But it pulled-off beautifully in the end and now its 81 times oversubscribed.
Sir Terry Leah, TESCO's chief executive once said " In retailing, there aren't huge barriers to entry. That's one of the reasons you cant hang around and trial this thing. You have to launch & go". Same was the case with Vishal. With one store in mid 1980s, now it has grown into 51 stores in 39 different cities. And good to see them launch at right time and so going will be good. There is a saying wrt war- If you are not on table, then you are on menu. I see that Vishal did not want to be in menu.It wanted to be in war and so it's battlefield response was a smooth display of combined operation - good development in recent years, open minded,took risks.

I had a chance to visit one of its stores in Pune. The store needs lot of improvement in its clothing section. The last floor was one of the best I have ever seen in any store.

Coming soon : SD's retail tale for Vishal megamart(VM)

The grass is greener, the light is brighter - Part II

Its been raining cat / dogs / elephants in Pune. So magazines and books are best way to spend time. I did not get chance to go out and visit any retail store this weekend. But will continue on Big Bazaar(BB) and its tale.
BB's tale:
BB looks strongly positioned in war. Uncertainty over how long it can last as king will depend on its efforts in near future. But for now it's overall rating stands at 8 out of 10. As doctors say "when weakness attacks the body, it goes to the weakest part", BB should try and work on it's non-profitable sections and turn it into most profitable section. And I believe, its clothing section is pretty useless. Wasting an entire floor on its own brand of clothes(very cheap quality) seems confusing. So guys, get it out !

Friday, June 22, 2007

The grass is greener, the light is brighter

Floyd's song 'High Hopes' has these wonderful lines :

The grass was greener

The light was brighter

The taste was sweeter

The nights of wonder

With friends surrounded

The dawn mist glowing

The water flowing

The endless river

Forever and ever

The song is all about things one may have gained and lost in life. All the lines just hit the right chord when one thinks of his/her own past. Same is the case with Big Bazaar(BB) and in the past it has done all right things. For it, grass "was" greener and still continues to be. Its the way the store is designed and managed , which attracts people.

BB was among the firsts to enter India's retail war . I haven't done any R&D to explain what BB might have done to do so well, but I believe it carries out an immense amount of market research, so that it gets under the skin of its customers. If that is the case, I think BB is winning the war .Also if it goes where others have been sorry to have trodden and test some new paths which Indian consumers like, then we surely have the winner in form of BB.

The song ,HIGH HOPES' best lines are

Encumbered forever by desire and ambition

There's a hunger still unsatisfied

Our weary eyes still stray to the horizon

Though down this road we've been so many times

BB is encumbered by desire and ambition to be the leader and though it is now, its hunger is still unsatisfied.

SD's retail tale for BB looks good but as always it has its own good/bad/ugly areas.

Wednesday, June 20, 2007

Wearing the inside out

"Wearing the inside out" is song from Pink Floyd's album "The division bell".
The best lines of the song are
Look at him now
He's paler somehow
But he's coming round
He's starting to choke
It's been so long since he spoke
Well he can have the words right from my mouth

This blog is inspired by Al Gore's documentary "An Inconvenient Truth". It was screened yesterday in my office and I just loved it. As the floyd lines tell about a person, even the situation of the earth can be expressed in similar words : Pale and choke. Its wearing inside and outside with condition worsening day by day.
So just a simple funda to follow in life : SAVE EARTH !

Sunday, June 17, 2007

The show must go on

From today onwards, the title of my blogs will be based on songs of Pink Floyd. I just love the band !
The song 'the show must go on' has an extra verse that was cut from the studio album, but nevertheless appears on its sleeve.
"Do I have to stand up
Wild eyed in the spotlight
What a nightmare Why!
Don't I turn and run"
[The song is about the control the managers and record companies have on the band.]

Nevertheless, the war of retails must also go on. Some one has to stand up in the spotlight and catch the blurred eyes of Indian consumers. And I believe, Big Bazaar is doing that. If you spend some time in the store,you will acknowledge that.

Visit to Big Bazaar(BB) was a good way to spend my weekend. I bought nothing but shaver worth Rs14 and spent almost 3 hours in the store(The cameras might have caught me N times in those 3 hours) .Net-net I believe BB is just ahead in the show of retails. The store has everything - from Rs5 chocos to Rs.50K home theatres. Everywhere the store has big banners which highlight the offers and discounts available. And its all due to a simple premise of economics - when supply outpaces demand, prices go down ! But let me not predict that BB is the winner of the war. Great baseball-playing philosopher , Yogi Berra , said "It's tough to make predictions , especially about future". And so do I believe that future 'may' be bright for BB,but we cannot conclude that .
Business is stuffed full of bluffers and successful companies and financial institutions owe as much to chance as to skills. Couple of years down the line BB may not be even in the scene. On my part, I would love to see them in war all the time. Personally I don't follow statistics to predict and analyse the future of a company. And why should we ? Cos statistics tell us so little about what is to come ! So the criteria like products, ambiance, quality can be rationale to analyse but most important among all is the SERVICE. One who provides the best serive will lead the race.

The show will always go on. New participants will enter the show and will make it more interesting. One whose service is bad will be out of it and but the show will also give some hits. The blockbuster products have their roots in bright ideas, rigorous research and canny marketing rather than luck. So dont turn and run but stand and fight !

Saturday, June 16, 2007

Some will win, some will lose

War games are commonly used by military to evaluate strategies, explore scenarios and reveal unexpected weakness. Some countries are always in war games in one or other part of the world. But checking the casualty numbers in Iraq's war, I don't think the war games truly test the soldiers.

Similarly in the war of retails, the war is yet to see it casualty. In India, the retailers go by their own strategies and never try to study the enemy. Buddhist saying is that "Your enemy is your best teacher". But for our retailers still the enemy is not so strong to teach !

In retail, as in war, outcome depends on what others do , as well as one's own action. For now the companies are busy with their own marketing strategies. Each is doing its best to create its own image in the society. They are wooing the customers in an unique way and that is good. Take the example of Subhiksha, it is targeting India's core population i.e. the middle class. With discounts on common commodities, the great Indian middle class rush to Subhiksha stores in large numbers.

These are the early days of war. Lot more has to be done to create a brand like WAL-MART or TESCO. In one way its good that India's investment policy keeps such big brands at bay from our volatile consumer market. But these barbarians at the gates are sometimes wiser than the gatekeepers. And this is proved from WAL-MART's partnership with Bharti. And how did they do it - continuous talks with our commerce minister. Interaction, not algebra, is the best way to win support for a new strategy and partnership. But at this given moment ,nothing can be predicted. Every group is spending in it's own way. As always, big spenders are risked of becoming "intoxicated with comfort" and sinking "into depravity". So the war may prove fatal for them. It may be that the simplest maxim works best. The small players can hit the dart . But nothing can be said of them as well. As a line in TIME by Pink Floyd goes "You run and you run , catch up with the sun as its sinking, racing home to come up behind you again". The small players of the war may try to follow the bigger ones and may soon die out. But as some Buddhists say change is an illusion ,no less than fixity : "By stating that there is neither motion nor rest , we follow the path of middle."So some in this war will win and some will not see the light again.

The simple Roman maxim - "if you want peace, prepare for war"- beholds the future of Indian retail war . Long live shopper's stop, reliance, birla, tata , subhiksha and vishal megamart !

ADD BOOKMARK

Friday, June 15, 2007

BarCamp @ Pune

Check the link http://barcamp.org/BlogCampPune
Barcamp is in Pune on 16th June, 2007. I am going to be part of it, will you? Register ASAP !

Thursday, June 14, 2007

CRISIL : Organised food retailing can increase rural income, cut inflation

This is the press release by Crisil .

Resultant increase in rural spending can boost GDP .
At an estimated Rs 12.8 trillion in 2006, India's retailing sector makes up close to forty per cent of the country's GDP. Of this, food and grocery (F&G) items account for a significant 74 per cent of total retail sales across both, the organised and unorganised sectors. Only 1% of the food items retailed in India flow through the organised retail channel.
An analysis done by CRISIL Research reveals that a robust, widespread and deeply penetrated organised food retailing network in India would address some key concerns facing the Indian economy today viz. limited rural prosperity and high food prices. Reduced supply chain costs arising out of lower wastage and storage costs can be shared between producers and consumers of food items as higher farm incomes and lower food prices.
The organised retail sector makes investments to reduce inefficiencies of the traditional multi-level F&G supply chain. These inefficiencies often arise out of restrictive procurement practices, and multi level storage and commissions. This pushes up the final retail prices paid by the Indian consumer to 2.6 times the prices paid to the Indian farmer. Better supply chain management implies disintermediation, an associated reduction in commissions and a far lower wastage of goods by enhancing transportation and storage facilities.
CRISIL Research has estimated the total avoidable supply chain costs in the F&G vertical in India at about Rs.1 trillion. About 57 per cent of this is due to avoidable wastage and about 43 per cent is due to avoidable costs of storage and commissions. Consequently, the average realisation of the farmer is only 35-40 per cent of the retail price. This is very low as compared with farm realisations of 60-65 per cent of the retail price in countries like the USA which have an organised retail penetration of about 80%.
Sudhir Nair, Head, CRISIL Research, says "If one-third of the above-mentioned savings (around Rs 335 billion) are passed on to the consumer in the form of lower costs, it amounts to more than 3.5 per cent of the country's spend on food items (Rs 9,510 billion); this can play a significant role in lowering food inflation."
Strengthening the case for organised food retailing in the country, Sudhir Nair further emphasises, "Realisations earned by farmers on food grains and fresh grocery, at current levels, are estimated at around Rs. 1.8 trillion. Assuming this segment shifts entirely to organised retailing, and two thirds of the savings from reduced supply chain inefficiencies are passed on to the farmer, farm incomes could grow by more than 37% to Rs. 2.47 trillion. With 60% of India's population employed in agriculture, this is very significant."
Further if farmers spend around 80 per cent of this incremental additional income, an incremental spending of upto Rs.536 billion would get added to the Indian economy. This is equivalent to nearly 1.7 per cent of India’s GDP.

SD's take on article : Though the figures look good, but converting them to reality is tough. But still it is good to shut the communists , the anti-retail kings of India, from making some bad decisions while in government.

Tuesday, June 12, 2007

Subhiksha - A True Desi store

After reading this blog, you might not feel like visiting the Subhiksha stores. But the observations and ratings are based on personal experience of author and his companion Jaydeep Rathore(JD). Reading a four page ad last Sunday did not change my attitude towards this store . The way it is managed is worse than pop&mom stores. As Floyd line goes "There is no dark side of moon, for the fact whole moon is dark", we can apply similar reworded line "There is no worst part of Subhikha, whole store is worst!". It is being managed in old Indian fashion and so requires a lift-over.

SD's retail tale for subhiksha goes like this :

I feel bad writing "the GOOD, the BAD, the UGLY" section for Subhiksha. But this is my passion. I write what I see. So Subhiksha fans/employees don't think that I work for any competitor. The blog is managed by a common man and a naive customers whose expectations match 60% of Indian population !

the GOOD:

I spoke to few frequently visiting customers and the reason they visited the store was due to low pricing of some products.
Another highlight of store was fresh idly / dosa dough at the location. I just LOVE it !
The price was mentioned in form of 'MRP Price - 10 / Subhiskha Price - 9.12' . This is good for customer when she thinks of buying something .
Subhiksha are fast moving into building a good customer database. The membership cards were available on-the-go and I am already a member. But the data was entered in a torn notepad and not in an online database - GUYS USE TECHNOLOGY !

the BAD & the UGLY:

The store was too dirty and congested.
Product variety was missing . We found tea box in toothpaste section
Store is not at all managed and haplessly maintained.
It is pretty small to be called a retail store. My local ma-pa store is bigger and cleaner.
One of the sections where you get atta and dal is like a dungeon and you dont like revisiting it.

Net-net, Subhiksha is a old-styled, desi retail for which management and customer base is not the target. All it might be looking at is high sales growth and I believe the day is not far when you will hear the king of acquisitions, WAL-MART, acquiring Subhiksha.

India's retail industry

Tuesday, August 7, 2007

Indian Retail Industry Update August 6-12, 2007

Thursday, August 2, 2007

Indian Retail Industry Update August 3, 2007

Wednesday, August 1, 2007

Indian Retail Industry Update August 2, 2007

Indian Retail Industry Update August 1, 2007

Monday, July 30, 2007

Indian Retail Industry Update July 31, 2007

Indian Retail Industry Update

Tuesday, July 24, 2007

Alice in warland