In one of the mega Retail events some years back, I was sitting in the audience listening to a conversation that was going on the stage, between a TV anchor of a reputed Business Channel and one of the very visible Retailers in India. This retailer had started from scratch and built a formidable empire in record time facing competition from some of the biggest conglomerates from the private sector.
I was always struck by one key differentiator between the developed retail markets and the indian retail market. Which is - while the retail sector was driven by entrepreneurs in most parts of the world, the Indian Retail sector has seen almost all of the Top 5 business conglomerates jump into the fray. You have the Tatas, Birlas, Ambanis, Mahindras, Rahejas, Videocon, RPG all making a huge and visible foray. There are, of course, enough examples of individual entrepreneurs carving their retail story in equally visible measure.
Though very early to make a judgement, the stark reality of the story so far is that deep pockets are no guarantee to Retailing success. The biggest corporates have had to face major losses and the shutting down of many stores. Major plans of getting big very fast had to be significantly trimmed down. These business houses employed some of the most visible professionals to run the show paying some of the highest salaries ever in India. As it stands today, all of them have admitted to the fact that they got it wrong, and are still trying to study and understand the dynamics of the retail business and the indian market. Management teams have undergone multiple changes -- just to get it right !!!
Coming back to the event, during the audience questions, I stood up and asked this Retailer,
"Sir, Where do you see the biggest threat to your business. Is it the big Indian Corporates or the big Foreign Retailers".
And his answer to it,
"My biggest worry today is that I have gotten too big too fast. While I try to ensure that I still maintain a good understanding of the pulse of the consumer, I can never match the single shop owners in their understanding of product & price, and its almost impossible to meet their standards of customer relationship. They are the ones who pose the biggest threat in taking my market share."
I was recounting this experience with my wife who runs a retail business and tried testing the above statement. As we discussed, it became apparent that, given the demographic profile of India (each state a different country ??), and the geographical aspects (no real planning of cities or zoning culture, traffic and parking woes), the big guys will never be able to overwhelm the single shop retailers in the same manner as it has happened in developed markets.The advantage of finding a hybrid value across the 5 P's of Retailing (Product, Price, Place, Promotion AND people) will always lie with the smaller retail shops.
And that presents a major opportunity for many entrepreneurs to enter the Indian retail market without too much of a threat from the big guys. In that sense, we probably may have a unique template where big retail can make a significant value statement to the Indian consumer, but not necessarily at the cost of the single shop. Worst case, that process may take much more years (even decades) before any such impact is visible.
Till then, happy shopping and happy retailing.
I was always struck by one key differentiator between the developed retail markets and the indian retail market. Which is - while the retail sector was driven by entrepreneurs in most parts of the world, the Indian Retail sector has seen almost all of the Top 5 business conglomerates jump into the fray. You have the Tatas, Birlas, Ambanis, Mahindras, Rahejas, Videocon, RPG all making a huge and visible foray. There are, of course, enough examples of individual entrepreneurs carving their retail story in equally visible measure.
Though very early to make a judgement, the stark reality of the story so far is that deep pockets are no guarantee to Retailing success. The biggest corporates have had to face major losses and the shutting down of many stores. Major plans of getting big very fast had to be significantly trimmed down. These business houses employed some of the most visible professionals to run the show paying some of the highest salaries ever in India. As it stands today, all of them have admitted to the fact that they got it wrong, and are still trying to study and understand the dynamics of the retail business and the indian market. Management teams have undergone multiple changes -- just to get it right !!!
Coming back to the event, during the audience questions, I stood up and asked this Retailer,
"Sir, Where do you see the biggest threat to your business. Is it the big Indian Corporates or the big Foreign Retailers".
And his answer to it,
"My biggest worry today is that I have gotten too big too fast. While I try to ensure that I still maintain a good understanding of the pulse of the consumer, I can never match the single shop owners in their understanding of product & price, and its almost impossible to meet their standards of customer relationship. They are the ones who pose the biggest threat in taking my market share."
I was recounting this experience with my wife who runs a retail business and tried testing the above statement. As we discussed, it became apparent that, given the demographic profile of India (each state a different country ??), and the geographical aspects (no real planning of cities or zoning culture, traffic and parking woes), the big guys will never be able to overwhelm the single shop retailers in the same manner as it has happened in developed markets.The advantage of finding a hybrid value across the 5 P's of Retailing (Product, Price, Place, Promotion AND people) will always lie with the smaller retail shops.
And that presents a major opportunity for many entrepreneurs to enter the Indian retail market without too much of a threat from the big guys. In that sense, we probably may have a unique template where big retail can make a significant value statement to the Indian consumer, but not necessarily at the cost of the single shop. Worst case, that process may take much more years (even decades) before any such impact is visible.
Till then, happy shopping and happy retailing.
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