India is rated among the top 10 FDI destinations. As targeted FDI is to hit $13 billion in the 12 months ending March 2007, more than double India’s previous best of $5.5 billion hit in the previous year. India is investing over US $130 billion in infrastructure by the end of this decade. Indian retail industry itself has attracted investment of over INR 200 billion (over $4 billion) in creating infrastructure, systems & shop-fit. The additional retail space is expected to add INR 300 billion ($ 6.67 billion) of business to organized retail. India’s stock market continues to rise at unprecedented levels & the quantum of investments is likely to skyrocket. India’s GDP growth at 8.7% makes it the second fastest growing economy in the world.
Indian retail scenario
My take on the Indian Retail scenario is: what took the organized retail in the developed world 100 - 150 odd years to mature, India will witness the same in a much crunched time of 30 to 40 years with all kinds of formats like Supermarkets, Hyper-markets, Cash & Carry, Department stores, Specialty Stores emerging and other new concepts. India has a diverse mix and blend of cultures. A melting pot for the young nation which blends both, Indian culture and a western mindset of a new emerging generation, both the organized retail and traditional mom and pop retail will co-exist and complement each other as in the other parts of the world. What will perish is business that is not willing to change. Each of them will add value whist catering to the unique requirement of products and services by this young country which is witnessing a change in its increasing mix of the middle class population which is getting richer. The nation will see a surge in annual incomes, by the year 2010, 1,40,000 families will grow to annual incomes of more than $2,30,000.
Indian Consumer
The Indian Consumers have witnessed changes from being a Striving Traditional Indian customer up to the 1980’s in a Triangle shaped economy where a large base of the population was poor.. to the one which is a Confident Global Indian of the 1990 and 2000’s era and moving towards being a Shining and Winning Indian where we will feature amongst the top 5 economies by 2025 and in an economy that will be a Diamond Shape where the bulk of the economy will be Middleclass and Rich and becoming increasingly intelligent, demanding more value for the money… Indian retail has witnessed and will see a sea of changes …
Indian Private Consumption
According to an Economic survey report and Technopak analysis current private consumption stands at US$ 410 Billion for 2007 and is planned to grow another US$ 200 Billion by 2013
Organized Retail Share
Organized retail share to reach 25% from the current 4% a lot of large Industry players contributing and committing to the growth of organized retail which has seen many success stories like the K. Raheja’s, Tata’s, Future, Lifestyle, D.S Group, Reliance, Bharti, Aditya Birla, ITC, RPG, Mahindra’s, DLF, India Bulls, Raymond, Globus, Subhiksha, Viveks, Nallis, Kapsons, Ritu wears, Ebony, Bombay Dyeing, Welspun, Arvind, S. Kumars, Century, Dabur, Essar, Nilkamal, Gitanjali, Apollo, Vishal, Parshvnath, Koutons, Provogue, Kewal Kiran, Giny & Jony,
and many more. A lot of the International Brands like Walmart, Tesco, Carrefour, Metro, Target, Marks & Spencers, Debenhams, Next, Gautier, Staples, Office works, Argos, Waitrose, My Dollar Store, Royal Sporting House, Planet Sports, Reebok, Nike, Adidas, Levis, Wrangler, Lee, Pepe, Lee Cooper, Tommy Hilfiger, Guess, Gas, Calvin Klien, Diesel, Miss Sixty, Energie, G-star United Colors of Benetton, Espirit, Nautica, Lacoste, Gant, French Connection, Mango, Promod, Zara, Giorgio Armani, Giordano, Kappa, Springfield, Bossini, Mothercare, Disney, Barbie, Pumpkin Patch, Adams, Okaidi, Kazo, New Look, 109 Degrees, S. Olivier, Jockey, Triumph, Etam, La Sensa, Mont Blanc, Louis Vuitton, Gucci, Salvatore Ferragamo, Valentino, Hugo Boss, Zegna, Luxxotica, Omega, Rolex, Swaroski,Tag Heuer, Swatch, Ray- Ban, Oakley, Apple, Bose, Nokia, Damas, Aldo, Nine-west, Charles & Keith, Body Shop, Prada, Clinique, Versace, D&G, Victorinox, Ferrari, Nao, DKNY, Samsonite, TGIF, Hard Rock Café, Patchi, Nando’s, Bread Talk, Cookie Man, Boost, Domino’s, Mc Donald’s, Pizza Hut, Subway etc with various formats & concepts.
I also foresee a win-win strategy for both kinds of retailers a lot of larger retail corporate’s will acquire small and medium sized retail businesses based on their strategy to scale up their operations and market share which will benefit both.
Organized Retail is yet to mature.
Since a lot of hype and money is committed towards this sector, anticipated investments forecasted by Technopak in organized retail will be US$ 35 Billion in next 4-5 years and rightly so,
Ø I see a lot of the organized retail players, who are in the midst of this growth phenomena, will keep a close track of the fast changing environmental needs that have to be anticipated from their instincts or research with a right degree of accuracy, for example our country has a large youth population and internet usage is high, so “web-retail” will be a future big potential growth area.
Ø The serious players will review & measure key performance indices regularly and make changes to deliver the right values in the business for example monitoring inventories at SKU levels regularly to increase availability hit rates of the merchandise on the floor, regular training of staff and daily feedback gathering mechanism by shop floor staff which will be filtered and translated to actionable points to ensure customer satisfaction and higher yield per square feet.
Ø Strategy and budgets which will be planned meticulously and closely monitored (3 years and 6months respectively) by the key players keeping in mind the changing economic scenario and the constantly evolving consumer preferences.
Ø The key is to innovate and reinvent your strategy wheel more often, based on your core competence and outsource or collaborate so as to match the speed of this fast paced economic growth for example outsourcing of logistics providing or Design based services to outsource specialist functions and ramp up growth.
Ø Since development is fast paced it is important to look into new learning’s of retailers in the recent grown economies like Thailand, Malaysia etc and the growing BRICS economies and learning’s of mistakes from competition in the country.
Format-wise Share of New Investments by 2013
It is also a time for the Retail Industry players to multi task - play God and perform well simultaneously in a few core areas:
Ø Whilst picking and choosing the right locations with the right mall developers.
Ø Training manpower quickly to drive very hard basic retail standards and business fundamentals.
Ø Tightening controls or drainages in operational systems
Ø Stringent quality controls from end to end to deliver the right value
Ø Effective supply chain looking for innovative and simple solutions to block any time delays and wastages
Ø Innovative and intelligent marketing and differentiated USP’s.
To deal with the formidable challenge of Growth as competition is growing and customers are flirting with all that is new and readily available and is currently shifting loyalties in this fast era of change.
Trade Governing Regulations
The current regulations are very stringent for the retail Industry and looking at the growth that the Industry is poised to take even the Government is under pressure to make suitable changes on issues like:
Ø Granting retail... Industry status
Ø Relaxed FDI regulations in all formats
Ø Lowering some of the taxes levied on products & services in retail.
Retail Support Services
There will be a lot of Retail support services business that will emerge and thrive in various areas and become big businesses
Ø Design Houses for Products and Retail shop
Ø CRM & Web Services
Ø Supply Chain & Logistics Services
Ø IT & MIS Data Management
Ø Retail Fitment Agencies
Ø Property Sourcing
Ø Retail Training Institutes/ Retail specialists training
Ø Mall Management
Ø Event Management
Ø Franchise Management
Ø Retail Management Consultants
Ø A & M Management specializing in Retail Brands
Emerging Retail Concepts
Since I see the new Indian consumer getting educated, more specialized and skilled, living in Nuclear families, richer with more working members per family, conscious of their health and well being, owning computers and are internet savvy, will experience Time poverty, will be Travel & leisure inclined, new concepts that will emerge in organized Retail will be in the services area :
Ø Education and Training for various areas
Ø Recruiting services
Ø Real Estate Consultancy services
Ø Beauty & Health services
Ø Laundry services
Ø Customized 24hr Tailoring services
Ø Virtual retail stores
Ø Travel Services
Ø Consultancy services for various areas
Ø Repair services for various areas like shoes, keys, electrical, plumbing,
Ø Wedding planning services
Ø Packers & moving services
Ø Hospitality services and more...
Besides more concepts in Home, Furniture & Furnishings, Toys, Apparels, Footwear, Watches, Lifestyles and many more…