There was a problem sending you an sms. Check your phone number or try again later.
We've sent a link to the Scribd app. If you didn't receive it, try again.
In 2004, R. Subramanian, Managing Director of Subhiksha, a discount retail chain, addressed a group of management students who wanted to learn from his miracle grocery-pharmaceuticals store that changed the face of discount retailing in South India. Growing from a single outlet in Thiruvanmyur, Chennai, to the largest chain of supermarkets and pharmacies with a turnover of Rs. 235 crore and 164 outlets had not been an easy task\u2014given the controversy about MRP and consumer prejudices against discount stores and not to mention the onslaught of big real estate businesses getting into retail.
The branding strategy for this retail store was low-cost and no-frills, i.e., a reliable and trustworthy store that has the lowest prices. The image of the store as communicated through various media was that of one who cared for its customers and ensured the best deals and savings. However, there was more to Subhiksha\u2019s strategy than low prices. It focused on building long-term relationships with its customers by giving them a lifetime of value and savings. The ability to do this stemmed from its relentless focus on value delivery rather than transactional relationships.
Retail was one of the few industries in India that had seen enough action in just the last five years. The others were IT, IT enabled and BPO industries. But the surprising thing was that retailing was even today striving for an industry status. The early players in the retail industry, for example, Raymond's, Indian Coffee House, Akbarally\u2019s and Bata, were limited to a few locations and regarded retailing as anactivity than anind ustry. Today retail was an industry, with players talking of ROI, employee management and IPO\u2019s.
In India, the retail sector was the second largest employer after agriculture. The retailing sector in India was highly fragmented and predominantly consisted of small, independent, owner-managed shops. The total retail trade in India was Rs. 11 lakh crore or $ 240 billion. Of this, organized retailing accounted for Rs. 14,000 crore, which was poised to grow at 35% per annum in the next five years. Food and grocery retailing accounted for 55% of all retail activity.
There had been a boom in retail trade in India owing to a gradual increase in the disposable incomes of the middle class households. More and more players were coming into retail business to introduce new formats like malls, supermarkets, discount stores, department stores and traditional looks of bookstores, chemist shops, and furnishing stores.
Retailers were adding new stores on a regular basis. There were over 13 million retail outlets in this country. Indian retailing industry was estimated to be $ 286 billion in 2004 and only about 1.6% share of this market was as organized sector
expected to be $ 300 billion by the year 2010 (CII-McKinsey Report). In comparison with other Asian economies, India was far behind in the organized retailing sector. In Thailand more than 40% of all consumer goods were sold through organized format. Similar phenomenon was seen in other Asian countries. (Exhibits 1 and 2)
Organized retailing got a boost during 2004 with the opening of new format stores, rapid growth of existing players, start of new-generation shopping malls, the government's intention of allowing a certain level of foreign direct investment in retail and the formation of a retailers' association. With consumer sentiment being positive during most of 2004, it led to substantial spending across a
According to Subramanian, 2004 had been a good year not so much in what happened for retail but more of the visibility and profile that it achieved and also in setting the expectations of fast growth. Also, the automobile boom was welcome, because the ability and willingness of people to travel was what made retail boom in many countries.
However, on the flip side, practically no progress was achieved in getting industry status for retail. Contrary to some expectations, availability of additional, quality retail space did not improve; the rentals actually hardened. This could act as somewhat of a dampener in the growth of organized retailing. Also, it was expected that the real estate supply would exceed demand in 2004. Therefore, the retailers expected retail spaces at good prices, but this did not happen as only 20 malls became operational in 2004, and costs did not fall a great deal. Also retailing was seen to have a long gestation of two to three years, especially with the high real estate costs and big malls. Hence it was an investment heavy industry.
However, 1998 was a year of inception of organized retailing in India with Shopper\u2019s Stop opening its first outlet in Mumbai. But it was 2004 when retail began to scale up and got its fair share of attention. With the economy growing and with some of the metros growing at a decent clip, one could expect more growth
In conclusion, India Incorporated had some advantages. It had a fast growing Indian middle class with more than ever disposable income. There was a positive economic outlook, and foreign exchange reserves were at an all time high. India was positioned as service provider in IT/ITES sector. These factors could be of help in taking the Indian retail scene forward.
Now bringing you back...
Does that email address look wrong? Try again with a different email.