Retail Pakistan- Whitepaper | Retail | Pakistan

Retail Pakistan: Outlook, Challenges & Opportunities

RETAIL PAKISTAN

RETAIL PAKISTAN: OUTLOOK, CHALLENGES & OPPORTUNITIES

An Executive Report By | Mantaq Systems
An Executive Report By: Mantaq Systems Page 1

personal relationships and product ranges.Retail Pakistan: Outlook. Research conducted through inter-personal and telephonic interviews with retail business leaders on their business priorities and challenges. Pakistan has a great market potential still waiting to be discovered. But nowadays we are seeing a growing number of large retail chains opening multiple new stores every month. The retail business leaders in both the round table conferences agreed unanimously that despite the challenges. In addition to summarizing the key insights from our research we have also included quotes from some of the most successful leaders in the industry. which were centered on a round table discussion of retail business leaders. Retail Outlook: Plenty of Opportunity Retailing in Pakistan remains highly fragmented and is dominated by small retailers. Some of the leaders had participated in the pre-event survey. industry specific challenges such as lack of quality human resource and limited infrastructure which are slowing down the growth of the industry as a whole. which compete within their own geographic areas in terms of price. Figure 1 An Executive Report By: Mantaq Systems Page 2 . especially in the major cities where there is a higher concentration of middle and upper-income consumers. “Retail thrived in a downward economy as the retail industry never really reached its full potential” In the fast moving retail space one must thoroughly understand such potential and key challenges in order to thrive and grow. At the same time there are a lot of unique. Key sources of information used in this whitepaper were   Twin events in Lahore and Karachi. This white paper attempts to look at the outlook of retail in Pakistan and understand some of the common challenges that the retail industry faces as a whole. Challenges & Opportunities Background Despite political uncertainty and economic turmoil. to discuss and possibly flesh out solutions for the unique challenges that the industry faces. experts believe that the outlook for retailing in Pakistan remains positive.

Consumer of today is much more intelligent and aware of the options he or she has. As more women enter the workforce. which sell a mix of grocery and non-grocery products. people with jobs. who is already investing in world class systems and processes. Retailers have already responded by launching products and marketing activities which specifically target women. This creates a great opportunity for the organized retail sector. One such segment that came up during the discussion was of that of the working women. A majority of the retail business leaders we talked to understood the potential in the market and deem growth as a top priority for their businesses. demand for female-specific products is on the rise. While in the past. The Pakistani retail industry no longer comprises of necessity brands and/or good only. In addition they felt that the standard of living of the Pakistani population has slowly but steadily improved over the past few years and consumption has shifted towards non-essential items and luxury goods such as branded and leisurely soft goods. more women gain economic independence and higher social status. Challenges & Opportunities Figure 1 shows results from the pre-event survey. customized and value added goods amongst the Pakistani consumers. the value share of non-grocery goods has gradually increased over time as well. While growth is seen as a priority by these retailers they don’t see much of a challenge in it (See Figure 2 in which shows responses of retailers with respect to challenges). people going to gyms etc. shopping experience and packaging. The changing and varying consumer preferences are creating a lot of opportunities for both new and existing retailers.Retail Pakistan: Outlook. This social trend has had a direct and positive impact on demand for retail goods. As a result there is a growing orientation towards “branded”. Both online and offline media have certainly empowered the consumer a lot. At the round table the retailers talked about a lot of evolving consumer segments that they found interesting and lucrative. For supermarkets and hypermarkets. especially in terms of lack of infrastructure and superior management processes. consumers usually shopped according to price. nowadays consumers pay equal attention to product quality. The Pakistani consumer is now hungry for goods beyond the daily necessity. Figure 2 Understanding Evolving Consumer Tastes Is Critical As cities are growing and more people are shifting from rural areas to urban areas there is an increase in the number of particular consumer segments such as students. In An Executive Report By: Mantaq Systems Page 3 . Hence. This is primary because most of the business leaders believed that the Pakistani retail market is still under developed.

a couple of retailers even admitted to seeing a surge in sales despite the success of competing brands. especially from the younger generation. from organized sector are setting benchmarks of superior product quality and customer service. Qualified HR: A Major Issue In The Pakistani Retail Industry Both at the round table conference and during interview discussions. benefits and career collaborate to improve this brand image through affiliations with universities and colleges” An Executive Report By: Mantaq Systems Page 4 . store experiences and marketing messages accordingly. Overall the majority of the retailers welcomed the growing competition from both local and international brands as they see this as a positive for the industry than as a threat to their individual brands.Retail Pakistan: Outlook. Competitive Landscape: Organized Vs Unorganized Retail Changes have occurred over the last decade in the retail sector in Pakistan such as new global brands entering the market. Interestingly. tax evasion. Due to the growing fragmentation in the consumer market there is still a lot of opportunity. The bigger players have been “It’s not that the organized sector able to achieve significant sales growth by creating superior products has snatched anyone’s share it’s just and brand differentiations and implementing superior processes and that the organized sector has been technology infrastructures. both local and global. including growth in the urban middle class and disposable incomes of certain segments in the market. It’s a matter of finding the right customer segments for your brand and targeting them accordingly. Nowadays growing at a faster pace” retailers. large scale shopping malls opening up and several local retailers getting more organized and growing significantly more than the rest of the pack. The traditional “mom and pop” stores face serious threats from the bigger local and global retail chains. Challenges & Opportunities order to win in this market. was the lack of qualified human resources especially in back offices. A lot of the retailers claimed to be offering base salaries. they were a lot of issues that various leaders raised such as lack of retail expertise. In order to compete the smaller players would have to improve their offering and service. These trends are linked to the broader socio–economic changes. Though they admitted “As a career choice not a lot of lack of world class processes and IT systems was one of the reasons for this but the core problem was the shortage of properly people. They wanted more people. to choose retailing as a career. retailers need to understand the preference of their target customer segments and align their offerings. that was claimed to be the biggest hurdle for retail growth. retail. limited infrastructure and systems etc. In the pre-event interviews a lot of retailers mentioned improving inventory management and increasing customer wallet shares [Chart 2] as one of their biggest challenges. who could actually use these processes and younger generation opt to work in systems to drive growth for them. But one issue. especially from the trained employees. In the past consumers did not have many choices in terms of products or shopping experiences. As an industry we need to Interestingly the retail leaders believed that establishing a retail institution or introducing retail related courses wouldn’t entirely resolve this issue.

In order to solve this “perception” several solutions were discussed. There were many discussions around this topic and hopefully we would see something concrete around this in the upcoming months. where they would have the opportunity of working in various departments of retail organization on a rotational basis. such as increased sales taxes. One of the key initiatives that was discussed was to introduce a structured industry wide internship program for upcoming graduating students from local universities. engineering. universities. Everyone admitted this being as a result of lost focus due chain of retail would have to play more to everyday “fires” in their own businesses. which at times emerged in the past to resolve one time issues. FMCG’s etc to be better career options. which would work in the collective interest of the industry and focus on solving their common problems. A couple of retailers even mentioned having achieved some level of success in hiring employees through college internship programs. Not only such an association would have to bring retailers together but other organizations in the ecosystems such as suppliers.Retail Pakistan: Outlook. A couple of retailers had already done this in the past and were successful in retaining some of the candidates. A couple of retailers mentioned the forming of a few segregated groups. An Executive Report By: Mantaq Systems Page 5 . who would get to “test” the student to see if he/she is a suitable candidate. and for the student who would hopefully be able to the see that it would exciting and rewarding career for them. consultants etc as well. Everyone in the value chain would have to contribute to ensure the continued growth of the industry. The Need For An Industry Association Run By A Fulltime Board There always has been awareness in the retail community about formally forming a retail association. But these groups tend to dismantle with time due to everyone’s busy “If anyone of the players in the value schedules. This would was termed as win-win for both the retailer. Solving issues mentioned above requires full time dedication and perseverance. Challenges & Opportunities growth opportunities at par with the rest of the industries yet graduates considered other industries such as banking. The students would get on hands experience in working for a retailer of their choice. than their role than it would be difficult A solution is perhaps to follow the example of other industries such for the industry to grow as a whole” as IT where the head of an industry association is a full time paid employee.

over the past few years. in terms of consumer segments. and go the dark ages as compared to retailing about it in an organized fashion. is a solid indicator of its success and “Retail in Pakistan is still in its infancy. The key is it to identify the right retail are huge. There is a huge opportunity in the market for both the the chances and scope for growth in existing players and the new entrants. potential. The next step now is to formalize a sustainable game plan to solve these challenges through a common platform so that the impressive growth of the retail industry could be sustained or even accelerated. We are still running in focus area for your business. political uncertainly and industry specific challenges. Despite economic downturn.” Moreover we saw a high level of awareness and consensus on all of the key industry challenges amongst the leadership of various retailers. the growth the industry has seen.Retail Pakistan: Outlook. worldwide. which is a positive start. An Executive Report By: Mantaq Systems Page 6 . Challenges & Opportunities Conclusion In short the outlook of retailing in Pakistan is significantly positive.

Challenges & Opportunities About Us Mantaq Systems is a premiere retail centric IT company in Pakistan that has constantly geared itself to meet the dynamics of the retail industry by introducing world class technologies and bringing vast knowledge expertise. both locally as well as internationally. To bring you the best in the world. We have marked footprint over a large number of verticals which include Apparel.Retail Pakistan: Outlook. a solid command on technology and years of experience in integrating technology into business. With more than 60 man years of retail experience we have successfully implemented on more than 900 stores in Pakistan and GCC. Pharmacies and Specialty Retail stores At Mantaq Systems. we have partnered with the global leaders of best in class software and crafted a solution that serves thousands of successful similar retail businesses worldwide. Our consultants have a thorough understanding of retail business. Grocery. we bring you the most comprehensive software platform to manage your growing retail business. Footwear. Some of the key solutions areas we serve are       Customer Experience Management Store Operations Management Marketing & Customer Loyalty Merchandise Planning and Operations Management Supply Chain Planning and Execution Management Business Intelligence An Executive Report By: Mantaq Systems Page 7 .

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