Big “Retail” Brands…Big Trouble “Retailing” …Rohit Goel

Big “Retail” Brands…Big Trouble “Retailing”

… Rohit Goel

Retail…the new economic engine driving across the country’s

GDP growth rate at a commendable 8-9 per cent shall soon
experience certain very radical restructuring given the
sprouting state of affairs, and to be explicit… the not so
favorable ones. This paper aims to underscore the major
problems being faced by the face of the Indian Market in
the Global Economy as the most attractive market for retail
investment.{Source: AT Kearney's Annual Global Retail
Development Index (GRDI)}. The Indian retail market, which
is the fifth largest retail destination globally, according
to industry estimates is estimated to grow from the US$ 330
billion in 2007 to US$ 427 billion by 2010. Industry
readers and practitioners are perhaps in high spirits and
glad about their predictions for the past semi-decade
analyzing the investment trends in retail by MNC’s as well
as other companies of Indian origin. But what was
unpredicted was human as always is… the predictions and
analysis did not take into account the qualitative or the
intangible factors besides certain concrete ones. Let us
focus one by one on the very possible and prevalent factors
that are the impetus for the state of “retail” affairs.

To acquaint ourselves with the challenges faced by the

retail sector let us mark the most critical issues that
pose the challenge:

 The Organized Retail Sector is not so “Organized”

Retail is India’s largest industry, accounting for over 10

per cent of the country’s GDP and around 8 per cent of the
employment. These figures illustrate the magnitude of
business activity that this segment contributes to the
country’s economy and also highlights the potential that
this sector veils only if it were to be a little more
“Organized.” The problem therefore is not and has never
been the volume of the business activity that the sector
involves in but as research data indicates, organised
retailing comprises only 2.8 per cent of the total
retailing market(currently at $312 billion) and is

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 Big “Retail” Brands…Big Trouble “Retailing” …Rohit Goel

estimated at around US$ 8.7 billion. The market size at the

same pace and parameters is however anticipated to grow up
to US $ 70 billion by the end of this decade. But the major
challenge prevails to be the colossal task of restructuring
the sector and hoeing out the unorganized elements such as
our very own and very famous kirana stores, paan shop, mom
and pop stores et al.

 A dilemma as to what is “retail-able”.

The problem is not that the who’s who of the retail

industry do not know what product is retail-able, the
problem lies in the fact that they exactly know what is NOT
“Selling,” with genuine researches intimating that 77 per
cent of the total retail sales hail from the food &
groceries segment. The lack of diversification till lately
was a major cause for the losses borne by the Retail
Giants. However an aloft trend in this arena was reflected
with Kishore Biyani’s (Future Group) and Ambani’s (Reliance
Retail) act of launching the first few retail outlets
exclusively for the “other segments” like electronic goods
and footwear to name a few. With only 23 per cent of total
retail sales that make up of the “other segment” there
certainly is a very massive potential that this segment
also embraces. The act will not only mitigate losses borne
by the retailers in any segment but also help building a
“reach & recall” element in the market. So for every small
(and big) need there is a “Reliance” that fulfills it. One
must realize that the 'wet market' (i.e. fresh food
available through hawkers) element of the “food and
groceries” segment is and can be extremely vulnerable to
the markets foible and varying tastes marring large volumes
of business and thereby sales. Addressing this inadequacy
is perhaps really critical.

 Lack of IT support to the entire sector per se.

Information Technology that undoubtedly forms the backbone

of an economy and is sure to drive a country’s growth
effortlessly from one laurel to another is a vital
accomplice responsible for the steadiness of the retail
sector also. IT not only ensures a smooth process of Supply
Chain Management across the various verticals involved but
also aids in the options available for merchandising-an
important factor in Retailing. Virtual Malls online are not
yet a thespian in our economy but definitely ensure
smoother and faster turnovers in all senses which are

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 Big “Retail” Brands…Big Trouble “Retailing” …Rohit Goel

beneficial equally to the business and the consumers. IT

and digitization of Services will generate easier payment
options and ensure more satisfaction and less customer
grievances thereby contributing to the “Indian Mindset
Change” which does not favor the “Retail Set-Up” of
tomorrow and the coming future.

 Buying Behaviour that is deep rooted and very Indian.

“Paas waley sharma ji ki dukaan se wahi 5 rupees wala namak

le aayo.”{Get the same Rupees 5 salt from the adjacent
Sharmaji’s Shop} This is a very common dialogue that is
exchanged in almost every household in India and I am sure
each one of us is able to connect well to this. The idea is
that this dialogue is not just a communication but a mirror
of our “deep rooted Indianess” w.r.t our buying behaviors.
Paas waley sharma ji ki dukaan denotes that not only is the
retail outlet close to the house but the person who owns or
runs the shop is a person well known to the lady of the
house. This develops a sense of security with regard to
affirming the purchase decision. Are any of the mega stores
willing to give this sense of security to any buyer however
frequently he/she visits the same mega store for purchasing
necessary commodities like salt/oil etc? None of the new
age stores will be able to do that. Kirana stores can
continue to guarantee this factor because they have been
there for years together before other options of buying
were available. Even their forefathers guaranteed the same
to our grandparents… and this factor makes the buying
behavior with regard to the retail items very deep rooted
and cynical. Interesting to note is the factor that “we”
Indians are used to connecting brands with pricing very
strongly. For example if Tata Salt was available at Rs. 5
sometime back each one would remember it as “5 rupees wala
namak” and the fact that the shop beside my house has it!
The notion that the big stores have everything that’s
expensive still plays a major role in preventing the common
man from entering the huge malls or retail spaces and then
of course there is no “Sharma ji” to listen to my problem
in any of these malls so I better pick it up from the shop
close by. Organised retail outlets can overcome this
problem by employing eligible local peoples who can
interact in vernacular language and win the confidence of
people.

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 Big “Retail” Brands…Big Trouble “Retailing” …Rohit Goel

 Hindrances from the Government/Political

Parties/Individuals/Sects etc. make the sector
vulnerable.

“BSP Zindabad…Reliance Murdabad” were the cries when

Reliance opened up its chain of “Reliance Fresh” outlets
across the state of Uttar Pradesh. States and parties
favoring a particular corporate entity for vested interests
has been an ongoing trend in the country post independence
but what Reliance witnessed in UP was a result of an even
ulterior motive. The idea was to instill in the state
farmers a sentiment of insecurity with Reliance stepping in
their territory of Retail… the perishables (fruits and
vegetables). The farmers were made to look at Reliance and
their likes with a feeling of suspicion, cynicism and
threat. The result being mobs attacking the outlets and the
outlets closing down whereas the political party in power
strengthening its hold on the weak farmer section that
forms a near majority of the states vote bank, leaving the
state and its customers deprived of the benefits of the
“new age retail.” UP as a state is a perfect example of how
easily a positive trend in Retail was stalled to the tunes
of a political whim. Similarly sects of shopkeepers and
outlets getting affected with the entry of the major
players in the retail market, lobby against constructive
drifts in the market and thereby stall the superior
consumer position that this style of retail has in the
offing.

 The “Human Resource Crunch”

The Retail Sector may be very lucrative for investment by

MNC’s and its development may, over a period of time change
notions in the consumers mind as the trend is witnessed
already in the metros. However the industry has not been
able to pose itself as one of the very rewarding careers to
the available and employable talent pool. The reason being
that like any other establishment the senior and middle
level management requirements are scant however the
requirement of front line shop people is in excess and the
industry has not been able to strike the right balance with
regard to this demand and supply. Albeit the qualifications
entailed for such opportunities is very basic ranging from
under graduation to a graduation at the most, yet the
eligible pool does not seek an employment in this sector
simply because it has not been marketed as a promising
career at that level and currently broadcasted as an option

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 Big “Retail” Brands…Big Trouble “Retailing” …Rohit Goel

with meager growth opportunities. The retail industry

according to recent reports is growing at a rate of 100
percent. Kishore Biyani's Future Group i.e. the Big Bazaar
chain of retail outlet alone provides employment to more
than 18,000 people and is planning to expand its employment
base to 34,000 by June 2008. If we add to this the foray by
mega players like Reliance and Bharti-Wal-Mart then the
fear can surely turn into a misperception. What we need is
a universal PR activity declaring this career option an
equally viable option to the aspirant pool as any other
vocation.

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