Sunday, December 28, 2008


India's Retail Revolution

Little method, lots of madness

By Harish Bijoor

Q: With the big buzz in retail all around, how do you see the retail revolution pan out in the coming years?

-Anand Patro, Mumbai

A: Anand, as I keep saying, retail as we know it today is but only a trailer of the real full-length movie that is due to unfold on the Indian market-scape.

Today, organized retail comprises 3.6% of the total pie in terms of volume share of trade. The rest is run by small Mom and Pop stores in every category, whether it be apparel, food and grocery or whatever.

Except for Petroleum, organized retail in India is still in a nascent stage in every category. Therefore, the face of emerging retail in India is likely to be very different from the face it sports today.

For one, "New retail" in India is going to be about brand ubiquity in the future. The brand will stare back at you every 300 yards in the market you will tend to walk in. And there will be options in every category that will flummox you. So much so that reach and convenience in terms of distance will start dictating your franchise of a particular retail outlet. In many ways, it is back to the days of 'Kirana' retail when you bought groceries from the grocer closest to you.

There will also be several models at play. The Mom and Pop outlets will morph in to a retail segment of their own. Each store will reinvent itself and offer relevance, originality in merchandise stocking and innovation in the offers at hand to the customer.

In addition to the traditional Mom and pop store on the morph mode, there will be the 7-11 formats that will be of a chain origin. Add to that the larger format departmental stores a la Subhiksha. Add further still to this mélange the super-market of a Wal Mart origin. Add the hyper-market that caters to retail and the Super-store that caters only to the B2B business.

There is going to be plenty on offer. In the Indian market, each of these will co-exist with one another with little method and a lot of madness. The first couple of years will decide the winners and the losers. It is then that we will enter into a consolidation phase where the biggies will grow bigger and many will fall by the wayside of Indian retail lore.

Emerging Indian retail will also be about clonal offerings. The moment a Croma Zip store at Mumbai airport makes an impression, there will many me-too's that will want a piece of the action. At the end of the day of course, a form of retail Darwinism will prevail and the fittest will survive. The fittest in terms of offerings, deep-pockets to survive wafer thin margin environments, and the fittest in terms of the tenacity to fight
competition that is irrational in its attack.3.6% of the total retail space valued at USD 330 Billion is in the hands of organized retail. India therefore remains a nation of small shop-keepers.

Q: Organized retail is facing flak in the Indian market. The protests have just started. How far do you see this going?

-Rajat Sinha, kolkata

A: Rajat-da, as Reliance, the Aditya Birla Group, Bharti-Walmart and everyone else makes inroads into organized retail, there is bound to be resistance from small retail. This is likely to become a political movement as well, and the savvy politician of the day is sitting on the fence to rake up the issue.

I do however believe that this will be a temporary hiccup for modern retail. Things will settle down as the consumer good comes to the fore and as prices fall for the consumer at large.

The middle-man will get squeezed. In the early days the middle-man will sequel. In later days things will settle down and these middle-men will fulfill other jobs within the retail scape at large.

Net of it, peace shall prevail. As will commerce.

Q: Quite a few of the heritage brands are undergoing brand re-positioning exercises. Do you believe this is right? Is it right to contemporaize heritage brands altogether? And to spread their appeal across categories of products even?

-Rathi Ganapathi, Bangalore

A: Rathi, I am a purist in the realm of brand thinking. I do believe brands must not extend themselves too thin. A brand is like an elastic. You stretch it too
thin, it breaks. It loses its depth. All it gains is width. And width does
not necessarily build heritage. It is depth that builds heritage.

Therefore, I do believe heritage brands must not extend themselves with new
sub-brand avatars. They must stay consistent to what they are. These brands
need to withstand the pressures of their immediate bottom-line profit
seeking CEO's and Finance Directors alike.

As a purist, I do believe these brands need to treat themselves as unique as
some of our heritage monuments themselves. If the Taj Mahal were to be
replicated in every Indian city, the Taj would lose some of its sheen for
sure. Imagine a Charminar in Delhi.....or a Gol Gumbaz in Bangalore.
Stretching heritage brands is equally ridiculous an attempt. Short term and
myopic. There is no scope for short-termism in the management of heritage


Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc.


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