Organized Retailing in Small Towns - Some Strategic Issues to Consider
Strategic thinking in Retail is a must today. When India's growth story slows down, strategy becomes a key imperative for survival.
It is a foregone conclusion that with the developed economies in deep recession for the next many years and slowing down of growth in the Indian metros and large towns, the truly vicious marketing battles in retail will be fought in the small towns and villages in India.
It will be a huge challenge transitioning the traditional small town Indian consumer to a modern organized shopping experiences, while trying to satisfy his or her huge expectations.
The value seeking (or value sucking ??) small town Indian consumer seeks the best of both worlds.
The close to home friendliness of the neighbourhood kirana with the structured comforts of
an organized shopping environment.
Also the best price.
The broadest and deepest variety of SKU range. Flexibility in payments.
Superb Pre-sales & After-sales Services.
Even today, the most bitter battles in retail the world has ever seen are being fought in India's small towns and villages daily.
Not in the large modern metros.
To survive and prosper, you better have a strategy.
That can not only keep the Walmarts of the world away from your customer, but also the traditional retailer your customer is used too.
And your strategy better work. In all organizational areas concerning the M-Assets
The days are gone when one could plan grandiose long term strategies.
The time has come for quick, nimble fast on the feet thinking actionable strategies.
Kaytek has provided Strategic Retail Consultancy and
Guidance for Prospective Entrepreneurs proposing to setup Organized Retail
Outlets in Small Towns of India.
We get involved in all areas of Retailing - Strategy,
Planning, Conceptualization, Operations, Branding, Financial, Human Resource
Development, Marketing, Systems, Software, Merchandising, etc.
Based on our interactions, we have prepared some strategic Issues for possible consideration for entrepreneurs and businessmen wanting to expand in the retail sector in India.
Importance of India as a Retail Market
India along with China is becoming the new and perhaps (only) two large
countries where the future and current MNC's (Multi-National Companies) will
fight out out their battles.
In my humble opinion, at some point in time, small
towns will not be left out in the competition and blood bath of the local Organized Retail Companies and global
Every Prospective Retailer's business plan should have a clear-cut
viable strategy to stay ahead of the business cyclones that may perhaps affect
every retailer in India.
Organized Retailing in India - Are there Profits ? If so, When ?
Internationally, retailing businesses have had traditionally low
margins due to various factors. Their markets are mature. The customers are well informed.
In India, even though consumers may not have got over the colors and excitement of a modern shopping mall, they are still high value seeking folks when they have to part with their money.
So, prospective entrepreneurs are advised to be cautious while preparing profitability timelines for their Retail Venture.
Most Industrialists and Businessmen would like to start makng profits from Zero Hour, Day One of their Retail Outlets being functional.
Alas !! Easy Pickings are out. Especially in Retail.
It takes a long time to move the traditional Indian consumer from the Awareness, Sampling, Repeat Purchase, Satisfaction and Loyalty Buying Cycles.
To the best of our knowledge, only now are any of the large major
retailing companies in India e.g. Shopper's Stop - Raheja Group, Mumbai, Big Bazaar, Pantaloon - Kishore
Biyani Group Mumbai, Trent, Westside (Tata Group) and Giants, FoodWorld , MusicWorld - RPG
Group beginning to make money.
After atleast 5 to 10 years of operation.
then, their Gross margins are not very large (maybe between 5 - 7%).
Perhaps even lower.
In many cases, their books are still in the red.
Some of the new ones are attempting to buy market share by loosing money on the fast selling food and grocery items.
They hope to convert their walk-in customer's fickle footfalls to future loyalty fast.
But is there not money to be made in India's Retail Business ?
Sure. There is.
As an example, The Unorganized Retail Sector makes money even though on low volumes and lower overheads.
The Shopkeeper or the Kirana down the Road has been making fat profits so far (maybe at our expense).
However, once Organized Retail Players start increasing their volumes and market share, surely and steadily it will hit the competition. Especially in the Unorganized Retail Sector.
Can Pure Indian Players Survive and Succeed ?
in Organized Retail, like in any other business, to survive and succeed, you need Deep Pockets. Besides Smart Strategies and a Sense of the Local Market.
Not Strategies designed in Air-Conditioned Rooms.
But in the dirt and dust of the Indian Marketplace.
Also, An Ability to Scale your Operations. Locally. Across the Region. Nationally. And even Internationally. While keeping your costs low. And Driving them still lower. Year After Year.
As Nirma and many other Indian players have demonstrated, it is possible to beat Multi-National Companies or Giants at their own game.
India is not just another easy market place, available for easy pickings. As many foreign companies have discovered to their own peril.
You may also Read
" Indian Market's Magic Keys.. "
Email Us : Can we be of help for your Retailing Project in India ?
To be Continued....