Challenges before Indian Retail Industry
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Retailing in India:
A challenging opportunity
“… I will say that if you’re alive you’ve got to flap your arms and legs, you’ve got to jump around a lot, for life is the very opposite of death….”. Every game is a knife-edge balance between reward and risk. Rewards are received at the end of the game if one has borne all the risk and is alive and kicking till the end. Indian retailing industry has been looked upon as a dream come true but for many entrepreneurs it has become a nightmare.
In this study we make an attempt to jot down the various problems concerning the Indian retail sector. Since a boon from one’s viewpoint may be a curse from another’s, so we have tried to ignore all types of biases. In some cases suggestive measures are also suggested. These measures are surely not mutually exclusive but may be (informally) collectively exhaustive.
Conspicuousness and eccentricity of Challenges
Major Challenges
1. Amalgamation or Confusion- According to Tata Strategic Management Group, India has a high density retail structure of 1 retail outlet per 90 people and is the 9th largest retail market in the world. But the structure of the retail industry in India is in utter jumble. The parallel operation of convenience stores, supermarkets, hypermarkets and specialty stores in the economy is bewildering. According to the ‘Wheel of Retailing Theory’, certain loopholes in one of the forms of marketing can get communicated to other forms also.
2. What to sell- Another bemusement is the category of items to be offered. According to researches, 41 percent of total consumption expenditure goes to the segment of food and groceries and it accounts for 77 percent of total retail sales. So it is obvious that this is the most preferred section of retailers. But unfortunately the foible taste bias for ‘wet market’ (i.e. fresh food available through hawkers) has marred this prospect also. Therefore supply chain management, storage of fresh perishable foods and persuading the customers that the food is inexpensive despite being fresh are genuine challenges to the newcomers. Diversifying the product base to consumer products such as readymade garments, furnitures, mobiles and computers can mitigate the losses, if any from food marketing and also broaden the reach to consumers.
3. Nostalgia- Indian shopping habits are no different. People tend to attach qualities like honesty, fair price, good behaviour etc. to shopkeepers with whom they have been dealing right from childhood. They find no reason to go to a distant megastore without any genuine reason. This problem is difficult to deal with as it demands a change in long-formed mindset. Organised retail outlets can overcome this problem by employing eligible local peoples who can interact in vernacular language and win the confidence of people.
4. Information Technology- This is a major problem and India must act fast if it wishes to create a smooth field for organized retailing. Digitization of services will make transfer of goods easy and an improvement in supply chain management will definitely play a significant role in attracting more consumers and less consumer grievances. Besides, it will generate easier payments option for customer and easier money movement for the CEOs of these highly diversified malls.
Minor Challenges
1. Human resource crunch- the concern for insufficient manpower in the industry has been in news for the last few months. This fear is somehow unfounded. 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-Walmart then the fear can surely turn into a misperception. Retailing mainly deals with hard-selling of space, trade of stocks and building of relationships. Since most of the openings are for front line shop people, a graduation will suffice. Nowadays many institutes also provide post-HSC and post-graduate retail-specific courses.
2. Hindrances from government- Some political parties want the government to amend laws and improve curbs so that the mega players can’t openly decimate the unorganized retail sector. This is a conclusion based on a myopic outlook and must be amended for a long term strategy. The fear is baseless because of the reasons mentioned above. The megastores will no doubt provide employment to the less educated masses. Also taking business away specially from small food vendors is more easily said than done. Instead the limiting move will send wrong signals to the investors and will ward off investments when the states need it most. Allowing 51 percent retail FDI in single brand retailing is a welcome move in this direction. It is expected that the government will create further opportunities for the organized retail to come up as home grown investment is always sweeter than foreign investment.
The advent of organised retailing in an economy where spending power is growing fast and Tier II as well as Tier III town dwellers are becoming brand conscious is sure to bring a revolution in the retail sector.
