The Indian Retail Phenomena & Wal*Mart's Juggernaut
Balakrishna Parankusam
The Indian customer is a paradox. She wants everything at a discount. Shopper loyalty takes a back seat over price discounts. Novelty seeker is the pseudonym that aptly fits the Indian shopper.
Wal*Mart's lobbyists are burning the midnight oil to ensure that the incumbent Central government opens the doors of FDI in Retail. The bitter South Korean experience of the retail behemoth where it sold all its 16 stores to South Korea's E-mart and that Carrefour which was the first international retailer to exit South Korea, such setbacks will definitely put some breaks on these retailers as they explore global shores. These retailers have failed to read what South Korean housewives want when they go shopping.
But Tesco had a different approach. They were able to "localize" their merchandize in tune with the South Korean customer requirements and they have garnered sustainable customer loyalty.
This clearly indicates that the Wal*Marts of the world will have to localize in their thirst for global dominance. Localization is the weapon that the Indian retailer have used so well that the Indian customer swears by the product offerings and discounts which the retailer provide.
But when Wal*Mart's forays into the Indian Retail scenario, the customer will stand to gain. This will usher in a healthy competition among all the retailers. The customer will get the best quality products at the lowest prices. The various FMCG, apparels and consumer durables products' companies will achieve greater penetration of their products and also witness improved bottom lines, volume wise. Margins of these companies will take a hit with Wal*Mart and Reliance Retail demanding greater markdowns. Reliance asking for 40% margins against the industry average of 25-30% is already creating waves in the vendors' circles.
As the retail industry grows, there will be a tremendous increase of businesses of local companies, manufacturing and selling unbranded products, for example savories, etc.
Last but not the least, the amount of job opportunities will witness a manifold increase. There have been vociferous protests by local traders opposing the opening of the Retail industry, but even they would stand to gain, as they would get products at much lower prices then what the companies are presently offering. These traditional "Pop & Son" stores will witness a minimal reduction in their fortunes as far as customer loyalty is concerned, but these stores have always been the destination for "Top - up" shopping and this is one trend which will never reverse.
The Indian Retail scenario promises to throw up surprises as it evolves, so lets fasten our seat belts and witness the phenomena unfolding in front of our eyes.
The Indian customer is a paradox. She wants everything at a discount. Shopper loyalty takes a back seat over price discounts. Novelty seeker is the pseudonym that aptly fits the Indian shopper.
Wal*Mart's lobbyists are burning the midnight oil to ensure that the incumbent Central government opens the doors of FDI in Retail. The bitter South Korean experience of the retail behemoth where it sold all its 16 stores to South Korea's E-mart and that Carrefour which was the first international retailer to exit South Korea, such setbacks will definitely put some breaks on these retailers as they explore global shores. These retailers have failed to read what South Korean housewives want when they go shopping.
But Tesco had a different approach. They were able to "localize" their merchandize in tune with the South Korean customer requirements and they have garnered sustainable customer loyalty.
This clearly indicates that the Wal*Marts of the world will have to localize in their thirst for global dominance. Localization is the weapon that the Indian retailer have used so well that the Indian customer swears by the product offerings and discounts which the retailer provide.
But when Wal*Mart's forays into the Indian Retail scenario, the customer will stand to gain. This will usher in a healthy competition among all the retailers. The customer will get the best quality products at the lowest prices. The various FMCG, apparels and consumer durables products' companies will achieve greater penetration of their products and also witness improved bottom lines, volume wise. Margins of these companies will take a hit with Wal*Mart and Reliance Retail demanding greater markdowns. Reliance asking for 40% margins against the industry average of 25-30% is already creating waves in the vendors' circles.
As the retail industry grows, there will be a tremendous increase of businesses of local companies, manufacturing and selling unbranded products, for example savories, etc.
Last but not the least, the amount of job opportunities will witness a manifold increase. There have been vociferous protests by local traders opposing the opening of the Retail industry, but even they would stand to gain, as they would get products at much lower prices then what the companies are presently offering. These traditional "Pop & Son" stores will witness a minimal reduction in their fortunes as far as customer loyalty is concerned, but these stores have always been the destination for "Top - up" shopping and this is one trend which will never reverse.
The Indian Retail scenario promises to throw up surprises as it evolves, so lets fasten our seat belts and witness the phenomena unfolding in front of our eyes.
2 comments:
Here i will also like to mention that the fears that many of the people are allying about FDI in retail leading to the closure of smaller outlets is baseless as its the smaller outlet which are now chanign the way they do business and thanks to the dynamics and the complexities of the indian market ,the smaller mom n pop store will find enough n more customer .
infact in china which has similar market demographics ,it has taken more then 30years for organized retail to get 20% market share and the number of small stores has only increased.
with the market opening up in india what we would see is--
1.Increased connectivity between the urban and rural ,which will reduce the gap .
2.Better logistics would mean ,better prices to the farmers and customers and reduction in the huge wastages.
3.growth in the infrastructure would mean a boom in the real estate,iron and steel and cement industry.
all of these leading to the overall GDP growth and the economy moving ahead.
the retail revolution is on....and i am glad we are all a part of it.
hello retail log!
i appreciate your effort to bring retailing concepts and wonderful information in bite size chunks to lay people like me. As a consumer i take great interest in the articles posted on this blog though i may not be able to add any inputs at this point of time.
good job
keep it up!!!
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