The Retail Transformation

India is a big retail market and expected to be one trillion by 2020. Indian retail industry employs around 40 million people and has around 15 million retail outlets
retail

Shiv Shivakumar, Group Executive President, Aditya Birla Group was designated keynote speaker at Indian retail and eretail congress (IReC) 2019 concluded in the capital city New Delhi. Followings are key excepts of this speech..

 

Indian retail is going through a transition phase. This retail transformation can be understood on the lines of airport evolution. There has been drastic upgradation in airport infrastructure over last decade. Today airports are city themselves; they have everything inside with superb experience. If we can trace back the journey of modern Indian trade the findings would be similar to how the airport have evolved.

Uniqueness of Indian Market

India is a big retail market and expected to be one trillion by 2020.  Indian retail industry employs around 40 million people and has around 15 million retail outlets; no country in the world has so many outlets, not even China. This is one of the main USPs of Indian market.

Quoting an experience from his Nokia tenure, he informed that when he used to run Nokia, China used to have 80 to 100 thousand outlets. At that time India had 300 hundred thousand retail points for mobile phones.  So , India is a huge retail market , and the business model that will evolve in future will be uniquely Indian. If anybody is enduring to implement learning from any other market, this exercise will be nothing but absolute waste of time. In no category, Indian retail behaves like any international market.

Top Categories and Business Models

If you look at big categories in retail today, these are top four-five categories today, among that food and grocery is number one, followed by apparel then jewellery finally IT electronics etc. Let’s look at whole retail business model of India and how it is changing.

If you look at historically, retailers and brands have never partnered well in India. Although, they both need each other, somehow retailers have this notion that they own the consumers, which is not true at all.

Do bear in mind that true businesses will come through true partnerships. Few successful partnered businesses will be followed by many. The benefits of partnership are very good for people.

The old retail business model was drived on affordable prices to pull the crowd, and maximizing private label opportunity especially in categories such as food and beverages, mainly to garner better margins. Monetize spaces on window shelves and finally the assisted sales. Nothing had changed in this model since long time.

The real changed started to happen when foreign retailers started penetrating Indian market.  As a ripple effect, Indian retailers to started paying attend of various aspects of retail including technology, lighting, fixters and overall ambience which was not the case earlier. However, we have long way to go.

At last, Indian retailers need to follow to route of ‘innovation’. It is a healthy practice for overall growth of retail industry.

 

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