Retail in India, at present,if not trod carefully and cautiously will be like “Pandora’sBox” which Zeus had given to Pandora, which was full of hope, but its untimely opening led to release of evil. If I were to relate this Greek myth to present retail scenario in India, “hope” relates to various opportunities it seeks to provide and whereas “patience” would be to wait for the right opportune time &use the right technological tools to get the desired result. In orderto reach to $1200 Billion by 2021 as brought out by October 2019 FICCI / Deloitte report, Indian retailers need to be disciplined and not indulge in price wars killing the traditional retail.Indian retail must be a market where all players prosper and not only a few big onesas even today 80-85% of the Indian retail revenues comes from the Kirana stores.
In another decade India is expected to overtake Japan to become the third-largest consumer market after USA & China. While , it is evident that lot is at stake and everyone is putting their best foot forward to achieve their numbers/sales target, but it also throws few pertinent questions , and future growth stories depend on the choices made, they are:-
- Does India want to achieve the targeted number with much disparity or all-round sectorial growths/ markets without widening the gap of have & have nots?
- Is the traditional retail/Kirana stores ready for the next technological leap or should Indiaprosper only with the big players , including, global players thriving on technology?
- Will government-aided schemes help organize and boost the traditional trade or will the Government come up with more steps like allowing 100% FDI which helps in achieving numbers/ larger players?
By addressing the above questions & by making choices judiciously thepuzzle of Indian retail will be solved. Indian retailers should take the following steps in the larger good for the market:
- Deep Discounting needs to go away like the evil in Pandora’s Box. Though deep discounting attractscustomers, they eat away margins and it is often seen that the companies offering them make huge losses and vanish in some time in spite of having a market or sell themselves to bigger companies or get divested with a PE firm
- As we know data is the new oil that many modern retails have started harnessing , but our traditional retail has either not understood the power of data, or if they have, they are not able to capture it and put it tocorrect use. The need of the hour is to organize the Kirana stores and educate them so that they keep pace with the evolving market.
- The last few years have seen the advent of online retail transactions whichare increasing steadily with more internet penetration making Omni channel the call of the day
- Technology has been playing a major role in the retail industry to solve various issues at hand and now AI/ML is the disruptive innovation that has created a new market while disrupting the existing market. Thiswill go a long way in evolving Indian retail as it may solve the major hurdles the Indian retail is currently facing - managing inventory, predicting sales, customer acquisition, customer engagement & loyalty(retention) and the last mile connectivity including reverse logistics (returns)
All the forms of trade have their own sets of challenges, but they all need to have a good technology partner who delivers to them innovative & cutting edge solutions which are customized for best results. For example, many Kirana stores are not using POS (Point of Sale) or using outdated POS, If they use the modern POS (which we call Point of Service) and not just a billing software, it can solve many problems by capturing data and throwing predictive sales by using AI/ML and help in managing inventory and knowing consumer habits across seasons & regions and this will boost their sales and counter the deep discounting done by larger players/ online players. Today technologies like understanding buyer’s mood by facial recognition& even using smartphones as a POS is a reality. These technologies need to be adapted effectively and used by all forms of trade and even stores in tier 2 & tier 3 cities to be a part of the Indian Retail Growth story
Jeff Bezos during his recent visit to India announcedthat his company AMAZON would invest $1 billion in India over the next five years, bringing millions of small and midsize local businesses online and Government also in the recent Union budget proposed a new levy of 1% TDS on e-commerce transactions, a move that could increase burden on sellers on such platforms and increase the cost of compliance. These 2 announcements may be a Game changer for Indian retail which has tremendous potential . Due to lack of technological penetration traditional retail/kirana stores have not been able to harness the market potential to its fullest . Once latest technology is adapted with discipline & patience, it will unleash the full potential of Indian retail and soon a new milestone above ($1200 billion) will be set for future and it will be like a ‘Pandora’s Box’ only with hope & no evil for the Indian retail market.
About the author
Amreshwar Sati is the Chief Operating Officer (COO) of iE3 Innovations Private Limited, a sister concern of US based company E3 retail and has around 24 years of varied experience in different spheres of business in various roles and responsibilities. He has a Global Executive MBA from Indian School of Business (ISB), Hyderabad with international Immersions at CEIBS, Shanghai, The Wharton School, UPENN & Kellogg School of Management, Illinois, USA. He can be reached via these following handles:
• Twitter - @amsati