Stratagem for retail betterment

The global retail industry has been growing at a brisk pace during the last few decades. At the same time Indian retail sector is going through a transitional phase to usher organised retail. The stake is small in the Indian market yet organized retail is showing all the promises to grow clocking a growth rate of 35 per cent.   

“The growth of organised retail will be driven by the franchise model in future,” said Gaurav Marya, President, Franchise India Holdings Limited while releasing the Fashion & Lifestyle Report 2009 at the two-day Franchise India Summit recently. “In fact, that is the reason that many big companies going into retail mode are adopting it,” he added.

The changing face of Indian Retail

As shopping in India have witnessed a revolution with the change in the consumer buying behaviour and the whole format of shopping also altering, industry of retail in India has become modern.   Also most of the retailers are expanding through franchise way as they cannot alone rely on the company owned model, which requires a lot of investment. 

As per the report ‘Mall Realities India 2010’ by leading property consultants, JLLM and Cushman & Wakefield India, over 100 malls of over 30 million sq feet of new shopping centre space are projected to open in India between 2009 and end-2010.

 Government’s Contribution

Government of India permitted 100 per cent FDI in cash-and-carry wholesale formats through the automatic route and up to and 51% FDI in single brand retail through Foreign Investment Promotion Board (FIPB). This rule has made the access easy for the international brands. But much furore has been raised from the other quarter of unorganised retailer who feared the entire market takeover by the big players. To maintain the balance the policymakers are now showing the restraints by not permitting FDI in multi-brand retailing soon. However, franchising is one such business policy that enables the small retailers too to embrace organized retailing through brand association where there’s a scope for leveraging business operation through the means of support provided by the franchisee.  

 

Tie-Ups In Retail

The 100 per cent FDI permit for cash & carry has paved the way for retail giants like Germany-based Metro and the US-based Wal-Mart to set up their shops in India giving the small an opportunity exploit the modern trading ambience. Also, Reliance Retail has already tied up with UK-based Marks & Spencer (M&S) to float an equal joint venture for apparel, gourmet food and cafes and scaled up to 1,400 stores by the end of next fiscal.

Tesco has already tied up with Tata Group and the entry of Carrefour is in the pipeline.   Otherwise Indian retailers are trying to tie-up with global brands through franchise and licensing agreement because they benefit both the partners.   

Employment and Training

Retail, India’s largest industry and the country’s largest source of employment after agriculture, has the deepest penetration into rural India, and generates more than 11% of India’s GDP. But the unskilled labor in rural India needs extensive training to grow the organised retail sector in India at faster pace. 

“My experience tells me that better staff can increase revenue by over 25%” said, Hemchandra Javeri, Co-founder, Executive Director, and Forum Synergies. Therefore big retail brands across the world are investing aggressively on training and educating their key customers - kiranas, hotels and restaurants.

Carrefour plans to roll out its full-fledged training programmes while launching its first store in the National Capital Region (NCR) for its key clients like small retailers, hotels and restaurants. For starters, it has already briefed over 600 suppliers and trained 100 farmers.

Metro Cash & Carry, which operates five wholesales centres in India, also started programme for hotels, restaurant, ‘Chef, U & METRO’, to share expertise in areas like thematic cuisine, food festivals and menu merchandising

Industry sources said Tesco, which is in the process of opening its cash and carry stores in India, is also evaluating such opportunities. Also Bharti Wal-Mart, which recently launched its first outlet in Amritsar, has rolled out programmes on taxation issues for kirana owners, food safety and hygiene workshops and live demos for hotels, restaurants and caterers.

The Challenges

Thus challenges like retail differentiation, merchandising mix, supply chain management and competition from suppliers’ brands are the talk of the day. In India, as we are moving to the next phase of retail development, each endeavor to offer experiential shopping.  One of the key observations by customers is that it is very difficult to find the uniqueness of retail stores.

 “Benefits of good SCM- supply chain management is that it reduces uncertainty and risks in the supply chain and contribute to the overall profitability”, said Vineet Kanujia, General Manager, Marketing, Safeexpress. The challenge lies in the deployment of SCM run by skilled professions and equipped with state-of-the-art technology.

Merchandising planning is one of the biggest challenges that any multi store retailer faces. Getting the right mix of product, which is store specific across organization, is a combination of customer insight, allocation and assortment techniques.

The challenge also lies in positioning private labels or in-house brands besides national and international brands

Conclusion

India is an enormous market, of which we are seeing only the tip of the iceberg. If the changes which are taking place in the metros retail start to percolate in the all the urban settlements then there will be a real revolution in the Indian Retail.

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