The Hindu Business Line : `Retail can have a multiplier effect'

Mr R. Subramanian, Managing Director of Subhiksha, in a Q&A session with students of St Mary's School for Management Studies, Sholinganallur. — Shaju John

Chennai , Oct. 10

THE retail sector can have a good multiplier effect on the economy and can be an effective building block as consumer spending fuels growth. A lack of organised retail can even hamper the overall growth of the market. "Today, we look at retail growth as part of infrastructural growth," said Mr R. Subramanian, Managing Director of discount retail chain, Subhiksha, at the inaugural session of the BL Club at the St. Mary's School of Management Studies, part of the Sathyabama group of institutions in Sholinganallur.

In a talk to the students, Mr Subramanian said that organised retail has gained pace in the South-East Asian economies and contributes almost 30 per cent of GDP in those countries whereas in India the scenario is very different - organised retail contributes under 10 per cent to GDP.

The food and grocery business in the country is around Rs 2,50,000 crore but organised retail constitutes barely one per cent of the total market. The opportunity is huge, stressed Mr Subramanian.

Tracing the growth of Subhiksha since it was launched in 1997, Mr Subramanian said that he consciously looked at a mass market model where the benefits of organised retail with lower prices could be enjoyed by a large swathe of customers.

He estimated that consumers who shopped in Subhiksha over the years could have had an overall saving of Rs 25 crore. He said that with the discount chain cutting prices others also were forced to cut prices.

He told the students that retailing could be a painfully tough business but full of challenges. Young people could see a phenomenal breadth of work early on and it would be a huge learning as store managers manage crores of rupees worth of inventory. They can also assume multi-functional roles at a very early age.

"Retailing is a youthful industry and there is opportunity to grow if he or she is willing to work hard," Mr Subramanian told the students.

His talk was followed by a lively interaction with students quizzing him on the Subhiksha "model," service standards and e.tailing.

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