The Hindu Business Line : ‘Organised retail needs to involve small store owners’

Mumbai, Sept. 5 The second day of the India Retail Forum debated the need for organised retail to go hand-in-hand with the traditional single store formats. Mr Suresh Prabhu, Shiv Sena MP and former Union Power Minister, said: “The success of organised retail cannot be judged by the bottomlines of the corporates. On a long-term basis you need to involve the masses and create a win-win situation for both parties.”

Endorsing the Minister’s ideas, Mr B.S. Nagesh, Managing Director, Shoppers’ Stop said, “By 2015 organised retail will grow to 20 per cent (of the retail business), considering the GDP grows at the same pace of 9.3 per cent. But the question that arises is will this 20 per cent have the power to help the remaining 80 per cent of unorganised retail? ” he said.

Talking about the consumption patterns emerging from the boom in modern retail, Ms Ireena Vittal, Principal, McKinsey & Co, said: “Credit today, cash tomorrow is going to be the mantra.” Adding to this, Mr Sumantra Banerjee, President & Chief Executive Officer, RPG Enterprises, said: “Growth triggers in the last three to four years have been due to three factors – favourable demographics, rise in consumer incomes and the mall boom. The pyramid shape of the consumers will change to diamond, with the lowest income group moving up to become the middle class consumers, who will constitute the maximum chunk of the buyers in the economy.”

Mr V. Vaidyanathan, Executive Director, ICICI Bank, and Chairman IRF 2007, said that people need to be trained for the retail industry.Highlighting the challenges for the retail industry, most speakers pointed to the soaring real estate rates as an impediment to retail growth. “When I see the prices of Delhi and Mumbai, they are higher than even those in Manhattan. At this rate, while every retailer wants a piece of the land pie in the city, what will happen is that there will be super congestion and growth without profit or margins,” said Mr Banerjee.

Mr R. Subramanian, Managing Director, Subhiksha Retail, said, “In our business, there are two fundamental costs – people and property. Since retail is always going to be a low-margin business, we need to work our way towards it and yet derive a way of getting quick returns.”

“As a means to cut costs, most of us in the industry are driving growth, setting up more stores,” said Mr Sanjay Jog, Future Group HR, adding that single store profitability should also be given importance.