The Hindu Business Line : Little method, lots of madness

Anand, as I keep saying, retail as we know it today is but only a trailer of the real full-length movie that is due to unfold on the Indian market-scape. Today, organised retail comprises 3.6 per cent of the total pie in terms of volume share of trade. The rest is run by small mom-and-pop stores in every category, whether it be apparel, food and grocery or whatever.

Except for petroleum, organised retail in India is still in a nascent stage in every category. Therefore, the face of emerging retail in India is likely to be very different from the face it sports today.

For one, ‘New Retail’ in India is going to be about brand ubiquity in the future. The brand will stare back at you every 300 yards in the market you will tend to walk in. And there will be options in every category that will flummox you. So much so that reach and convenience in terms of distance will start dictating your franchise of a particular retail outlet. In many ways, it is back to the days of kirana retail when you bought groceries from the grocer closest to you.

There will also be several models at play. The mom-and-pop outlets will morph in to a retail segment of their own. Each store will reinvent itself and offer relevance, originality in merchandise stocking and innovation in the offers.

In addition to the traditional mom-and-pop store in the morph mode, there will be the 7-11 formats that will be of a chain origin. Add to that the larger format departmental stores a la Subhiksha. Add further still to this mélange the supermarket of a Wal-Mart origin. Add the hypermarket that caters to retail and the superstore that caters only to the B2B business.

There is going to be plenty on offer. In the Indian market, each of these will co-exist with one another with little method and a lot of madness.

The first couple of years will decide the winners and the losers. It is then that we will enter a consolidation phase where the biggies will grow bigger and many will fall by the wayside. Emerging Indian retail will also be about clonal offerings.

The moment a Croma Zip store at Mumbai airport makes an impression, there will many ‘me-toos’ that will want a piece of the action. At the end of the day of course, a form of retail Darwinism will prevail and the fittest will survive. The fittest in terms of offerings, deep pockets to survive wafer-thin margins, and the fittest in terms of the tenacity to fight competition that is irrational in its attack.

Of the total retail space, 3.6 per cent valued at $330 billion is in the hands of organised retail. India therefore remains a nation of small shop-keepers.

Organised retail is facing flak in the Indian market. The protests have just started. How far do you see this going?

-Rajat Sinha, Kolkata

Rajat-da, as Reliance, the Aditya Birla Group, Bharti-Wal-Mart and everyone else makes inroads into organised retail, there is bound to be resistance from small retail. This is likely to become a political movement as well, and the savvy politician of the day is sitting on the fence to rake up the issue. I do, however, believe that this will be a temporary hiccup for modern retail. Things will settle down as the consumer’s good takes priority and as prices fall for the consumer at large.

The middle-man will get squeezed. In later days, things will settle down and these middlemen will fulfil other jobs within the retail scape at large.

Ultimately, peace shall prevail. As will commerce.

Quite a few of the heritage brands are undergoing re-positioning exercises. Do you believe this is right? Is it right to contemporise heritage brands altogether? And to spread their appeal across categories of products even?

-Rathi Ganapathi, Bangalore

Rathi, I am a purist in the realm of brand thinking. I do believe brands must not extend themselves too thin. A brand is like elastic. You stretch it too thin, it breaks. It loses its depth. All it gains is width. And width does not necessarily build heritage. It is depth that builds heritage.

Therefore, I do believe heritage brands must not extend themselves with new sub-brand avatars. They must stay consistent to what they are. These brands need to withstand the pressures of their immediate bottom-line profit-seeking CEOs and Finance Directors alike.

As a purist, I do believe these brands need to treat themselves as unique as some of our heritage monuments themselves.

If the Taj Mahal were to be replicated in every Indian city, the Taj would lose some of its sheen for sure. Imagine a Charminar in Delhi or a Gol Gumbaz in Bangalore. Stretching heritage brands is equally ridiculous an attempt. Short term and myopic. There is no scope for short-termism in the management of heritage brands.

(Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc).

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