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While most of the attention - and the debate - over India’s estimated $450 billion retail industry has been focussed around organised retail — and specifically, the entry of foreign, big box retailers into the Indian market, the fact remains that organised retail accounts for only seven per cent of the market.
The balance 93 per cent is the actual backbone of India’s sub-continent sized retail network, the millions of so called ‘mom and pop’ stores, which provide most of the turnover and almost all of the employment.
Where’s the focus?
And marketers and companies, believes retail specialist Sanjiv Sethi, have simply not paid enough attention to this sector, the ‘trade’ which drives most businesses in this country.
India’s largely disorganised but staggeringly large retail network translates into over 14 million operational retail outlets, or a retail outlet density of about 11 shop outlets for every 1,000 people.
This is an astonishingly large number and poses a mammoth challenge to organisations and marketers. But surprisingly, says Sethi, very few organisations invest into active trade management.
Many tools, few solutions
“We have so many tools available to us in organisations,” says Sethi, who worked with FMCG and telecom sector majors before taking time out to do his PhD in management.
“There is Customer Relationship Management (CRM), integrating technology and business practices to build relationships with customers. Then there is Supply Chain Management and ERP-Enterprise resource planning software. But none of them can handle the complex and encompassing relationship between trade partners/retailers,” he says.
“Variables like prices, incentives, discounts, adjustment in invoices, attending to the customers through help desk and others present a daunting task before the sellers. That’s why I looked for an alternative,” he added.
His research led to not just his doctorate, but the creation of a patented tool which he calls ‘Trade Relationship Management’, or TRM. Ït’s not a technology or a software, it’s a complete process,” he argues.
Life-cycle of trade
His argument is that “huge ad spends amounting to crores were not getting converted in to revenues or market share and were only helping build ITP scores-Intention to Purchase or TOMA-Top of Mind Awareness scores,” he says.
Under the TRM model, companies need to look at all variables, not just customer market share. They need to look at the revenue market shares, as well as the trade market share, he says.
“It’s not only about stock turns or return on investment, it’s about full life cycle management of trade,” says Sethi.
Right from recruitment to communication to training to commerce and engagement with trade, he claims his system offers simple processes and tools which can enable companies - and managers down the line - to engage meaningfully with trade channels, and more significantly, calibrate returns to spends.
With India’s retail sector getting set for a new phase with the entry of foreign big -box retailers, trade engagement is likely to be crucial to existing players for taking on the new competition
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