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| The Promise is Intact |
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The Retail Track harboured on the theme ‘India’s Attractiveness - Underlying Forces, Sustainability and Future Trends.’ AK Singhal, Chairman, KSA Technopark began on a rather optimistic note. “Despite recent turmoil, the India story remains encouraging, he said, adding that it was because the fundamentals are strong and there are opportunities here even if the GDP grows at 5-6%. The reasons he enumerated were - rising income, balanced population( more in the earning group unlike Japan, Italy etc.), dropping dependency ratio, rapid urbanisation, attitudinal changes where the ‘Young India’ premium products are driven by enjoyment and experience.
“Our incomes are increasing, but our wants and aspirations are increasing even faster. Hence there are trade offs required in the needs basket, specially in food, as people trade down in food and FMCG goods to trade up in lifestyle and fashion. Private labels come in here,” he explained.
Singhal was of the opinion that the premature death of modern retail–grocery is exaggerated. This is because we tend to judge the health of industry by health of big leaders like Shoppers Stop, Reliance retail, etc. He said that in India over 20,000 new modern retail outlets are likely to be opened in next two years.
“Modern retail is currently experiencing a steep learning curve. The current turbulence is not entirely unexpected or undesirable. But the promise is still intact," he said. Speaker Sunil Chainani, Director FabIndia stressed on the need for a shift in mindset – “from everything foreign to Indian”. He said that FabIndia is a story where people feel proud to wear Indian clothes, not only when in India but also when travelling abroad. He also added that in the past loyalty was stronger – to brands, employers etc. But that is not the case now, and hence brands must take that into account and build a distinct brand. “Loyalty is changing with new formats, online sales etc. Retailers that don’t innovate and don’t move with the time will not survive,” he noted.
He shared the model of FabIndia of how they source artisans across country, try and help create jobs for 100,000 artisans in India, help strengthen this supply chain, set up a micro finance company where artisans themselves are shareholders. Hence they work collectively to get management in place to serve the customer in a timely fashion. “Because ultimately the urban customer will not pay a premium for a good cause. They want value for money,” he said.
The next speaker was BVM Rao, HR Head Shoppers Stop. He spoke about the challenge of managing growth and profitability at Shoppers. Some principles of sustaining growth, according to him, were cutting costs all over yet delivering highest level of customer service, get connected with CRM/loyalty programme, identify value drivers, experience etc. He shared how at Shoppers Stop the top line sales are not going as strong, and how in anticipation of growth, inventory piled up and contract costs bloated. “Now Shoppers Stop is re-looking at the store format (very large stores not very attractive) and merchandize mix. Currently very are looking at more collaborative planning with suppliers, and compensation also needs to be realigned with the industry. Overheads as a percentage of sales need to be checked," he summed up.
(Inputs from student Satvika Saboo, Class of 2009)
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