Growth of Organized retail in India Essay Example

due to location issues. This mindset does not allow fear of mistakes to slow down progress. Shoppers Stop aims for operational break-even in 12-18 months, whereas Pantaloon targets 6 months.

Westside considers the 1-year break-even point, while for supermarkets like Foodworld, the break-even level is six months at the operational store level and for discount stores like Subhiksha, it is 2-3 months. According to Nagesh, if a store is not profitable, it is due to either customer entry or merchandise mix. Therefore, superior formats and merchandise planning are crucial to success.

Despite a company's aggressive expansion strategy upon entering the retail industry, it is suggested that they may not immediately make a profit. However, this should not negatively affect the profitability of individual stores. There is no substantial evidence to support the idea that organized retail is doomed to fail. Although challenges exist, they are primarily related to internal factors as opposed to external ones. Retailers may encounter obstacles such as reduced consumer spending, increased real estate costs and government regulations; nevertheless, success can be achieved through taking appropriate measures which many retailers are striving towards (refer to 'Chasing the Dream' below).

Mathur emphasizes that retailing requires a long-term investment, with profits potentially taking 3-5 years to materialize. Singhal notes that it took Thailand 12 years to achieve a 40% share in organized retail, Brazil 12 years for 37%, and China 10 years for 20%. Nevertheless, the industry holds promise for growth due to its early stages of development. The next phase for retailing involves consolidation, which may bring new entries and exits. While retailers have made errors, they have also taken corrective measures in recent times.

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to director of Subhiksha Trading Services, R Subramanian, the solution is to go back to basics and concentrate on adding value to the customer. While enjoyable shopping experiences are beneficial, they may not be what Indian consumers are seeking. As opposed to areas like Eastern Europe or China, Indian consumers have a wide range of retail options available and are not waiting for organized retailers to open. Therefore, the key is to efficiently manage costs by passing on good deals to customers and assessing how each rupee spent can contribute to the success of the business. Players such as Globus have transitioned to an all-apparel store.

Shoppers' Stop is positioning itself as a competitor to small, unorganized retailers operating in 2,000-5,000 square feet by offering larger options at competitive prices. To increase customer entry, they have introduced promotional events that are not related to markdowns, such as '101 days around the seven wonders of the world'. Other retailers like Ebony are also focusing on strengthening customer relationship management and supply chain management. Recently, many players in the industry have implemented IT solutions to improve their inventory management.

According to Birinder Singh Narula, the executive director of Ebony Retail Holdings, there has been a shift towards planned growth from uncontrolled growth. He states that their future expansion strategy will focus on consolidation in regions to reduce marketing and HR costs, which has been their approach in the past. Nagesh also concurs, mentioning that backend costs increase nearly seven times if stores are opened in different cities, but only 1.5 times if they are located in the same city.