The share & #BANNER1 & # of modern or organised retail in India is a mere 3 per cent at present. But the good news is that countries such as Thailand, Brazil, China and Poland took several years (18, 15, 10 and eight, respectively), to get to where they are today, with respect to getting their organised retail market shares between 5 and 40 per cent.
At the CII Retail Brand Summit held recently in Mumbai, Bijou Kurien, president and chief executive, Lifestyle, Reliance Retail, went on to reveal some more interesting facts about India's retail industry. For example, there are approximately 1.2 crore 'mom and pop' stores here. Largely, people still buy fruit and vegetables off the streets. Further, FDI is not permitted, except for single brand and cash and carry formats. And despite over 70 per cent of India's population residing in rural areas, the urban-rural split of the retail market is 55:45, clearly indicating that there's a lot more scope to tap the rural belt.
He then went on to speak of the key drivers for retail - securing the appropriate real estate deal, assortment strategy (deciding which products to keep), display and design, differentiated formats, marketing and communication, supply chain/ procurement/ distribution, IT and infrastructure, people recruitment, and a flexible management structure that changes with the times. Out of these, Kurien pointed out that getting the right people is a big issue for the retail industry.
"At the entry level, you get people a dime a dozen, but at the mid-level management level, it is difficult to retain people," Kurien said, highlighting the attrition rate in the industry. At the entry level, too, things aren't all that rosy. More often than not, the front desk staff comprises people who have passed Class 10 or Class 12, who, on not having identified their skills, become peons, store clerks and shop assistants. "Formal retail training institutes could perhaps be the answer," Kurien suggested.
Next, Kurien spoke of the peculiarities in the Indian supply chain. In a category such as food, for instance, farmers pass on the goods to traders, who, in turn, pass them on to commission agents, wholesalers and, finally, retailers. This long chain ensures that the product that reaches the end consumer is hugely expensive (3.5 times the farm price), owing to the big margins charged by the intermediaries. "As some modern retail formats are already procuring material directly from farmers, this problem could be solved," Kurien said, "but this will lead to employment problems for the middlemen."
As of now, the government of India is trying to strike a balance by coming up with regulations that keep everyone happy. "However, it will be difficult for a ministry at the national level to regulate the industry across states, owing to the peculiarities of each region," Kurien concluded.