National Retail Summit 2010: The future of retailing lies in India

By Mitra Joshi , afaqs!, Mumbai | In Marketing | January 13, 2010
The retail sector faces major challenges such as the current slowdown, future growth, investments required and support from real-estate developers

The National Retail Summit 2010 at the Hyatt Regency, Mumbai on January 12 had the panellists discussing the current and future positioning of the retail sector in India, along with the opportunities available and challenges faced in maintaining equilibrium.

The session chair was handled by Anuj Puri, chairperson and country head, Jones Lang LaSalle Meghraj. The panellists were Anand Raghuraman, partner, Boston Consulting Group; Thomas Varghese, chairperson, CII National Committee on Retail and chief executive officer, Aditya Birla Retail; Kishore Biyani, group CEO, Future Group; Anand Kripalu, managing director, Cadbury India; and BS Nagesh, vice-chairperson, Shoppers Stop.

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The discussion started with the issue of the economic slowdown, which has puzzled the world economy since September 2008, and its impact on the Indian retail industry. Nagesh said that everybody has learnt a lesson from the recession. However, the coming years seem positive and the consumers are also in a mood to spend, contrary to the scenario a few months ago.

Biyani agreed and said that although many people lost jobs because of the recession and majority of categories got expensive, India is still in a secure environment as customers are trying new products. New categories have been built and demands have risen.

Recalling the market scenario in 1999-2000, when demand faded out and fast moving consumer companies cut short the marketing ways, Kripalu said that the same scenario prevailed in the current recession but the marketing strategy wasn't compromised. Hence, a lesson was learnt. Across the globe, categories have grown - the latest being the mobile industry, where business has grown in double digits, almost more than 20 per cent despite the recession.

Raghuraman spoke about the difficult economic phase, calling it temporary and hailed the Indian market which stood steady. He added that while the western economies are still struggling and the export based businesses are trying to find a holding all over the world, Indian companies, especially the leaders, have cut the right functions and levels.

Varghese said that India is more penetrated in Tier II and III cities and they share the same aspiration level as the leading metros of the country.

Nagesh spoke about the challenges and said that the pace of change amongst consumers is larger than the pace of change in retailers. Moreover, there is a huge leadership challenge posed in a general manner.

Biyani said that the old economy business model survives on the outdated norms and the lack of leadership is clearly visible, even though the new age economy thrives on telecom and IT. New leaders are needed to handle the new age businesses, which are ten years old.

Varghese averred that the consumer habits are evolving with time as consumers look for different categories. The extent of globalisation will let the youngsters go to organised trade and one can easily see a change in consumption of lifestyle products. Indians 'go gaga' about branded apparel as the marketing and promotions are aggressive. Any industry - be it food or retail - is growing fast in the country.

Kripalu added that rural India also strives for branded products but is constrained by money and availability. He added that the smallest of towns are growing faster than the urban areas.

Biyani spoke about the business model which is experimented with for at least a year and a half before putting it into action. He stated that FMCG players had a lack of confidence before, but not anymore as the Indian economy will be a US$1 trillion economy next year, which will grow further in the future.

Raghuraman spoke about the retail players of the west who started long ago, the best example being Wal-Mart. He added that while everybody is looking for money in India and is ready to invest, there's a long process to everything, including the retail sector. The 'kirana' stores enjoy the extended cost culture in India, and the western retail houses are waiting in a queue to be in the country, looking at the profitable setting.

Nagesh said that while many splurge on assets worth Rs 10-50 crore - even cars more than a crore are being sold, youngsters wouldn't splash on a Louis Vuitton bag the way many Singaporeans do.

Varghese nodded in agreement and said that super luxury stores are being formed but Indians are still at a nascent stage as they are pretty selective about owning assets.

Biyani concluded the session by saying that retail construction in the real estate sector is still in a learning phase for the developers. Retail is all about productivity but the whole business of retail construction in the country has a long way to go.