Indiaretailing.com: Experience vs. convenience, as the retail mêlée goes
By Ranjan Kaplish and Satrajit Sen
Through a special arrangement, what follows is an excerpt of an article from Indiaretailing.com, presented here for discussion.
According to India Retail Report 2007, organized retail presently only comprises 4.7 percent of the overall retail market in India, but was expected to grow by 34.8 percent by 2006-07. The business of buying, selling and buying, with its tremendous growth potential, has attracted not only the national corporate giants (Ambanis, Biyanis, Tatas) and multinational behemoths (Carrefour, Wal-Mart), but enterprising Indian industrialists are busy opening jazzy shops, and are heard chanting the charming retail mantra, 'my customer is my king.'
Perhaps this is a good time to pose this question: How can mom-and-pop stores or other old, independent retailers organize themselves to be part of the expected organized retail figure?
The subject sounds strange, being unheard or less talked-about. If an ancient marketplace starts providing services and experiences better than a branded multi-brand outlet, will its participants be considered among the organized retailers?
Dharmendra Kumar, director, FDI Watch in Retail, suggested independents form cooperatives. "The small and independent retailers can easily outnumber the countable companies in the business. They should club together and form cooperatives; together they can become one company, through which they can form a model that can compete."
Arvind Singhal, chairman, Technopak Advisors, advises investing in a basic electronic POS system, which can generate elementary performance reports to facilitate category management, brand/SKU management, etc. Independents should make their outlets "look fresher, cleaner, brighter, and, in general, more contemporary and less cluttered." Renovations could include adding customer-friendly shelving and displays to encourage shoppers to "walk around, touch and feel the product" and self-shop.
Overall, independents should focus on their specialization and strengths, including their proximity to customers. "Independents should further, strengthen customer contact/relationship by trying to learn and remember customer names and preferences (a computer-based system will help a lot), and stay in 'communication' with them, whether they are in the store or at their homes," said Mr. Singhal.
Jayant Kochar, managing director, Go Fish Retail Solutions, likewise advised independents to "forget about asking for level-playing fields" and focus on areas where they have a competitive advantage. Secondly, he urged independents to focus on the top-line, believing most small retailers are obsessed with controlling costs. Said Mr. Kochar, "What they need to think about is out-of-the-box ways to increase sales, by grabbing every viable opportunity to satisfy the latent needs and wants of their customers."
Finally, Mr. Kochar urged independents to surprise customers.
"We have found that when retailers think of how to delight their customers, they usually end up going in for expensive promotions and gimmicks, which may be counter-productive; or they go in for the same things that all the stores around them are doing," said Mr. Kochar. "Think, instead, of what you can do that will pleasantly surprise them - this is the best way to create real delight that will lead to more frequent visits and higher sales."
Discussion Questions: What parallels can you draw between India's current state of retail development and the history of independents in the U.S.? What lessons can mom & pops in India learn about the way U.S. retail was organized? What do they need to do if they are to compete against the chains?