Or in other words, here i am going to talk of demand and supply. Urge/need and i will do it for you business. Though the roots evolve over simple process, the actual implementation is as complex as it can get. The professional term for "I will do it for you business" is "Supply Chain Management". These views have evolved from an interesting read on retail.
India with a population of one billion, growing middle class, rising highly educated youngsters and hence ever expanding consumer market is rated to be the most underserved market in terms of Global Retail opportunity. It is assumed that retail is going to be the next boom in India after IT.
Facts-
- India's retail industry is among top10 and is valued to be around 300 billion.
- Three big players- Wall Mart&Bharti, Reliance and Pantaloon.
- 300 million strong middle class
India's decison to allow upto 51% FDI in retail sector led to coming in of wall mart which allianced with Bharti to tab this immense unleashing potential in SCM sector.
While the market figures are lucrative, the challenges that retail Industry will face as it develops in India are quite a few. The market being non uniform, led by mushroom growth of small retailers, thousands of middle man and uneducation at the level of root suppiers are not easy to curb. But in every urge that is strong lay an opportunity to fight challenge. Here are some of the typical challenges that i feel a retail business will have to handle effectively.
- Poor Infrastructure
- Gap between rural and urban economy and consumption patterns
- Absence of high tech infrastructure and facilities
- Lack of retailing and warehousing expertise
- Inefficient and less organized transportation operators
A retail industry survives on effective supply chain management system. It should be able to do away with bottom line costs and push the advantage to customers in form of lower cost and hence increased loyalty in return. They need to effectively manage the infrastructure and take maximun advantage of locations and strategically place their distribution centers to take geographical advantages. Retail faces more competition as this is based more of customer perception and benefits that they can offer to customer against the competitors operating in similar situations. Change and implementation is key. Retail players might want to set up an extensive distribution network. This should have stronger inventory to face uncertainity, distribution centers close to market and stronger collaboration. The marketing strategy might have to differ based on regions and customer segments significantly considering underlying diversity inherent in Indian diaspora.
The basics for this industry will vary from typical service industry. The roots of the retailers will have to reside in India, they will have to work closely with local people and ground level workers. So, the Retailing business in India has to operate in extremely localised manner. It will involve a lot of ground work. Businesses will have to look for optimum utlization of cheap labour force, tabbing benefits residing in regional structure. They will have to invest in technical solutions which integrate this diversity at an overall level. They will have to establish third party relations and build strcutures to take first movers advantage at this stage. Aligning with local business players is key here.
97 percent of Indian retail industry today is owned by small and medium sized retailers. New entrants in this sector will have to strategise on whether to tab this potential or enter into structured retailing as Reliance has done. Retailers should explore the sourcing opportunities in India. Availability of cheap labour force and localised skills can be used effctively to drastically reduce assembling and manufacturing costs for goods to be marketed. Also, some of the goods to be sold will strictly be localised and hence will need development of local skills. The reginal parity and different set of challenges will make supply change networking strategy in India quite different from the one that exists in global market today.
Retail Boom will bring Indian pride and development at grass root level. This growth will need local semi skilled people reap benefits of economic prosperity. As i strongly believe, any economy and business close to food, clothe and shelter, will survive. Retail connects all three needs in one store. This has a future. Who knows India might beat China in manufacturing. After all, this is one country which can turn challenges into strengths if need be. :)
