The global trends have important implications for Indian retailers. The Indian consumer remains value conscious. The consumer in most cases is willing to spend money, but remains cost conscious, evaluating every rupee spent. It is therefore imperative for retailers to offer price advantage via sourcing and operational efficiency and a strong private label program to attract customers. Existing and new entrants need to achieve scale quickly for driving efficiencies in procurement, supply chain and marketing. Else they risk being marginalized by larger players.

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Real estate and human resources will be the critical drivers to build scale. While there are a few hundred malls under various stages of development across the country, retailers will need to think out of the box as well to ensure availability of real estate. This may include acquiring and developing the real estate themselves rather than wait for mall development. Given the rising demand for retail real estate, retailers will need to take a long term view on rentals and look at alternative options like ownership or very long term leases. Retailers that invest in training will be able to ensure availability of quality manpower in the rapidly growing market.

 

In summary, the retail market is the next growth frontier for corporate India. It offers an opportunity for a large player to build a Rs. 40,000 Cr retail business spanning multiple categories by 2015 (at current prices). Compared to this, the revenue of the largest Indian retailer Pantaloon was only Rs 1085 Cr in 2005. No wonder large domestic business houses and international retailers have expressed keen interest to enter the retail sector in India. However, to capitalize on the opportunity, a player needs to be aggressive in its outlook and build scale quickly.

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