8/3/2010 Retail in India...you bet!

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Retail in India...you bet!

When recession hovered over majority of the businesses in India last year, a
retailing guru made a comment, “Stop reading newspapers to offset
recession.” The stalwart tried to convey that no recession had the strength
as immense as the willpower of the doer. He can overcome the toughest of
the situation through sheer determination. True! The industry did change with
the looming recession and experts say it was all for the good.

The retailers were made aware of the basics in retailing as needed for
sustaining in the industry. Also, most of the new retailers had planned for the
future and invested for the future's requirement, however, the actual
requirement was not in consonant with the investment. So recession brought
in corrections. It first accomplished the important job of placing the stores in
order and second, linking investment to the actual size of the company rather
than its future size. Recession also helped companies to get better deals
like the one in real estate. Says a CBRE report, retailers adopted a store-in-
store approach to increase customer footfall. The advantage of having a
store-in-store format is that it allows two different retailers to synergise their
offerings, which can be mutually beneficial for the parties involved. Brands that set up the shop-in-shops, gain more
visibility, while at the same time they can cap their real estate costs. Such kool tricks were used and recession
showed the way forward.

India's retail industry is one of the fastest growing in the world. We have come a long way from the local kiranas to
the posh malls with inviting infrastructure. The jump in retail has not been sudden. It did take some time to sink in our
psyche that the person at the racks in the malls is as friendly and genuine as the banya near our residence.

“The change has occurred in 8 basic denominations namely place, merchandise, price, people, communication,
suppliers, systems and logistics, “ explains Kumar Rajagopalan, CEO, Retailer's Association of India. Despite the
global economic recession and a slowdown in the Indian economy, long-term growth in retailing in India is expected
to stay on track. With a stable government and pro retail industry reforms, the year ahead and beyond promises to be
a period full of opportunities for the retail industry.

The retail industry's share to the GDP is around 9%.of which 60% comes from food and grocery retail. The modern
trade retail is growing by 30-40% and the overall retail industry is growing at 13-15% rate. The industry has also
reacted positively towards the recently announced budget. The income tax slab relaxation in the budget announced
will further push the consumer spending which is a good indication for the retail business. However, it is a double-
headed sword, feels Rajagopalan. He cautions that inflation, if it continues this way, can offset the spending power as
created by IT relaxation.

The total value of India's retail business is Rs 18 lakh crore, of which 60% makes food retail. The statistics
corroborate the fact that the industry is highly unorganised given that in a pie diagram of the retail industry the
organised or the modern trade retail almost shares around 5% and traditional retail shares 95% of the total pie.

The investment climate in the retail segment is exciting since December last year as retailers are consolidating and
re-looking at expansion at the front end. Also back end investments are getting some momentum. In a couple of
months investments of around Rs 1,00,000 crore are likely to come in. However, the core place where retailers
stopped investing last year was technology in retail. But they are slowly understanding that if operations are built tight
retail can grow.

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 8/3/2010 Retail in India...you bet!

“ Around 2% of total turnover is now being invested towards technology which includes capital investment and revenue
expenditure. This investment would further stretch to 4 % since retailers are still in their hyper-growth stage.” says
Rajagoplan. The investment in technology will be more on collaborative platform in contrast to the proprietary platform.
Few innovations in technology include a shift from owning servers towards cloud computing. Many applications are
now available on a SAS model ( Software As Service) model rather than the pure license model (where one software
is shared by multiple people). There are a lot more investments happening on the networking side in an attempt to
crunch communication between manufacturers of products and services and the end consumer, explains
Rajagopalan. Further mobile phone applications have made it easier for people to be accessed directly and CRM has
become the order of day.

In this technologically developed retail environment opportunities to enter the retail business for a new entrepreneur
are aplenty. India's democratic structure is healthy for any business and so with the case of retail. Though there are
issues like licensing and single window clearance but a retailer can still start retail business at ease. The industry
has been asking for significant changes in law particularly pertaining to labour. It has been demanding 365 days work
permit which is not currently prevented under Bombay Shops & Establishment Act 1948.
It has also been asking for a decision in favour of allowing women employees to work beyond the stipulated work
hours.

The industry is appreciating the recognition for modern trade retail and its contribution to the GDP by the government.
However, there are various issues over giving the retail an industry status and whether it should be accommodated
under department of industrial policy & promotion (DIPP) or consumer affairs ministry, or whether it should be under a
ministry or a regulatory body.

Many a hope is pinned on allowing FDI in multi brand retail. The government is mulling over the prospect of allowing
FDI in multi brand retail after having allowed FDI of around 51% in the single brand retail. Foreign companies would
bring in sophistication in supply chain and refine the industry with its professional approach. But views on FDI are
contradictory. Whereas one sect of retailers feel FDI would bring in funds from the players who understand retail and
technical know- how in the country, another group of retailers argue that foreign dominance might not protect the
interests of domestic retailers

The different views were sensed in the contradictory statements made by Rajagopalan and Dharmendra, director,
India FDI Watch. Whereas Rajagopalan feels FDI is necessary for the next phase of evolution of the industry,
Dharmendra thinks that the retail structure should not be controlled by a handful of multinational corporations in
association with Indian corporate partners. He says that the government must protect livelihood of retailers and
vendors, ensure better prices to farmers, provide quality products at reasonable prices to consumers, protect ecology,
communities and ensure decent work condition with living wages to workers.

Whatever the versions are, the beauty of Indian retails remains. in fact whatever little experience and investment one
has, a person can comfortably start a business in retail. The Indian retailers have realised this, the only bet lies in the
co-existence and prosperity of the next door and white vest wearing bhaiyya with the white collared manager of the
supermarket.

Cyanopsia hydrol imbricate modespacing rance virgate habitant, trisporic selected homogenizer?

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