The Indian Kaleidoscope: Emerging trends in Retail

The Indian
Kaleidoscope
Emerging trends
in retail

September 2012

Foreword
India’s retail market is expected to cross 1.3 trillion USD by 2020 from the
current market size of 500 billion USD. Modern retail with a penetration
of only 5% is expected to grow about six times from the current 27 billion
USD to 220 billion USD, across all categories and segments.
The recently unveiled Vision 2023 by Chief Minister Selvi J Jayalalithaa
will ensure that Tamil Nadu reaches the numero uno position in the next
11 years in all parameters enshrined in the Human Development Index
(HDI) to make the state an ideal destination for foreign and domestic
investments. The CM’s emphasis on agriculture including cold storage
and associated logistics, as well as terminal market complexes promises
to collectively result in a booming retail market.
This report aims to identify key issues and recommend possible solutions
to directly and positively impact the growth of this sector. Based on the
recommendations, FICCI is expected to interact with stakeholders
including government bodies, and relevant institutions.
We are privileged to have PwC as our knowledge partner. I thank them
for their contribution and extend my hearty wishes to all those involved
for their outstanding effort and immaculate execution.

P Murari IAS (R)
Advisor to President, FICCI, New Delhi

Contents
08 Setting up shop
14 The extravaganza

33 The high price

44 Conclusion

45 Retail success stories from Tamil Nadu

The Indian Kaleidoscope: Emerging trends in Retail 5

Executive summary
Though, the monsoon in India may be deficient but it is raining deals and
discounts for the Indian consumers. To attract customers, retailers are
sending personalised messages via sms or emails. The Indian retail
landscape is evolving from from the brick-and-mortar model to adopt
technology for connecting with consumers. The aim is to achieve a
complete seamless customer experience.
It’s a new world for both retailers and the customers where the latter is
the king. Indians spend 25.2% of their time on social networking
websites. As we move from the world of skeptics to early adopters to
ultimately the tacticians, online retailing and mobile retailing are the
new modes of growth.
Though the overall sentiment for the sector continues to be a cautious
one, margins are subdued and revenue still under pressure. The June

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quarter results are reminiscent of this. The off-season sale and advent
of festival season in the subsequent months will make the second half
of the calendar year a more reasonable. As a strategy, retailers
continue to focus on improving the operations machinery of the
business, shifting to low cost channels, promoting private labels,
emphasis on increasing customer base, improving in cost structure,
discounts and offers and innovative strategies such as ‘flat discounts’,
sale during wee hours of morning or late till midnight, are some of
them. While it is business as usual for the retailers, the sector is
holding its breath for the much anticipated FDI policy. Till then, to be
or not to be is the million dollar question.
This report aims to highlight the key areas to help global retailers
entering the Indian market. Our sections deal with measures that
impact the top and the bottom line.


Setting up shop
01
India’s large and aspiring middle class of country’s rural population of 700
75 million households or 300 million million presents an opportunity for
individuals want products that are retail and consumer companies that
value-driven. The country’s 500 million cannot be ignored.
people under the age of 25 have access The current estimated value of the
to more money that has additionally Indian retail sector is about 500 billion
resulted in independence, aspirations USD and is pegged to reach 1.3 trillion
and a demand for products. USD by 2020. The penetration level of
Reality check modern retail (currently 5%) will
increase six-fold from the current 27
The Indian retail sector accounts for
billion USD to 220 billion USD in 2020.
over 20% of the country’s gross domestic
The Indian retail sector is expected to
product (GDP) and contributes 8% to
grow at a CAGR of 15 to 20%. Factors
total employment. The cumulative
driving the organised retail sector
foreign direct investment (FDI) inflows
include the following:
in single-brand retail trading, during
April 2000 to June 2011, stood at 69.26 • Higher incomes driving the
million USD. purchase of essential and non-
essential products
Studies like the MasterCard Worldwide
• Evolving consumption patterns of
Index of Consumer Confidence have
Indian customers
ranked Indian consumers as some of the
most confident in the world. The more • New technology and lifestyle trends
confident the consumers are about the creating replacement demand
strength of the economy, their personal
finances, their career growth, etc., the
more they tend to increase their
consumption, purchase non-essential
products, experiment with products,
brands, categories, etc. Besides, the

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• Increase in rural income as well as Share of organised
urbanisation Country
retail to total retail
• Increase in easy access to credit and US 85%
consumer awareness
UK 80%
• Growth of modern trade format
Malaysia 55%
across urban, Tier I, Tier II and Tier
III cities and towns Thailand 40%

• Rapid urbanisation and growing China 20%
trend towards nuclear families South Korea 15%
Indonesia 25%
Philippines 35%
India 5%
Source: Media reports

Key players in the Indian retail market are as follows:

Pantaloon Retail Ltd (Future Group venture) Over 2 million sq ft of retail space spread over 35 cities with 65 stores and 21 factory outlets
Shoppers Stop (K Raheja Group venture) Over 3.21 million sq ft of retail space spread over 23 cities with 51 stores
Spencers Retail(part of RP-SG Group) Retail footage of close to 1 million sq ft across 45 cities with 200 stores
Lifestyle Retail (Landmark Group venture) Approximately 15 lifestyle and eight Home Centre stores
74 Easyday stores with plans to invest about 2.5 billion USD over the next five years to add about 10
Bharti Retail
million sq ft of retail space in the country
Reliance Retail 700 stores with a revenue of 7,600 crore INR
575 stores with approximate revenue of 2,000 crore INR. Recently, purchased stake in
Aditya Birla ‘More’
Pantaloon Retail
Tata Trent 59 Westside stores, 13 Starbazaar hypermarkets and 26 Landmark bookstores

Source: Media reports, company websites


Foreign entrants in the Indian segment Inflationary effect
are as follows:
India’s growth has slowed to 6.5% in the
• Germany-based Metro Cash & Carry current fiscal, dragged down by a nine-year
opened six wholesale centres in the low of 5.3% in the March quarter on
country. account of poor performance of the
• Walmart with Bharti Retail, owner manufacturing sector. This is due to the
of Easyday stores. cascading effect of the global slowdown
• British retailer Tesco Plc (TESCO), that originated from developed economies
signed an agreement with Trent Ltd and has impacted both China and India,
(Trent), the retail arm of Tata Group the major contributors to the world GDP.
to set up cash-and-carry stores. However, despite these short-term
• Carrefour opened its first cash-and- difficulties, the medium outlook is more
carry store in New Delhi. positive, states an OPEC report.
From the sector’s perspective, both
The Economic consumers and retailers are being
Pendulum negatively affected as currently inflation is
supply-based, rather than demand-driven.
The global economy is decelerating. In Before the downturn, consumers
2012, majority of the economies are subsidised their spending through credit or
witnessing slow growth as compared to dipping into savings, but this is no longer
the year before. Even though the US achievable or sustainable. As a
economy has started to show some signs consequence both margins and sales are
of recovery, failure of the government to under pressure.
come out with a conclusive fiscal plan is
affecting investor confidence, A strong GDP growth, rising consumer
employment creation and the capital confidence, consumption-based behaviour,
market. Similarly in Europe, the euro increasing income, and a large pool of
crisis has had a negative impact on the consumers provide windows of
consumer sentiment. Besides, countries opportunities for global retailers to invest
such as Greece, Spain and Italy are in the Indian market. Largely deals are
seething under the economic pressure. happening in the online model whether it is
The growth in China is also slowing due pharmacy, apparel, baby care or books.
to tightening of its monetary policy. Considering that we have the youngest
India too has been affected. To add to population in the world, such companies
the woes, we are facing high inflation are bound to see growth, making it
across economies. inevitable for financial investors to be
present in this segment.

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Mergers and acquisitions trend is sustainable although steps need
to be taken towards improving the supply
PwC’s 15th Annual Global CEO Survey
chain and long-term strategies.
indicated that half of CEOs in
developed countries believed that Some of the recently announced deals
emerging economies are more include the following:
important to their company’s future.
With the developed markets witnessing Investor Investee Sector
an economic turmoil, emerging SAIF Ventures InkFruit Online apparel site
countries are fast becoming the retail
Tiger Capital, Helion
hotspot for foreign players. In the past Letsbuy.com Online consumer durables site
Ventures, Accel India
five years, retail chain giants such as
Fidelity Bigshoebazaar India Online shoe site for wholesale purchases
Walmart, Tesco and Metro Group, saw
Tiger Capital CaratLane.com Online jewellery site
revenues in developing countries grow
2.5 times faster than their home Sequoia Capital India Lovable Lingerie Innerwear
markets. India provides an opportunity Standard Chartered
Privi Organics Indian aroma chemical products manufacturer
for retailers seeking to make Private Equity
investment in the emerging economies Source: Media reports
to participate in the growth and
increase their global presence However, the existing restrictive FDI • Ferragamo with DLF
The nascent stage of organized retail policy framework continues to pose a • Damas with Gitanjali Lifestyle
penetration in India and the shortage of challenge and drive the M&A activity.
• Inditex (Zara) with Trent
availability of cash for expansion will Ever since the policy on single brand
prompt more business activity in the • Burberrey with Genesis Color
retail policy was announced in 2006,
sector. This has been the primary more than 60 brands have set up retail • S Oliver with Orient Craft
reason for the M&As in this sector, operations in India in strategic joint The current FDI Policy on single brand
especially in the e-commerce segment. ventures with Indian partners. Some of specifically require the foreign investor to
In 2011, the e-commerce sector raised these include: be the brand owner, and therefore, it
over 500 million USD from 67 deals as closes doors for any direct investment by
• Marks & Spencer with Reliance Retail
compared to 2010 which saw only 18 an international private equity player in
investments worth 112 million USD. • Georgia Armani with DLF
this segment.
This is backed by strong fundamentals • Fendi with Chordia Fashions
such as critical mass of Internet users,
broadband penetration and 3G growth,
rising middle class, improved payment
gateways and logistics. Some experts
feel that this may just be a bubble
phenomenon, while others feel this


In January 2012, the government further year 1997 (requiring government
liberalised the policy on single brand approval for 100% FDI). This was further
retail trading by increasing the FDI cap liberalised in 2006 by placing the
from 51 to 100%, subject to certain segment under automatic route. Since
conditions. This policy has opened doors 2006, the FDI in wholesale trading has
for further M&A activity, especially for been freely permitted. In April 2010, the
the following: government issued certain operational
• Existing joint ventures, where foreign guidelines for Indian companies with FDI
investor may wish to acquire the engaged in wholesale trading activities.
Indian partners stake Some of the operational guidelines have
• Existing licenced or franchise substantive impact on the M&A activities
arrangements, where the foreign in this space. The key ones are as follows:
principal may now wish to set up • Business customers need to have a
stores under 100% ownership and government licence or registration to
acquire the existing business of such act as such
licencee or franchisee in India.
• Group company sales are to be
On account of certain ambiguities in the restricted to 25% of wholesale
policy, M&A on these have been relatively turnover
slow, but it is expected to pick up as and Currently, most e-commerce companies
when these uncertainties are ironed-out and multi-brand retail trading companies
with further liberalisation in the policy. have adopted B2B route for raising
The multi-brand retail sector is foreign capital or formed strategic joint
witnessing calibrated liberalisation, while ventures with foreign retailers. A typical
currently under prohibition. The trading structure is as follows:
sector was first opened for FDI with a
formal policy on wholesale trading in the

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The primary advantage of this is that the to conditions. If the policy is announced,
foreign investor or retailer gets an early the following are some of the possible
mover advantage combined with the M&A activities:
hope that the businesses can be • New joint ventures with Indian
consolidated in the future as and when partners for new retail venture
the policy is liberalised. Currently, 100%
• Acquisition of equity stake or new
FDI is allowed in B2B trade. Therefore, investments by foreign retailers in
the FDI in this segment helps in building existing Indian retail companies
up the back-end infrastructure and
• Consolidation of the above B2B
vendor relationships.
structures into a single entity.
Though, some of the challenges that
The current proposed policy framework
fraught such commercial agreements
in this segment, as announced in
include inability of foreign investor to
November 2011, contemplates conditions
participate in front-end retail business,
such as minimum investment of 100
supply chain inefficiencies, financing the
million USD with 50% of foreign capital
roll-out of retail stores, etc.
used to develop back-end infrastructure.
There is high expectation from the Such conditions will be more amenable to
proposed policy initiatives whereby the large hyper-market formats and may not
government is contemplating permitting immediately benefit speciality retail such
FDI in multi-brand retail trading, subject as pharmacy, electronic goods, etc.


The extravaganza
02
From General trade to Modern trade Success story
and now going virtual, Indian retail
With over 32 categories, thousands of
sector is going through its own lifecycle.
products from more than 100 FMCG
However, important to note is that the
companies to choose from, the
emergence of one mode does not
‘AaramShop’ concept has been launched
hamper the existence of the other. In
on a pilot basis in the Delhi and National
this section, we explore how the kirana
Capital Region (NCR). Over 3,000
stores have reinvented themselves to
traditional grocers have partnered with
beat the hype around modern trade.
it. Selling groceries online is not new in
Then we talk about how much
India. Just last year, over a dozen online
weightage does customer experience
portals mushroomed across the country
carry and then we move on to the
selling a wide-range of products-from
multichannels of retailing.
household items to food. The front-end
for these e-grocers were websites and the
Co-existence of the back-end primarily warehouses.
kiranas with Traditional shopkeepers are now latching
on to portals such as www.araamshop.
organised retail com and www.kiranawalla.com.
The coexistence of the local kirana store
When a customer orders online through
and the organised players is a no-
these portals, it is communicated to the
brainer in the current context of the
closest shopkeeper partner near his or her
Indian retail sector. There are no two
house who in turn delivers the purchase
ways to it. Organised players target
order at home. This gives another point of
cities and not the hinterlands. It is the
sale to the customer and at the same time
kirana guys who take care of the daily
lower overheads for the seller who does
household needs in those areas. In fact,
not have to invest in a physical shop.
these neighbourhood mom-and-pop
stores continue to be the only point of The balancing act
sale for most FMCG players to rural The advent of FDI and MNC players in the
areas of the country. The kiranas have retail sector was considered to impact the
reinvented themselves in the cities to kirana stores. However, these stores have
stay relevant to its target audience. existed since ages and they still continue

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to be at the beck-and-call of many To outdo the modern trade players, Future outlook
households. Their presence in the midst kirana shopkeepers conduct bulk
The one difference between the
of a residential area is a big advantage. A purchases from organised players and
traditional kirana shops in India and the
small item, be it a loaf of bread or few avail volume discounts. This has helped
traditional mom-and-pop stores in the
eggs gets delivered at the doorstep. In them to stay relevant to customers’ needs
West is that the latter, historically, were
India, kirana and traditional retailing still and at the same time earn a higher
relatively inefficient as compared to the
continues to be the single largest outlet margin for themselves. Private label is the
modern trade. However, it is proved that
for sale of FMCG goods. Even the product cash-cow for most players in the
the traditional kirana stores and outlets in
mix that the neighbourhood shop stocks developed markets. Similar phenomenon
India are ultra-efficient and have been
varies from small cottage industries, is visible in India as well. We see that the
able to compete very successfully with
especially ayurvedic and other healthcare cash-and-carry players are pushing their
modern retail for a very long period of
products, a few FMCG products such as private labels through the kirana store
time. Modern trade has expanded
soaps and shampoos, and taste-driven rather than the modern retailers. This
dramatically, but the classical, traditional
products such as local biscuits and poses serious threats to the FMCG players
kirana and convenience outlets have
savouries, which cannot make it to a big whose prime point of sales is the kirana
grown, modernised and become
retail supply chain. outlet.
self-service outlets to do remarkably well.
Modern retail has been in existence for The experience of China and Indonesia
New initiatives
sometime now and there have not been shows that traditional and modern retail
many cases where kirana shops had to can co-exist and grow, albeit at different The political mayhem over fears of
shut down due to an organised player rates. While kirana stores may be extinction of these shops seems
coming up in the neighbourhood. There growing at 2 to 5%, organised retail may misplaced. Such is the reach and power of
have also been certain external be growing at 20 to 40% CAGR or more. these local shops that LIC, the biggest
environmental factors such as high This is due to the fact that organised retail insurance company in India has proposed
rentals, demographic change in the is growing at a low base. In Indonesia, to include them as their agents for selling
consuming class and increased disposable even after the emergence of its micro insurance plans. Players such as
income that led to a slower growth in the supermarkets, 90% of fresh food and 70% the Future Group plan to expand their
traditional retail. In fact, large retailers of entire food is still controlled by corner store format KBs Fair Price
had to reinvent and evolve their business traditional retailers. In Japan, organised (received funding from Japan’s retail
models to arrive at a format that could retailers co-opt several kirana stores and chain Lawsons) through the existing
compete with a local mom-and-pop-shop. hawkers drawn from the pool of shops and help to revamp, refurnish and
traditional retailers and are upgraded rebrand the outlets while providing
with capital infusion and trained to meet back-end support. The idea is to promote
the demands of customers. inclusive retail growth.


Kirana stores are rapidly adapting credit card fraud or the authenticity of the Our discussions with customers across
technology to remain in touch with their vendor. They also have reward points for various sectors provided some useful
customers. Today, grocery retailers are building loyalty. observations. Some of the customer
going online. These players are Chennaionlinegrocery.com also has a responses are as follows:
particularly popular in the metros, sophisticated website. They accept credit
catering to the Internet savvy customers, cards payments and is very user-friendly.
who have limited time. Pristine-nature.com is another online
Dilligrocery.com services the Delhi NCR retailer who deals exclusively with delivery
I walked into a store where a sign
area and offer home delivery free-of-cost of organic grocery. was displayed: In case you do not
if the bill is over 2,000 INR or they charge find a product on shelf, let us know
a flat 50 INR (which in today’s world is Customer Experience and we shall deliver it at your
less than the cost of fuel one would incur Management home. This, according to me, was
to go to a modern format for shopping an amazing shopping experience.
groceries) for delivery. They have a The Indian retail experience has gone
turnaround time of one to two days. They beyond the traditional brick–and-mortar
even have a clear return policy which is store and includes numerous touch points I had bought two shirts from a
important for online retailers. such as online stores, social networks, call reputed brand, which were not
Greenytails.com has a common website centres, etc. Changing economic dynamics, used for about two years. There
for India and the US. In India, they service was some defect in the quality of
diverse choices in products and services,
the shirts. When I approached the
Bangalore and Hyderabad and offer free numerous shopping formats and
retail store, I was surprised that
home delivery with an extra service unparalleled access to information has they managed to retrieve purchase
charge in a few areas. Their website is empowered customers to expect more from information with the limited
well-designed and user-friendly. The their retail experience. information I provided. The
prices are also competitive with the retailer also allowed me to
The recent economic downturn has taught
regular grocery stores. They currently exchange the shirts. This was truly
discipline to the customers. In today’s
offer ‘cash on delivery’ mode of payment a wonderful customer experience.
rapidly changing and digitally connected
which is actually a good way to get
world, customers are more value-conscious
customers to try the website, since
while making purchase decisions. Quality, price, discounts,
customers do not have to pay anything
upfront and do not have to worry about Customer testimonials availability of products across
various categories and
express checkouts are some of
the few aspects of a complete
customer experience.

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Customer experience lifecycle In the purchase phase, the customer takes
the buying decision on the product and
Today, a customer interacts with the
pays for it. Various touch points in this
retailer multiple times before, during
phase include the web, the physical store,
and after the purchase. The interaction
sales associates, assortments, layouts, etc.
may happen across multiple channels.
Therefore, it is important for the In the service phase, the customer service
retailer to provide complete and and loyalty programmes are the key
consistent customer experience across touch points that the retailer has with the
these channels. customer. After sales customer service
includes installation of an appliance or
Customer experience lifecycle return and exchange of merchandise.
Evolution of customer experience
Customers today care more about the
retailing experience than they did in the
past. Their expectations from retailers go
beyond just shopping of goods and
services. Today, consumers are looking
for a personalised, seamless and
distinctive experience from the retailers.

In the research phase, the customer
analyses the information available from
various touch points, such as word of
mouth, newspaper advertisements,
mailers or the web, etc. services. Today’s
consumer is looking for a personalised,
seamless and distinctive experience from
the retailers.


• Localised experience: Given the • Distinctive experience: Apart • Stores should be conveniently
amount of information retailers have from the competitive price, the located and have the right layout.
about the customer behaviour, buying customers seek a distinctive • Customers want to be entertained
habits, etc. the consumer expects shopping experience driven by and even educated while they shop.
the retailer to ensure that the goods best customer service. Retailers
and services are available in the have developed customer friendly • Retail store staff members (sales
stores when the customer walks in to return or exchange policies, persons as well as cashiers) are the
shop. The retailers need to establish loyalty programmes, customer brand ambassadors for the store.
the relevance with the customer. appreciation days, etc. Retailer They are in direct contact with
Individual attention, personalised use better customer service to the customers at various touch
promotional offers, best utilisation of differentiate between retailers, points and deliver the experience.
time and money are few other basic generate customer loyalty, increase Continuous investment is required
expectations that customers have customer purchases and create in the training and coaching of
from retailers. positive brand image. Retailers staff to deliver on customers’
have started giving promotional expectations.
• Seamless experience: Consumers
discounts via SMS to customers • It is important to stay connected
want to traverse multiple channels
when they are in the store or in with the customers today to remain
easily and enjoy a seamless
the mall where the retailer has the the top-of-the-mind recall when
experience. This means the physical
store. they shop.
store, web, catalogue, call centre
and kiosks have to be integrated Apart from the above, various factors • There is a growing demand for
to ensure a consistent customer that affect the customer experience customised products, be it cars,
experience across these channels. include the following: apparel, computers or music.
Best Buy in the US provides seamless
experience online as well as in • Customers in the do-it-yourself • Easy returns policy is a must in
the store. Customers can research (DIY) segment (example IKEA) e-commerce. Retailers need to set
online and come to the store for a seek customisation and those in the up reverse logistics solutions to
physical experience. It also offers do-it-for-me (DIFM) segment seek make returning products bought
same pricing, offers, to the customers convenience. online easy.
online as well as in the store. • Customers expect quick service
even at retail stores, not just in fast-
food restaurants.

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The dynamic retailer Retailers today know that customers have
a wide variety of products and formats to
Consumers are leading the way in
choose from. It is important for the
multichannel shopping, with many
retailers to create bond with the
retailers lagging behind in meeting their
customers by offering personalised
needs. Today’s global retailers have a
experience and be of relevance to the
huge opportunity to enhance the
customers. In today's environment,
mechanisms necessary to keep up with
retailers need to have single view of the
shoppers who are demanding more
customer, understand their buying
customisation in terms of delivery,
behaviour and yearning to engage, and
returns, product choice and number of
demonstrate loyalty to the customer.
channels from which to choose.
The global customer requires retailers to
Retailers need to become far more
be more connected, more empowered
innovative with their online presence.
and more proactive than ever before.
They should refresh their physical
formats to emphasise quality and
customer satisfaction, and not just price
and selection (which is generally
researched online). They must align Connected
themselves with the buying tendencies of • Seamless and
the growing middle-class customers in consistent experience
the emerging markets. across all channels

Empowered
• Improved productivity
Proactive and customer service
• Execute with insight by across global workforce
analysing information
• Continue to be relevant
to customer


Customers looking beyond loyalty For example: Target in the US has been
management in driving customer able to predict if a woman is pregnant
experience five months before the delivery. This has
helped the retail giant provide necessary
Customers are loyal to a brand or retail
products and services to the loyal
store or restaurant not because of any
customer and also run targeted
promotion, discount coupon, or loyalty
promotions influencing buying
membership but for the customer
behaviour, thus driving sales.
experience they derive.
One of the key performance indicators
Today's customer is flooded with
that measure the effectiveness of the
information about the variety of
loyalty program is the 'Loyalty Customer
products and choice of formats for
Sales vs. Total Sales'. This tells the
shopping. He/she interacts with retailers
retailer how much of total sales from a
via multiple channels, be it the point of
channel are from its loyalty customers.
sales or the e-commerce portal.
But it is important to analyse how many
Retailers today are working towards
loyalty customers are redeeming the
shifting the focus from price to value,
points earned, which shows the true
relevance, differentiation and
picture of customer loyalty to the
competitiveness, which in the long run
retailer.
will create value for the customers and
thus drive sales. Answering the following questions will
help retailers increase their loyal
Customer loyalty is a tool used by the
customer base and thus increase sales:
retailers to capture the customer base
and thus customer insights. Retailers • Am I loyal to my customers?
use business intelligence systems to • What value do I add to the
analyse the customer data, helping them customer?
improve merchandise and assortments, • How am I different from others in
defining and executing targeted the market?
promotional campaigns, etc. this in turn
• How do I continue to be relevant to
leads to better shopping experience and customer?
incremental sales.

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PwC model for operational • Level 3- Building the muscle:
excellence in retail This level aims at building
capabilities that give the
Leading retailers across the world use organisation a competitive
the operational excellence model to advantage in the market and help
provide a superior shopping experience deliver products and services at
to the customers. The journey of a lower cost. These capabilities
operational excellence is logically and include lean operations, lean
scientifically divided into four levels. marketing, lean organisation,
etc. The focus is on generating
• Level 1- Basic assurance to quantum benefits once the
stakeholders: This level aims at foundations are in place.
setting up routine management
systems to enable all processes to • Level 4- Develop competitive
run at a basic level of stability. This superiority: At this level, the
is done by the last-mile continuous company aims at becoming a
improvement teams. The focus benchmark in the industry to
is on getting quick wins and continuously increase the gap
employee engagement. between itself and the competitors.

• Level 2- Quality and customer We can help our retail clients
satisfaction: This level aims customise these levels to their
at refining and standardising environment and enable them to
practices to ensure higher quality objectively evaluate their progress
and customer satisfaction.
Variability reduction to improve
process capability using concepts
like Six Sigma is one of the main
themes of this level.


Retailers across sectors have gained
significantly from such programmes
which have had an impact on their
revenues, cost, quality and
responsiveness

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Category: Value fashion
Max Retail: Offering value fashion at keen prices

Sector snapshot Company profile
Growth opportunities exist in Max Retail: Fashion need not be
India’s apparel market… expensive!
PwC’s thought leadership report Strong Max’s focus on providing “fashion
and Steady – 2011 Outlook for the Retail at keen prices” is generating strong
and Consumer Products Sector in Asia current growth…
indicates that the Indian apparel market Keenly priced apparel is priced lesser
is relatively untapped across all than affordably priced apparel even!
categories. Clothing sales have been Keenly priced apparel is especially
rising steadily in recent years, supported important in developing markets
by a large market of young consumers since customers need to be educated
and an increasing interest in Western about fashion, before making the
fashion. Apparel companies are using purchase. Max uses its design
marketing strategies to build their brand, strength to produce sharply-priced
increase awareness and create a apparel that has a high fashion
fashionable, lifestyle-oriented image. component. Designers in the Middle
Efforts to raise funds from PEs are East along with those in India create
enabling apparel brands to grow their and localise fashion for global and
store networks, boost production local markets, respectively.
capacity, offer new styles, hire design …across men, women, children,
talent, develop larger format stores, value, premium, plus-size, etc.
establish shop-in- shops, etc.
For many Indians, low prices are a
Clothing: Market demand growth (% real change) pa key purchase driver.
Country 2010 2011 2012 2013 2014 The following factors drive the
China 10.9 10.8 10.3 10.9 11.4 growth of value fashion retail:
India 6.1 7.6 8.4 8.3 8 • Increasing incomes are enabling
Japan 1.6 1.2 1 0.9 0.8 Indian consumers to spend more
Taiwan 3.9 4.8 4.2 3.4 3.8 and experiment across products,
brands and categories.
Source: Strong and Steady—2011 Outlook for the
• Apparel is no longer a functional
Retail and Consumer Products
Sector in Asia, PwC, 2010-14 are forecasts
category but one that conveys


appearance, prestige and image. • Over 50% of India’s population By March 2013, Max will operate 100
Consumers want to buy apparel that is under 25. Young Indians are stores, doubling operations from the
is both affordable and fashionable. aspirational, demanding and focussed current 51 stores. Max is the Landmark
on apparel that is both Group’s fastest growing offering in India,
• The growth of modern trade has
helped increase the demand for • Current penetration of apparel in across its formats (food and grocery,
both branded and value apparel. the organised retail category is department stores, apparel, etc.).
This, coupled with the emergence 10%. This is expected to increase to
of new sectors and professional job 30 to 35% by 2015. Tier 2 cities like Coimbatore, Indore,
opportunities, has also helped drive Bhopal, etc. are showing strong growth.
… and presents long-term potential for Consumers in these locations are
demand for office wear.
its parent company, Landmark Group. aspirational and view Max as a strong
fashion brand.

Four critical success factors help define the winners in India’s apparel market.
Providing fashion at very competitive prices is a major driver of success for Max. Max does not compromise fashion
for price or vice versa. Providing apparel that is beyond normal pricing levels has enabled the chain to grow rapidly
Fashion and pricing both within the Landmark Group and within India. Part of offering good fashion is localising the styling (necklines,
hemlines, colours, embroidery, etc.). Max localises one-third of its product range sourced from its global
headquarters, enabling it to “be global and connect local.”
Customer needs and expectations evolve given their exposure to international travel, media, the Internet, etc.
Today, the Indian consumer expects a better experience overall:
• Availability of apparel: The consumer wants sharply priced, fashionable apparel to expand their wardrobe
both at the workplace and at home. Customers no longer want to dress up just for work, they also want to
The customer experience
look good at home, implying access to choice and range.
• Store experience: From the time a customer enters the store to when she/he leaves, she/he must have a
good experience across several touchpoints that include: Trial room | Interacting with staff | After-sales
experience | Billing at the POS | Store ambience
Freshness takes into account new product promotions, new designs, new colours, new styling, etc. Keeping fashion
Freshness of category
exciting helps engage and retain customers, results in sales, generates repeat traffic, etc.
Participants need to build a sustainable business model given that the gestation period for success in the retail
sector is long. Sustainable product pricing, offering products that imply longevity, expanding operations in a
Long-term business model
calibrated but determined manner, etc. are some of the ways in which retailers can convey their commitment to
building a long-term presence.

24 PwC

Commerce in Emerging models in India The sceptics

e-commerce We can always argue that the Indian Both the retailers and the consumers have
e-Commerce industry is evolving. But on used electronic media cautiously. Issues
Which movie featured the song ‘Why taking a closer look at the industry, we relating to the use of credit cards, debit
this Kolaveri di’? Few of us might know realise that it will be worth US$ 70 billion cards and online banking have kept some
the correct answer (Tamil film ‘3’), but by 2015 (according to ASSOCHAM) with consumers at bay. The legacy of using the
the majority of 20 million fans of this a steady growth of 35% CAGR. So what touch and feel of the product is a critical
song who viewed it on YouTube at least are the various e-commerce models at attribute to the decision of buying.
once were not interested in knowing play in this industry? We have categorised Internet or the electronic media is largely
which movie this song belonged to. The the models based on this hypothesis. being used by consumers for search,
song almost started a cult. Now there research, price comparison and finally
are several versions of the song, adopted the ‘store locater’ to buy the product.
by young and old across the country, The retailers have adopted the internet
eventually making Dhanush a channel to have a footprint to position
household name. them among search engines, bill boards
Today, e-Commerce is about how an and name tags. The idea has never been
e-channel is used by a user to position to integrate the store supply chain or
the product. It helps create the right inventory to create an electronic model.
buzz, is available on more than one The benchmark has been to wait for the
platform or device and delivers the competitors act first and then understand
product to the customer instantly. The how they are using the web to market
payments can be made online or products and then follow the lead.
through cash on delivery.
We will now look at how the new The retailer and consumers can be in
e-commerce models are emerging and different stages in their approach to the
helping both consumers and retailers. market.


The early adopters shop online. This represents a 40% rise
from the 627 million online shoppers
There are some who have been buying
recorded for 2009. The report confirms
and selling on the web since the last
that 85% internet users in this period
decade or the golden era of Indian
shopped online. The majority of
broadband internet story. Sites such as
e-shoppers were from South Korea, where
fnp.in and indiaplaza.com have wooed
a staggering 99% internet users were also
the customer for years. The consumer
e-shoppers. Japanese, German and UK
has always been attracted to the value
consumers rank second while Indian
add and convenience of doing multiple
shoppers rank third. E-shopping has
things at one time. The quality of
gradually become the most favoured
service and merchandise was not the
online activity after emailing and surfing.
focus. This breed of early adopters has
constantly pushed the retailers to think According to Google, India has more than
of new mechanisms to lure customers to 100 million internet users, half of whom
internet shopping. make online purchases, and the number
is growing every year. With such a large
The global online retail industry has
market size, retailers as well as consumer
gone through a lot of transformation
goods manufacturers are entering the
over the past two decades. E-commerce
web space to attract potential customers.
has become very popular in the areas of
apparel, arts and handicrafts, books, car Competing in a high-pressure business
rentals, computers and electronics, scenario has become a challenge for
cosmetics, financial services, gifts and retailers. Retailers are looking at the
novelties, etc. internet as an effective alternative sales
channel, which gives them direct access
The retailers have managed to maintain
to target customers. Online retail (also
the faith of consumer in the internet by
known as e-tail) is a web-enabled
being able to integrate the conventional
interface between a retailer and its target
supply chain with order management
consumers for selling products and
from the web. Commerce was also
services on the web with the facility of
changing with mobile payments taking
ecommerce. These kinds of retailers are
shape. A 2011 global online survey by
also known as e-tailers. Almost all big
Nielsen suggests that about 875 million
retailers now have presence on the web.
consumers across the world prefer to

26 PwC

The tacticians online retailers are Staples Inc, Home According to eBay, Indian online shoppers
Shop 18, Indiaplaza, eBay India, Future remain brand savvy, even when they are
Global online shopping giant Amazon.
Bazaar, Indiatimes and Rediff. Easy shopping online. The eBay India Census
com recently launched a new service for
availability of broadband services and has found that brands such as Sony,
Indian consumers, claiming to offer 1.2
increasing internet penetration is Nokia, Samsung, Apple and Reebok
crore products from both local and
supporting the growth of online retailing. continue to top buyers’ charts. Lifestyle
international retailers.
The increasing purchasing power of the products, such as cosmetics, jewellery,
The company claimed that Junglee.com Indian customers is set to bring an online watches, fashion products and fitness
would offer options from hundreds of shopping boom in India. One of the latest equipment account for over 45% of eBay’s
online and offline retailers, including additions to online retail is advertising sales in India.
Homeshop18, Hidesign, Gitanjali, through social media websites like According to industry leaders, portals
Fabindia, Bata India, Dabur, Microsoft, Facebook, Twitter, Google+, etc. Apart offering daily deals and discount offers
Reebok, and Amazon.com. from website technologies, retail leaders with good delivery services attract the
It will have more than 90 lakh books and are trying to adopt video, mobile and largest number of online shoppers. “The
30 lakh products from more than 14,000 social media strategies with a view to customer behaviour is changing
Indian and global brands across more provide richer, more engaging and user dramatically. People are not only using
than 25 product categories, including friendly experience. the Web to book air tickets and movie
mobile phones, cameras, toys and games, It is not only the private sector but also tickets but also do not hesitate in placing
baby products, books, music, movies and the government sector which has woken orders for mobiles, laptops and other
TV, clothing, and jewellery. up to the possibilities that the internet has consumer electronics and home
This consumer is not only the buyer but in store. This means that today people can appliances,” a senior marketing executive
also the seller. Websites like olx.com and not only purchase clothing, utensils, from Flipkart.com, an online shopping
quikr.com have made the quintessential furniture, electronics, books, movies, portal, told Mail Today. “Seeing this bold
Indian feel more in control and sense of flight tickets, rent cars and thousands consumer behaviour, more companies are
ownership of doing the ‘deal’. other products online, but they can also collaborating with such daily deal and
book railway tickets and even pay their discount sites. All the top consumer
Among Indian states, Maharashtra has
self assessment and advance taxes online electronics and home appliances
the best IT infrastructure, both for
through government websites. The days companies are listed with us. In the
retailers as well as consumers. Mumbai
when people had to stand in long queues growing competition space companies
accounts for a 24% of India’s e-commerce
at the stores or spend the whole day to pay with good delivery services score points
transactions. Some of the popular Indian
taxes or buy railway tickets are slowly over others,” the executive said.
becoming a thing of the past.


The tacticians have pushed the e-tail The various incentives of online shopping
environment from being connected to include competitive pricing, speed,
virtual. E-tail stores are open 24x7. convenience, variety of products, home
Discounts happen at midnight. Flash delivery and ease of shopping from
discount mailers and SMSes are sent out anywhere at any time.
and sites see millions of concurrent users However, even though people are
logged in for a few hours. This seems to spending much time and money on the
be a social phenomenon. It is similar to web, they haven’t abandoned physical
the advent of supermarkets in the late stores. They’re just using them for
1990s when people used to queue up for different things. Retailers should now
hours to be able to touch and feel focus on understanding, adopting and
products which were earlier handed over monetising multichannel retail.
to them across the counter by the
salesperson. Retailers are trying to target
the social media to be able to influence
the decision of the buyer. However,
monetising social media is still a nebulous
topic. Several papers and researches have
been done to be articulate the manner in
which retailers or client at large should
and are using social media to target
customer. We would like to look at this
topic from a multichannel approach and
ask the question: What are people looking
for online?
Price is a big factor, but it’s not the only
one: many shoppers are prepared to pay a
bit more for a big item like a plasma TV if
it means the retailer will also install it,
remove the packaging, and take the old
one away. The internet makes it easier to
establish the real correlation between
price and value, and what ‘value for
money’ really means for a particular
product, and a particular person.

Source: PwC UK survey on 1000 consumers in the last quarter of 2010

28 PwC

What areas should retailers • Develop a truly multichannel main organisational structure and
concentrate on for the multichannel business: Online operations need be treated as an integral part of the
strategy? to be treated like any other part of brand proposition, rather than an
the company, and not as some sort independent business governed by its
• They need to learn new skills and of incubator venture, or an offshoot own rules.
develop new tools – and fast. It of the marketing or IT departments.
is mostly about getting better and The state of play on multichannel retail is
Business development has to become
more responsive in marketing business as usual, which demands still evolving, but we believe there are five
and merchandising, so that the new business practices, new roles and key factors that retailers should be
landing pages of the web store can responsibilities, and new approaches addressing now, if they’re to stay ahead of
respond instantaneously to external to incentives and remuneration. the game.
events that might prompt a specific E-commerce has to move into the
impulse purchase. Many of the more
traditional retailers still have a lot to
learn about customer relationship
management and direct marketing,
1 Most With shoppers consolidating their spending on fewer retailers, the
winners will be those who ensure they make it onto the ‘most
favoured favored’ list for their large customers.
and could gain some useful insights
from studying how the catalogue
operators exploit their customer data.
• Where and what to invest in:
Money and resources are always 2 Most Operating in a multi-channel world makes it even more important
to understand your most valuable customers, and to be able to serve
going to be limited, but the new retail Valuable them when they want, and how they want.
environment is throwing out so many
new product and service propositions
that it can be hard for even the
most experienced and professional
retailers to know what customers will
3 Most The digital space provides a raft of new opportunities to engage
consumers, and to learn from their behaviours from Twitter and
Vocal Facebook, to online campaigns and consumer reviews.
really want, and what will genuinely
create long-term value.
• The ‘dark channels’: These are
called so because most retailers don’t
understand what’s really going on 4 Key New performance measures that reflect the realities of this new
multi-channel world are the next essntial building block to making
there, but because they need to, if KPIs profitable decisions and choices.
they’re to stay ahead of the curve in
a multichannel world. An enormous
wealth of data can be harvested about
how your customers behave online,
how often they visit, what they look
5 Real The real winners will be those who can deliver a sustainable
advantage by developing new operating models, designed to handle
Winners the realities of multi-channel retailing.
at, how long they’re there, and what
they buy, or don’t buy.


The last peg in this puzzle of commerce is entertainment, conduct personal finances their phone. Nearly the same number of
the most critical and possibly the most and much more. It is one of the most women and men use internet services on
important one that completes the powerful mediums for one-to-one mobile phones, which is fairly surprising
discussion on commerce. Commerce in marketing. Opening up a new spectrum and interesting to know. This is in
e-commerce is about money making its of branding and awareness, its reach is far contrast to mobile subscriber base, which
move from the wallets of the customers to better and larger. Advancement in comprises 70% men and 30% women.
the cash registers of the retailers. In the technology and boom of 3G and wireless
Transaction pattern for the past six
e-tail world, conventional payment devices has added to the growth of e-tail.
months from the users aged over 35 years
methods continue to provide strong Even advertisers have bought this story. is given below:
infrastructure support for commerce to India is the top-performing mobile
exist. Cash on delivery (COD) has recently advertising region in Asia. The growth in Particulars Statistics
equipped the retailer to address a large global mobile advertising expenditure Travel-related purchase 19%
number of Indian customers who do not has been tremendous with a year-on-year Grocery purchase 23%
use plastic money over the web. growth of 139%. More than 126 billion
Household utility payments 21%
We would like to focus our attention on ads were served in 2011, as compared to
Entertainment and lifestyle
the future of how commerce would be 52 billion in 2010. These numbers 28%
– books, music and movies
done by 800 million subscribers in India. represent the scope of opportunity not
India’s population on mobile
This opportunity is being debated by only for marketing specialists but also the viewing and booking travel 14%
analysts, bankers and the masses in view untapped potential for mobile through their handsets
of the changing form of money. transactions. In fact some brands have
Source:The BuzzCity report
been successful in doing so with their
Mobile commerce is the new avatar of
advanced applications and proven
e-commerce, bringing a revolutionary With Flipkart, homeshop18 and new
credibility.
change in the retail space. A growing entrants like Jabong, m-commerce has
country like India, which has over 800 As per a report by Buzzcity, it will be a achieved success in India as well. Travel is
million mobile subscribers, provides huge great surprise to know that 35% of mobile one of the fastest growing segments in
opportunity to retailers. Tapping this subscribers are not even aware about the m-commerce. People tend to buy tickets
medium will change the way we do basic mobile transactions available on and source hotel accommodation through
business transactions, access their mobile phones. About 14% of India’s
population views and books travel tickets
through their handsets.

30 PwC

Flipkart
Pioneering India’s online commerce market

Sector snapshot • Convenience, speed and 24-hour
accessibility in purchasing products is
Online retail is nascent in India and will being valued increasingly.
over time, evolve and more closely…
PwC’s thought leadership report Strong Company profile
and Steady – 2011 Outlook for the Retail
and Consumer Products Sector in Asia
Flipkart: Offering new categories,
predicts online commerce to be the next
reaching more customers,
major area for retail growth in Asia.
expanding operations
Though nascent, India’s online retail India’s E-commerce market is growing
market is growing at double-digit rates at 20 to 30% CAGR and…
and is likely to be the next format that Flipkart offers a range of goods online,
retailers will incorporate into their array including books, music, consumer
of channels. electronics, etc. Several factors are
Growth drivers include the following: driving the growth of India’s online retail
• Internet penetration, the use of market, including internet penetration,
broadband, etc. are making it easy the convenience of purchasing products
(and quick!) for consumers to shop online, etc. Senior management at
online at home, at the office, etc. Flipkart believes that consumer
• Global and local E-commerce behaviour is changing and in a few years,
participants have launched websites “Everyone will be buying everything
that offer Indian consumers a range online, just like they buy only their tickets
of products (apparel, baby products, online today.” As the market evolves, so
electronics, etc.). will the consumer.
• The market has seen the emergence …resemble E-commerce markets in
of a range of buying mature retail environments.
• propositions, such as group buying
Since 2007, PwC has been conducting
sites, direct sales sites, etc.
surveys on online shopping, in the UK,
• Consumers are more willing to examining new and emerging retail
experiment with new forms of retail developments in the digital space. Since
purchase and feel confident to search
then, the value of online retail has
for and buy goods online.


increased to almost eight percent of the …online retail players have aggressive Social Media
total retail market, with growth growth plans.
As part of its efforts to enhance the
expectations of 10% per year. Interviews By 2013-14, Flipkart plans to: customer experience, Flipkart manages
with more than 1,000 consumers in the
• Offer new categories on its website its social media presence carefully. A part
last quarter of 2010 revealed that we are
of Flipkart’s customer support team
witnessing a new pattern in consumer • Increase its footprint of warehouses
manages the company’s presence on
behaviour. When PwC began this series • Expand operations into new cities Facebook and Twitter. Only five or six of
in 2007, only 63% of the people we spoke
• Increase staff size from 2000 to over the 200 tweets each day are negative. The
to were actually using the internet 10,000 group’s SLA for responding to negative
regularly to shop. In 2010, things had
• Grow revenues 10 to 30 times over feedback on social media sites is one hour
changed.
but on an average, customers are
Nearly 20% of respondents were Customer service will be a critical responded to within 15 minutes.
spending more than half their disposable success factor for online retailers.
income online. Customer service is important for online
Customer insights
• Fourteen percent were buying on the customers since it builds trust and
web every week. comfort. When online customers have a Indian consumers are
positive experience with Flipkart’s generally perceived as
• Fourteen percent were doing it more price-driven and value-
often—a figure that wasfour percent customer service, they convey this to their
friends (word-of-mouth). conscious. While that may
only two years ago
be true, senior
Customer service and satisfaction
management at Flipkart
Flipkart maintains customer service believes that their online
teams to manage customer queries, track consumer is driven by both
the movement of goods ordered, ensure price as well as a minimum
timely delivery, etc. Providing good level of quality (in terms of
customer service enables Flipkart to enjoy the end-to-end experience).
high levels of customer satisfaction, As the economy grows,
generate repeat business and ensure incomes rise and
positive word-of-mouth. aspirations increase, the
More than once a week
Senior management believes that as the Indian consumer will
Once a week
retail sector evolves, customer satisfaction evolve into a more quality-
Source: Pick ‘n’ Mix - Meeting the Demands of
the New Multi-channel Shopper, PwC will be a key driver of success for most conscious consumer.
brands and organisations.

32 PwC

The high price
03
The growth in organised retail faces or no taxes. Consumer familiarity that
unprecedented challenges, both on the runs from generation to generation and
regulatory front as well as at the easy access are big advantages for the
operational level. In the below section we traditional retailing sector. Most modern
try to look at the operational, tax and retailers find it hard to replicate this level
regulatory issues and challenges. of intimacy.
Traditional retailers have also risen to the
Operational issues & competition from organised retailers. The
challenges adoption of IT systems, surveillance
systems, tracking the customer database,
‘Don’t make customers happy, make loyalty management, SMS marketing,
happy customers’. To ensure this ‘content’ credit purchase, and free home delivery
experience, retailers have to incessantly have helped unorganised players retain
work on the operational aspects of the customers.
business. In our next chapter we talk
about some of these issues that must be Infrastructure, supply chain and
oiled to make sure the customer has a logistics network
‘delightful’ experience. Availability of the right merchandise at
the right place, in the right condition,
Fragmented market with
within the right timeframe and at a
unorganised players
minimum cost is the primary objective of
The Indian retail market is dominated by retail supply chain management. Goods
unorganised retailers (mom-and-pop or in store but not on shelves could mean
kirana stores). The organised retail loss of sales and an undesirable customer
penetration stands at 5% and is growing experience. It is also important to vary
at a CAGR of 15 to 20%. the assortment and merchandise form
Organised retailers continue to face stiff one store to another, even in a single
competition from the unorganised sector. state, to cater to market sensitivities.
The latter have a low cost structure, are Investments in specialised supply chain
mostly owner-operated, with negligible management (SCM) IT solutions help
real estate and labour costs and pay little


retailers manage the store as well as Retail frauds
warehouse replenishment and lower
Retail frauds have been a concern for the
inventory holding cost.
Indian sector. According to the Global
An economy of scale for the procurement Retail Theft Barometer (GRTB) 2011
of goods is also another challenge faced covering 45 nations, the shrinkage in
by retailers. Few large retailers have been India stood at 2.38%, the highest in the
able to consolidate requirements and world. The average global shrinkage was
enjoy economies of scale. estimated at 1.45%. The good news is that
Poor infrastructure and the availability of as per the GRTB, the retail shrinkage loss
only a few organised supply chain and for India in 2011 is less than 2010.
logistics players further increases the Shrinkages as a percentage of total retail sales
problem for retailers leading to a delayed
availability of stock and huge costs.
With the government investing heavily in
infrastructure, and with global logistics
giants investing in India, we shall soon
witness the consolidation in the supply
chain and logistics sector. This will help
retailers and consumers significantly.

0 1.5 2.5

0.5 2 3

1

Source: The Global Retail Theft Barometer 2011, CARE Research

As per the GRTB, the key reasons for the • Vendor frauds
retail shrinkage or pilferage in India Retailers have started investing in loss
include the following: prevention and security measures such as
• Shoplifting (accounting for more CCTV, surveillance cameras, RFID, etc.
than 50% of total shrinkage value) This will help them in scaling down the
• Internal administrative errors shrinkages but the investment in these
areas is still at a nascent stage.
• Employee theft

34 PwC

Diverse customer needs Skilled workforce deliver its brand promise, quality, services
and store ambiance, etc. Retailers in
India is characterised by varying Availability of trained manpower both at
mature markets have used customer
consumer tastes, preferences and buying the store and managerial level has been a
service as a tool to generate footfall and
habits. Customer needs, tastes and major concern for the Indian retail sector.
create a positive brand image.
preferences differ in every state, town The problem is escalating with the rise in
and village. This puts a lot of pressure on organised retail and large global players High cost of real estate
the retailer in planning the assortments of entering the country. The attrition rate in Lack of readily available quality real
stores to cater to the diverse customer the industry stands at 25 to 35 %. estate as well as high rentals in India are
profile. major challenges for the retailers.
While the paucity of skilled manpower is
Easily available information via the a challenge, it is important to ensure Property rentals in the country are among
Internet or mobile, global lifestyle of continuous learning for the existing staff. the highest in the world and add
consumers, increasing income, aspiration Large retailers have setup dedicated considerably to operational cost. The
for global brands, overseas travel, etc. are teams to conduct training workshops and Indian real estate cost accounts for 5 to
making Indian customers more coach the retail workforce both fresh as 9% of the net revenue of the retailer as
knowledgeable than before. They are well as experienced on topics such as compared to 3 to 4% of global retailers. At
demanding premium products in health, product information, customer service, the same time, real estate sector is
food and beverage, dietary supplements, customer complaint management, etc. undermined with high stamp duty cost on
skincare, etc. Some of the large corporates have transfer of property.
partnered with premium management Availability of quality retail space at the
The changing customer needs and desires
institutes and designed retail-specific right price has been holding the
require retailers to continuously innovate
courses. expansion plans of retailers. In recent
with the product mix as well as offers and
promotions. Customer loyalty Looking beyond price times, retailers have moved out from
programmes play an important role in prominent malls of Tier I cities and even
Economic factors such as the increasing
helping retailers understand the customer renegotiated the rental agreements with
choice in products and shopping formats
behaviour and plan the right product mix. landlords to reduce costs. Retailers have
and unparalleled access to information
also started expanding their presence in
Long gestation period are fuelling today’s empowered shoppers,
the Tier II and Tier III cities.
who expect more from their retail
Margins for the retailers are very thin and
experience.
it takes a few years for a store to break
even after it starts operating in the Indian Today's customers are flooded with
subcontinent. Retailers believe that diverse options for products and services.
patience, deep pockets, continuous Today, the price of a commodity is not the
innovation and localisation of products only differentiator for the retailers. The
and services for the consumers is the key discerning consumers are expecting more
to long-term success. from retailers in terms of products that


The Indian Kaleidoscope: Emerging trends in Retail

The Indian Kaleidoscope: Emerging trends in Retail

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