The big indian retail circus

1. THE BIG INDIAN RETAIL CIRCUS
Wal-Mart has packed up; of course they made the right noises about helping
the Government create conditions that enable FDI in multi-brand retail" and about
sticking to one of the largest and fastest growing consuming markets of the world etc.
These noises are fairly understandable but there is a lot for us to read between the
lines.
There are hordes of speculations about what Wal-Mart did wrong and what
perhaps Ikea seems to have done right. I believe this is erroneous thinking. The idea
is not just to make a successful entry but also to create a viable and sustainable
market. So any success story has to be eventually backed by revenues and a healthy
bottom line.
Chidambarams infamous remark that
Walmart is just a speck in the overall retail investment climate in India, was perhaps
not a polite thing to say in view of Wal-Marts politically correct exit, but then we know
that the Government of India did not invest into Wal-Mart. Perhaps they should have,
not financially but in terms of commitment to the larger cause of attracting Retail FDI
into the country!
I'm reasonably sure that the Finance Ministers observation has not sent the
right signals to the retail giants. No investor would like to be compared to specks and
they are not, they are sizeable entities, some of them having their revenues
competing with smaller world economies. The current mindset of making such
irrelevant remarks cant even be justified if our country were chockablock with Forex
reserves. The recent Dollar Vs. Rupee rallies dont seem to support such a mindset.

2. To put it simply, our Political leadership needs to develop a service orientation, which
will go a long way in helping them achieve better Governance across domains not
limited to merely attracting retail FDI.
The view of the Government and political leadership in the last few years
towards FDI in Retail has been rather unfortunate and there is one word that
describes it aptly - Hubris!
As a result in the last decade or so numerous brands that have tried their luck
at solving the Indian retail puzzle have met with mixed results. Many of these have
been successful whilst a lot have shut shop and moved on to greener pastures and
the rest are still trying their luck. Then there are those brands that have been waiting
for a long time at the fringes trying to make sense of the FDI policy and devise the
correct entry strategy that doesnt defy their commercial logic.
So what is it that makes the India Retail story so untenable for many foreign
investors? Is it ok to just blame the Government or does the case warrant a deeper
introspection?
What the Government is not getting right?
Consider this! When we approach prospective investors we present to them
exactly how their investments are going to be secure and submit detailed business
plans for their perusal to assure that their money will grow. We spend considerable
amounts of time and resources in getting our projections to be near perfect.
I dont see how attracting investments into the country should be any different.
I am not saying that the Government is not making any efforts but my contention is
that perhaps a more customized approach could yield better results at least with the
larger investors.

3. Perhaps the Political leadership of this country should try harder to create a
win-win situation for all the stakeholders and not fall to populist measures such as
State Govt. clearances etc. These are dampeners from the investors point of view.
Quite frankly I do not even see how the Consumer wins with such policies.
Endemic corruption with in the system also needs to be addressed and
weeded out. Easier said than done, but maybe the FDI policy could make a humble
beginning by introducing a single window clearance. The riders in the policy need to
be revisited from an investors point of view and should go a long way in slashing
corruption opportunities. And let not Caveat Emptor be the guiding force here!
What are the brands not getting right?
Many brands tend to get carried away by the sheer numbers that India offers.
India the Billion plus country offers an orgasmic number of consumers for any retailer.
Most brands start with a logic strongly based on the humongous population of India
and directly relate it to the projected consumption of their goods and build their
investment strategies around this. More often than not many pack their bags before
you can say Indi-yeah!
The Brands need to understand the Indian Consumer better before they
devise India specific strategies. They should understand that the fact that they got
their act right in 60 odd countries is merely a laundry list when they devise their India
plans.
India should be considered more as a commitment rather than just an
investment. Most plans fall haywire here because of many unconsidered factors.
Fortunately, India is one country that offers course corrections rather easily. There are
numerous brands that have understood these facts and made relevant tweaks to their
strategy and offerings to script enviable success stories.
India offers a great platform for cost reduction, innovation, consumption and
competition, all the ingredients for scripting stupendous success stories for investors
on a global scale and for the Government to attract loads of FDI.

4. One can only hope that these stakeholders working together to create wealth
for mutual benefits address this great opportunity effectively as partners and stop the
blame game!