Indian Retail Revolution: Advantage – End User

Article by: Pushpendra Sharma

"Malls may come and malls may go, but shopping will never harm us", seems to be the motto of most Indian shoppers, comprising primarily of the fairer sex. In the era of mammoth shopping malls, concept stores, designer boutiques, multiplexes, family entertainment centers, the maximum advantage lies with the end user.

India has unleashed a new chapter in the art of shopping with approximately 280 malls being planned and conceptualized in the country. I have lost count of the kind of concepts, ideas and formats that have started taking shape in the country. A few years ago who would’ve thought concepts such as designer stores, gold souk, electronics mall, hypermarkets, discount stores, family entertainment centers etc. will become so widely acclaimed and accepted with Indian households. Full & due credit goes to the Indian real estate developers for having the vision and determination for success and seeing projects through and creating a name for themselves in the Indian real estate industry.

Ms. Tinoo Joshi, Development Commissioner (Handicrafts), Govt. of India, an eminent I.A.S. officer who has played a vital role in upgrading the Indian Handicraft industry is of a firm belief that "Shopping in India can be compared to any developed market in the world, primarily due to the availability of international brands in India and more importantly most of the Indian consumers today have international exposure." She adds, "There has been a exponential growth in the Indian consumer spending due to the increasing competition amongst retailers offering discounts to lure customers. There is tremendous competition amongst the craftsmen in the Indian Handicraft Industry and the benefits are passed on as discounts to the end-user."
Ms. Joshi further comments, "Presentation enhances the value of the consumers curiosity towards a certain product, that leads to high spending. Consumers are also looking for convenience, therefore the concept of everything under one umbrella is something that today’s retailers are being compelled to provide. In the current retail scenario in India the end-users are laying the rules of retail demand, which is leading to value accentuated branding, a break away from monotony and a one stop shop approach."

As shopping malls formats are mushrooming, the end-user too has become quite finicky over the concept of shopping. With over a dozen malls planned in Gurgaon itself, the targeted end-user has become extremely conscious of where to shop and where to get the best deal. This is simply because of the immense competition that retailers are facing amongst each other, trying to meet targets at the same time offering unique sops to the customers.

India’s economy is on a fast track, with investments pouring in across industries, we are quite happy to be a part of this booming economy, as there is tremendous potential in the years to come. One of the most promising and evergreen industry, is the retail industry and today as things stand, we have seen tremendous growth. "Real estate backed retail revolution", is what is driving the retail industry in India where end-users are its drivers. We have identified two key factors for the success of any real estate - retail development project, these factors are:
1. Hygiene Factor
2. Motivation Factor

Hygiene Factor comprises of the essential pre-requisites of any successful retail development, i.e. Location, Location and Location whereas Motivation Factor comprises primarily of end-users / shoppers / consumers. But the key element here is the end-user, since whichever way you look at it without the latter the former is inconsequential. E.g., A Mercedes Maybach would be termed as a white elephant if there were no one to drive it.

Dr. Asha Sharma, a renowned Gynaecologist who is the HOD (Obstetrics & Gynaecology), Rockland Hospital, New Delhi comments "Most of my overseas trips comprised of shopping for all kinds of essentials, but today you find everything in India, from designer wear, to designer furniture, to designer accessories, the concept of shopping has certainly changed for the better. Inorder to attract customers and due to increasing competition, retailers are being compelled to offer discounts, therefore customers definitely have an advantage over retailers."

Moving on to the finer details of this Indian retail revolution, the single most driving factor are people, customers who are the key elements for success for any retail development. Therefore inorder to attract steady footfall, leading to conversions, it is crucial that retailers pay sincere attention to the needs of the customers. Today the customer have a rock-solid advantage since there are plenty of retail stores, concepts, that are available in India who are competing with each other on all aspects (i.e. merchandise, concept, pricing, range of product, quality of product, location, sops etc.) and inorder to generate revenues these retailers go out of their way to please customers, therefore the concept of privilege memberships.

Shivina Kumari, Director International Programs India, C.T.I.S., an avid shopper, who makes frequent overseas shopping trips, is now quite happy shopping in India. She says, "Indian retailers are wooing the customer with hard-sell marketing campaigns, special offers, launching new trends every season and constant changing of goods on retail to have current and new products displayed. In addition shopping has become a form of entertainment where one is treated to exciting visual displays, special promotional campaigns and makeover. Pop Culture, which hit the US in the 1990’s, has recently come to India where the average Indian is influenced by TV, movies, music and print media. This in turn impacts the retail sector where the consumer is looking to dress like a famous celebrity they may have seen on TV, or in real life and the Indian retailers are at par with the western retailers as far as spending and to add to the retail revolution the malls today are selling a lifestyle that we Indians have dreamt to live."
Ms. Kumari adds, "Many years ago shopping in India meant going to overcrowded markets, haggling with the vendors and often getting cheated. Today's mall concept has standardized the quality of the goods and pricing. In addition the customer has some advantage, as the vendor is held responsible for providing goods that meet the quality the customer demands. Although she is happy shopping in India she feels that the Indian retailers still have a long way to go in terms of customer service and guarantees."

Inorder to maximize the conversions for any small, mid size or high-end retailer, the formula is quite simple. There are 5 key elements of a good shopping experience that a customers looks out for, these elements are:
1. Location of the store, mall etc.
2. Service offered
3. Sops / Unique offerings
a. Pricing (i.e. stores in malls vis-à-vis high street stores)
b. Product Quality
c. Range of merchandise (product mix)
d. Ambience of the store (décor / interiors)
e. Loyalty program memberships
4. Easy approach to the store
5. Convenient parking

Sachin Wadhwa, Sony World India Incharge, a high overseas spender too agrees "That the concept of shopping in India has witnessed a paramount change, strictly from the point of view of the consumers from traditional unorganized to continuously evolving new formats of retailing." Mr. Wadhwa adds, "The customer is benefiting from the retail revolution and today it’s completely a buyers market primarily due to increased competition amongst retailers."
In the new age of Indian retailing consumers have basic preferences and in the increasing era of competition, retailers are going out of their way to attract customers therefore we can state that end-users are driving the change in the concept of shopping – therefore in simpler words it is more a demand driven market than a supply driven market.

Finally inorder to sum up the observation, retailers treat customers as kings due to the existing and cut throat competition, therefore we can say that in today’s world of Indian Retail Revolution it’s Advantage - End User.

India Shining. What About The Malls?

Franchiseek International Magazine: April 2005

"India Shining" is the new mantra, an ode to the growing economy, development and high investor sentiment that India has seen in the past 5 years courtesy political stability. Everyone is talking about India Shining across industries, let us take a view on the subject relating to a very attractive and growing Industry - Real Estate-Retail development.

It is evident that in today's era of mushrooming malls there are only a select few retailers will ramp home in the long term retail battle. A majority of retailers, in fact, are loosing business. It is surprising why these retailers are not thinking out of the box inorder to improve their sales.

It would not be wise if I were to criticize developers for designing majestic shopping projects (e.g. malls, multiplexes and FEC's) and taking the level of retail design to the next level. Rather, one must give them for commissioning these design marvels. However, we must understand that Indians are by temperament extremely price sensitive and these design marvels seem to intimidate and mislead the customers into forming their own misconceptions (for instance, that products are overpriced). Therefore, in order to sustain their existence in this glamour-laden milieu, retailers must provide something unique. We know that even record-breaking footfalls will not reap or generate enough volume for today's retailer to survive till the time there is differential pricing-product assortment.

Most of the malls of today barring a select few e.g. Phoenix Mills, Mumbai offer nothing unique to the end-user. We need to develop and grow this price sensitive market by offering 'value for money schemes'. This though, is easier said than done, and needs to be carefully studied and understood. Majority of the retailers today complain, and rightly so, that since their margins are so less how can they offer discounts and schemes - it would not be possible to run a business in this manner. I couldn't agree more, but can they justify low sales? unpaid employees? shutting shop? The answer is simple, in today's competitive market, retailers need to be experimenting with products, prices, schemes/offerings else they will not be able to survive in the market. Full credit goes to the hypermarket Indian badshah's Big Bazaar and Giant, who have understood and capitalized from the price sensitive Indian shopper. We asked a few Industry specialists regarding their comments on this subject.

Sanjay Kapoor, Managing Director, Satya Paul, is emphatic: "a large number of footfalls are not actually shopping but are at the mall for the ambience etc. Retailers need to provide a value proposition in terms of product and pricing taking into account the customer base that is actually walking into the mall. It is key to understand the customer first. Our retail industry is still quite nascent and very little data exists on the type of customer and their preferences. This will build over time giving a better insight on the customer." Mr Kapoor adds that "change is constant in a growing market and innovation is the key to success here - be it in innovation in the product, marketing, price etc etc." Indeed, Indian retailers need to learn from the US & European markets the art of mall and shopping experience.

At this point, one might wonder why would a customer specially drive to a mall, fight for parking, wait minutes in long queues for the elevator and then enter a store and pay a similar price for a similar product that he or she could have purchased from any high-street store nearby their place of residence? Well, till the retailer does not pull up their socks, offer unique concepts, pricing and products in these malls we will soon notice retailers shutting shops in these malls.

Mr. H S Kohli, CEO Ebony adds "More than differential pricing its differential product assortment that retailers have to devise for holding mall stores as opposed to high street stores. Mall stores should typically have a larger share of fast moving, average price-point and impulse-driven merchandise, as opposed to planned purchase (such as suits, marriage attires etc), unless we are talking of a specialty mall (such as home improvement or marriage related). It's already evident from strategies adopted by ethnic apparel retailers such as Meena Bazaar and jewelers such as Tanishq. Differential pricing may lead to channel conflict if one has multiple channels such as exclusive stores, MBO's, franchised stores etc., and therefore is avoidable".

Lastly, inorder to encash on "India Shining", we must reach out to the end-user/customer, generate unique MRP - "Mall Retail Pricing" only then will the customer be able to spend lavishly and shop freely in these malls.