What’s the next step of retailing…?

During my visit to a Big Bazaar departmental store last week, I got a feel of a vegetable market where vendors try to sell vegetables by yelling the cost of their product… the same was the condition here where the sales person was selling the groceries by ringing a bell and bellowing the lowest price and discounts. I was stunned and it made me to think, is this of the trend coming up in Indian retail? Or is this a consequence of competition where retailers have to yell and shout about the discounts they offer? On the other hand, is it a strategy to attract their target segment? When it comes to organized retail, which accounts for hardly four per cent of the total retail market and is pegged to grow to $64 billion by 2015, is trying a variety of methods ranging from discount stores to supermarket to hypermarkets to specialty chains, and most players appear to be gravitating towards the hypermarket format. Can you imagine the intensity of competition five years down the line?

The major players like Pantaloon to RPG to Piramals or the Tatas are working to exploit this model, which is perceived by consumers as more value enhancing. However, in the long run, the strategy most likely to succeed is a more balanced multi-format strategy that will help the retailers adapt to the different shopping patterns that exist within the country and even within regions. Here again, merely copying global trends will not help. On the other hand, a research found that single-format players generated higher shareholder value than multi-format ones. Some feel a combination of cash-and-carry and neighborhood stores, as in a hub-and-spokes model can be a good bet. As of now, India needs a lot of room for experimentation on part of the retailers. Currently, there are no cut-and-dried solutions when it comes to fixing on the right retail format.
Finally, with the flush of the retail boom, the elimination of traditional intermediaries are bringing windfall gains (as well bringing much-needed relief to the producers), and few years down the line, even this source is going to dry out as competition intensifies and margins come under pressure. What would set the survivors apart from those who are forced to sell out (or go belly-up) will be differentiators like location, value-added services (convenience), private labels and customer loyalty programmes, other than price. Going further in the last, the retailer-manufacturer tie-ups, state-of-the-art supply chain infrastructure, global sourcing and scale will be a key factor. If experience in other markets is anything to go by, will be an ability to read shifting trends…and then again what next?
By Sonal