The other day, I walked into a shop which stocks household provisions. To my utter delight, I found a brand of constipation relieving powder which I had not seen since quite a long time in Pondicherry, where I live. However, the shop owner was not amused by my decision to buy a pack. “Sir”, he cautioned, “initial results would be good, and you will end up using it regularly. But after a year, the problem will become much worse!” Well, the Good Samaritan lost a small sale, but won over a dedicated customer for life!
On the contrary, my experience in big shopping malls has been rather disheartening. The eye contact is often perfunctory. The personal touch is invariably missing. Most of the stores have some loyalty programs running, but the warmth and the courtesy extended is superficial. If I need a product exchange, the procedural complexities leave me gasping for breath. If I wish to leave behind an order for a specific product, there is a good chance I would never hear from the store again. Often, the product knowledge of sales staff is so sketchy that it leaves one wondering what professionalism in sales management is all about.
To me, the raging controversy about Government of India’s decision to allow 51 per cent FDI in multi-brand retail is meaningless. The Government appears to be over-stating the benefits of FDI in retail, whereas the Opposition is hell-bent upon projecting this as the last nail in the coffin for all the chemists, kiryana stores and sari stores in India.
As and when Wal-Mart, IKEA and others enter India, they would face challenges of high density of population, high real estate costs, absence of parking spaces and professionally managed supply chains, poor infrastructure and a policy environment which could spring unpleasant surprises. Anyone who imagines the Indian market to be a cake walk for retail MNCs would surely be off the mark.
As per a recent CRISIL study, reported recently in The Hindu, organized retail penetration during 2011-12 was merely 7 per cent of the $430 billion domestic retail industry. The balance was held by the Mom-and-Pop Stores. If all states in India were to allow FDI in retail, CRISIL estimate the organized retail’s share to rise to 10-15 per cent in about five years time.
Retail majors in the developed world are struggling to keep afloat. Internet is changing the way we buy things. Smart shoppers these days browse for books and other items in stores, but finally buy them off the internet, enjoying whopping discounts. Strong backward linkages in warehousing and logistics are quietly bringing about this retail revolution.
Closer home, we find a housewife in Surat buying a mobile phone from Indiatimes and a student in Assam ordering a book on Flipkart. A family in Hyderabad plans for a bus trip to Tirupati and makes its bookings using Redbus. A businessman from Ludhiana orders shoes off Myntra and a teenager in Cochin buys a swanky new salwar kameez from Yebhi. A health-conscious housewife in Jaipur gets her supplies of Omega-3 supplements courtesy HealthKart. An executive pursuing his hobby in gardening in Nagpur seeks the support of Costco to buy a hedge trimmer. A book-worm like me in Pondicherry orders a Kindle book reader from Amazon!
In the days to come, advances in technology and wider internet connectivity will keep nibbling at the market share of nut and bolt retail. But who can resist the feel and touch of a silk sari and the whiff of fresh printed paper when browsing a book before taking a buying decision?! Organized retail may suffer much more on this account than our Mom-and-Pop stores. They offer personalized service. Door delivery is not an issue. If one is a regular customer, short-term credit is quite the norm. There are minimal exchange blues.
The trust generated in customers is a key factor which would always ensure that our Mom-and-Pop stores shall not only survive but also flourish! In a worst case scenario, their rate of growth may get a temporary dampener, but survive they shall. After all, David did win over Goliath eons back!
ashokbhatia 