The past few weeks US newspapers have been full of news about a dismal holiday season for retailers in the US. There are news galore of retailers doing distress sales, filing for chapter 11 protection et al. Now we all have heard about the decoupling and India having a strong domestic demand and Retail being a sunrise sector and there being room for everyone and all that.
So on one lazy weekend in the last week of December i did a small recce of the retailers in Vashi. Started my reccee from Dmart. Had heard about this retail chain but was visiting an outlet for the first time. First Impressions - a no nonsense, no frills retailer targeting the masses. It was full of people (which is not an uncommon site in Malls in India, infact in most public places in India!)balancing their shopping bags! DMart has a very Apna Bazaar like feel, if you have seen one, except its more organised and professional.
Feeling good i moved to a Reliance Fresh outlet. Coming from a Dmart it looked Fresh and Colourful. Though what was missing were the people! The only people in it were the employees! Same story at the 'More' by Aditya Birla retail. Next i went to a Foodbazaar. More people than the earlier two but thinner than the usual hustle and bustle. Slow and down so far.
Next destination was Subhikha. This was quick, i just had to pass by it. The store has been shut! Enough of small empty or closed boxes (stores) i thought... i decided to visit the Big Box retailers and moved to HyperCity. Excellent store, excellent merchandise, excellent layout..empty ailes! More Hype than customers.
I stepped out and moved to the last store on my list. And then i knew where the crowds from all the earlier stores had vanished...offcourse to the Great Indian Shopping Festival at the Big Bazaar! (picture Biyani as the pied piper luring away all the customers!:) Call it another marketing gimmick, call it an air conditioned market or call him a bania! At the end of the day, He Sells.Period.
Though this time the Great Indian Shopping Festival was not half as great as the earlier campaigns. Slow and down for sure.
The excesses of the party are showing. During the good time everyone and his uncle, infact anyone, with deep pockets and grand visions was jumping into retail and was busy rolling out stores, launching multiple formats, making announcements..
But as Warren Buffet puts it
"Its only when the tide goes out, you learn whos been swimming naked!"..we'll know soon:)
Thursday, January 15, 2009
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6 comments:
Insightful, but one thing to note is.....a) the profile of the people in and around these stores( which trows light on their spending pattern)
b)location of the different stores(accessibility)
c)A promotional campaign can create a spike in sale in a particular store, but not necessarily in a long term.
Well, this is one sector where sales are still growing. By all macro parameters, we are still an under-penetrated market. Obviously, given the global doom, what we need to track are same store sales growth (which might be declining) and expansion plans (which may have been delayed by 1-2 years). Also, the next 2-3 years would see the demise of non serious players. Another point to remember, smaller retailers are known to file for bankruptcy periodically. Only those retailers which have scaled faster have managed to survive. Btw, Wal-Mart has returned positive 20% returns in the past 1 year. What has not helped the sector are the FDI restrictions which have made no sense. I think we are still to see retail in the truly international sense in India. If I am a bit aggressive today, I would put some of my money behind Pantaloons.
hey akshay nice write ups.....
Hi Akshay interesting piece.
One pattern I am increasingly noticing in UK is people are opting more and more for online shopping. I could not believe people could shop online even for grocery. This trend is killing high street stores. Price comparison sites give such a great flexibility of comparing different products retailers out of consumer’ consideration set much before consumer steps out of his home. If you could add something about changing consumer trends in India it would be really interesting.
Good work keep it up buddy.
Completely agree with the thought that retail sector in India still has a lot to mature. Also I think that India might not see such a doom in this space , as that is happening in the US or UK. Reason being, most of our people still don't spend on credit. Compared to these developed economies which are seeing new bankruptcies everyday, I would assume we would still see some growth , but yes , this needs to be carefully planned rather than being too agressive.
A very Good Analysis Akshay.
I would also suggest and if you get chance to go and see Magnet.
This is by Ashok Maheshwari the Founder and Ex MD of Dmart.
He has now started his own retail chain named Magnet. One store in Matunga(W) One in Bandra. May be one in New Mumbai.
Mr Maheshwari has very good insights about retail and thats why you see so much footfall in Dmart.
Magnet is improvement over Dmart. A must see place.
Nice blog Akshay. Very Down to Earth use of English and insightful too.
I am very keen to read your upcoming blogs too.
Thanks
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