What faults do you see in Organized Retail sector ?

till today very few organised retailers have been able to understand the market dynamics and only those few are able to sustain the business if not making profit. a local retailer understands the customers need,want and demand far better than a modern organised retailer and this is again due to insufficient market information. Apart from all these poor supply chain methods and cost of real estate have always resulted in low margins.

regards,

Mohan

The organized retail in India is fast becoming disorganized because of the following reasons.

1. Every one tried to get into the race with weak or no strategy.

2. Lost Focus half way. To make it work cost effectively or break even faster, a lot of untried and tested models and processes are quickly adopted randomly. Example, contract farming, Private labels etc. At the same time trying to adopt state of the art technologies, without having enough critical mass, supporting infrastructure and knowldgeable workers

3. Business model, store formats and merchandise mix are being experimented too frequently without doing due diligence.

4. Sufficient time is not allocated in planning and the retail projects are executed in a hurry as if there is no tomorrow. Since the retailers in India are new, we do not have the sophistication, habit, culture and exposure to adopt some of the techniques that are being applied. There should be all the more reason for a great planning effort.

5. Finally, concepts brought from west or developed countries are modified un scientifically and forced into operation. These processes in the west evolved over a period of years of research and controlled and planned experimentation.

I think the problem is with supply chain issues. Logistics and an effective supply chain infrastructure are indispensable for seamless and cost efficient operation in the current volatile times. Economies of scale by way of warehouses, distribution centers and transportation efficiency will be necessary for survival

That is the rpoblem here in India. People have not been able to specify the TYPE of store they want to project.

Look, there are success stories like Big Bazaar, D Marts etc. At the same time a Shubhiksha had to close its shutters. Why did that happen?? If you cannot live upto the "Isse sasta aur kahin nahin milega" type of store you are throwing yourself open to be shut down sooner or later. Big Bazaar has slowly but steadily offered its customers the comfort level of making things of daily use available at relatively affordable prices and they have maintained the format of BIG thorughout there chain of stores. They have not over promised but delivered more to the upcoming middle calss which has now started using plastic cards for living.

Similarly across you have the AtoZ store format like Walmart and Plaza Centers that have kept their promise of delivering Quality goods and BRANDS and have managed to keep themselves afloat and deliver all the time. They have been able to distinguish themselves as NICHE stores where high priced brands are sold and have been able to attract only the clientelle that can afford to spend at such stores. Of course their Loyalty progrms have also palyd a huge part in retaining customers.

Defining the type of store you are is very important as you are completely sure of the demography that will be attracted to your kind of store. In Mumbai places like ATRIA mall, Landmark City etc will not find loyal customers because the stores are not defined in anyway. You have Gucci selling top of the line material and next to it is a relatively unknown brand which kind of dampens the spirit and the experience!! There has to be a semblance of the store format first and then the other logistics can be looked into. Plannignwill come only after defining the business. You cannot just wake up and look into your bank balance and say "Chal yaar Store khol dete hain!!"... (Lets open a store today)... That is a very weak proposition.

Most of the retailers jumped the retail bandwagon to expand fast fast and fell flat .They did noty care about unrealistic rentals and went ahead without a good supply chain ,hence they fell flat.Secondly everybody wants to sell sasta ,so there is no brand differentiation.You must give people some reason to come to your store apart from offering good price.One should look at a brand like Spencer's which is a highly differentiated brand from its competitors

1. High costs for the organized sector arises from: higher labor costs, social security to employees, high quality real estate, much bigger premises, comfort facilities such as air-conditioning, back-up power supply, taxes etc. Organized retailing also has to cope with the middle class psychology that the bigger and brighter sales outlet is, the more expensive it will be.                             
2. Staff or Employees are not trained about product and they are not made for changes in future.
3. Warehouse or DC Distribution centre or not in  HUB and Spoke Model ,but single Distribution  at centre for States .
4.  If Take Examples of Shopping on Saturday or Sunday in Hyper Market or big bazaar .We have to Wait of hours in Queues for Billing at end of billing cashiers explains the offer or we have taken wrong offer all mess-up at cash counter.

Retail works if costs are under control, and profits are available. We had a good  profitable model last 55 years.

Recently, we started a new TREND ! Get expensive, very expensively rented areas, high farm costs, zero road and infrastructure, lousy interconnection E-systems, inadequate data to tap to cover and address segments, taxes on top of taxes so only rent seekers and tax collectors made money. This led to situations where Retailers were left saddled with bills, large rental to be paid, high interests on loans taken, no takers on IPOs, nothing left to invest on IT or Training.

Indians lack etiquette required to run service and customer facing industries, our cultural "diversity" itself is a very diplomatic way of getting away from trainings and gloss over flaws.

So likely, a small Bahrain or Dubai would be having more JD Arthurs or Siebel or RFID implementations than the whole of India combined, and most would Tally or some other stupid softwrae would burn their hands going for SAS implementations.

Unless you can tackle these issues Head-On, we are only going to untangle a cup of noodles and wasting time working out which end begins where and ends where ...

Bad pricing and PSU oils subsidies brought a situation where Reliance, one of the biggest players rolled back and put their whole thing on back-burner. Now we are a BAD BRAND - we have a CHAAPA for anyone to even consider selling high priced expensive stuff in the country, excepting through outlets like say Hyatt chains or other five star hotels or duty free shops at Airports.

Like dear old Corleone, we need AN OFFER THAN CAN"T BE REFUSED !

So if u ask me what is the difference between Air India and Subiksha, well - Subiksha is grounded, but Air India would still be bailed out !

however, for a country like India, with say well invested consultancy with say Rabo - YES BANK, there is very tremendous opportunities in Food and Beverages Retailing across the full supply chain from plantation, storage, transportation, finance, retailing etc. Brazil and the Oranges is a major reference point. Even Filipines has a superb F&B chain we can and should work to replicate.

Amul and Cherian is a good case in point ...

My unique and innovative ideas of customer retention would bring new revolution in this retail industries.

 In the race for acquiring sites in the last two years, retailers made decision which were not according to the business requirements, cause of this we have seen many unviable stores being closed down.Many opted for carpet bombing without doing proper location mapping, they ended up providing customer with more number of stores, easily reachable but it increased their operating cost and decreased SPF of the profitable stores.The main aim behind this was to capture all the available locations in the market to avoid entrance of competitors from abroad.

Its a common site to see 2-3 stores of a same brand on a same road or in a same market in bangalore.

I have read so many problem in retails. But no body having a good solution. I have a unique idea for retention of customer which i am sure can bring new revolution in retails. Easy to implement. call me on 919326786000 or naseerleo@yahoo.com.

I feel we should take advice from the retail consulting firms example Faces Consultancy (www.facesconsultancy.com), inorder to organise the retail companies. This will help in the operations, sales and customer services of any retail company. Slowly and steadily the consulting firms are getting into the Indian market to help the retail sector grow. Faces will be launching their services soon in India...

margin is a key factor ... reduce it and flaunt it ... thru advertisements .. customer should feel sense and awke up in the morning with you .. this way u will gain customers ... and then when u r able 2 say " show me the money " ( courtesy Jerry Maguire movie ) ... gradually increase the margins ...