aspirations and road map for emerging retailers
DESCRIPTION
Chennai Retail Summit (CRS) 2014TRANSCRIPT
Why this study?
6%
40%
Size of the retail market - 2013
100% = USD 440 bn, Rs 265,000 cr
Organized Retail; including e-tailing
“Mom & Pop” stores
“Organizing” Retailers <20 stores< 20 cr Turnover; Modern practices – billing / inventory
• Qualitative• 23 retailers in• Chennai and
surrounding markets
• Categories: Apparel, Grocery, Food, Restaurant, Fast fashion, Cosmetics, Jewelry
“State of Play” of Independent Retail
Business Growth
Profitability
Competition
People
Technology
Regulatory Policy
Customer experience
Space
• Growth for most retailers is 15% + y-o-y – last 3 to 5 years.
• Margins – Shrinking or Stable. No-one spoke about expanding margins
Branding is the single biggest challenge
Business Growth
Profitability
• Creating a brand in the customer’s mind – single biggest challenge.
• Mechanisms:• Franchising• Creating own
label• Service• Move up the
value chain
Competition
People
Technology
Regulatory Policy
Customer experience
Space
“Customer's expect a modern apparel store which has invested in
frontage and store windows to sell an item worth
Rs.500 at Rs.100” – Vimal Rajan, Director, Amigos
“Consumer discretionary spend on apparel, footwear
is decreasing. Inflation needs to be stable for
consumer confidence to return” - Murali Krishnan, MD, Kalyani Associates
Grocery retailers: Input cost has increased by
more than 50% for the last two years – they were not able to pass on the entire price rise to the consumer.
Competition: “Re” and “E”
Business Growth
Profitability
Competition
People
Technology
Regulatory Policy
Customer experience
Space
“I realize the power of e-commerce,
when I see my staff regularly giving directions to the Flipkart delivery
boy”, Arun Kumar, Director, Sri Ramana
Silks; Madurai
Space and People worries
Business Growth
Profitability
Space
Technology
Regulatory Policy
Customer experience
People
Not only is space cost increasing, the
pace is the highest in the smaller towns –
Salem, Trichy, Erode, Karur, Thanjavur. Retailers in these cities report that
rentals have risen as much as 10 times in the last 10 years.
Competition
People Matters
All but one retailer spoke of high
attrition – in most cases - above 90%
per year. That means that front end staff in any
given store changes
completely every year.
“Attrition is linked to ‘brand power’. Even banks give better loans to staff
who work for brands like Levi’s”
- Vimal Rajan, Diretor, Amigos
Technology: Social, but not sure how to go about e-commerce
Technology
Regulatory Policy
Emerging Retailers are “ Surprisingly
Social”
Billing / Inventory are automated.
Except for grocery / small format
supermarkets, all retailers felt that an ecommerce listing
would help – but were not always sure how
to go about it.
Regulatory: Accumulative, minor ‘irritants’
Regulatory Policy
Emerging retailers want clarity and speed on licensing and operating norms. Reactions to FDI are mixed – some
believe it will push up space and people costs, others see it as an opportunity to
learn from global retailers.
Larger retailers among those surveyed see GST as an enabler.
About a third of the retailers wanted protection from the predatory pricing of e-
tailers.
Regulatory: Accumulative, minor ‘irritants’
Regulatory Policy
Need clarity, transparency on:
• Licenses for store opening
• 365 days permission
• Labour registers
• Coordination with urban planning (e.g. metro work in Chennai)
Emerging retailers want clarity and speed on licensing and operating norms. Reactions to FDI are mixed – some
believe it will push up space and people costs, others see it as an opportunity to
learn from global retailers.
Larger retailers among those surveyed see GST as an enabler.
About a third of the retailers wanted protection from the predatory pricing of e-
tailers.
In summary: “State of Play” of Independent Retail
Business Growth
Profitability
Space
People
Competition
Regulatory Policy
Customer experience
Technology
Based on your feedback we will look
to continue this dialogue with retailers across other markets – Delhi, Bangalore, Mumbai, Surat etc.