Monday, September 22, 2008


Hardly a week ago this blogger wrote about the David Vs Goliath piece referring to the changes taking place in the market place in the country in the face of determined onslaught by global retailers in the retail sector with large investments. It was mentioned that the unorganized retail sector will be hard to beat in this war for the hearts and minds of the consumers. Lo, here comes the news in to day's Deccan Chronicle under the banner " Indian Retail hits a road block". According to the analysis of its reporter Ms Sangeetha Chengappa the growth of organized retailing which was growing at @13% annually, is not able to sustain this for various reasons such as inability by many players to break even, low sales volumes, low profit margins, exorbitant real estate rentals and inevitable locational mismatch. Though it is too early to predict a total collapse, the indications are that many smaller players will sell out their operations to big fishes having deep pockets. Decently put, it means a large scale reorganization with the avowed objective of consolidation and redesign of the retail formats more relevant to the country with a higher chance of success. Naturally many small operators who adopted the modern retailing format with large investments will have to lower their shutters and take to the escape route.

It is not that one enjoys seeing such unfortunate developments but concern is there whether adequate home work was done before investing in a market like that in India which is tradition bound and slow to change, with old habits ingrained deeply in their ethos. A better strategy would have been to set up shops for wholesale or bulk marketing providing umbrella to the millions of traders as resource centers and evolve a 'live and let live' strategy. Indians have a history of tremendous tolerance, deep loyalty and high sense of compassion. These traits make it difficult to break the hold of their family traders on their mind and heart so easily. That is why it was felt that the unorganized traders will never disappear from the Indian landscape, in spite of the daunting muscles on display by the multinational retail giants.


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