More
than 90% of rural retail market is left to be tapped and
franchisee-based model is proving to be the most efficient one in
tapping this market, echoed retail experts assembled at Evolve, a two
day summit on retail and e-commerce organized by Sir M Visvesvaraya
Institute of Management Studies and Research (SVIMS), a leading
Mumbai-based business school.
“Our
experiments in places like Kalol (Gujarat) and Karnal (Haryana) is so
far proving that it is effective to set up a single big wholesale unit
in remote places and encourage residents in villages nearby to run
franchisees by sourcing products from the unit. In this way, villages
will have access to the best of the products available in cities. We are
running about 15 franchisee outlets around our Karnal wholesale outlet
and is proving to be very successful,” said Dipayan Baishya, Associate
Vice-President, Strategy, The Future group, addressing the audience
assembled at the Evolve summit.
Future Group will be
providing the right brand, technical and training support for the
franchisees to ensure uniformity in the look and feel of these stores.
He said at the moment, it made little sense to operate fully owned
retail shops in tier-iii towns and villages.
In addition to
rural, the Future Group plans to step up franchisee based models, in the
form of convenient stores in metros like Delhi, Bangalore and Mumbai as
well. “Right now we have 100 franchisee-based convenient stores in
Delhi and 200 stores throughout Delhi, Bangalore and Mumbai. We plan to
expand to more than 1000 convenient stores in these cities in the next
two years,” said Mr. Baishya.
This would be an alternative
viable option as in the next 5-7 years as the city is expected to face
shortage in the availability of land for retail expansion. Customization
of products and services, to suit the needs of regional and
sub-regional population will be the key to success, he highlighted.
Supporting
Mr Baishya’s view, Dr BR Manjunath, Director General, SVIMS said that
the retail market in India is too nascent and retailers need to invest a
fair share of time and resources to study understanding the customers
for the next five years, as customization of products and services has
become too critical today.
In 2011, Indian retail market
was about $470 billion and is expected to touch $675 billion by 2016. By
2020, the traditional and organized retail industry is expected to
touch $ 1.3 trillion.
Mr. Jerry Rao, e-commerce expert and
Chairman, Value and Budget Housing Corporation, said, pricing is
currently a major challenge in e-commerce. The e-commerce companies
charge any rate today for their services, which may be too low or too
high. According to Mr Rao, there needs to be more research and studies
conducted to arrive at a standard pricing mechanism for different kinds
of e-commerce products and services. “Should an e-commerce arm of a
retail company sell its products at lesser rate compared to products
sold out of its physical outlets is still a dilemma. The retailer could
pass on the benefits he saves on rentals, staff and AC, to his
e-commerce customers. However, this could also have a demoralizing
impact on its retail employees. Similarly, how much a telecom company
should charge its customer for using specialized calls like knowing
Rahukalam or astrology is still unclear. Should it be one rupee, five
rupees or ten rupees?”
According to Mr Jerry Rao with the
advancement of technology, availability of real time data will enable
services with time-bound requirement of a five Star hotel or an airline
to fill the unoccupied suits or business class seats through innovative
concepts like last moment auctions, targeting the right customer
profile. This technology to predict consumer interest is gradually
moving into physical retail space. Iris screening technologies are being
used to study the time spent by a particular consumer at various spaces
of the super market, time spent in searching spots of her interest,
products her interest, which could be utilized by companies for
prediction of her interests and engagement with her of.
According
to Nitin Mukadam, founder, localbaniya.com and CRM expert, Customer
Relationship Management aided by data analytics is going to be the game
changer from now. Technology will enable procurement of timely data
based on the choices of the customer, which can be effectively used for
customer engagement leading to customer loyalty.
According
to Mr Mukadam, the technology is growing in such a way that it is today
able to exactly predict what the customer is planning to buy, which
section of an e-commerce site she visits often, what are her areas of
particular interests etc. E-commerce companies could utilize this
knowledge for customizing its services for this particular consumer.
According to Mr Mukadam, an e-commerce company could build right
data-bases by extracting intelligent data from Google analytics,
incentivize the customer to register and then later engage customers in
constant dialogue and foster customer communities through social media.
Mr
Rahul Jagtiani, Founder, Plush Plaza, India’s home décor site said that
e-commerce and social media is making it easy for the start-ups to gain
visibility. “New Search engine optimization and search engine marketing
models, social media sites and You Tube are enabling new entrepreneurs
to gain maximum visibility in no time. These advantages were never there
for a generation back entrepreneur,” said Jagtiani.
Mr
Kartik Jain, Vice-President, Infibeam, a leading e-commerce site, the
emergence of social-cloud-mobile media is enabling e-commerce companies
to give multiple services to different vendors on a cloud-based model.
The cloud-based model is negating the need for multiple server farms and
at the same time enhancing the scalability and efficiency of services.
According
to Mr Jairaj Hegde, Vice-President, Sherwin Williams, India, Indian
retailers should focus heavily upon improving supply chain management
and training of man power. Today, there is an increasing need to deliver
highly customized products and services on a real-time basis. Most
retail enterprises falter because they do not recognize that it is the
supply chain which ensures Customer satisfaction and delight
Vinayak
Bhat, Country Manager, FactSet India observed that FDI is going to
change the whole retail scenario in the country. He observed in the new
regime, there is going to be more opportunities for domestic micro and
small and medium enterprises, partnership opportunities through joint
ventures, franchisees and strategic licensing, and more job creation.
This may put pressure on the kirana stores to innovate. E-commerce
growth will result into creation of supply chain infrastructure, mobile
commerce, social media leverage etc.
D. Balasubramaniam,
partner, Ecovis RKCA, said the big retailer should make an attempt to
learn methods on customer relationship and service from the local kirana
stores and adapt them at their level. He focused on the strengths of
Kirana stores, and forecasted that the Kirana stores in India would
reinvent themselves, most probably on Supermarket model, to meet the
customer expectations. Ultimately, the cash Management is easy for
Kirana stores, as in most Indian cities, rentals are far higher than in
the west, which is a disincentive for the Retail trade.
Is
HR ready for growth in retail and e-commerce? The industry says no,
while the institutes think otherwise. Mr Ravindra Gupta of Micro Retail
said, “If in acquisition of talent, its management and development is
not done right, there is a huge rate of attrition. Hence innovative
techniques are needed to retain the employee hired.”
Mr
Rakesh Vanarse, founder, Brandcepts Advertising, said the retail sector
has the potential of bringing in millions of job opportunities in the
country. There lies a huge training potential at the level of retail
management and retail operations. This is an opportunity for B-Schools,
and other education and training centres to come up with new courses on
retail operations management.
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