Big bazaar, Shopping malls, Hypermarkets and Mega mart. These are just a few names which almost spontaneously strike to an individual’s mind when the word retailing comes into picture. It reaches every single home in every single corner of the nation! The market is huge and is untapped in various ways.
Today, in the present economic position the world is, the word “credit crunch” seems to be highly fashionable. Let us try to analyze the hiccups and opportunities of this buzz word on the Indian retail industry. I will try and put forward my analysis on the same which has resulted from a bit of market study and interaction with big thinkers. I shall basically be concentrating on the opportunities that one can look at in the current market scenario.
The thought process moving across the investors today is “None of the customers are willing to invest their money in everything apart from the basic needs today.” How should one as a retailer take this? If one can sensitively look at the retail market, a huge amount of an investment is involved before a retailer actually pitches himself into the market. For him to reach the break-even and start making profits, it takes a lot of time and patience. Hence, in a highly skeptical and volatile market condition, it’s very important for one to sense the importance of the slightest of the opportunity that is created.
Having understood the seriousness of the situation let me just elaborate on the problem itself. Since retail industry runs on a low margin business model, the time required for the industry to recover is more. One can see a sluggish and a weaker period for a much longer time when compared to the other sectors. “The basic problem is profit and not consumers!” quoted Mr.Bhaskar Bhat, MD, Titan. This simple sentence says it all. The customers are still very much there in the picture. The only problem is that they are not yielding the kind of profit the companies were getting. This was just a briefing about the problem that is prevailing today. One has to also consider the impact of other sectors and the interdependency factors as well before coming to any conclusion. Just to sum it up, the magnitude of the problem is huge!
One choice for an individual is to sit and analyze the problem that prevails. The other option of course is to tweak the situation a little bit and make the best out of it. Just to take an optimistic approach, let me put forward a few good things about this situation as well. One can be aggressive in his approach and expand his establishments to reach out more and more people and make them realize that there are other ways of dealing things as well! The current situation also has seen the sustainability of various sectors like food and farming. So, the bottom of the pyramid is still alive and kicking. If
We can also look at the revenue shared model. This is the model followed in the malls now-a-days. One established individual/organization helping the other smaller ones by providing a good platform for establishment. This is a perfect WIN-WIN model. This also involves a good amount of economy distribution among the individuals involved in the business. Since more and more number of people are skeptical about spending, it provides space for a new era of innovation. One can concentrate on low-price high-quality products, thus providing a room for a lot of technological improvement.
We can also look into the service industry as a money making industry. If an individual decides not to buy a new vehicle for a few more years, this automatically calls for a good and reliable service provider who can help the individual to maintain his vehicle so that he doesn’t have to invest in a new one. Apart from these, the basic service providers like doctors, lawyers etc., will be in demand no matter what is the economic situation. To give this article a philanthropic twist, we can also ask them to reduce their prices or do more of social services if they are not serious about business!
Above mentioned were just a few bright sparks which are existing even in the current market which is told to chaotic by many analysts. At this juncture I would appreciate if you would think on these lines which says, “When the world is observing recession,
Just to take you all forward, let me just share with you all a few key points which I came across. These were a few takeaways from the established players in the industry.
- Get the cost structures rightly in place. Re-examine the pricing that has been conventionally been done.
- Do not reduce the prices of the products. Instead work on a pricing model which will basically reduce the overall pricing of the products thus preserving the MRP of the product. This is basically because, once the market comes back, you must make up for the loses. Also, you should exist in a competent way even when the market is doing very good. More importantly, you should maintain the expectancy level the customers have in the brand.
- Please consider the fact that the mothers, kids and other market pullers do not watch and analyze the market analysis telecasted on the television sets.
- Geographically position yourself properly in the market.
- Have the bigger picture of
These were again just a few observations made in the market. This is the best time to invest, to gain good market share, to leave an impression on the customers, to exist and also to make a long term impact on the society. All that is required is a little bit of optimism and a foresighted thought process which can lead you to success. So retailers, nothing to worry, have patience, enjoy the competition and make the best out of the market! Happy retailing!!
NOTE: Few of the analysis and ideas were shared as part of the TiE Entrepreneurial summit ’08.
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