Friday, November 04, 2005

Of malls and retailers

Chennais high streets may be gaining in terms of footfalls as Kaps notes, but elsewhere in Mumbai Dadar, once the high street of Mumbais middle class, is slowly being relegated to the background of the festival shopping network (There was a good article in TOI a few days back, but I couldnt locate it online). With malls every nook and cranny, people no longer need to go to these streets to get their shopping done. One can lament about the decline of these stores, but I believe that this is partly their own undoing.

Linking road in Bombay and to a lesser extent Commercial street in Bangalore are two examples. Both these places offer things that are, quite simply put, difficult to find in a standard mall. Linking road and Comm street offer a fair amount of variety that is definitely more than a standard mall.

There is no surprise in a mall. There is a mandatory Pantaloons or a Shoppers and then there is a Mc Donalds or Pizza Hut and a food court. There is a grocery shop and then there are a few other shops. The malls in India are rapidly resembling malls in the US, where apart from the mall architecture, there is no real difference in the outlets in any mall give or take a few.

This is where the streets can score over the malls and streets like Linking road and Commercial street do. So, what about a place like Dadar? Dadar may or may not be the right example, but Dadar here is the euphemism I use for any of the non branded stores. When I go to a non branded store, I look for lower prices. Prices at these places need to be lower than the price at the average mall or department store.

My experience with these places has been that the prices here are usually lower by about 20 odd percent, but quality is lower by about 50%. Design and elegance is still lower. So, the average shirt in a non branded store these days could cost about 600 odd rupees, but if I pay about 800 rupees, I can get a good branded shirt in the nearby mall. This shirt which costs 600 rupees will look sad in front of (say) an Indigo Nation shirt in terms of fit and finish and worse in terms of design. A part of the factor is, I believe, smaller retailers (and perhaps smaller brands, just by virtue of being a brand) in their quest for higher margins from a slightly lower footfall have hiked up their prices to just below branded prices, but have not kept pace with the quality. Many customers would rather have the security of good quality when they buy than a lower price without any guarantee.

Unless the smaller retailers pull up their socks and deliver innovative stuff like the Linking Road chaps, it is the end of the road for them, sooner or later and its only a question of time.

2 comments:

anthony said...

I won't talk about branded cloth and unbranded ones as I prefer branded one anyday, but in other categories other than clothes, I notice that small shops are giving better bargains than the mega retailer. I am talking about White goods and other household stuff. For Mumbai, VSP is not as low as a smaller retailer if you now how to bargain. I don't know if Indian Reatoler can give te kinds of discounts that the US counterparts do. We don't have much cost to cull and with dealer and wholeseller margin already so thin, I doubt if a bigger retailer can have such a clout.
Some magazine names Kishore Biyani the Walton of India. I see Big Bazaar and I only see chaos, its just a bazaar as the name says but only under a roof. We only can Wait and watch. tony

Neelakantan said...

These are two different things.
One, one of the reasons we get a discount from smaller dealers is because our average trader does not pay taxes. He evades taxes. With a wink and a nudge you can pick up stuff without a bill which impacts people like us in the longer run in the form of more tax to be paid, so a move to organised retail is good for all concerned.
Two, The bigger dealers offer better deals on white goods and that is because of their scale.

Big bazaar, is bizarre, but whatever, it sells and sells like crazy! Big retailers will find the going tough. More on this sometime soon.