Wednesday, July 19, 2006

Retail - the coming battle 1

The war for retailing muscle in India is hotting up. While preventing the biggies from abroad to enter, this is seen as a time to create/consolidate their own standings by the new/existing entrants, before the biggies finally make their entry.

I believe, retailing will be the next big thing in India - if we go by Reliances usual strategy of scale - though I think a one size fits all model wont work. Reliances refinery, telecom and perhaps in retail will be a case study in the years to come, but for now, I see interesting challenges for new entrants in the retail space in India.

Today, the retail space in India is fractious in the size and shape of shops. There are the neighbourhood kirana stores which are as much about convenience as much as they are about leakages in the tax system. There are also neighbourhood kirana stores masquerading as supermarket stores - basically self service stores- that use "in house branding" to protect their margins. Then there are the slightly older supermarket stores like Foodworld. Newer entrants like Big Bazaar have successfully penetrated the existing market, even with their limited stores - indicating that the market is ready for big ticket retail. But even as Reliance makes its plans, there are several smaller players like Subhiksha - who are adopting a different strategy and which is why this space will be quite interesting for the next few years during which a shake-out is imminent.

Also in this space is ITC with its rural malls and many others with their micro distribution models. Each of these above models have their own advantages and the newer entrants will have to fight each of these battles at their levels. Let the games begin...

2 comments:

Stephen Zavestoski said...

I love your blog, it's one of the few in the Indian blogosphere that deals consistently with issues like globalization in a way that considers what it means for everyday life in India.

I think you're right about "interesting challenges for new entrants in the retail space in India." I blogged about the HyperCity retail model as if it would be the only future retail model in India. But your examples in the "David v/s Goliath - retail" post illustrate how Indians are savvy and will not be duped by the allure of massive floorspace, extensive selection, and bright lights.

I look forward to catching up on many of your past entries and keeping up with the new ones!

Neelakantan said...

Thanks, hope you find this blog informative and useful...