Retail Review 2011

The year 2011 almost opened with a turnaround of Vishal Megamart, the retailer who bled big time and went into losses. According to media reports TPG Capital (formerly Texas Pacific Group) and Shriram Group from South India invested around Rs. 200 crores to acquire the wholesale, franchise undertaking and the retail business of the company. The process of acquisition took a good three months’ time and in March 2011 the deal was concluded. Since November 2009, the debt restructuring programmme of Vishal Megamart began under a Corporate Debt Restructuring (CDR) process led by the State Bank of India on behalf of a host of lenders. TPG wholesale by virtue of the acquisition obtained the mandate to operate the back-end sourcing, logistics and franchise operations while Airplaza Retail could operate the retail shops alongside the other franchisee partners currently operating Vishal-branded stores. While many observers in the industry expected a similar CDR to happen with Subhiksha, no progress was seen in 2011 even though the process started much earlier.

Online retailing boomed in 2011, with a whopping increase in sales and transactions. The latest ComScore data estimates that nearly 60 per cent of online users in India visited a retail site in November 2011. The number of online shoppers was seen increasing 18 per cent as compared to the past year. ComScore released a report which says that the visitation of customers to the top retail and coupon sites in India (based on data from its ComScore Media Metrix service) increased the e-commerce craze manifold. An estimated 16.5 per cent of the Indian online population visited deal sites such as Snapdeal.com and Mydala.com in 2011. Many sites like homeshop18.com, fashionandyou.com, flipcart.com, redbus,com, etc. have met with tremendous success in 2011 and the year 2011 has ushered in the next e-commerce revolution in India and e-commerce may be the way to go in future.

The year 2011 also saw the untimely demise of two retail doyens of India Mr. Raghu Pillai and Mr. Ved Prakash Arya. Mr. Pillai made a remarkable achievement of establishing Foodworld and Spencer’s Retail in India. A founding member of the Governing Board of Retailers Association of India (RAI), he spared no efforts to establish modern retailing in India. Mr. Ved Prakash Arya too was a founding member of the Governing Board of Retailers’ Association of India and he established the Globus chain of fashion stores in India. He was also the first non-family member to gain a berth on the Board of Pantaloon Retail India Limited. He made a huge difference to the establishment of modern retailing in India by offering his professional service to the industry. He was also a veritable force to reckon with when it came to getting things done for establishing best practices for modern retailing in India.

TRRAIN (Trust for Retailers and Retail Associates of India), a non-government organization founded by Mr. B.S. Nagesh, Vice Chairman of Shoppers’ Stop declared December 12^th as the Retail Employees Day (RED) and the organization urged every retailing company to thank its front-end employees and reward them as well, on that day recognizing their efforts. The Retail Employees Day in India got established on 12^th December 2011 with universal celebrations happening across the country!

The close of the year 2011 came about with the Government of India proposing to open up Foreign Direct Investment (FDI) in multi-brand retailing in India and the opposition trying to block the passing of the bill in the cabinet. However as we all are aware the policy is on the on the anvil and one can expect the opening of FDI to the extent of 100% in single-brand retailing and a partial opening of FDI in multi-brand retailing soon.

However, the year 2011 has been one filled with a great deal of activities that could enable the growth of modern retailing in India!

- Dr. Gibson G. Vedamani