For the large food retail stores like the huge Wal-Mart
kinds, the challenge may remain in merchandising the humongous spreads of shelves
on the shop floor appropriately when they try to establish their presence in India.
The shelf space may be about 3 to 4 times more than the carpet area of the
floor, depending upon the space between shelves and the height of the fixtures.
True ‘big-boxers’ may find it difficult to come by enough listings to
merchandise all the shelves. Food categories need to be planned well in terms
of accurate considerations of space for every category, sub-category, brand and
SKU mapped in a planogram. When international hypermarkets establish their
business in India, the size and scale of each store may have to be shrunk to
fit the country’s needs and conditions. The average size of such hypermarkets
cannot be the same as we find in the USA or UK. Would they trade their DNA off
as hypermarkets? Or, would they continue to have the same large size and try to
meet the challenges successfully?
I call it the ‘big-boxer’ because the format may need to
fight with the complete merchandising and supply system to get the store to operate in
well-oiled precision without being stuck for want of replenishments on time.
These big-boxers as they establish their business in India may ask the valid question
whether there is a local service support available for products sourced from
other locations than the one the store is located in. India is a composition of
many states, which behave like different countries, but at the same time many
major cities of the country house a cosmopolitan mix of people from all states
and for regional products with strong local flavor may find it difficult to
gain distribution pan-India. For such regional products the network of
distributors may be scant and often may not have the required capabilities to
replenish stocks as when needed. Truly big hypermarkets when they open their
stores in various town locations may insist on merchandise supplies from the
company’s local distributors and not from manufacturers directly for many
products. So, ‘middlemen’ who are the distributors may still have a strong
presence in the supply chain in the retail supply chain. Would these
‘big-boxers’ want to enjoy the benefit of availing maximum margins and yet insist
on supplies to be made from local distributors, ignoring the incidence of high supply
chain expenses and squeezed margins?
Recently a premium mall management company conceived the idea
of opening a large ‘Outlet Mall’, where a mix of premium brand outlets, which
could be strategic clearance outlets functioning throughout the year. On the
strengths side, it was a good strategy to drive footfalls. If done well in a
premium brand mix, it could even stand out as a first-of-the-kind outlet mall
in India. The widest and deepest merchandise overruns exclusively retailed in
premium brand ‘outlets’ in the mall may be of great interest to customers. On
the flip side, it may be a challenge for brands to continuously merchandise
outlet stores given the limited merchandising seasons that typical Indian
retailers adopt. The risk one may foresee is that while premium brand partners
may not be adequately available in number, currently to partner, many may also
prefer to clear bargain merchandise from their own stores twice or even thrice
a year. In course of time, premium brand partners may wean in number if they
don’t find adequate quantum of merchandise to clear and mediocre brands may
find space in the mall if the mix is not controlled over a period of time. The
idea was instantly dropped as infeasible.
Would globally successful BIG retailers make a BIG BANG in
India? After all, BIG is just relative!
- Dr. Gibson G. Vedamani
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