Retailing in 2015: Looking at the Rear View Mirror!

The year 2015 is passing by as it leaves behind some mixed retailing memories.

For modern retailing in India FDI policy hurdles have been looming large as a spectre that seems to haunt the sector. The year’s policy issues in retailing peaked when two different writ petitions were filed in the Delhi High Court against ecommerce companies – one by the footwear retailers association challenging that FDI norms are violated and the other by Retailers’ Association of India on behalf of modern retailers seeking FDI policy parity with ecommerce companies. The Court has ordered the Enforcement Directorate to probe 21 ecommerce companies for any violation. Ecommerce companies argue that they carry out their business only on a B2B model as they facilitate the business between the seller and the customer! The matter is still under judicial consideration. In truth, they sell the products and services to customers directly, though listed sellers raise each sales invoice but they collect the proceeds on their sellers’ behalf!

Small and medium retailers across the country especially in towns and villages are flourishing as a principal result of good availability of quality Fast Moving Consumer Goods (FMCG) and many new product launches in the right value price-points favoring the mass consumers, still augmenting internal consumption. Maggi had its testing time but it is currently coming back to life like a phoenix in the marketplace. Brick and mortar retail growth is stunted and the pace is reportedly at around 6%, which too is contributed to, perhaps only by inorganic growth. Above all those domestic big retailers, who depend only on FDI to benefit, are still waiting in the wings for divestiture (though with their mounting troubles of gross merchandise mismanagement and product value run down by way of going on huge discount sales).

Online and multi-channel retailing have been the focus of brick and mortar retailers in the year that is passing by, while the online retailers were seen to be enthusiastic about opening physical stores. Industry experts have opined that this validates the need for the co-existence of one another! The ecommerce companies have placed trust on brick and mortar retailing as they have opened their physical pop-up retail stores in 2015.

Online retailers had a ‘treasuring’ as well as a testing time in 2015. Industry reports said that the Indian ecommerce space may be in for a shake up in 2015 because they feared a fall consequent to the poor performance of online retailers in the last two fiscals. Key players like Flipkart and Snapdeal continued to acquire funding with increased valuations during the year. Both companies have banked on their Gross Merchandise Value (the worth of goods traded through the portal), which is currently considered to be a key yardstick for performance for online retailers as these companies have been posting huge financial losses. GMV for the online retailers has been reported to be growing at a very fast pace. Strategic initiatives like the Big Billion Day Sales of Flipkart, Weekend Super Sales of Snapdeal have been undertaken to increase sales by creating a huge hype across the nation that reportedly saw millions of app downloads! Online retailers line Myntra killed their websites and went with their app only in 2015, which is seen as a daring move to confidently depend on the migration of customers to mobile shopping. Online retailers like Firstcry, Fabfurnish, Lenskart, etc. opened up their offline presence as well. Amazon opened its first offline bookstore in Seattle in the USA in 2015 while many bookstore branches closed their doors or de-risked their space deployment in India during the same period.

The Industry looks forward to the growth of the online sales customers who would again facilitate the tremendous increase of the business. The brick and mortar retailers would have to count on their efficiency while 'piggybacking' on successful malls in cities and high streets in towns. The towns may be their best bet in future if at all they try to match the growth pace of their online counterparts. 

Fortune yet lies in the bottom of the pyramid for organized retailing in India!

Happy Retailing Year 2016!!

-       Dr. Gibson Vedamani

                          gibsonv@yahoo.com

The Faces That Launched A Thousand Ships...

Everyday is a special day. Every day of the year is almost celebrated nowadays - to commemorate an event or to remember someone. Usually celebrations are done to perpetuate the remembrance of the day at least once a year for things gone by! We celebrate birthdays and memorial days. Perhaps it all began in the Biblical Days when people had to be helped to remember important days in History so that they could continuously cling to God and religious disciplines. Later, the focus on the celebrations and remembrances of days might have moved towards human beings and mundane events!

Our ancestors perhaps never had to celebrate Father’s Day or Mother’s Day to remember their parents. They were so much an integral part of their lives, though they may not have been in touch with them everyday. I have always wondered why the Son’s and Daughter’s Day is not celebrated with as much pomp and glory as the Father’s Day and Mother’s Day are celebrated. There is no separate Son’s Day yet, though! Perhaps consequent to a yet strong or binding relationship that is nurtured by parents that they do not have to celebrate these days to remember children! May be it is the children who have lost the strength of the bond (often leaving parents to feel like a weaned child!), that they have to celebrate a Father’s Day or a Mother’s Day to remember them! Some argue that the Father’s Day and Mother’s Day would suffice for the parents too to remember their children. Hence there is no need for separate days to be found to commemorate in reciprocation! Critiques reveal that these days have been called into existence for commercial reasons – reasons to sell greeting cards, gifts and bouquets!

Let me come to the brass tacks of business. B. S. Nagesh, the founding CEO of Shoppers’ Stop who is known in the Indian retailing circles as the Pioneering Modern Retail Professional conceptualized a Day to recognize and reward the achievements of the front-end sales and service personnel. He calls it the Retail Employees Day with an acronym RED! He gives an opportunity to the sales and service people every year to tell of their great deeds – where they have gone the extra mile to satisfy customers! Some argue that people in the service industry have to serve by going the extra mile all the time as hygiene need. They quiz the very need to talk about the demands of the nature of the job and fulfillment of the job’s responsibilities! Others say that it is only just and fair to recognize and reward the best. Yet one may say that millions of floor personnel are serving customers on the shop floors day in and day out in the retailing continent of India and it may help to remind every one of them to excel in delighting customers. And reward the best among them!

India’s Father of Brick and Mortar Retailing, Kishore Biyani conceptualized many significant days to celebrate on his shop floors. The most significant of them are The National Festival Holiday Day Sale (that eventually got extended as The National Festival Holiday Week!) and The Big Billion Day Sales. He has marked the days to shake his customers out of the comfort zones of their homes on National Festival Holidays and make them go to his stores in loads every year!

It’s now the turn of the billion dollar online retailers. They sell at less prices. Customers can enjoy additional value. That’s super value! And here comes one more day – The Super Value Day!

We are sure to have many genres of retailers who would be competing to establish their own ‘days’. On the other hand, we would have our retail floor personnel vying with each other for achieving excellence.

Now for the doyens of Indian retailing and for all that they have done, the retailing posterity may remember them and ask the Shakespearean way, “Were these the faces that launched a thousand ships and burnt the topless towers of Ilium?”

- Dr. Gibson G. Vedamani

Level Playing Fields in Indian Retailing

Equality debates have been heating up in India. Recently the press reported that an actress demanded wage equality between actresses and actors. The word ‘actor’ is now commonly applied to both genders and it’s now the ‘female actor’ and the ‘male actor’! So, I have to revise my sentence to negate the semantic distinction and mention that a female actor demanded wage equality between ‘female actors’ and ‘male actors’! Equality has been achieved in ‘word’ but it appears that in terms of wages in the tinsel world it is not yet a reality!

The Times of India carried an advertisement as part of its own Corporate Social Responsibility yesterday, claiming vociferous attention to gender equality that is denied under some laws that treat women as unequal second-class citizens. The advertisement copy read thus: “Identity in Crisis – Acknowledge the Individual in Every Woman” featuring Chanda Kochhar, ICICI Bank’s Managing Director. The advertisement said, ”The Hindu Succession Act says that in the absence of a spouse and childless, the property of a woman who dies without a will goes to the husband’s heirs. Why? Why not to her siblings or heirs?” The equality demand raised by TOI is only just and fair.

It’s the turn of retailers to look at equality rights now.  Just as the fourth estate has been highlighting equality demands, the modern retailers of India have lost no time in staking their claims. (The neo-modern ones are the online retailers who are pushing the brick and mortar moderns into the past, fast!). The big brick and mortar retailers have moved the Delhi High Court seeking justice for ‘level playing’ field with online retailers. High level discussions are on for allowing 100% Foreign Direct Investment in online B2C retailing in India and in brick and mortar it’s allowed only partially with conditions on investments. India is a land of small retailers with a statistical count of over 14 million tiny retailers. Consequent to that singular attempt to have level playing field with them, did the Government of India not allow FDI fully in the modern retail trade.

Arguments are centering on numbers. On the one hand pro-online retailers argue that the number of marketplace vendors that online retailers have been able to create is humungous with the large ecommerce organizations sourcing from as many as over three lakh suppliers who are the Micro Small & Medium Enterprises (MSME) in India. They say on the other hand that brick and mortar retailers have been able to develop only a few hundreds of vendors from within the country! And online retailers have been able to attract investors with billions of dollars while the brick and mortar retailers have not been able to garner even a tenth! Brick and mortar retailers cry foul saying that if FDI were allowed 100%, investments would pour in larger measures. The next question goes towards the concern of the Government of India for small retailers and what would happen to them if FDI were allowed 100% in brick and mortar retailing.

Level playing fields in retailing seem to go fathomless. Online retailers have been rocking the marketplaces and benefitting Indian consumers. The claim of big retailers may work more the other way than getting FDI norms in their favour. It may attract the attention of policy makers to lay conditions (like the ‘must source’ clause) for e-commerce organizations to source and sell majority of merchandise made in India (which if implemented may only do good for our country!) But, would that be just and fair to all including the millions of new online consumers? Or open FDI 100% in modern retailing considering retailing as one entity, that is, online retailers and brick and mortars combined, without any conditions? Would that be just and fair to the millions of small retailers who depend on the daily business from their petty shops for a livelihood? The Modi Government must have the answers!

                                                                                                     - Dr. Gibson G. Vedamani