Indian Retail: Changing Trends in 2010

Nice Article from Times
Indian Retail in 2010 faces a simple challenge, how to grow, and do so at a fast pace. Kamlesh Pandya speaks to a cross section of retail personalities


Given the challenging economic scenario in the previous year, Indian Retail has swung across extremes. “We have seen the retail graph hit the highs and the lows, owing to the volatile economic conditions,” says Dharmesh Jain, CMD, Nirmal Lifestyle.
“The beginning of 2009 witnessed a few retailers expanding their formats and geographic reach, consolidating their businesses and operating through wafer thin margins to sustain themselves. But, 2010 is a new beginning and I expect it will see a different perspective,” he adds.
Retailers cannot influence macro economic fundamentals, but they can influence spend behaviour at a given retail chain and/ or store, says Susil Dungarwal of advisory firm Beyond Square Feet. “In the present sort of economic climate, marketing spends are reduced and therefore it is critical that funds allocated to marketing are spent optimally.”
The Golden Adage in Retail is that 80 per cent of profits are from 20 per cent of the customers, says Dungarwal. Therefore, it is critical to focus on the core customer base of the business. If one lakh is the marketing budget, the same needs to be focused on a customer base of a lakh, then the marketing efficacy is Re. 1 per customer. Alternatively, if the core customer base is just 20,000 then the marketing efficacy is Rs. 5 per customer. So, strategically, it is important to identify the core customer base of the business. This helps reduce customer acquisition as well as customer retention costs and at the same time, makes the spending more efficient. This is the entire basis of precision marketing, the ‘new age benefactor’ for retail marketers,” he adds.
The retail setup in India is very different from what is available globally. The mindset of an Indian consumer is very different from that of Singapore or Dubai and the retail infrastructure needs to develop itself in tune with local needs and sensibilities, says Alok Dubey - VP & Brand Head, Arvind Brands. “It is imperative to provide that choice of spectrum to the consumer instead of just air-conditioned large spaces with window of the world which is a likely zone for an occasional flirting for the consumer but not necessarily a comfortable shopping space of their own. “Businesses need to move away from ‘lowest price leader’, mass marketing and mass acquisition tactics and instead focus on profitable and sustainable 77 growth, says Kumar Rajagopalan, CEO, Retailers Association of India. “Retail businesses need to focus nurturing a core customer base that is profitable to the company. Successful retailers generate majority of their profits from this core base,” he adds. In 2010, he expects retail businesses to focus on continuous innovation in terms of store formats, marketing tactics to product offerings. It is critical that there is a strong focus in this area as the Indian market is still an emerging one,” he adds. "Mr. B K Soni of Ecoreco says a retail approach works best, even when it comes to the ewaste recycling business. The retail approach provides an organised manner of reaching out to our target audience, and it has been a success," he points out. "For India, retail is a 'natural' success story," he adds.
There are many examples of retailers across the world creating exceptional retail brands by adopting practices that create exceptional retail experience, says Kumar Rajagopalan. “Back home, the traditional retailers have always adopted techniques like customer recognition, home delivery and credits to create customer experience. In 2010, India’s modern retailers should take retailing to the next level by adopting either a customer experience strategy or a clear price strategy.”