New mantra for retail – social media, personalization...
The success of modern retail across the country is an established fact now. Modern or organized retail, which comprised just seven per cent of the overall retail market in 2011-12, is growing at a CAGR of over 20 per cent and has now attained a 10 per cent share of the total retail sector. It is expected to double in size in the next three years to Rs. 1,71,800 crore from the current Rs. 87,100 crore. With the New Year around the corner, many modern retail players are looking to turn over a new leaf and finally break into profitable territory.
The past few years have been challenging, even for those who chose to tread the waters carefully. But the tide could turn now and returns on investment, which until recently were like the proverbial willo’-wisp, might well start showing up. Supermarket chain D-mart, with its spectacular IPO listing and subsequent jaw-dropping valuation, has shone the light to profitability that other F&G retailers can well emulate.
It is expected that the next few months will see the retail sector close in on positive returns. Players like Spencer’s have expressed confidence about being closer to profitability than ever before and those sentiments are being shared by several other players as well. Many of them are rolling up their sleeves to get into expansion mode and expand further in massive ways to cater to the demands of the fast evolving consumers.
But though the future looks promising, it will not pay to act complacent. For one, success can never be taken for granted. The market scenario is changing fast and new-age consumers are shifting their priorities in unpredictable ways. More and more consumers are making their buying decisions by weighing in on factors like convenience of shopping, speed of delivery and, of course, the cost of purchase as well.
Talking of the shifts in the market and consumer behavior, it is pertinent to point out that the changes we see in the industry today had its genesis years ago. But it is only now that we are feeling the reverberations of the transition. The neighborhood shops that existed until a few years ago have gradually metamorphosed into small super value stores of today. This change has been felt prominently in the metros as well as in other smaller cities and towns (tier II and tier III cities).
However, due to the rapid progression and explosion of technology, the changes in the industry are now happening at lightning speed and their impact is being felt almost immediately. After all, we are living in an age of innovations and disruptions and satisfying the requirements of modern day consumers requires keeping the ear and eyes close to the pulse of consumers. Going ahead, we will witness several new changes that will further disrupt and transform the retail sector in India.
Already, it seems that the retail market in India is changing even faster than the people are able to understand it. Retailers need to be well on top of the changes and new trends disrupting the industry. Only then, they would be in a position to make intelligent and informed predictions and craft strategies based on the new trends with the potential to shake up the market. To keep themselves abreast of the new unforeseen changes, they should make the necessary course correction and adjustments by modifying their business strategies and introducing new formats. That will give them a fair chance of cashing in on the new trends and capturing a good share of the changing marketplace. There is no other option but for the retailer to change because the consumer is changing too, as well as the overall retail environment.
In my view, retailers are well aware of the challenges facing them and are equipping themselves to come out on top. They know that the sector has the potential and capacity to grow for many years to come and so they are trimming their sails to suit the new winds blowing through the industry. The growth in the years ahead will be fueled by the new generations, their rising earning capacities and their aspirations to spend and enjoy life instead of focusing on savings for tomorrow. These consumers have the confidence in their own future, in the opportunities available in the country and in their earning capabilities. They will not be deterred from spending freely and fearlessly but they will also continue making bold new demands of our retail eco-system. Retailers, in trend with this new sensibility, will live to grow, multiply, and thrive.
The author, Rakesh Gambhir, has over 30 years of experience in Food Retail, New concept/ brands, FMCG and Organised Retail. Currently, he heads Dubai Overseas Trade office in India and is on the Board of Skill Development – SME for Retail – besides also advising on international food retailing in India. He is reachable at email@example.com