An interesting opinion by Arvind. However there are many aspects that bear some thoughts. When the going was good – India shining; Retail Rocking….everyone jumped on the bandwagon – consultants offering India on a platter, companies that had no clue about consumers (having spent a decade or more in the B2B space)started announcing 10/100/1000 stores in 3 years or maybe less; the search for retailers began (in a country where organized retail did not exist beyond the past 5-7 years), so bring in expats (expect them to learn India & deliver in a year) so on and forth.
This actually spawned a industry by itself:
Consulting on entry strategy/liaison/funding, property etc.
Search for people
Furnishing, Merchandising you name it.
We had experts all of a sudden with a bidding war being waged. A lot many employees took advantage of this shifting jobs every couple of months.
In all this euphoria everyone forgot/pretended to/avoided the fact & number game. So the 1st year losses accumulated & with a bit of creativity (maybe accounting/inventory management etc) it carried on to the next year & maybe another year; till the bubble burst from below.
Except for the funding companies; nobody was really in the finance business, so when bottom up everyone started asking for their money, the pyramid started collapsing. And there poor subhiksha was caught!
Whilst trying to understand their plight, the fact also remains that there was the board of directors who obviously met if not monthly, once a quarter; their auditors, bankers, vendors who all knew about this collapse – structured or otherwise. Here probably, everyone thought ‘why spoil a good thing’ someone is bound to take care of it….unfortunately that someone was no one.
And there endeth the first lesson for organized retailers!
I am not an analyst, industry leader or similar, however would like to ask…
How is this different from Satyam?
Even @ average of 5 people per store we are talking about 5000 minimum without a job, salary till may if they are lucky.
Take my word for it: There is going to be a Satyam in every industry to ensure CORRECTION for the rest of the players in that particular industry, which may not be bad at all in the long run.
However expecting people/companies to learn from this is a DREAM:)