A couple of days ago, a friend sent an sms asking the above question. Quite relevant, in the current “india shining, retail rocking” scenario.This is the oft repeated question, used by the keenly aware junta – jurnos, politicos, mischief makers, gyan givers to name a few.
But the moment they are asked to substantiate, with facts, figures, examples, you see vague answers, some references & moving over to another bit of happening news!
To put the record straight & in the right perspective, YES the new corporatisation shall affect the next door grocery shop, other contractors PROVIDED they do not accept change & move up the value chain.
Some examples that negate the effect of large format retailers; manufacturers & may probably have helped the small timers to scale up their operations or make more profits!!!
15 – 18 years ago
Washing machines used to a luxury and used in metros particularly except the ones in interiors of Punjab or Maharashtra to churn butter milk!
Today they cost less than one EMI of a Maruti & are used for 3-4 years, then exchanged. Ever wondered where these exchanged ones go?
Travelling the districts, towns, villages they are replacing the luxury thoughts in India’s vast hinterland.
AND the same goes for your TV; ovens; AC; Gas stove, Mobile Phones…… you name it.
And who are the distributors? Yes the same retailers who decided to expand/add on a business to their existing one.
So the started providing Accessibility
7-9 years ago
Rental AC’s were the norm, Assembled vs Branded the difference was 50 – 100%. When the difference began shrinking, some of the larger & brighter next door ones negotiated with the manufacturers & started supplying the branded product. They also became fitting & maintenance companies for the larger brands.
Similarly Mobile Phones, Refrigeration& so on……
Thereby, providing adjacency to the manufacturer efforts.
Coming to the large retailers who are the threat?
Maybe 20 years down the road, it may so look like it but today????
How many of them are there?
Which states, cities, districts, towns, and villages have they covered, intend covering & will cover in the next 10 years?
How many of them have the supply chain & logistics in place? E.G. A large format selling vegetables would end up running out of stock far quicker than the next door retailer.
How many of them have understood the complete catchments & applied their learning’s?
Would their size enable them to move up the value chain or do reverse integration as quickly as their next door retailers?
YES, they are helping in controlling, driving prices down, introducing new concepts that get quickly copied.
But their bottom line only improve by using private labels, whereas the next door retailer is extremely happy making 2% more from the brands, who have to keep them happy still.
The questions being raised is more relevant to the western countries, which had less resources and hence made more mistakes that were documented.
And the biggest leveler is 11 pm in the night, when all your Large format stores are closed & you call next door & say ‘Abe Ganpat, Soda la’
My personal opinion is that India shall be better at evaluating the pro & con; shorten the learning curve & co exists in a harmonious relationship, because that is what we do best!