The retail ride hit a pothole around 2008. With the rush among the retailers to rapidly expand into newer markets to gain first mover advantage, both real estate and human resource costs were driven up. The same wasn’t matched by higher footfalls. To make matter worse, the global financial storm affected liquidity in the market making investors and lenders wary of the existing business models.
As a result, the likes of Subhiksha and Vishal Retail went down and others were forced to rethink their strategies. The organised retail sector saw 10% decline in sales in 2008. There were stores closure, changes in formats and organisations made leaner. Vendors, on the other hand, looked at newer ways to make their brands more relevant to consumers and retailers.
According to My View: The time to ‘discount’ growth trends in retail seem to have ended, with ‘heavy footfalls’ being the recurring theme across the past couple of years. But reports of higher volume sales across different regions, Indian retail sector appeared to have achieved success by the end of year 2010.
My Inner Feeling Says: Indian Retail’s long-term growth outlook will remain ‘solid’, due to positive economic factors which include strong GDP growth, higher disposable incomes, an increase in the proportion of higher income households, which represents a positive demographic shift, as also greater acceptability of organised retail in smaller cities and towns as well.
Growth opportunities are expected to be witnessed in Rural Retailing, E-Retailing and Retail Franchising by the end of the 2010. While opportunities exist amongst these options, implementing these requires standardization of processes as well as identification of early entrepreneurs. Further, a strong legal framework is called for to protect the process and concept.
