Stellar Power breakfast: - Food for thought, nourishment for ideas.
Date: 4th September 2010, Saturday
Venue: The Grand, Vasant Kunj, New Delhi India
The retail industry has grown explosively in the last ten years in India. We at Stellar have been an integral part of the growth of our clients, by helping them develop their people strategies, address their people challenges and engaging with them in every aspect of their business.
We believe the Stellar Power Breakfast is a forum where we can discuss these subjects and make a beginning to address them.
Looking ahead at the next three years, what are the KEY OPPORTUNITIES for organized retail?
The explosive growth of new store locations in Tier 1 towns, increasing share of wallet of our consumers and increasing Average Bill Value, improving efficiencies by strengthening supply chain and sourcing, and delivering consumer delight and therefore loyalty by upgrading people skills and processes
What are the KEY CHALLENGES?
Real estate quality and pricing, weak vendor base and quality of outsourced products, inefficient supply chain and logistics and inadequacy of quality people for key roles.
What are the areas YOU think the industry players can COLLABORATE on?
We at Stellar believe there are some significant areas in which key players can work together for mutual and common gain.
Shailja Dutt, Managing Director Stellar Search & the host for the morning started the discussion by addressing the speakers and audience with a welcome note speech. She also supported the agenda for the meet, which is “collaboration among the retailers, real estate for a more unified effort towards market development in the retail sector”
Hemchandra Javeri, a retail doyer ex-president Madura garments & CEO Nike India and an advisor to our board at stellar introduced the panelist: -
Reliance Lifestyle: - Bijou Kurien, President and Chief Executive Lifestyle
Spar: - Viney Singh, Managing Director
Reebok: - Subhinder Singh Prem, Managing Director
Star Centers: - Pranay Sinha, Managing Director
He further went on to introduce certain prominent personalities in the audience like Pramod Arora, Group President and CEO PVR Group, Hemant Sagar, from Leoconant Hemant, Manjula Tiwari, COO Espirit, Pankaj Rejhen, Managing Director from Jones Lang LaSalle, Atul Chand, Managing Director ITC Lifestyle, Santosh Unni, Managing Director from Costa’s, Prabhakar A Singh, Senior Vice President Human Resources Emaar MGF, Anurag Rajpal, Vice President- Apparel Brands Spencers Retail, V Nagaraj, Vice President Human Resource from Arvind Brands.
“Where are the growth opportunities in the medium term?” was the opening question asked by Ms Shailja Dutt, moderator and host.
A life style perspective
Bijou Kurien President and Chief Executive-Lifestyle said growth is largely in a impulse driven category, where spending is related to “consumer driven confidence rather than the amount of money in the wallet”.
He also explained that the growth is further fuelled by the fast paced evolution of consumer attitudes and behaviors. The evolution is particularly seen in the attitudes of the younger generations who are more aware of the choices they can exercise. In short the classroom ideas of retailing are being replaced by ground realities of market demand and supply.
He went on to speak about annihilation of the “Classical Mantra” for a number of stores in a city. He said cannibalization among branded stores being opened near each other is normally considered to be the classical mantra for store expansion, but now this idea is getting demolished. He says one has to understand the idea of buying potential and where it exists. In lifestyle spaces he says the more the brands the more the spaces and stores the more likely the consumer will spend from his pocket.
“Where is the innovation in store formats?” was the next question asked by Shailja Dutt
Organized Vs Unorganized
Viney Singh, Managing Director Spar, said that the development of the organized retail started with the small format stores like convenience stores. These stores had no evolved concept of differentiation which might attract consumers. The major shift came with the advent of large format store like “Hypermarkets” which were associated with a certain “value” in the minds of the consumers. They had another factor associated with them, one that of “convenience” a one stop shop experience.
These factors have helped the organized sector to have better grip on the minds of the consumers as opposed to the unorganized sector where the experience has not changed.
He went on to say that the large format stores would be the driving force behind the sector growth as the economies of scale tilt in its favor. He went on to say that a small format store would take many years to even break-even as it is not able to satisfy a diverse spectrum of consumers coupled with a huge initial investment.
“Telecom Style Leverage” a missed opportunity in apparel retail? Was the next question she asked
Subhinder Singh Prem, Managing Director Reebok, spoke that traditionally in India the focus is more on the “manufacturing mentality “rather than the branding of the product. He also debunked the zoning myth by which we tend to categorize the city. He felt a better understanding of the various consumer segments within a city i.e. Premium, Middle and lower segment may prove to be useful rather than categorizing a whole city in particular type
A better understanding of women’s wear in retail has evolved in the association of women with shopping. Manjula Tiwari, COO Esprit explained the powerful role of the woman consumer in retail, especially apparel and footwear retail. However she strongly stressed on creating the right customer experience & engagement on the shop floor. She further went on to add that the right store manager can create a 40-50% increase in the store profitability. She strongly endorses female store managers.
Atul Chand, Managing Director Wills Lifestyle, says that the retailer have to evolve faster than the consumer to ensure better understanding of the consumers needs. This he says could mean collaboration like Zoning of stores in a mall. Development of vendors is another key issue faced in the industry.
Shailja Posed her next question to the real estate industry
“Infrastructure does it support the development of accelerated retail expansion?”
Pranay Sinha, Managing Director Star Centers, feels that there is not adequate research put into the development of retail infrastructure as a result there are many malls that are opening and not making money. It is a result of the poor planning in the mall development industry. Content plays an important role in good infrastructure.
He felt there will be increased predictability of project success and failure as there is more awareness that is developing with retailers regarding the infrastructure.
Customer Understanding: - To develop better consumer experience
A key issue discussed was “The Demanding and Discerning Value driven Indian Customer” Shailja felt customer experience initiatives taken by companies in India are not adequate as compared to the developed retail markets. The participants went on to discuss how to create a paradigm shift in the consumer experience in India. Pankaj Renjhen added the real estate perspective and went on to say that many retailers don’t know what their audience wants.
Conclusion
Shailja, stressed the role of the people as the greatest asset and yet the most difficult piece of the retail puzzle. She felt that the industry needs to collaborate to bring greater recognition and a preferred employer status to this industry.
The morning concluded on the note that the industry will create strong collaborative standards for entry level hires. The immediate need of the industry is a world class infrastructure which would accelerate the growth of the retail sector. Collaborating on that front was the need of the hour.