Flattening of the Retail Market


[Note 1: Suck it, I don't mean flattening as Thomas Friedman meant.. I mean Flattening as in 'Flat Anna' as in 'Thassal Gone' as in 'Slept Of' or in extreme cases .. 'Died']

[Note 2: I'm sure many would disagree with this post :) ]

One thing I cannot fully understand is why 'Retail' is becoming such buzz word in India. I feel it'll only undergo one or two boom and bust cycles. Why? .. The Internet...

Internet penetration in India is on the rise. Yes, in the villages too largely thanks to mobile phones, open source software and companies such as FINO and ITC's E-Choupal which are largely bringing the informal and 'undefined' market into the organized sector. Conventional models of internet connectivity and growth based on developed countries won't prove efficient here as the growth in these areas is largely due to the stupendous growth of new technology.

Even in the urban areas not many of us would want to visit the groceries or the Kirana stores for our daily needs when one can simply place an order from work using an online portal and the goods are being delivered right to your doorstep. This might even be possible in the villages due to mobile phone penetration where companies can deliver goods to villages on a bi-weekly basis with almost zero inventory cost thanks to pre orders made by the village dwellers.

Of course it will be a while before companies can achieve economies of scale and this practice becomes widespread, but personally these options are going to become available way before Wall - Mart conquers every street corner. But then again there will always be shops who provide further value to the customer by enhancing the shopping 'experience' making shopping a leisure activity rather than a necessity. Probably a trend that Malls should pay more attention to before they start construction!

So, lets consider that this does happen. Internet enabled services does destroy the retail sector (even the unorganized ones!) . The amount of prime real estate that gets freed up due to this would be major change everywhere!! With shops closing all that area can be put to more productive use.

Ah, well .. but I guess I am but idealizing. I'm sure there will always be unions, communists and probably even local goondas who might stop all this from happening....

Image Courtsey www.indiaretailbiz.com

6 comments:

  1. Think of all the farm land the many Wall marts will convert into giant Re-Tail OUT-Lets with corridors wider than our roads...YES.. they WILL be stopped by the forces of goonda,unions , and communism... (Unless they are all paid off)

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  2. I am not sure why u thrashed retail. u wud wanna call offline retail being dead. amazon calls itself online retail and it almost doubled profits during recession. So the use of word retail has to be used with caution cus Internet provieded service cud be called online retail as in the case of amazon and similar kinds.

    I think you have not given thought over online vs offline fully. The perception throught "touch n feel", prospects of bargain, being convinced of guarantee of qlty are unavailable in online. It is also not possible for online retailers to go shop to shop inquiring prices, to have strategic pricing. but shops can very well access those few online retailers whose search results r the most popular and fix their price accordingly. So you see, it has pros and cons. I dont really think it ll die off.

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  3. @smiling assassin: Thank you for your comment!

    I am very sorry in not making it explicitly clear that I am talking about "offline retail". I was not aware that the terminologies that Amazon adopts are what the whole world has to follow. I deeply regret my lack of knowledge. I deeply regret for not realizing the fact that readers of the post may not make the distinction with respect to the entities I am talking about.

    It is very true that large companies cannot hire market research firms to visit shops and get an idea of the prevailing prices. Also, I did not realize that they are so ignorant to the fact that most small time retailers sell their goods at the maximum retail price and when someone like Subhiksha comes along to sell goods at below MRP they will be threatened and forced to increase prices. Furthermore due to the large values of goods that an 'online' retailer will sell it is only obvious that it will (somehow) not be the market leader and the (low) prices that it sets its goods will definitely not determine the market rate thereby not forcing the small time retailer to quit, or sell smuggled goods.

    Oh, of course small time retailers are the future! You are absolutely correct..

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  4. How come i din think of ne of the things you guys commented... o.O

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  5. Lol Ambi. It it were some electronics thingy then we wud've got suck it.. also Patnaik sir's classes helped a bit :D

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  6. I dint like the tone of sarcasm in ur remarks :x or were u being truthful?

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