The first session at the Retail Leadership Summit organised by the Retailers Association of India was on Connected Retail: The New World Order. Moderated by Mr. B.S. Nagesh, Chairman-RAI; Founder – TRRAIN, the session gave an stimulating and interesting start to the day…
The distinguished panellists discussing on the subject were:
Kishore Biyani, Group CEO, Future Group
Mohit Pande, Country Head – South East Asia and India, Google for Work
Rakesh Jhunjhunwala, ACE Equity Investor
Ramanathan Hariharan, Group Director & Board Member, Landmark Group
Sachin Bansal, Co-Founder & Executive Chairman, Flipkart
As Nagesh welcomed the panellists, the session commenced with Mohit Pande stating categorically that Google had always believed in investing in things that people think is crazy and that is the main intent of their foray into promoting e-commerce at a time when it seemed impossible.
Ace equity investor Rakesh Jhunjhunwala was very vocal in his approach while stating that success is the ability to accept change. However, he cautioned that we should not get overwhelmed. According to him, too much is being made out of the disruptions by technology. To his mind, the real disruption has come in only one area and that is communication.
On being asked whether online has created a huge impact in this country and about the whole story about online, Sachin Bansal, Co-founder & Executive Chairman, Flipkart said that everything that we do on a regular basis is changing due to internet, from how you take a taxi to how you book a hotel room and now even how you shop. All these has made normal humans to super humans due to the access to internet. He felt that people are finding value in internet and as long as they find value, they will adopt it.
However, Sachin cautioned that today we have just 8-10% share of the total retail as e-commerce and it needs to grow at 60%-70% y-o-y. Unfortunately, infrastructure in India yet is not matured enough to support e-commerce and hence massive investment is required.
Kishore Biyani, Group CEO, Future Group, was quizzed that when he had started off with Isse sasta kahi nahi, when he launched the large format brick and mortar store. He was quite categorical in his opinion that though times are changing with customers wanting to shop 24X7 and even though technology reduces time, space and improves connectivity, it’s still a long way for e-retailers to catch up with physical retailers since brick and mortar works on 14% cost of doing business while e-retailers are doing it at 50-60%. He expressed concern that if this continues, it may not be too long before most e-retailers will be forced to close shop.
Ramnathan Hariharan, Group Director & Board Member, Landmark Group, said that he definitely sees change coming with consumers becoming tech savvy. It is therefore important that we realise and accept the change. According to him, the earlier kirana stores were more connected with consumers and then came large format stores. Technology has provided us the platform where large format retailers can also connect personally with the customer. This is where technology can help.
Ace equity investor Rakesh Jhunjhunwala was vocal in expressing his doubts on the feasibility of the business models of online retail. He believes that successful companies are built by cash flows and profits and not by investor’s money. History tells us that there can be first round or second round of investor’s money but there will never be a third round.
Sachin Bansal was asked how he sees the offline and online merging. He gave the example of Myntra where he said that the cost of operating is already becoming profitable if the cost of technology is removed, and he sees signs of such profits in all e-commerce operations. He feels that when sales go up by 10x, technology cost and investment cost is certainly not going to increase 10x and that is where the turnaround will happen. He felt that lot of influence from offline will come to online. He remarked that Flipkart has seen Chinese and American brands tapping the Indian market through online channels without investment in India.
The discussion took the turn of a stimulating debate on the viability of operating models and confluence of online and offline.
Kishore Biyani accepted that one cannot stop an idea whose time has come from booming and hence offline players have to learn from online players.
While the esteemed panellists had their unique points of view on operating models and on offline and online, all agreed with Mohit Pande of Google for Work when he said that one cannot take away the impact of technology on retail and on people’s lives.
Post by: Sanjay Thampy, http://sanjaythampy.blogspot.in