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

Highlights of the event included the release of 6 reports on Retail – the largest single Knowledge compilation on Retail in India, ever.

Delivering the inaugural Chairman’s Address, B S Nagesh, Chairman RAI, Founder, TRRAIN said: “In every major retail market globally, Retail features in the top 10 richest companies. Retail drives value. Indian retailers have used the last three years to correct past mistakes and aggressive over-expansion of the previous decade. In the future, one of the key value drivers will be Corporate Governance. Well-governed retailers will command a premium. There is no space for a “dukaandari” mindset, when it comes to Governance”.

Well-governed retailers will command a premium. There is no space for a “dukaandari” mindset, when it comes to Governance.

– B S Nagesh, Chairman RAI, Founder, TRRAIN

The keynote address was delivered by Sanjiv Mehta, CEO & Managing Director, Hindustan Unilever Limited. “E-tailing is to retail, what the steam engine was to horse-manure in Victorian England – it’s revolutionary, not evolutionary”, he said, adding that “There is enough market play for all channels – Traditional kiraanas, Large kiraanas, Modern trade and E-tail – to grow. Each faces different challenges. The kiraanas need to become experiential, e-tail needs to fix supply chain and modern trade needs to find “local” relevance”.

Build for Value, not Valuation.
– Kishore Biyani, Founder & Group CEO, Future Group

The Keynote panel discussion was on the theme of “Decoding market evolution”.

Kishore Biyani said “Previously our addressable market was 30 crore Indians. In the last 10 years, another 15 crore new voters have come in. This segment is young, democratic in its thinking, yet wants to “fit in”. They will buy organic. They will also buy frozen for convenience. The frozen french fry at home costs Rs 10 – at McDonalds it costs Rs 30 – they see value in both formats”.

“Value for the customer of today is CONTEXTUAL. That’s the single biggest change in the last decade of growth”, he said adding that retailers must  “Build for Value, not Valuation”.

E-tailing is to retail, what the steam engine was to horse-manure in Victorian England – it’s revolutionary, not evolutionary.

– Sanjiv Mehta,
CEO & Managing Director, Hindustan Unilever Limited.

RLS saw the release of 7 Knowledge reports. Key insights are highlighted here – full details are available at http://rls.net.in/Knowledge_Zone.html

RAI – TCS: Retail Operations Benchmarking Excellence Survey (ROBES)

There has been an increased e-commerce adoption by consumers during 2013. Brick and Mortar retailers have begun to view multi-channel strategically, instead of considering their e-tailing counterparts as price predators.  This report benchmarks the multi-channel practices of 40 Retail brands against e-tailers.  Key insights which emerged:

• Brick and mortar retailers are looking at multi-channels as one of the top 5 priorities for 2014.
• Ecommerce channels (non-store channel ) of brick and mortar retailers are yielding higher growth, higher cash memo size, and lower returns.
• For example, on an average, brick and mortar retailers find that their online cash memo size is 12% higher than in-store.
• Online returns of Brick and mortar retailers are <3% – significantly lower than pure-play e-tailers.

For brick and mortar retailers, multi-channel is about “on-demand retailing” – about giving the consumer better access and deeper range. Unlike their ecommerce counterparts, it is not a ‘pricing’ game: most retailers have a uniform pricing policy across all channels.

RAI-KPMG: Emerging Consumer Segments in India

This report identifies new segments of consumers including – the urban time starved consumer, the rural ‘windfall’ consumer, the “Value conscious” customer etc.
Key insights:

• Leveraging technology is the key to reaching the consumer.
• Supply chain innovation is needed to provide ‘stripped down’ service models.
• Hybrid models – using a mix of online and offline are emerging.

RAI-AIMIA India Millennial loyalty survey

Millennials are defined as those between the age of 19 and 29, and are expected to be the generation that will force brands to change the way they build sustainable customer loyalty.

AIMIA loyalty survey profiles the buying habits of this segment of customers. Key insights:

• Today’s customers are more ‘social and vocal’: 60% of millenials use social media and 41% seek opinions of their network before buying.
• They are willing to share data, but need transparency on what that data would be used for.
• They are more willing to engage than their counterparts in other countries.
• They are interested in more than just cash rewards.
• They want loyalty programs to provide ‘faster’ rewards.

RAI –PWC: Total Retail:  A change is underway

This quantitative survey of 1000 Indian online consumers profiles buying habits.  Key insights:

• Online shopping is driven as much by “trust” as by “price”.
• Online is about convenience.
• The customer experience matters even in an online context.

RAI-GP2WW: Great Places to Work in Indian Retail

This ‘first of a kind’ report surveyed 50 retailers to answer the question “Which retailer is the best employer?”. The Great Places to work with uses a proprietary framework which includes employee surveys and interviews as well as representations from management.

Lifestyle International emerged as the top retailer in India, followed by Titan and Shoppers Stop.

RAI –JLL: Emerging trends in retail spaces

This report profiles cities which are emerging as retail destinations in Tier 2 India.

• Retail realty in India is driven by income growth, a demographic ‘dividend’ and the fact that available space is polarized as regards quality.
• Mumbai, Delhi and Bangalore continue to mature.
• Emerging markets include Pune, Chennai, Ahmedabad, Chandigarh, followed by Surat, Amritsar, Ludhiana and Jaipur.

RAI – WWF: Sustainability in India Retail

This report profiles global practices by retailers in terms of creating sustainability in the supply chain and business practices.  Key insights:

• The world is today consuming 1.5 planets worth of resources annually.
• Demand for certain commodities such as palm oil, milk and beef (buffalo meat) is threatening India’s biodiversity.
• Owing to its direct contact with consumers, the retail industry is in a position to drive change towards sustainability.
• Experience with mature markets shows that the ‘tipping point’ towards structural sustainability is when consumers adopt and are willing to pay for sustainable products.

South India is incredibly diverse – be it language, culture, food or clothing. The four southern states have 25% of the country’s population, but 30% of its retail turnover. They are more literate and have higher levels of per capita income. Consequently South India is a very attractive market as far as retail is concerned.

 Some of the salient points about South India as a retail market are:

•  The South is the home of organized retail – and has built vibrant brands ranging back to the 1940’s.
• Entrepreneurs in the South are not risk averse – contrary to popular stereotype.
• Once they have found a robust business model, they are willing to scale – for example – textile,  apparel, jewelry retailers have built large (>50,000 sq. feet) single category showrooms, and have invested in marketing, technology and people.
• South India has built strong vibrant brands.
• Malls recognize that they need local and regional Southern brands as much as they need their national counterparts.
• The South has several retail “firsts” to its credit – the first electronics chain (VGP / Viveks) , largest jewelry chain, Large international sari brands (Nallis)

• Brands built in the South are consistent when they go national –

  whether its Nallis in Delhi or Kalyan Jewellers in Ahmedabad.

South India is the home of retail capabilities in India & has created the modern retail movement in this country. It has the wherewithal to accommodate new channels, new customers and the aspirations of the next generation of family entrepreneurs. It is the time for other South based brands to think and plan national.

(Bijou Kurien was the keynote speaker at the Kongu Retail Summit, Coimbatore held on 18^th March 2014)

Panelists – from Left to Right: 

Vasanth Kumar, ED, Max Retail; Rahul Mehta –  President, Clothing Manufacturers Association of India; Darpan Kapoor, Vice President, Kapsons Fashions; Vineet Gautam, Country Head, Bestseller India; Vinay Nadkarni, MD & CEO, Globus Stores Pvt Ltd
Moderated by Rahul Mehta, President CMAI

What is the one trend that has been driving Indian lifestyle retail in recent years?

• Having established 100 stores across 40 cities, the strategy that has worked is “Affordable Fresh Fashion”.

• Retailers have a choice – 75% margin, with 2 inventory turns a year or 35% margin on 8 turns

• We operate at a 40-42% margin and turnaround stock 6 times a year.

• Store profiling is the key to this business

• We price our products sharply to allow us to turnaround stock within 60 days.