RAI Chairman’s Address @ RLS 2014

B S NageshRLS 2014 commenced with the inaugural speech delivered by Mr BS Nagesh, Chairman, Retailers Association of India (RAI).
Aligning with the core theme of the summit “Retailing in Emerging Markets”, the speech was focused on the evolution that the Indian retail market witnessed in the last 10 years.

“Entrepreneurs in retail should build businesses because they see value, not valuation” – B S Nagesh, Chairman RAI, Founder, TRRAIN

Retail is Value
“The last 10 years has seen positive and negative changes. There has been growth and in some cases, it has tipped  into aggressive business expansion. Some retailers have used the slowdown of 2010-2013 to rectify the mistakes. More importantly, there are now thousands of companies and sub-segments of industry who have joined the retail bandwagon,” said Nagesh.

“Amongst the top 5 companies in every country, there is at least 1 retail company. The time will come when an Indian retailer too will feature amongst the top 10 retail companies in the world.” He added.
The politics of Retail
“Whichever government comes to power, retail will benefit. If, after elections in May 2014, the government moves for FDI –5% of retail which is organized retail will benefit.  In the Long term, the 95% of retail which is not part of Modern Retail will still benefit. And if, after May 2014, the government chooses to defer FDI, the sector will still grow”, he noted.
The next 5 years are likely to be golden years in terms of consumption he said. RAI believes that from the learning of last 10 years, the next 5 years are golden years in terms of growth and opportunity.
Do not build a business for FDI
“Entrepreneurs in retail should build businesses because of the market opportunity, not because of valuation” he said. It’s important that the people who build businesses focus on value, NOT valuation.
What will change
There are few major changes that we expect. One is the presence of online.  While it’s still 5% of retailers top line, and less than 2% of the overall sector, the simple fact is tommorrow’s consumer is online.
People Power
People power is going to be important in the next decade. There’s a need to develop skilled professionals and RAI extensively works on this and “Manning Modern Retail” is one such platform where we discuss on this bringing in together India’s retail fraternity.
‘Real Power’ v.s ‘Power of Power’
The Power of Power – refers to the fact that power cost has gone up, power is scarce. At the same time, some governments are slashing tariffs.   Retailers need to track developments and manage this dimension – as electricity costs impact the business.

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

Future focus: Governance
“Governance in retail is no longer ‘dukaandari’ governance. It’s about building structurally strong and well governed companies.
There’s no more space for a “khandani” mindset. Well-governed retail companies will create value – and will command a premium over peers. “- he noted.

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Retailers Association of India (RAI) is the unified voice of Indian retailers. RAI is a not for profit organization (registered under section 25 of Companies Act, 1956), works with all the stakeholders for creating the right environment for the growth of the modern retail industry in India. RAI is the body that encourages, develops, facilitates and supports retailers to become modern and adopt best practices that will delight customers. RAI has a three charter aim of Retail Development, Facilitation and Propagation.