<\/a>When you talk of organized retail in India, no story is complete without mention of The Future Group. From its earliest entities \u2013 Pantaloons and Big Bazaar, the group has played an indispensible role in strengthening and streamlining modern \/organized retailing in the country. As we step into the New Year (2013), we have a quick conversation with the group’s joint managing director- Rakesh Biyani to have his take on the current and past retail dynamics of the country.<\/em><\/p>\n RAI: How would you want to remember 2012 in the history of modern retail in India?<\/strong> RAI: When you say things could have been better, can you explain the context?<\/strong> RAI: What are the challenges that we are facing?<\/strong> RAI: What was the consumer sentiment as seen in 2012?<\/strong> RAI: How do you see the growth of ecommerce in India? Is it a bubble ready to burst?<\/strong>
\nRB:<\/strong> At the beginning of 2012, the business was quite slow, having more to do with inflation pressure that the country was facing. And most of us being in the business of fashion , the pressure was felt all the more. The cost prices had gone up considerably, the issue of excise duty was creating hurdles and other similar factors contributed towards extremely low consumer and market sentiments. This continued till about the beginning of the festive season, post which it gave promising signals. This year the festive season was better than what we saw in 2011 and the market has picked up since then though I must say that things could have been much better. Demand can be higher than what we are seeing today. As retailers, it is getting important for us to spend considerable time and efforts on understanding the changing needs of the consumers.<\/p>\n
\nRB:<\/strong> I think what has happened is somewhere our cost prices seem to have gone for a toss. We have lost control on that. It has become very difficult to price our product at the level where you can create demand and it is more to do with higher end cost, staff cost etc. Hence the productivity gain that you wanted in terms of sales per sq.ft has not happened at the level which would be viable. Unless the retail industry is going to consistently deliver higher double digits same store growths in the next two years, the business is going to be unviable.<\/p>\n
\nRB:<\/strong> The challenges are enormous. When I say cost needs to be controlled, we also need to understand that all of it is not within our control. The electricity cost is one such example. The tax policies are suddenly announced and there is a dictate to implement them on a short notice so there is no migration plan that we can have in place. These are some of the things we need to look at. In a consumer business, you cannot change things overnight and the transition period is very important. Even if we look at GST, all taxation policies have been designed for a smooth GST migration but then the decision on GST still remains pending.<\/p>\n
\nRakesh Biyani:<\/strong> The market looked positive October 2012 onwards. We saw a lot more people walking into our stores but the first half was dull. The low sentiments that we see in the market off late has its roots in the uncertainties prevailing due to reasons such as high real estate and\u00a0 rent cost, fuel cost and other expenses which have shot up. All this put together is leaving behind an extremely limited basket space for retail shopping. The costs towards taking care of the necessities are taking a lot more of the consumer’s wallet.<\/p>\n
\nRB:<\/strong> I think online is a reality and it is here to stay and I have no question on that front at least. Online is a much cheaper and easier opportunity to get in right now in terms of getting the store front ready and thus we are seeing so many new entrants having specialty ecommerce portals \u2013 from jewelry to hand bags to footwear etc. What we need to keep in mind is that just as in retail, the only people who shall survive are those who have a better proposition. But online is going to be there and it is not a boom which shall get burst. People just need to be careful to see what is the cost at which they are acquiring customers, what is the cost at which they retaining them and what is the cost they are delivering their products at. So you should not stretch yourself beyond what you can afford. Online business in India is only going to grow bigger and at the end of the day, in a large market like ours, online will have to be an integral part of every retailer’s strategy.<\/p>\n