Retailing - It happen in India
Does the title sound similar? I think many of you who had been venturing out to Big Bazaar will recognize as it is similar to the title of the book which is on story of Pantaloons and Big Bazaar by the Rajah of Indian Retail - Kishore Biyani (KB).
There is no coincidence that this title is similar, because in this article I am going to write about Retailing in India – now and how it will be in future, the great Indian consumer and of course Big-Bazaar and Pantaloons.
Since the day I have been back from US (in Jan 2007), I have seen one big change in Mangalore. I have seen crowd of people, children, young & old. Why I am mentioning this here is because in earlier 2 years (2003 to 2004), I had not seen or I would say I was not aware that so many people exists in Mangalore. Coming back to the point, I have seen this crowd doing one thing most often which is thronging Big Bazaar and crowding it like anything. On Saturdays and Sundays you will not find place to walk as its completely clogged by people trying to get the best deal.
Organized Retail which is the new buzzword is luring lots of corporates. Walmart/Bharti, Carrefour, Reliance, Tata and Birla all are venturing into Retail with big-bang. There is a shift in shopping pattern of those Indian consumers who shop at these retail chains. This shopping pattern was/is Indian consumers reluctance to buy something without any choice to be made. Everyone knows that when we used to go shopping (be it anything) we will go to multiple shops, check out the quality and prices, try for the best deal and then purchase the item from the place where we get the best deal. This pattern had multiple advantages, one being one used to be satisfied on quality which one gets, one will be aware of value for money and above all one would be satisfied on the fact that best deal was made. But this fact is fast changing with emergence of organized retailing which is cashing in on the fact that Indian consumers as like consumers of other developed countries are now short of time and high on cash to spend. This is the basic philosophy which is driving all these retailers.
Big-Bazaar or KB's philosophy - 'Sabse accha Sabse sasta', doesn't hold good. One might get some product cheapest there, but quality is not guaranteed. Now for me Big-Bazaar is just a place where I go and watch people searching around things (myself not buying anything from Big-Bazaar), trying to get best deals, buying things which are not needed (another philosophy for organized retail), standing in the check-out queue and in the end of this 1-2 hour marathon saving 50-100 bucks (I am not taking example of monthly ration supplies here). I always have this one question - is this saving of 50-100 bucks worth? Wouldn't had it been much better if the same product could have been brought from some kirana shop saving time and also saving on unnecessary spending?
Currently Big-Bazaar might be cashing in on the fact that in organized retail it does not have much competition. But by next year when Walmart/Bharti, Tata and Birla join the bandwagon it might be difficult for KB and Big-Bazaar to hold on to the tag-line 'Sabse accha Sabse sasta'. They will need to bring in quality and standards (which is evidently lacking now) for the 'Sabse accha' part of the tag line while keeping the 'Sabse sasta' part intact. It will not be that easy, given the fact that Walmart is a master in Operational and Supply Chain efficiencies. Already Walmart has suppliers in India and China, so for its foray it will just need to increase its sourcing, it already has quality standards set (though everyone know about Walmart's quality with respect to other US retailers).
Here I would also like to bring and talk about KB's philosophy that consumers should not save but spend their earnings (this is US consumer pattern) which is given in his book 'It happened in India'. There is great difference between US and Indian economy, its consumers and spending habits of consumers. Even if organized retailers are coming in and spending power is increasing one fact which will still differentiate Indian consumers spending habit from US consumers will be social-security. In US, social security is assured for each and every citizen while in India its still a long dream. Here people save and they will continue to save. They will save until they have their own home, they will save for their children's marriage and they will save for their future security. Changing this pattern will be difficult not even for KB and Big-Bazaar but even for any or all the organized retailers working together.
There has been numerous discussions on entry of big retailers and their impact on our kirana shops. I feel that there will not be much impact and these kirana shops will continue to exist and thrive. Only that they will have to bring in some differentiation with respect to services they will provide. Another thing which big retailers will need to take care of is not to upset these kirana shop owners, our farmers or the lower income level people, whose livelihood depends on these unorganized sectors. Buying power may be concentrated with a few but if the majority of these lower income / poor people people gets upset over the fact that their livelihood is taken away and no other alternate jobs are made then the situation will definitely take bad shape. It might take shape of violent protests (as seen from ransacking of Reliance Fresh shops in Bihar some weeks back) or legislation could be brought in (as these are the people who vote).
Though I feel there is nothing wrong in giving big-retailers a chance to establish retailers should be aware of their responsibilities with respect to pricing, quality and the shopping experience which they provide. Profit should not be the only parameter for which these retailers are coming.
In the end, it's up to the consumers on how they react to this explosion and expansion of organized retailers. As it has always been said – customer is the king. It will be sometime before we see what the king decides and who has the last laugh – king or the rajah (KB).
There is no coincidence that this title is similar, because in this article I am going to write about Retailing in India – now and how it will be in future, the great Indian consumer and of course Big-Bazaar and Pantaloons.
Since the day I have been back from US (in Jan 2007), I have seen one big change in Mangalore. I have seen crowd of people, children, young & old. Why I am mentioning this here is because in earlier 2 years (2003 to 2004), I had not seen or I would say I was not aware that so many people exists in Mangalore. Coming back to the point, I have seen this crowd doing one thing most often which is thronging Big Bazaar and crowding it like anything. On Saturdays and Sundays you will not find place to walk as its completely clogged by people trying to get the best deal.
Organized Retail which is the new buzzword is luring lots of corporates. Walmart/Bharti, Carrefour, Reliance, Tata and Birla all are venturing into Retail with big-bang. There is a shift in shopping pattern of those Indian consumers who shop at these retail chains. This shopping pattern was/is Indian consumers reluctance to buy something without any choice to be made. Everyone knows that when we used to go shopping (be it anything) we will go to multiple shops, check out the quality and prices, try for the best deal and then purchase the item from the place where we get the best deal. This pattern had multiple advantages, one being one used to be satisfied on quality which one gets, one will be aware of value for money and above all one would be satisfied on the fact that best deal was made. But this fact is fast changing with emergence of organized retailing which is cashing in on the fact that Indian consumers as like consumers of other developed countries are now short of time and high on cash to spend. This is the basic philosophy which is driving all these retailers.
Big-Bazaar or KB's philosophy - 'Sabse accha Sabse sasta', doesn't hold good. One might get some product cheapest there, but quality is not guaranteed. Now for me Big-Bazaar is just a place where I go and watch people searching around things (myself not buying anything from Big-Bazaar), trying to get best deals, buying things which are not needed (another philosophy for organized retail), standing in the check-out queue and in the end of this 1-2 hour marathon saving 50-100 bucks (I am not taking example of monthly ration supplies here). I always have this one question - is this saving of 50-100 bucks worth? Wouldn't had it been much better if the same product could have been brought from some kirana shop saving time and also saving on unnecessary spending?
Currently Big-Bazaar might be cashing in on the fact that in organized retail it does not have much competition. But by next year when Walmart/Bharti, Tata and Birla join the bandwagon it might be difficult for KB and Big-Bazaar to hold on to the tag-line 'Sabse accha Sabse sasta'. They will need to bring in quality and standards (which is evidently lacking now) for the 'Sabse accha' part of the tag line while keeping the 'Sabse sasta' part intact. It will not be that easy, given the fact that Walmart is a master in Operational and Supply Chain efficiencies. Already Walmart has suppliers in India and China, so for its foray it will just need to increase its sourcing, it already has quality standards set (though everyone know about Walmart's quality with respect to other US retailers).
Here I would also like to bring and talk about KB's philosophy that consumers should not save but spend their earnings (this is US consumer pattern) which is given in his book 'It happened in India'. There is great difference between US and Indian economy, its consumers and spending habits of consumers. Even if organized retailers are coming in and spending power is increasing one fact which will still differentiate Indian consumers spending habit from US consumers will be social-security. In US, social security is assured for each and every citizen while in India its still a long dream. Here people save and they will continue to save. They will save until they have their own home, they will save for their children's marriage and they will save for their future security. Changing this pattern will be difficult not even for KB and Big-Bazaar but even for any or all the organized retailers working together.
There has been numerous discussions on entry of big retailers and their impact on our kirana shops. I feel that there will not be much impact and these kirana shops will continue to exist and thrive. Only that they will have to bring in some differentiation with respect to services they will provide. Another thing which big retailers will need to take care of is not to upset these kirana shop owners, our farmers or the lower income level people, whose livelihood depends on these unorganized sectors. Buying power may be concentrated with a few but if the majority of these lower income / poor people people gets upset over the fact that their livelihood is taken away and no other alternate jobs are made then the situation will definitely take bad shape. It might take shape of violent protests (as seen from ransacking of Reliance Fresh shops in Bihar some weeks back) or legislation could be brought in (as these are the people who vote).
Though I feel there is nothing wrong in giving big-retailers a chance to establish retailers should be aware of their responsibilities with respect to pricing, quality and the shopping experience which they provide. Profit should not be the only parameter for which these retailers are coming.
In the end, it's up to the consumers on how they react to this explosion and expansion of organized retailers. As it has always been said – customer is the king. It will be sometime before we see what the king decides and who has the last laugh – king or the rajah (KB).
3 comments:
Who is KB and what is Big Bazaar? You compare it with Walmart but from the description it comes out closer to a Costco.
I have never been to a Costco and obviously haven't even heard of this Big Bazaar until now, so really I am not qualified to compare the two. But I have shopped at Walmart and as you rightly say there is a huge quality gap b/w a Walmart and a even a mid grade store. BUT, its a good place to buy branded products...you esstntially pay a lot less for the same thing you'd otherwise buy from, say, a Macy's or a Bed Bath & Beyond or a JCPenny (and I am talking abt the exact same product - same brand and everything). It is not very difficult to end up buying unnecessary stuff once you are there 'coz every think is so freakkin cheap! So yes, I agree with you that these big stores have the potential of leaving a big hole in our pockets, especially in India since it's a new concept...but isn't Big Bazaar cheap like Walmart? Dont they sell branded products? If its not, then I dont think it can steal away the loyal customers from the old trusted ration walla just around the corner from our house.
P.S. I read some time ago that Walmart is eyeing India and later I read that there was some opposition to it. Has is already opened shops in India?
P.P.S. The so called Social Security is a dream in US as well...one cannout survive on it. It a mere eyewash!
well well well, one of the longest cooment I have got till now on my blog. But it also proves that people do read my blog :)
Ok Divya, here goes explanation to your doubts (I hope my comment in itself doesn't become as big as the blog)
KB is Kishore Biyani. He is the owner of Big Bazaar & Pantaloons (and some other retail formats) in India. Big Bazaar / Pantaloons are couple of Retail chains in India others being Westside (Tata's), some retail chains in Tamil Nadu which are now expanding across India.
Costco (or in fact Walmart's Sam's club) are wholesale shops. Concept there is a little different as you need to be a member to shop at those stores. In India we are not currently seeing this type or retailing (but later it might come up). Big Bazaar is like normal US retailer where you get everything under one roof (clothes / home accessories / utensils / other products etc), along with Big Bazaar are some joint stores which are Food Bazaar - for eatables / fresh vegetables / fruits, Furniture bazaar - electronics / furniture shop and Pantaloons - which is a little high-end clothing store (can compare it to Macy's).
In US because of the size of Walmart it gets the same product at lesser cost (because of volume purchase) than other retailers so the price there is lesser. These branded products are with MRP (maximum retail price). In Big Bazaar price difference on these products are not that differnt, couple of bucks (Rs.) or paisa's on an item. And that's the reason why I blooged, just because everyday I see people flocking the store, making huge rush, spending more time than required and then saving couple of bucks. I agree saving is everyone's right, but I am trying to say is why not save time :)
We will definately see, how in India retail grows. Till then everything is just assumption / thoughts.
Btw Walmart will be coing in India through partnership with Bharti (parent company of Airtel) and other big retailers are also in discussions for entry in India.
I agree one cannot completely survive on Social Security in US. But atleast they get some amount so that they can fight and survice. But in India if a person doesn't have job and no money, I don't think he/she will survive for long.
(Repeating from my e-mail ;)
We do have social security in India...we call it family! Itsn't it amazing how even the extended families are so close to everyone os us in India and we know they are there for us. US mein extended chodo, every often even the immediate family doesn't help. That is why social security is needed here more than India.
BTW, thanks for the explanation. Yes, I do read your blog :)
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