Retail is a 'tricky' business, say experts. And retailers are a trickier lot. Yet, they have grabbed power across the globe by simply transforming private labels from price purchases into powerful brands.
Retailers are a busy lot too. They are constantly creating strategies to sell their products -- always toiling to excel.
What makes retail business rock? What plans set the cash boxes ringing? Does Indian retail business still have a long way to go? What do Indian retailers need to do to compete with their foreign counterparts?
Professor Nirmalya Kumar answered many such queries during a live chat on Friday. Kumar is a professor of marketing at London Business School, where he is also faculty director for executive education, director of the centre for marketing and co-director of the Aditya Birla India Centre. He is also the co-author of
Private Label Strategy: How to Meet the Store Brand Challenge, published by Harvard Business School Press.
Here is the chat transcript:
Nirmalya Kumar says, Welcome aboard! Let's chat. Pls send in your questions
Manoj Sharma asked, What is the future of departmental stores Vs speciality store in field of garment?
Nirmalya Kumar answers, Both dept and specialty stores will always exist in garments. More recently, in the developed mkts, specialty stores have been more successful. Dept stores have been caught in the middle between specialty stores in the high end and discount stores in the low end. But in Asia, dept stores continue to be strong as consumers seem to have a preference for them.
bala asked, Will cash and carry format succeed in India? Metro is supposedly struggling and will Wal-Mart make it work for them?
Nirmalya Kumar answers, C and c always has a place in the retail environment of a country but it depends on consumers/shopowners travelling substantial distance and buying in large lot sizes. This means a car is very necessary for the concept to work as well as good roads so that the travel time is not too long. In India, roads and car penetration among middle classes/kirana storeowners is still a barrier to the success of this format.
Shiju asked, In one of ur presentations u have said that "Retail Chains should not hire MBA's".Being an MBA I was intrigued.Can u elaborate?
Nirmalya Kumar answers, Of course I was being a little flippant when I said that. What I meant was in discount retailing, MBAs tend not to have the cost discipline needed. Also, they tend to be less detail-oriented and reluctant to get their hands dirty. Having said this, most top retailers like Tesco and traditional dept stores increasingly hire MBAs, especially to manage the retail brands.
santosh asked, taxation/octroi rates being different accross the country,how do you think this will affect the distribution and procurement of goods for the big retailers like Tesco, Carrefour & Walmart wanting to enter India
Nirmalya Kumar answers, It is true that state level taxation prohibits retail cos from developing and optimising a national supply chain. A retailer's competitive advantage is in how efficiently they can take the product from the manufacturer to the consumer. Having trucks wait at state borders for taxation clearance does not allow them to exploit the full potential that national logistics chain should have.
ASHWIN asked, What is the future of small time kirana or mom & pop stores in india with the entry of reliance and in the near future Walmart in this space.I can already see a lot of vegetable vendors shutting shop because of relaince fresh?
Nirmalya Kumar answers, In retail, one consumer need is convenience as described by being the nearest store to them. The kirana store will occupy that position though we may need less of them inthe future as the consumers use them only for 'top up shopping'. However, it's true that the regular shopping basket of the consumer will move to the organised retail sector.In the end, it's not Reliance that will kill the kirana store but consumer preferences.
tappi asked, Can you tell us a bit about your childhood, your education and how have you landed up here etc?
Nirmalya Kumar answers, I grew up in Kolkata, went to La Martz and did my BCom from calcutta University. I left for the US to pursue an MBA and continued to do a Phd at Kellogg. But to land up here is not the education that alone does it because many people have the same educational background. As a professor, it's the quality and originality of your published ideas that get you fame.
srinivas asked, How important is the Wireless and RFID technology in retail business. Do think that retails will opt for these technolgies in furture. What is the trend right now in US or Europe on this.
Nirmalya Kumar answers, Wireless and RFID are being used extensively by Wal-Mart. It is believed that there will be substantial impact on retailing from these technologies in terms of making the supply chain more efficient, reducing shrinkage and lowering labour cost (for example automatic check outs). Also, it should give a better understanding to retailers and manufacturers what consumers are buying, why and when.
askumar asked, Hi Prof Kumar, with very attractive pay packages for the staff on one hand and very expensive infrastructure of the store on the other can these big name retail chains of today sustain the these high operating costs?
Nirmalya Kumar answers, It is true that retail works on much smaller margins than manufacturers. Even world class retailers like Wal-Mart work on 3 per cent net margin. Therefore, retail has a low cost culture. The high Indian cost in some sense should