By Saumya Roy, MINT (Partner to the Wall Street Journal)
\n9 December 2007 <\/i> <\/p>\n\n
Jay Goradia, a 25-year-old engineer, walked into \na hypermarket in suburban Mumbai looking for shampoo and some other personal care \nproducts. A little while later, he walked out with an expensive cellphone, along \nwith the shampoo.<\/p>
"The disadvantage of malls is that you end up buying \nmore than you intended to. Things are displayed in such a way in a mall that you \ntend to get tempted," he says with a grin. Goradia says he loves hanging \nout at the new branded retail outlets which are changing the landscape around \nhis home in Mumbai’s western suburb of Kandivli. <\/P>
As organized retail spreads, \nshoppers such as Goradia are lapping it up. It is changing the way they live, \nand the way they spend their time and money. Shoppers do not look at organized \nretail as a cheaper alternative. They do, however, love the convenience these \noutlets offer them-they can buy everything they want, eat and be entertained at \none place. <\/P>
Currently, organized retail forms just 3% of India’s retail \nindustry, roughly estimated at $330 billion (approx. Rs13 trillion), but it is \nset to grow to 16% by 2015, according to estimates by Technopak Advisors, a New \nDelhi-based retail consulting company. To tap this market, major players such \nas Future Group, Reliance Industries Ltd, Tata Group, Aditya Birla Group, K Raheja \nCorp., and Mahindra and Mahindra Ltd have announced mega investments in the sector. \nThe success of these plans, however, depends on the response of the Indian consumer \nto the organized retail format. <\/P>
Mint, in association with Pitch, a monthly \nmarketing magazine published by Adsert Web Solutions Pvt. Ltd, a Delhi-based media \norganization, and Synovate India, the market research arm of Aegis Group Plc., \nconducted a survey to track consumer response to organized retail. <\/P>
The \nsurvey findings are based on interviews with 2,787 women shoppers in Mumbai, New \nDelhi, Hyderabad and Indore over August and September, and indicate the retail \nbrands people like, as well as their shopping preferences. <\/P>
Mint’s survey \nshows that shoppers are shifting from traditional retail to branded retail outlets \nbecause of the variety, and what they perceive as better quality and fresher produce.<\/P>
"Traffic \ncongestion and commuting difficulties that are prevalent in India drive consumers \nto the best single destination for shopping. This is the single biggest reason \nfor the success of one-stop shops," says Andrew Levermore, chief executive \nof HyperCity Retail (India) Pvt. Ltd, a hypermarket in Mumbai’s western suburb \nof Malad. <\/P>
The survey shows that 45% respondents visit branded retail outlets \nonce a month, and one-third of all their shopping happens in organized retail. \nThe signs of growth are visible everywhere. Big Bazaar, the hypermarket chain \nfrom India’s largest listed retailer, Pantaloon Retail (India) Ltd, had around \n55 stores in June; it’s aiming at around 120 stores by next June. Subhiksha Trading \nServices Ltd had around 670 stores in March; it expects this figure to cross 1,300 \nstores by March 2008.<\/P>\n
The survey also showed how the creation of supply-more \norganized retail-is creating demand; the market is open for companies with ambitious \nexpansion plans. At the moment, some of the stores that were most visited in one \ncity are yet to find their feet in other cities.<\/P>
Trinethra, which was the \nmost visited in Hyderabad, doesn’t have a presence in any other city. Reliance \nFresh is most visited in Indore; it is just in the process of opening in Mumbai. \nLike others, both Reliance and the Aditya Birla Group, which owns Trinethra, plan \na nationwide chain of stores. <\/P>
So, chains that manage to bag the best locations \nwhile keeping rental costs down could have an advantage. Retailers say they find \nMumbai and Delhi the hardest cities in terms of finding space. This may be why \norganized retail is somewhat restricted in these cities, compared with Hyderabad \nand Bangalore. That may also be why just 19% of all consumer spends happen in \nDelhi’s organized retail outlets, compared with 45% in Hyderabad. <\/P>
Despite \nthe limitations, however, the buzz can be felt at organized retail outlets everywhere, \nwith shopping carts virtually locked in traffic jams on weekends. More and more \npeople are hanging out at these stores, where a growing range of products entice-leading \nto more sales for newer products and categories. <\/P>
At Big Bazaar, which emerged \nas the most visited store in the Mint survey, electronics and mobile phone-categories \nthat were introduced only last year-now account for about 6% of sales. At Crossword \nBookstores Ltd, the 50-store chain which was the most preferred in its category, \nsales for non-fiction-traditionally considered a less-read category-rose 30% for \nthe six months ended in September, compared to the previous six months. <\/P>
Goradia \nvisits Inorbit Mall at least every other weekend. He might go to see a movie or \nhang out with friends-but it often leads to temptation, and shopping. Around Diwali, \nhe bought a washing machine, fridge, grinding machine, food processor, television, \nwater purifier, DVD player and an air conditioner for his new home-all from one \nshop-in one day. While he had checked out prices at other stores, Goradia bought \neverything from one store because prices were competitive, and it was convenient. \nHe also bought some things he had not intended to. <\/P>
Consumers may be enjoying \nthe convenience of one-stop shopping and entertainment, but they aren’t yet seeing \nthe retail revolution drive down prices. Most consumers surveyed said they do \nwant to see prices come down in organized retail. <\/P>
In fact, pricing is one \narea many retailers are concentrating on as the number of retail chains grows. \nSeveral are competing to offer the steepest discounts. Vishal Megamart, a unit \nof Vishal Retail Ltd, offers discounts by stocking more products under its label-these \nare 30-50% cheaper, according to Vishal’s chief executive Ram Aggarwal. <\/P>
Subhiksha, \nwhich is the second most visited store nationally, competes with Big Bazaar by \noffering branded consumer products and mobiles at lower prices. <\/P>
"Our \nnational footprint is one year old vis-a-vis Big Bazaar, which is five years old. \nThey have two to three times our floor space. But, given the patronage and the \nUSP that we have, it can’t be long before we become the largest-we could be (getting) \nthere even as we speak," says Subhiksha’s managing director, R. Subramanian. \nThe chain opened its first store in Chennai in 1997, expanding to cities across \nIndia much later.
<\/P>\n
Some things aren’t clear yet. For instance, shoppers \nsaid they would like to see better packaged and better quality products. But retailers \nseem divided over whether Indians like traditional, open displays of products, \nor whether they are taking to packaged food. <\/P>
Sales volumes of packaged \nvegetables and other food have increased by 80% year-on-year at the nearly two-year-old \nHypercity. At Big Bazaar, vegetables displayed in open baskets and bins do better \nthan packaged ones. "Indian consumers respond to visual cues, such as touch \nand feel, to decide what they like and (what they) don’t," says Big Bazaar \nhead Rajan Malhotra.<\/P>
Shoppers are deterred by long billing lines and the \nlack of parking and shopping space. Goradia says he wishes malls had a centralized \ndatabase, so consumers could get information on the prices at every store. Ridhi \nKasurde, a 29-year-old beautician who lives near the Phoenix Mills mall in Mumbai, \nsays she stopped shopping there because her local shop delivers her monthly groceries \nat home. "I don’t have to stand in queues for half an hour, and prices may \nbe the same, or cheaper," she says.<\/P>
Retailers are, in fact, grappling \nwith issues such as how to deal with the growing crowds on weekends and evenings. \nBig Bazaar gets as many customers between 6pm and 9pm as it does between 10am \nand 6pm. Inorbit could get as many as 75,000 visitors on a festive weekend, such \nas around Diwali. On other weekends, there could be as many as 45,000 people at \nthe retail outlet. It is no wonder, then, that Malhotra visits the stores between \n11am and 2pm on Sundays. <\/P>
Despite any reservations they may have, shoppers \nseem to love the deals and the buzz of organized retail. Mint’s survey indicates \nthat consumers like advertisements which give information about new products and \ndiscounts. <\/P>
"From a consumer perspective, advertising on national \ntelevision does convey reliability and credibility," says Devangshu Dutta, \nchief executive of Third Eyesight, a New Delhi-based retail consulting company.<\/strong> \n<\/P> One indication of how things could play out comes from Hyderabad, home \nto some of the oldest organized retail stores. Mint’s survey indicates that 53% \npeople go to branded retail outlets once a month in Hyderabad, compared to the \nnational average of 45%. It also shows that 45% of their spending happens in organized \nretail in Andhra Pradesh’s capital city, compared to 33% nationally. Crossword \nopened its second bookstore in Hyderabad last year, and sales this November were \n20% more than last November, says Aniyan Nair, Crossword’s head of operations \nand marketing.<\/P> "It’s not a surprise," says Malhotra. "Consumers \nthere (Hyderabad) are comfortable with retail because organized retail started \nearlier." <\/P> Other cities are getting there. "Now, people \ndon’t go to a store with a list and just buy off it," says Third Eyesight’s \nDutta. "They don’t go to stores and ask for whatever shirts there are in \ntheir sizes to be taken out from closed boxes. Instead, they see everything on \na shelf and may end up buying a tie along with the shirt they saw on the shelf."<\/strong><\/P>\n","protected":false},"excerpt":{"rendered":" By Saumya Roy, MINT (Partner to the Wall Street Journal) 9 December 2007 Jay Goradia, a 25-year-old engineer, walked into a hypermarket in suburban Mumbai looking for shampoo and some other personal care products. A little while later, he walked out with an expensive cellphone, along with the shampoo. "The disadvantage of malls is that […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-1990","post","type-post","status-publish","format-standard","hentry","category-press-quotes"],"yoast_head":"\n