What Ecommerce means to me?

"Metros have a dominant share of purchases, with Tier 2 and 3 cities catching up fast. Metros contributed 51 per cent of all e-commerce transactions, while Tier 2 and 3 cities contributed about 40 per cent and rural India 9 per cent. "

India has 100 million internet users today. According to eBay Census 2011, a study on the Indian e-commerce landscape released last year, as many as 3,311 Indian cities shopped online between July 1, 2010, and June 30, 2011. Of this, over 1,267 were non-metro cities. For catering to this segment, understanding Customer behaviour, mindset and comfort are of prime concern before we plan the second coming of ecommerce in India. Consider this when you shop on BestBuy or ebay for a laptop, you don't pay that much attention to taxes as much as you pay to SHIPPING!!! While a little research is required to understand the conditioned response from buyers better , putting business strategy to this approach is a natural business solution that will evolve.

Retailer Hat: Boss! I am a small time apparel retailer in one remote part of Delhi. Recently I have heard a lot of my shopkeeper friends discuss about the internet where one can register free of cost and suddenly you become visible to the entire Delhi internet savvy population. ....This has got me excited as I see a whole lot of new customers who I can serve and who know about my existence. I would like to be a part of this I say to myself. I expect to achieve the following:

Inform Delhi about my existence and the products I deal in apart from my regular customers I cater to.

Hopefully attract new profitable customers whom I can sell to and get incremental business.

I have heard about a lot of websites these days offering to increase my business by bringing new customers only if I give their customers huge discounts plus pay a commission on every sale to these websites. I wish if the website would just connect me with these new customers and let me do the selling. Please don’t dictate to me how much discount I need to give to your customer.

I have currently registered my business on yellow pages and also subscribed to just dial services. Though I have paid upfront to these companies for listing me in their retailer database I hardly get any customers from them. I also spend some money every quarter on distributing some pamphlets in my locality to let people know about any special offers I am currently running. I wish to market myself aggressively however I don’t want to spend a fortune doing it.

"We recently heard about Letsbuy buyout by Flipkart. This is an example of what is likely to be additional consolidation in the e-commerce space. In addition to cross-sector mergers, category consolidation is also likely to be on the upswing. But if you see what consumer demands in a market like India is -i-commerce (intelligent commerce= best discounts) and s-commerce (peer recommended assisted shopping experience). Here, I see a marriage of Content, ecommerce, services and social media support."

Take another case!

Customer Hat: Geees! I am a housewife who dabbles with the internet searching for the best price for a product I need. I generally visit the retailers in my locality and also search the websites to see if I can come across some new designs.

I don’t mind paying for a product which has some exclusivity attached around it. I will definitely get motivated if I can see that it is looking good on me. Maybe I would like to put on a dress virtually, post that on Facebook and see if I get compliments!!

I use Google to surf the internet and a couple of other deal sites to do my product search. However not every time do I get the relevant information I am looking for. I wish there was one such search engine which was custom made to give all answers to my shopping requirements. I wish I could see the product pictures and read their description. Also get the address and contact information of the retailer.

Apart from this basic information I wish I could also get a personal shopping assistant who could recommend some designs from their collection based on my specific body type and give me some style tips to complete the look. I need all this and more at a price competitive to the store I normally shop from. If only the retailer could deliver it to my doorstep and I could make the payment once I receive the delivery. This would make me happy. I also need to earn some loyalty points for using this shopping search engine redeemable across all the retailers showcasing their products/services and listed with this shopping platform.

In short it tells me that If I am coming up with an e-commerce venture in India, I need to know that here is this quintessential shopper who seeks the thrill of shopping /winning and getting rewarded all at the same time across my spectrum of shopping needs with a tangible value proposition.

Retail Employment in India

Barriers to Employment
India's fiscal deficit and its capital distortions, restrictive labor laws, and poor infrastructure are the most important barriers to rapid growth. However, research shows that the most important problems are product and land market barriers, and India's ability to absorb the imminent surge of the working age population.

Challenges facing Indian retail industry

•The tax structure in India favors small retail business
•Lack of adequate infrastructure facilities
•High cost of real estate
•Dissimilarity in consumer groups
•Restrictions in Foreign Direct Investment
•Shortage of retail study options
•Shortage of trained manpower
•Low retail management skill

Will Rural Retail Catch up fast ???

Rural India, which accounts for more than 70 per cent of the country's one billion population (according to the Census of India 2001), is not just witnessing an increase in its income but also in consumption and production.The rural retail market is currently estimated at US$ 112 billion, or around 40 per cent of the US$ 280 billion Indian retail market, according to a study paper, 'The Rise of Rural India', by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

Major domestic retailers like AV Birla, ITC, Godrej, Reliance and many others have already set up farm linkages. Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance Fresh, Project Shakti (Hindustan Unilever) and Naya Yug Bazaar have established rural retail hubs.

Rural retail was supposed to cash in on the prosperity of Bharat, but the storyline hasn’t really gone the way big corporate houses had hoped.While some have chosen to wind up business, others have preferred to go slow due to a host of reasons.

Such stores offer products like agri-inputs, cattle feed, plastic furniture, FMCG products, automobiles, banking, crop insurance and other agronomical services.

Setting up an organised retail business in rural towns proved to be challenging. Companies have faced problems with regard to infrastructure, distribution, fluctuating rural incomes and stiff competition from local kirana stores, which operate at much lower costs. However, these factors did not deter companies such as DCM Shriram Consolidated Ltd (DSCL), ITC, Godrej and Triveni Engineering from investing in rural retail.

However, recently, Triveni decided to shut its 42 stores after its retail venture incurred losses of about Rs 19 crore in over five years of operations. The company had not expanded the number of outlets for the past two years. DSCL, with 300 retail outlets under the Hariyali Kisaan Bazaar brand, did not expand in 2009-10. It is not looking to increase the number in 2010-11, either. Over the last four years, they have grown the business 10-fold to around 300 outlets. Having achieved a critical mass, the company in 2010-11 is focusing on consolidation.

The erratic monsoon in the last kharif season had affected farm incomes. However, rural incomes have gone up consistently over recent years, on regular increase in the support price of crops like wheat, paddy and sugarcane. More, farm income is not taxed.
As rural retail does not have any benchmarks to follow, we have to keep innovating. Like all retail formats, rural retail also had a slowdown and is now looking at focusing on making its individual formats work. With improvement in the market sentiment after a satisfactory rabi season in 2009, we can expect the markets to improve.

Some ray of hope at the end of the tunnel

The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The India retail industry is expected to grow from Rs. 35,000 crore in 2004-05 to Rs. 109,000 crore by the year 2010.

Comments welcome!

Business Planning in Retail-IT

Linking IT with business strategies is easier said than done. The demands facing today’s retailers are more numerous and complex than ever before. Consumers have come to expect more value and higher service levels, while retail executives want to leverage technology to attain marketing, operational, and financial advantage. Corporate governance boards demand due diligence scrutiny and outside regulators continue to add rigor into financial reporting and business processes. As a consequence, the IT project request backlog continues to grow and retailers search for ways to measure IT’s business value and to balance the effective utilization of the IT resource.

Are Business Strategies Dependent on Technology?

Creating a retail IT strategy can be the result of an active and engaged IT organization that partners with the leadership teams of separate business units on a cross functional basis. This partnership can take the form of shared educational experiences, industry analysis, competitive trend observation and analysis, and thought leadership relative to emerging technology and applications. Through involvement with the business units, the IT organization can evolve from being a service enabler for business units to a technology competitive advantage driver across the entire company.

Retail IT- Fashion or Fusion?

The Business-IT Fusion approach enables retailers to frame IT initiatives with quantifiable business cases plus business objective alignment. This approach, when combined with an understanding of best practices from both within and outside of the retail industry, becomes invaluable in the decision-making process. The retailer can then refine and rank company mission-critical initiatives, and define a multi-year phased approach to achieve business results. The end result is IT direction aligned with corporate direction.

The Anti- Climax

For most retailers, IT is not seen as a strategic partner of the business — it is simply viewed as a cost that needs to be better controlled. One reason for this is the widely-held belief that only a small percentage of IT projects yield their expected results, and that many projects exceed their time and budget constraints — or are abandoned all together. Considering that most retailers do not have an IT strategy aligned with their business objectives, the implication is that a large portion of their IT project spending is either unproductive or not supportive of business goals.

Organised Vs Unorganised

Going by Census 2001, nearly 3 crores of people work in wholesale and retail trade in the country – 1.1 crores in the urban and 1.9 crores in the rural areas. Any protest by this sector “will cause companies such as Reliance, Pantaloon, Spencer, Bharti and now the Birlas to stand up and listen.
Organised retail has not penetrated and will not penetrate rural India for obvious reasons – it is just unviable. It is only the urban areas that organised retail is slowly but not steadily growing in.
Those belonging to the upper middle income group and higher income group and living in cities have been increasingly patronising organised trade thanks to the latter’s proliferation. That way speaking, they have traditionally stayed away from the mom-and-pop stores as far as possible.
Who patronises the outlets of organised retail in urban India? Definitely not the lower stratum of society; this stratum represents people who are either daily-wagers or who work for the unorganised trade and industry; their employment is seasonal which means they may remain jobless during the off-season. At sunset, they receive their wages with which they buy their rice or atta for the austere supper ahead. Their purchases are meagre and only the mom-and-pop stores will entertain them. Organised retail will not vend 50 ml of edible oil or 250 gm of rice or atta to such humble consumers.
Those belonging to the lower end of the middle – income group are generally employees of State / Central governments and the organised private sector.
They buy from the mom-and-pop stores on credit during the month and settle the bill when they receive their salaries in the first week of the succeeding month. At best, the lower end of the middle-income group may patronise organised retail for purchase of vegetables because the vegetable vendor does not provide credit anyway.
The truth therefore is that unorganised trade has not been affected to the extent it is made out. The statement of Mr Praveen Khandelwal, General Secretary, Confederation of All India Traders that “united we stand, divided we fall” is at best a diversionary tactic. Instead he had better prevail on his fellow-members to equip themselves better to take the competition head-on by being transparent in their dealings, by being quality-conscious and by being price-conscious, amongst other things.

Retailing Report- India

India is one of the most attractive destinations for retailers from all across the globe. Thanks to the entry of corporate, changing consumer behavior & lifestyle, increasing influence of western culture and rising income, the Indian retail industry has seen phenomenal growth in the last five years (2001-2006) and organized retailing has finally emerged from the shadows of unorganized retailing and is contributing significantly to the growth of the overall retail sector, according to ""Booming Retail Sector in India”, a new market research report by RNCOS. The research report helps the client to analyze the opportunities and factors that will make the Indian retail industry a success.

Key Findings

Organized retail market in India is expected to reach US$ 50 Billion mark by 2011.
Number of shopping malls is expected to increase at a CAGR of more than 18.9% from 2007 to 2015.
Rural market is projected to dominate the retail industry landscape in India by 2012 with total market share of above 50%.
Organized retailing of mobile handset and accessories is expected to reach close to Rs. 5000 Crore by 2010.
Driven by the expanding retail market, third party logistic market is forecasted to reach US$ 20 Billion by 2011.
Apparel, along with food and grocery, will lead the organized retailing in India.
Demand for readymade garments in rural India is expected to increase at a CAGR of 16.5% during 2008-2010.
Women apparel market (in value terms) is anticipated to grow at a CAGR of 17.79% till 2010. The organized apparel retailing in India is projected to surge at a CAGR of 30% from 2008 to reach Rs. 52,289 Crore in 2010.
Increasing at a CAGR of 25%, branded apparel industry for women is expected to hit Rs. 18,351 Crore by 2010.
The organized lingerie retail market in India is expected to touch Rs 4000 Crore mark by 2009.
IT revenue from the retail segment is forecasted to grow at a CAGR of 43.41% by 2010.

Retail space under operations [in million sqft at the end of March-2008]:

* Pantaloon Retail - 8.9
* Vishal - 2.2
* Shoppers Stop - 1.6
* Spencers - 1.2
* Trent - 1.1

Retail Sales for FY 2008 [in Rs million]:

* Pantaloon Retail - 55,218
* Vishal - 10,053
* Shoppers Stop - 11,901
* Spencers - 8,061
* Trent - 7,162

Retail Gross Margins [in %ge]:

* Pantaloon Retail - 33.7
* Vishal - 44.1
* Shoppers Stop - 36.7
* Spencers - 14.4 [Lowest in the Industry]
* Trent - 42

Retail Real Estate Expense as Percentage of FY08 Sales:

* Pantaloon Retail - 7.2
* Vishal - 6.0
* Shoppers Stop - 8.6
* Spencers - 8.8
* Trent - 3.5

Retail Space Addition in FY 2008 [%ge growth YoY]:

* Pantaloon Retail - 67.5
* Vishal - 68.6
* Shoppers Stop - 36.9
* Spencers - 133.8
* Trent - 27.3

Retail Revenue in INR / sft in FY 2008:

* Pantaloon Retail - 7,788
* Vishal - 5,838
* Shoppers Stop - 8,585
* Spencers - 9,113
* Trent - 7,575

Smart Vs Big companies- Power to sell.

Westpac set to sell fast food shops as retail downturn bites
Thursday, 7 August 2008

Westpac Banking Corporation is likely to sell off 64 Australian fast food properties worth about $100 million because of tougher refinancing and retail conditions.

The bank has called meetings of two of its unlisted property trusts, which owns properties occupied by Hungry Jack's, KFC, Red Rooster Family Restaurants and others.

Westpac has warned that the trusts – the Westpac Family Restaurants Trust and the Westpac Family Restaurants Property Trust No.2 – will "face difficulties" if the restaurants are not sold. It cited increased refinancing costs and lower capital growth in future years, made possible by a softening retail property market.

Lessees of the properties have the first right of refusal to acquire the properties in the trust.

The first trust owns 36 Hungry Jack's and KFC stores, which it bought in 2002. The second trust's 28 properties comprise 19 Red Rooster restaurants, nine Chicken Treats, three Domino's Family Restaurants, one Subway Family Restaurant and one delicatessen.

The News Capsule- India Vs Brain Drain

India's vast middle class with its expanding purchasing power and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets.
The world's largest retailer, Wal-Mart, has tied-up with Sunil Mittal's Bharti Enterprises to enter Indian retail market.
Microsoft's first shop-in-shop pilot has been launched with the Tata Group subsidiary Infiniti Retail's multi-brand consumer durables retail format, Croma.
The Walt Disney Company, consumer product retailing arm of global animation giant, will soon add 135 new stores to its existing 15 stores.
World's leading coffee chain, Starbucks' enters India through a tie-up with the country's leading multiplex operator PVR Limited.
Apple Inc has entered into an exclusive marketing and distribution deal with Reliance Retail through "iStore by Reliance Digital".
The UK-based international coffee chain, Costa Coffee, plans to double the number of retail outlets by the end of 2008.
British retailer Marks & Spencer's has tied with Reliance Retail and plans to open at least 50 new stores in India over the next five years, with an initial investment of up to US$ 58 million.
UK's largest home textile retail chain, Rosebys, which was acquired by Gujarat Heavy Chemicals in 2006, is set to foray into the domestic market this year with a slew of stores.
German sportswear and Apparel Company, Adidas is going in for a major expansion across India, and plans to have a total of about 450 franchisee outlets in the country.

Discount Malls and E-tailing

Sell more..."Discount is the word"
Even as the organized retail market is starting to take off, there has been a concomitant surge in branded discount outlets in India. Top realtors and local retail chains are developing malls in regional boroughs, specifically to sell premium branded goods. At least 50 such malls are to come up in the next two years across the country positioned in the middle-to-the-premium end of the market.
For example, Royal Palms is developing Orchard Road Mall in the western suburbs of Mumbai. Similarly, Akruti Nirman, which is planning to brand its discount malls in Kanjurmag, Ghatkopar, Mumbai and Thane as 'Cityworld', has decided to develop similar malls in Tier II and Tier III cities. Some of the other prominent discount retailers include Pantaloon Retail (India) Ltd's Brand Factory, Arvind Mills Ltd's Megamart andand Provogue (India) Ltd's Promart among others
E-retailing in India
The increase in the PC and internet penetration along with the growing preference of Indian consumers to shop online has given a tremendous boost to e-tailing-the online version of retail shopping. An estimated 10 per cent of the total e-commerce market is accounted by e-tailing.
With today's, net-savvy Indians making online purchases like never before, both the number and variety of products sold online has grown exponentially. According to the Indian Marketing Research Bureau (IMRB) and Internet and Mobile Association of India (IAMAI), the e-tail market is estimated to grow by 30 per cent to US$ 273.02 million in 2007-08, from US$ 210.01 million in 2006-07.
In fact, there has been a continuous rise in the number of people accessing the internet. According to online research and advisory firm JuxtConsult's 'India Online 2008', there are over 49 million internet users in India. Significantly, internet penetration (as a percentage of population) has grown to 12 per cent, up 3 per cent from last year's 9 per cent.

Reforming Retail
The Government allows 100 per cent foreign direct investment (FDI) in cash and carry through the automatic route and 51 per cent in single brand. Besides, the franchise route is available for big operators. To further attract global retailers, the economic survey 2007-08 has suggested a share for foreign equity in all retail trade and 100 per cent in respect of luxury brands and other specialised retail chains.