How can FDI in Multi Brand Retail Help Farmers?

The debate is on from long time on multi brand retail in India. Now there are indications 26% FDI would be open up on multi brand retail. If so happen, there will be certain benefits farmers will get.

1. Assured purchases- Any large retail chain will need supplies. These are not going to come from abroad. These will have to be produced in some part of India. The company will have to get into a contract farming agreement with farmers and ensure that the produce is picked up and transported regularly.

2. Increase in productivity- Companies will have to compete not only on prices to the consumer but also on remunerative prices to farmers. This is possible only if they invest in better seeds, fertilizers and farm practices. The farmer has to get higher returns from his land and he needs support to do this: be it technology, better inputs or management. The winner will be the one which can get the farmers’ incomes up and keep the consumer prices down.

3. Better Quality- It calls for intervention at the farming, transport and storage stages. Besides giving right seeds and other inputs to the farmers, companies will have to advise farmers on management of the crops and use of consumer friendly pesticides.

4. Better Supply Chain Management- Perishable agricultural produce is now subjected to unscientific handling, resulting in huge wastage. Most often, the consumer pays for this wastage. A large company would consider increasing its competitiveness by ensuring the efficiency of logistics. This requires investments in warehouses and in transport and handling.

5. Introduction of new technologies- The competitive advantage of companies will come from introduction of new technologies to enhance productivity and quality at the farm level and in logistics. This could benefit a large number of farmers.

Bricks to Clicks: Online Retail Beyond Touch n’ Feel Now

It is always believed that Indian consumer are very much prone to ‘touch and feel’ factor before making a purchase. Experts used to feel certain categories online will not be revenue generating.

 According to comScore, non-travel/auto/gas/food e-commerce sales represented just 7.1% of total retail sales in the US in Q2 2010. But, significantly, online sales have grown at an annualized rate of 9.7% since 2006 (vs. the 2.3% annualized decline in total retail sales over that same period, which includes the Great Recession). Indian in online retail is a Rs 1200 Crore industry, growing at 30%. However, time and again they have been proven wrong by innovative online retailers who have developed tremendous category focus. Internationally, Zappos.com did this with shoes and Bluenile.com did it with fine jewelry. If we look at domestic players flipkart.com, futurebazaar.com, trades.in, infibeam.com & timtara.com are doing good across the categories. No of players now focusing on their e-commerce arm. Gitanjali group is trying to replicate bluenile in India. Bata shoe one of the most trusted brand of India has started their online arm as well. Players like Adidas, Lifestyle and many more focusing on online sale. These are typically the products have the touch and feel.

Gradually it seems like dot com bubble is long behind us. Now its  clear that the shift from malls of bricks & mortar to stores on mouse click was not a two- to three- year revolution, but a 15-20 year evolution.

Retail Shrinkage: Indians are Unbeatable Yet Again !!

On an average, a modern retail format has 15 close circuit televisions and 30 employees on surveillance, yet when it comes to shoplifting, no one can beat Indians

First of all let’s understand what is retail shrinkage?

Retail shrinkage is the difference in the value of stock as per the books and the actual stock available in the shop. This short fall may be due to-

• Shoplifting
• Employee theft
• Supplier fraud
• Administrative errors

As per the survey conducted by Centre for Retail Research is a UK-based manufacturer and supplier of retail shrink management solutions, among 920 large retailers across 36 countries India with the highest shrinkage rate of 3.10 per cent, an increase of 6.9 per cent over last year.

In India, while Shoplifting were caused by customer theft which contributed around 44.7 percent loss, employee theft was responsible for 23.7 percent as compared to 8.4 per cent by suppliers, said the survey. However, administrative errors contributed to 23.2 per cent, added the survey.

In comparison to India global retail theft declined (5.5 per cent) between July 2009 and June 2010. Shrink cost retailers $107.3 billion during the study period, representing 1.36 per cent of global retail sales. This is down from 1.43 per cent the previous year. The lowest shrinkage rate was found in Taiwan (0.87 per cent), while in Europe the rate stood at 1.27 per cent.

What is more alarming that Indian retailers are not taking shrinkage seriously. They do not find it hitting their bottom line directly. Indian retailers are not ready to increase spent on security. Whereas report have shown clearly that those who have increased spent on security are able to shrinkage rate drastically.

 Nikhil Kunwar

Retail punch !!

Today I came across very interesting fact. Its about how offline retailers reaping benefits from e biz portals. Online retail ventures are offering additional discounts to generate volume.

IT products have very less margins. Retailer (such as Nehru Place retailers) are ordering IT products in big no and availing discounts from online portals and selling on prevailing market price. This way they are earning more margins than normal. 

Interesting !!

Nikhil Kunwar

Roll-up Time for Mom n Pop Stores: Kirana stores facing succession crises.

In India after radical changes in retail still 90% of the pie is unorganised retail. With 10 lakh plus kirana store owners in the country and several of them having succession trouble (running a kirana is not the preferred career option for many in the new generation), it might be the right time for a roll-up operation. A roll-up is the consolidation of several small businesses under one roof, usually through a publicly held holding company.

The roll-up strategy can be very successful if you have capable management driving the ship and an industry where the synergies for consolidation make sense. Roll-ups provide greater efficiencies such as merging back office accounting, marketing and purchasing. The roll-up also provides an exit strategy for mom and pop owners who are seeking to retire in the not too distant future. With most kirana stores occupying / owning prime property, the real estate benefits could be substantial. 

Keeping in mind such scenario I think its the best time for entrepreneurs to identify their own expertise and capability to capture the opportunity to hold such roll up. Integrated Kirana stores will need man-power & Technology. If such consolidation is bound to happen in future due to succession crises, one can start a venture that can outsource manpower & technology to the backend operations etc. Its a big opportunity for upcoming managers & retail industry leaders & its a right time to look into it.

Nikhil Kunwar

Strong economy, good monsoon and festive season, it's Diwali for retailers !!!!

Still 15 days to go for Diwali, and Indian retailers are already witnessing 15-25% hike in their sales. Products such as 3D, LED and 40-inch-plus LCD and Plasma television sets, front-loading washing machines, high capacity frost-free and side-by-side refrigerators, convection microwaves, branded apparel and fashion wear, imported chocolates, dry fruits and wine, digital SLR cameras and smartphones are in high demand across the country. High ticket value products are generating volumes that ultimately resulting to boom this year. Online retailers as well witnessing 10-15% rise in their sales. 

Macro economic factors, Sensex 20K & mounting, good monsoon & festive mood are key drivers for such boom. Events like CWG 2010 keeping our spirits high & positive.

Factors like timely delivery and assurance to quality still threatening. Despite of all odds India INC is  bound to achieve new high in retail. Such scenario will surely put pressure on policy makers to open FDI on multi brand retail in India.

Nikhil Kunwar

Retail Punch

e-tail is really interesting....and each customer is unique......Today gotta a call from customer who asked for assurance from us for timely delivery.........He gave a interesting argument---------Dekho beta if get married n ur wife come to ur home after 1 year, so there is no point of getting married today...... :) :)

Soon 49% FDI for multi retail brands in India.