Building Successful Indian Brands

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Building Successful Indian Brands by Sundar
Bharathidasan Institute of Management, Trichy
Building Successful Indian Retail Brands
Contributed By
Bharathidasan Institute of Management
Building Successful Indian Brands by Sundar
Bharathidasan Institute of Management, Trichy
The Global Retail Scenario
Large format retail businesses dominate the retail landscape in the United States and across Europe, in terms of retail space, categories, range, brands, and volumes. Indian retail industry cannot hope to learn much by merely looking at the Western success stories in retail. Their scales of operations are very huge, the profit margins that they earn are also much higher and they operate in multiple formats like discount stores, warehouses, supermarkets, departmental stores, hyper-markets, convenience stores and specialty stores.. The economy and lifestyle of the West is not in line with that of India and hence the retailing scene in India has not evolved in the same format as the West nor can we learn valuable lessons from their style of operations. In retailing, the conventional wisdom used to be, that, the critical success factor was location. But precise location no longer matters and geo-demographics is increasingly becoming irrelevant. The leading multiple chain retailers, superstores and malls create their own centers of gravity, attracting customers by car, bus, train or even by plane to wherever they are located.

The growth of multiple chain retailers has been relentless for many years in the west and this has been accompanied by the development of retail names as brands in their own right. Discount retailer Walmart has catapulted to the top of the Fortune 500 rankings in the U.S. with a turnover of $258 billions (2003 revenues – the basis for 2004 rankings), ahead even of oil major Exxon Mobil and the mammoth manufacturing giant General Electric. A ruthless policy, of, ‘Always Low prices. Always.’ has brought Walmart to the top. On the day after Thanksgiving in November 2002, Wal-Mart sales hit $1.43 billion in one single day.

Walmart and Nordstrom in the U.S. and Sainsbury’s and Marks & Spencer in the U.K. have grown by rapid geographic expansion in their own countries. Specialists like Benetton of Italy and IKEA of Sweden and The Body Shop of the UK are international Building Successful Indian Brands by Sundar

Bharathidasan Institute of Management, Trichy
and the fast food chains like McDonald’s and Pizza Hut are everywhere. The same products are increasingly available from the same names on every continent. Retailers worldwide have immensely benefited from the sustained growth of the disposable income of their global consumers.

Geographic saturation
The end of the nineties has signified a turning tide of retailer power. The limit to retail ambition is geographic saturation. There is already a fear that the U.S is ‘over-malled’, that available shopping space exceeds customer demand for products. The retailer logic that ‘if we build new stores they will come’, is being belied. Many retailers have started postponing their store expansion plans. The track record of some of their international store expansions is also not promising.

Category killer competition
The threat of saturation is accompanied by a new competition from the low cost category killers. Specialist competition is eating away at the market share and forcing down the prices and gross margins of the multiple chains. The success of the giant killers in the toys segment – Toys R Us and in home furnishings – Home Depot, in the are a case in point.

Alternative shopping channels.
The newest retail format that is showing growth in the U.S., and is more frightening for retailers than for consumers, is the Internet. The potential for on-line shopping which is growing in the U.S. questions retailers’ investments in more physical sites and stores and makes it imperative that they too explore the new agenda of...
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