May 25, 2012

Will Walmart do to big Indian retailers what Samsung, LG did to BPL, Videocons?

Indian corporate has not understood that mass marketing in India is completely a different ball game as compared to the developed countries. India is unique diverse country therefore mass marketing needs qualified strategic approach different from the west. Our masses are divided by many factors other than economic or color of skin. Therefore despite opening up of the organised retail almost a couple of decades ago and entry of India's largest business houses alongwith unprecedented GDP growth resulting into 300 million middle class no domestic retailer can claim victory. Most companies are operating at scaled down version gasping for breath. In fact the large players in retail industry in India are looking forward to government's nod to FDI in multi-brand so that they could sell their companies to Walmart & Carreffour.  

Indians people lack the social skills to run service industries based on trust. See what is happening in our service sector like telecom, electricity, education & medical services etc. Service sector survives on values like trust, fairplay, equality & honesty. We have many religions, castes, languages, skins colors, eating habits but most uniting feature of our Indian society is overwhelming distrust of other. We put too much currency on smart play over fairplay. One retail company believes that India was a Sone Ki Chiriya ( Gold Sparrow) & they shall once again strive to achieve it. I would prefer India to be a Sone Ka Hathi ( Elephant of Gold).

We must keep in mind that we are not USA or Europe where people generally trust each other. We are a society that’s fractured by insidious mistrust that keeps people from behaving like a cohesive them. First step towards success of retail is to build a trustworthy team that in turn could inspire trust of the buyers, Till such mindset is achieved even Walmart would have to struggle in Indian market. Without inculcation of pride among the team working at the outlets its impossible to run such an operation.

If you examine the reasons for failure of organized retail in India many factors have been cited by various experts but no one has pointed out the most critical issue of absence of trust as the prime culprit. After all there is enough growth in economy leading to healthy demand for goods & services, some players have deepest pockets too, there is reasonably good transport backbone and India has quite a few well established fmcg majors present for long enough periods too.

We witnessed huge customer interest in buying at such outlets in the beginning & any research could reveal that customers could return to buy from organized retail if the players could get their act together. Quantity, prices, packaging, buying convenience, availability, variety and experience are few given factors that are in favor of organized retail.

Though most retail players failed due to absence of managerial competency for such operations particularly in marketing function lacked the understanding & creativity required to maintain a robust interest of customers in the stores. Across the board players focused on product images to lure the customers without strategizing the brand pull in an effective manner.

I have deep conviction that most Indian retail players would happily sell off their unmanageable companies to the new entrant into the market. Without exception Indian companies lack the competencies to take on the competition in b2c space. We are heading into times when Indian corporations would be relegated to b2b space whereas b2c would be dominated by the global giants. World's largest democracy would have global companies operating in b2c arena going into next decade. 

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