Previous

Page - 6

2.2 Retail Format Model for India

The key to a winning retail format is to follow a model that suits the Indian consumer behaviour. One big undisputable fact is that almost all retail players (especially in food) have been region-specific. So whether it is FoodWorld, Nilgiris, Margin Free Market, Giant, Varkey's and Subhiksha in the South, Sabka Bazaar only in and around Delhi, Haiko in Mumbai or Ahmedabad-based Adani, they have clearly battled with scalability.

Issues to be tackled
Scaling has multiple implications. Ideally, it is an attempt to increase market share/ revenues or growth. But the question is: How does it affect operations? Does it mean reduction in assortment, shift to standardisation and reduced customisation? Where to scale, up, down or out? When to scale? Should a FoodWorld replicate its South-based format in a Delhi? And what happens when it wants to go to other 10 million+ towns? And then lower down the pop strata? (More real estate space is available in smaller towns, but do the footfalls justify the bigger box format?)

Need for multiple formats
Clearly, a retailer needs different formats for different town classes - but then what happens to economies of scale via standardization? A good way out is the way the RPG group is treating its Music World stores - flagship vs. smaller vs. the express outlets located in, say, a FoodWorld. Similarly, the way ABC has defined Café Coffee Day outlets - flagship vs. takeaway.

Most of the global powerhouses in the retailing sector such as Wal-Mart, Carrefour, Tesco etc have adopted multi-format and multi-product strategies in order to customize their product offering for distinct target segments (refer table below).

Next

* Contributed by -
Harmesh Mehrotra & Manu Arora,
MBA (IB) 2004-2006,
School of International Business,
Indian Institute of Foreign Trade, New Delhi.