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Indian retailers have decided to capture the niche segments; they are going ‘micro’
Haven’t we heard enough of the retail revolution sweeping across the nation? Yes we have! But one thing which most of us still seem to miss out on is the latest changes in the growth and investment patterns. The fiercely growing Rs.9.3 trillion retail rodeo (as estimated by CII) is heading for a twist in 2008 as both existing biggies and new players start experimenting with innovative retail formats.
Slated to start its operations by January-end, Dabur’s new health and beauty retail venture ‘new u’ has put aside Rs.1.2 billion for 2008 and aims a turnover of Rs.10 billion by 2010. But the question is how, when everyone suddenly seem gearing up with big money? “To achieve such a turnover, we plan to have exclusive tie ups with various brands and our revenue model will try to leverage such strategic collaboration,” elaborates Peter Baker, CEO, Health and Beauty Stores, Dabur India. Even Mukesh Ambani is trailing this stride of innovative formats. He plans 10 new retail formats in 2008, which will cover almost all the business verticals. Affirms Raghu Pillai, President, Reliance Retail, “We are open for tie ups but at the same time we will develop several in-house brands as we believe the margin in them is always high.”
In fact cornered by the Korean chaebols, Godrej & Boyce, too seems to ramp up its act. Cashing in on the retail boom, Godrej is going gung ho to revamp its consumer durable retail venture – Lifespace. And to sustain its profitability, the company is resorting to constant value addition. “But for the value-added products we need to have own retail stores, which will also save the cost of hiring dealers. We have tested the water for over two years now and we think this is the right time to launch our stores across the country,” adds Jamshyd N Godrej, Chairman, Godrej & Boyce, who plans to open as many as 90 stores by 2010. With retail expected to grow at 50% and specialised formats to cover over 25% of the total organised retail in 2008 (Retailers Association of India), Kishore Biyani is also combating back. But unlike other retailers, Biyani is investing in small retailers to promote their retail ventures.
Indeed, these strategies are unique. But the real question is whose retail model will fetch the maximum revenues? Well, analysts claim that new formats of retailing are cashing in on value-added services by creating lucrative revenue models and this is what makes them distinguished from regular retailing. But what becomes necessary is exclusive tie ups and penetration which certainly seems taking off now. However, one thing which retailers still need to keep in mind is that the key to success is not just about formats, it’s about understanding the consumers dynamic, mindsets and attitudes. And this is the real challenge as well as the panacea for success.
B&E edit bureau: Angshuman Paul
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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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