India's Retail Bubble

[vijayr3]

India's retail growth story is very startling! Organised Retail in India is less than 5%, the organised retail growth foray is all set for big plans and rapid growth, (for ex: Reliance Retail to open up 350 stores in a year, opening a new store almost everyday!)
Indian biggies like Pantaloon, Reliance Retail, RPG Group and many more have just paused their expansion plans across India for many reasons like heating up real estate prices, shortage of skilled retail personnel, supply chain or past retail experiences / best practices, fuel costs etc. Other companies who have just stepped into India such Wal-Mart, Marks & Spencer, Carrefour, Tesco have not opened their stores yet nor to the set growth plans. Big opportunities and tie ups have been shelved, such as Wincanton (UK Supply Chain Company) - Reliance Retail tie up for supply chain. Reliance just could'nt achieve targets, Wincanton has stepped back. Were will this lead to? Just like another Walstreet crash? Broadly speaking what would be the ideal solution?
A) Warehouse Consolidation
B) Transport Consolidation
C) Infrastructure development
D) Slow down, re think business plan??

[Starbucks Junkie]

Vijay,

You clearly have some knowledge on this subject, how about creating an article entry on the subject in our monthly competition.

SJ

[vijayr3]

Hi, thanks for ur response. Definitely will try to make a paper on it. Would like to make point here with reference to previous posts in regards to retail bubble in India. There is so much hype on India's retail growth! Some lines on India's retail study (Global Retail Development Index 2007, GRDI) looks over exaggerated. I would like to say something strongly to foreign entrants, India is a very diverse country every state has different languages, food habits, climate, and around 40%- 45% are below poverty line (no body knows the correct figure on this). Hard to trust govt. statistics. Well world bank report says population less than $ 1 a day is around 33% (does that mean people earning above $1 a day are not poor? very funny) and the US $ is volatile these days (1 US$ was Rs. 38 last year now 1 US$ approx. Rs. 48)
Of course the foreign guys have all found a Indian partner to work as FDI restrictions wont allow them multi brand retailers to where as single brand retailers are only to invest 100% until now. But what they want to prove in India when India is still under developed with parallel economy. Wealth is created and cornered only at big cities like Mumbai, Bangalore, New Delhi, etc. Of the world's 10 ten rich, 2 are from India origin and at the same time poorest of world poor in the same country. (Sorry, too much of economics)
But these are not to be taken very lightly. Will add more in the article which I would try to prepare very soon!

[Starbucks Junkie]

I look forward to reading it..