Creating demand: how modern retail can drive consumption

Mumbai: “India will bypass the traditional evolution of retail as witnessed in the US by making a transition from the existing retail outlets directly to malls and hypermarkets,” says Kishore Biyani, managing director, Pantaloon Retail (India) Ltd who is also co-chairman, CII national committee on retail. ICICI Bank’s Chanda Kochar, who says retail in banking has developed on the strength of home and loans and credit cards, also shares this hypothesis. They were speaking at a press conference in Mumbai to announce the Retail India 2004 exposition, the Confederation of Indian Industry’s (CII) retail exposition due to be held in Mumbai on September 29 and 30, this year

The first decade of modern retail in India, says Biyani, has been characterised by retail driving a shift from traditional channels to new formats including department stores, hypermarkets, supermarkets and specialty stores across a range of categories. Modern retail formats have mushroomed in the metros and mini-metros, and over the last few years have also begun to establish a presence in the second rung cities, exposing shoppers to new shopping options, he adds.

Biyani cites studies, which reveal that the share of modern retail will grow from about 2 per cent currently, to 15-20 per cent over the next decades. “With GDP growth predictions averaging 6-7 per cent, and private consumption comprising half of the Indian GDP, it is necessary for consumption to grow rapidly to support the growth of the economy.”

Adds Kochar, “In the absence of a healthy growth in private consumption, economic growth will not result in substantial improvement in the quality of life. The development of the retail industry is a key factor influencing the promotion of consumption.”

In the next two or three years, Biyani expects at least two Indian retail businesses crossing Rs1000 crore sales turnover. With over 300 mall projects currently underway across the country, retailers will have options to select projects which best support their proposition and India shall witness the emergence of specialty malls e.g. home improvement malls, electronics and technology malls etc., which address specific consumer communities. Consumers will shop at malls for over 50 to 60 per cent of their shopping, as opposed to the 20 to 25 per cent currently.

Kochar and Biyani stated that eRetailing had not acquired popularity in India, barring for discount sales would not pose a threat to the brick and mortar shopping experience of the malls. Only banks have successfully managed to get customers through the net, said Kochar.

CII’s Retail India 2004, will focus on enabling a shift in retail preferences by equipping retailers with insights in to the Indian consumer and strategies for demand creation. Several international speakers from USA, Singapore and Malaysia will address the conference.

Some of the speakers at Retail India will be Rajiv Bakshi, chairman, Pepsico India Holdings Pvt Ltd , B S Nagesh, managing director & CEO, Shoppers Stop, Noel Tata, managing director, Trent Ltd, Y C Deveshwar, chairman, ITC, Vikram Bakshi, managing director, McDonalds India (North), John Thorne, general manager, Checkpoint Systems, USA, Hiren K Patel, chairman and managing director, Nirma, Ro Shroff, Callison Inc., USA