Unorganised retailers no longer fragmented

The Davids of Indian retail are taking on the Goliaths. CNBC-TV18 reports the durable retailers are uniting to tackle the big boys.

It has always been an unorganised, fragmented business with regional chains like Vijay Sales, Viveks and Kohinoor, operating in select cities. But now corporate giants are stepping in. Already the Tata Group has launched its Croma chain; and Reliance and Pantaloon have stores in store, so to say. So the small retailers fear.

"The purchasing power that the big players bring with them, gives them the ability to negotiate better prices with the manufacturers, take more volumes and therefore sell at a best price to the end consumer," says Mazyar Kotwal, senior manager, Advisory Services, KPMG.

Small retailers are coming together to combat the competitive threat. They are joining hands to effectively form a countrywide network.

"It is a three pronged strategy — exchange ideas, buy together as a group from vendors, and have a common brand, an internal store brand, which is common across the country," explains Nilesh Gupta, MD, Vijay Sales.

So now, you'll see HAV, or Home Audio Video branded toasters, irons and televisions all over India, which is expected to emerge as a national brand.

In a business where retail margins are as low as 10 per cent, sourcing at a competitive price is crucial. Small retailers hope their collective bargaining will help to keep the big boys at bay.