The Indian Retail Market and the Herd Mentality

Dont loose your sleep dear Retailers there is much to chew than your mouth can hold.
India is too big a rural market for Big Retail brands to conquere .The small time retailers need not worry too much as of now, a person from say "Kecheri" in Thrissur Dist. will not travel all the way to Trichur Town (20 KM away) to get things like 5 kg sugar etc. from the Mall.

And Malls cannot be started in all corners of the village as they lose their strategic advantages of Place,Time,Volume,accessability.

If someone starts a Mall for a village population of 5000 he will be doomed as the logistic cost of sustaining a good mall will surely be higher than the total average expenditure by all the 5000 strong population in a month.

Hence Retailers and small shop owners should take their business to the masses and see that they penerate deep into each village and provide such convenience to the villagers that they dont even think of travelling to the town for purchasing their groceries/electronics/Garments. The Retailers can even start home delivery schemes.

And they should not allow their stronghold on distribution chain to weaken,they can play the role of Franchisees or Sourcing Agents to the Big Retail Giants or they can prevent one such Mall coming to their town through co-operative movement. The small retailers who provide different goods and services should come together and pool capital through co-operative society and start a Mall themselves in the Town or villages , the profit will be distributed to the shareholders and risk of individual businesses get covered as well as they will get a stronger bargaining power to get goods from industries at the same price as Retail Giants, as well as enjoy some concessions enjoyed by the co-operative societies. The moment the Giant sees a competition in an area they will think twice to set up their business there.
A good example I can quote is the state of Malls which were set up in close proximity in an area in western suburbs of Mumbai (Goregaon to Kandivili) these Giant Malls were so near to each other that each started eating into the business of others and the laws of economics were tilted against their favour in such a way that they are forced to continue with very meger profits as an early exit from the market will burn deep holes in their pockets.

Inorder to prevent such situations and to sustain Retail boom in India , the Govenments should bring in some regulation in the approval of Malls in a locality based on the population, expenditure capacity of the population, Proximity to the source / distribution network, need of the region and competition.

On the other hand Governments should be careful in opening up opportunities to the Business Houses in India as many of them (usually small ones) follow the "Herd Mentality" they flock to a business where they see some success stories e.g. Airline industry (today nobody knows where the East-West Airlines have vanished) , Telecom industry many have burnt their fingers by jumping into a market with a saturated bandwidth Spectrum next to face the music is the Retail and Real Estate/Reality industry and slowly but surely the death of many Media Houses and News Channels (the ones which have become more of a Music channel) are in sight. The Government should control this flocking and channelize the resources available with various Business Houses to different Areas of opportunites.
India is a Big Growing Economy and there is enough market space in various segments for one to make a fortune but the million dollar question is are you moving in the right/unique direction ?

- Ajitkumar