Why Organized Retail In India Is Headed For Hard Times

“Customer is the king” goes the old adage. Nowhere is it falser than in India. Till the 90s, the state owned PSUs doled out slipshod products and services to us, and now the private sector is leaving no stone unturned to ensure we stay a bunch of dissatisfied, unhappy customers. I am going to state 3 recent ‘case-studies’. They are representative of the experience me and my friends have had:

a.) Café Coffee Day: Today is friendship day. To celebrate the occasion, Café Coffee Day has introduced a new menu. Everything on this menu is 15-25% more expensive than their ‘normal’ menu. Ordering something from the old menu is not an option that I am given. The basic Rs. 50 Cappuccino has taken a new avatar (’Go Nuts Cappuccino’ or something to that effect) which will set you off by Rs. 62. What did I do? I came home and made myself a cup of tea. You’d have gotten Rs. 50 from me Coffee Day, you got nothing instead. I just hope that the new menu gimmick doesn’t last beyond today, otherwise Coffee Day just lost a customer.

b.) Planet M: They are definitely feeling the pinch – especially the store at Brigade Road. I have mixed feelings about their diversification into mobile phones. Sure it helps them optimally utilize their real estate investments but at the same time it dilutes their brand as a speciality music store. In any case, they can’t beat Subhiksha and Big Bazaar on cellphone prices. Nor are they trying to differentiate the experience (try offering sales and service under one roof guys. Anyone who has had to go to the official Nokia repair center will tell you that it is not something one would ever do out of choice). And I don’t know how you plan to attract customers on a warm day if you switch off the air conditioning without ensuring proper ventilation. Add to this poor inventory management/ignorant staff and you have a fiasco in the making (specific instances: Life in Metro (out of stock, no idea when to expect fresh stock), Jaane Tu Ya Jaane Na (music lying on an obscure shelf, staff doesn’t know they have the music), Dham Dhoom (out of stock, no idea when to expect fresh stock).

c.) Levis (and other big-name garment brands in general): Is it just me or does everyone else feel that the cuts, colors and designs offered in India look jaded and utterly unwearable? I realize that clothes are a matter of personal choice but the number of times I’ve come out without buying from the big-name brand stores makes me wonder if the problem is not entirely with me. The prices these brands are charging these days are quite close to what you’d pay in the US. And yet the quality and the overall tailoring feels like that of a lot which was rejected by the importers abroad.

Yes, rising real estate prices and a slowing economy are problems that all of us are confronted with. Add to that the quality of labor in India, (how many times have you been put off by unhelpful, ignorant, discourteous staff?) and it makes for a very tough retailing environment. But it doesn’t mean that you forget the customer. Sure we’ll buy – since often our choice tends to be between the devil and the dead sea – but don’t expect the stellar growth rates that everyone has been hopeful about.

  • so i call upon you all sleeping giants....isn't there anyone to step forward and make a merry of this untapped market? i am sure there are people, you just need the courage and vision to step in to the game :)...till that day comes, i will keep on wasting my neurons worrying over others money :)
  • Vineeth
    err...btw about that issue with the clothes... it is you :)
  • C.P.Gulati
    Hi Deepak,It is good analysis of the situation and difficult times in which the retail business operate. After all it the poeple and their attitude be it the govt or private sector who have to implement the systems and policies. The only difference being that people in govt jobs are pretty secured while their counterparts else where are not so lucky.
  • Hi Tauji, I agree that it's the people's attitude, but we need to investigate the reasons that cause these attitudes to develop. One can understand that the lack of competition and accountability contributed to customer unfriendly policies in past but in private sector, where the market punishes incompetence, things should be better.

    I have a theory about the "average customer facing Joe's" indifference to customers. A lot of big-chain outlets - thanks to the labor policies in India - often source workers from an intermediary. This keeps them from incentivizing the performers since these workers are not the part of the core organization. And while they can fire the non-performers, they are usually absorbed back by the same intermediary and placed elsewhere. Semi-skilled/skilled labor after all, is in short supply. This causes the checks balances of rewards and punishments to go awry, and we as customers bear the brunt of it.

    A couple of books that I recently came across, throw some more light on these (and similar) issues - a.) In spite of the Gods by Edward Luce and b.) Escape from the benevolent zookeepers by S. Aiyar (a compilation of his Swaminomics column in the Times Of India) are wonderful reads.
  • kunal
    hey deepak,
    i fully agree with u'r views. its a hopeless situation all around, whether it be govt. sector or private.
  • Hi Kunal,

    While agree that the picture is not all that rosy, I wouldn't go so far as to call it hopeless (yet!). The big chain owners just need to empathize with the customer a little. Its not rocket science after all! And honestly, I think the average Indian customer - thanks to years of not having much choice - is not all that demanding. Just get the basics right, treat the customer with respect and the rest will follow.
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