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.

August 3, 2008