Key success factors

Securing the right retail real estate

When it comes to the retail sector, it is all about location, location and location! A fundamental aspect of retailers’ operations is the availability of good quality retail real estate. A few years ago, there were not enough retail real estate options and many retailers were forced to rent (high-priced) space that skewed their profitability metrics. Today, the scenario has changed.. Positive consumer sentiments, the entry of new foreign brands, incumbents’ expansion plans and increasing hiring needs are helping drive demand for retail space in Tier I cities. Also as a result of industrial growth and expansion several retailers are planning to expand operations to Tier II and Tier III cities.

Localising products for Indian consumers

Research and development, innovation and new product development are emerging as key drivers of success. As part of this effort, product localisation has emerged as a driver of sales, customer excitement, customer interest, etc. While Indian consumers want access to products available overseas, they are also keen to feel that a product has been created especially for them. Localisation can take several forms which include but are not limited to the following:

  • Creating and launching products specifically for Indian consumers
  • Making changes to store layout to appeal to Indian consumers
  • Customising production or food preparation practices for cultural sensitivities and local palettes.
Supply chain expertise an imperative for competitive advantage

Expertise in supply chain dynamics is a critical enabler for the growth of modern trade. India is a large and fragmented country and the absence of strong infrastructure and logistics systems make it challenging to reach consumers across other geographies. Studies suggest that logistics costs are between 10% to 12% of total GDP. With the Indian government making investments in state highways, an overall decline of logistics costs is bound to occur. Creating efficient supply chains and achieving competitive advantage for retailers is a function of the following:

  • Integrating vendor-managed inventory programmes with planning and forecasting processes
  • Integrating components of the value chain
  • Using a multimodal transport network
  • Encouraging skill development
  • Using innovative techniques