BOOK REVIEW Buying what they're selling India's Store Wars by Geoff Hiscock
Reviewed by Muhammad Cohen
Global economic downturn and Mumbai attacks notwithstanding, it's clear that
India is the next big thing. Within a couple of decades, it's likely to surpass
China as the world's most populous nation, at least temporarily. The population
in its four leading urban areas - the Golden Quadrilateral of Mumbai, Kolkata,
New Delhi and Chennai - tops 53 million, more people than all of South Korea,
South Africa, Spain or two Malaysias.
By 2015, India's economy is forecast to double. By 2040, India projects to
become the world's second-largest economy, trailing only China. The world
recession may slow the trend, but it won't change the tide. One reason behind
India's success: with
hundreds of millions of English speakers and tens of millions of university
graduates, the country has a powerful, advanced services sector that many
developed nations would envy.
But one key portion of that services sector remains underdeveloped - retailing.
Of India's estimated US$410 billion retail spending last year, just $15
billion, a scant 3.8%, went to so-called modern retailing. Instead, much of it
was spent in the country's 12 million kirana (corner) stores. By 2013,
overall retail spending is forecast to increase 50%. But the share to modern
retailing will grow 800% to $120 billion, bolstered by more than 500 shopping
malls in various stages of development. Even that figure will represent less
than 20% of overall retail spending.
Geoff Hiscock's India's Store Wars introduces the key players behind
this extraordinary transformation in the making. Here, too, global economic
woes may set back that timetable, but they won't reverse the movement described
in the book's subtitle: Retail Revolution and the Battle for the Next 500
Million Shoppers. Soon, half a billion Indians now living in poverty will
become new consumers eager to sample the temptations of the 21st century.
Future is now
The book is at its best portraying current retail leaders and contenders
gunning to knock them off their pedestals. Today's master of Indian retailing
is Kishore Biyani, leader of the Future Group that includes Pantaloon
clothiers, Big Bazaar hypermarkets, Food Bazaar supermarkets, Home Town home
improvements, EZone electronics, Depot books and music plus futurebazaar.com.
The group targets every segment of the boom, including consumer finance through
Future Capital, retail property through Future Space, even advertising through
Future Media. Despite its extraordinary reach, Future remains focused, thanks
in large part to Biyani's near-obsession with tracking consumer behavior.
Biyani modeled Big Bazaar after Saravana Stores, self-proclaimed "super store
of the shopping world" with four outlets along Chennai's Ranganathan Street, "a
halfway house for the Indian shopper's momentous transition to modernity" in
Hiscock's view. Up to 100,000 shoppers a day visit Saravana's shabby
seven-story 25,000 square foot original outlet, drawn by its promise of the
"lowest prices in the nation".
Saravana's turnover of more than 2 billion rupees (US$50 million) makes it
India's most successful retailer of its size. A family business founded by
three brothers with roots in rice milling, one sibling now runs the renegade
Saravana Selvarathnam store down the road promising to undersell his brothers.
But Saravana remains a local phenomenon, destined to instruct the revolution
rather than lead it.
Big Bazaar's rivals include traditional retailers Shoppers Stop and Spencer's
Retail, but many others now want to join the party. Newcomers include India's
biggest business names - Reliance, Bharti, Birla and Tata - as well as the
low-price grocery leader Subhiksha, where a lack of air-conditioning is part of
the no frills experience.
There are nearly as many approaches to modern Indian retailing as there are
contenders. Shoppers Stop follows Future Group's model of stores across the
full product spectrum. Bharti has partnered with Wal-Mart; India still bars
foreign companies from independent entry into retailing. Tata has partnered
with Benetton but hasn't yet synchronized the components of its vast own
empire, such as India's leading watchmaker Titan, for maximum retailing impact.
Farm to fork
Reliance, India's biggest company, has the biggest ambitions. The group began
its assault with a 452-strong chain of Reliance Fresh supermarkets, taking a
"farm to fork" approach that it hopes will not only give its stores superior
products but convert rural farmers into customers. It also aims to bring the kirana
store into the 21st century through franchising.
All of these ambitions face obstacles as huge as the opportunity. India's road
from farm to fork, for example, is often poorly maintained, crowded with
unprofessional drivers in unreliable vehicles. The cold chain to keep food
fresh is virtually non-existent; while India is now a world leader in food
production, it's also a leader in food spoilage and an insignificant exporter.
Retail projects on the drawing board will require 1.5 million new staff.
There's also political opposition to homegrown corporate retailing, never mind
foreigners in partnerships or, someday, on their own. Faced with these
difficulties, it's not just aspiring retailers but India's Store Wars that
often comes up short.
Author Hiscock presents a lengthy list of interviews and other close encounters
with top business minds. He also wrote India's Global Wealth Club, but
his new book has the feel of a cut-and-paste job. It's longer on facts and
quotes than insights and analysis. Hiscock uncritically accepts what his
sources tell him without questioning their boundless optimism or pursuing key
issues they raise. For example, though the book repeatedly alludes to political
opposition to modern retailing, it never says who those opponents are, what
they want, or examines big retail's counter-strategies.
Turning the kirana
Similarly, India's retail competition doesn't just pit the top groups against
each other, but it matches the modern stores as a group against kirana stores
and other traditional retailers. Yet there's no detail about what a kirana
looks like, how one operates and what makes it successful, nor any information
on other retailers, such as traditional markets, that will still control 80% or
more of India's total retailing by 2013.
In place of analysis and insight, like many businesspeople, Hiscock puts his
faith in consultants. Overwhelmingly, they spout banalities. Occasionally they
tumble into ridiculousness such as lists of top retailers featuring unnamed and
non-existent companies. Consultants generally specialize in stating the
obvious, yet, along with Hiscock, they miss the most obvious point of all.
It's not until four pages from the end of India's Store Wars that the
book compares the challenges facing India with the experiences of China.
Certainly these two billion-strong countries have unique characteristics, but
retailing in China has faced many of the same hurdles now confronting India,
including establishing supply chains, cold chains and other support
infrastructure, staffing outlets and partnering with foreign firms,
successfully and otherwise.
Many consultants make a living reinventing the wheel, so it's not surprising
they might neglect to mention these parallels between Asia's two giants. Author
Hiscock's failure is less understandable. A credible retailing analyst would
understand that you don't accept stock answers off the shelf. More importantly,
in retailing and beyond, you don't just buy whatever they're selling.
India's Store Wars by Geoff Hiscock, John Wiley & Sons, 2008
(paperback). ISBN: 9780470823514. Price: US$22.95, 200 pages.
Former broadcast news producer Muhammad Cohen told America's story to the
world as a US diplomat and is author of Hong Kong On Air (www.hongkongonair.com),
a novel set during the 1997 handover about television news, love, betrayal,
high finance and cheap lingerie.
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But one key portion of that services sector remains underdeveloped - retailing.
Of India's estimated US$410 billion retail spending last year, just $15
billion, a scant 3.8%, went to so-called modern retailing. Instead, much of it
was spent in the country's 12 million kirana (corner) stores. By 2013,
overall retail spending is forecast to increase 50%. But the share to modern
retailing will grow 800% to $120 billion, bolstered by more than 500 shopping
malls in various stages of development. Even that figure will represent less
than 20% of overall retail spending.
