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Has organised retail lost the plot?

February 11, 2009

Organised retailers remain unsure as to which format works best and, given their loss levels, cannot even invest in the kind of supply chains they need to be competitive.

Check out what two industry stalwarts: Nikhil Vora, managing director, IDFC SSKI Securities, and R Subramanian, managing director, Subhiksha, have to say about it:

Nikhil Vora, managing director, IDFC SSKI Securities Ltd

Each square foot of retail needs Rs 2,000 of capital, organised retail makes a profit of just Rs 300! So who's going to fund it?

With more than $300 billion of retail sales annually, an economy growing at seven per cent, 500 million people below the age of 24 who don't have any guilt about consumption, I'm a big fan of organised Indian retail.

But in the near future, organised retail's story is a poor one. Superimposing a new channel in a non-differentiated business is always a long haul -- even after being in the market for more than 15 years, some of India's largest consumer companies like ITC, HUL, Nestle and the Tatas have got less than three per cent of the branded staples market. The same applies to all the attempts to digitalise the cable industry.

Image: Inorbit mall in Mumbai. | Photograph: Jewella C Miranda

Also read: Your air travel just became costlier!

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