Boom time predicted for organised retailing in ’02

Updated: Jan 21 2002, 05:30am hrs
In 2002, organised retailing is expected to trigger a greater retail boom. However, less competitive players will be compelled into exiting the business environment, forecasts Mr Vivek Mathur, associate director, head of retailing practice, KSA Technopak.

Mr Mathur explains that the retail boom is actually a process of evolution, which reflects changes in consumer needs and expectations, increasing purchasing power and proliferation of brands in various consumer goods categories. “In the backdrop of the arriving transition in consumption patterns and consumer trends, we are confident that organised retailing will continue to develop strongly in India, though clearly some businesses shall not be as successful as others, since there have been so many entrants over a relatively short period,” remarks Mr Mathur.

Outlining the strategies to attain profitable scales of operations to cash in on the evolutionary boom, Mr Mathur elaborates the prominence of the following business domains:

* Customer focus: Given the diversity of consumers in India, identification of the target customer segment and aligning the merchandise, prices and services with these customers’ needs will be the primary step towards strongly bound customer management.

* Strong value proposition: Each store shall need to develop a compelling reason for the customer to buy from that store, and this shall form the core of the store’s brand. Thus, developing a shopping experience as a brand proposition will differentiate the winners from the rest.

* Rational roll-out strategy: This incorporates addressing issues of national vs regional dominance and decisions to enter which city and when, determined by the supply chain structure, homogeneity of target consumer needs, segment size and infrastructure, and development of appropriate store grades for markets with differing potential.

* Controlled fixed costs: Variabilising costs wherever feasible in terms of occupancy costs, organisation and phasing infrastructure investments will hold the key to effective retailing.

In essence, all the strategies have to piggy back on adequate capitalisation to sustain investments in stores, infrastructure, and supply chain in the initial years, Mr Mathur opines.

Healthcare retailing

The ever-changing dynamics of healthcare business will also confront a fresh slew of marketing challenges in the area of healthcare retailing.

According to Mr Mathur, the following analogies will determine the change drivers in healthcare retailing:

* The Rs 80,000-crore healthcare industry in India is growing at 15 per cent per annum. Of this, about 50 per cent comprise hospitals and nursing homes, the rest being domiciliary including doctors (both allopathic and alternate medicines), pharmacies and diagnostic labs. This shows potential in other non-hospital forms of health delivery services such as organised pharmaceutical retailing and primary healthcare .

* Preventive care is a significant 30 per cent of the total market, and six out of 10 patients take self-medication, that is without going to the doctors, indicating an opportunity for OTC drugs as well as preventive medical services.

* Of the total market, 90 per cent is catered to by the private sector and only 10 per cent is from Government-owned facilities. In India, 90 per cent expenses are paid from an individual’s pocket, without any sponsorship either from insurance companies or employers. This again indicates a huge potential for private health insurance.

The three core differentiation in this form of retailing, according to Mr Mathur, are product and service assortment, width, and competitive service-centric pricing initiative.

Explaining the strategic orientation in healthcare retailing, elaborates Mr Mathur: “Retail is more discretionary expense whereas healthcare retailing is more need-driven. Therefore, in healthcare retailing different formats could be adopted to cater to various health needs of the same target consumer. There could be primary healthcare centres (limited width of services, driven with quick and prompt services—just like convenience stores addressing basic and core needs) and secondary healthcare centres (wider services option, may be catering to a radius of 5 km) incorporating more serious needs such as complex diagnostic tests.

Executing an integrated strategy and feeling consumer pulse are the mantras to kick retail bottomline to a prosperous start, concludes Mr Mathur.