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GD AT URPERCENTILE : RETAIL MANAGEMENT IN INDIA - A BUBBLE PHENOMENON OR NOT

Sucheta, Tuhin Chaturvedi, Ritesh, D.Nag and Ami clear this GD.

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Sucheta: Hi, My name is Sucheta Sinharoy, Graduate Microbiology, Kolkata Got call from Christ College, Alliance Business Academy.

Tuhin Chaturvedi: Good evening to all. I am Tuhin Chaturvedi, B.E. Telecomm, 10 months experience in Bangalore. Have calls from ICFAI and Narsee Monjee

Ritesh: I am Ritesh, 2.5 yrs experience, Bangalore

D.Nag: Debabrata Nag, Chemical Engineering, Kolkata

Ami: Ami, B. E. (I.T.), Gujarat

Kirti Gupta: B.Tech I.T 2005

Achal arora: Achal from Bangalore , working in sterling Commerce, 1.5 yrs of experience. Got call from IIM-A,C

www.UrPercentile.com: The Topic of the GD is:  “Retail Management in India - A Bubble Phenomenon or Not?” .Please Start

Ritesh: The Retail sector has done a fantastic job of increasing the competitiveness of the FMCG products in developed economies such as the US, Germany & the UK. It has created a lot of jobs & has contributed to the growth of GDP in these countries. In India, the organized Retail sector is less than 10% of the total Retail industry. Even now the Retail industry contributes to about 8 - 10 % of the GDP of our nation. The government has hinted at some benefits to international Retail giants so that they can collaborate & help in building Retail chains as ventures with Indian companies.

D.Nag: Retailing is a process in which Retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells individual items or small quantities to the general public

Sucheta: Retailing is a process in which company buys goods at whole sale rate and sells individual products to consumers though stores.

Tuhin Chaturvedi: I think it's too early for us to pose a question pertaining to a bubble about a field which is still at a very inchoate stage in our country. Retail is just flexing it's muscles in India via the Bharti Walmart deal and Mukesh Ambani's decision to move in or Kishore Biyani's plans to consolidate further in a sphere which has always been his own. However, Retail is a potential candidate for a bubble phenomenon. This is because in a growing economy, consumerism is also a concomitant. Urban middle class people, who have always been accustomed to the kiranas might be bought by the sprawling malls, excellent variety of good available and the promptest of service. I also think that the Retail boom enjoyed by the developed countries will also be in India's way to growth.

D.Nag: In India today the Retailing industry is booming and companies like Pantaloons have also started diploma course in Retail Management in the past year.
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Sucheta: I am sorry Ritesh you are wrong about the organized Retail sector share. It is only 3% of the entire Retail sector.

Kirti Gupta: But in India the Retailing industry is an unorganized lot consisting of, in most of the cases, small entrepreneurs. And the virtual omnipresence of the Indian Retailer can be attributed to these small entrepreneurs only so this has to improvised to large scale so as to make it a long-lasting paradise in India

Ami: The topic is quite with the time as India, as a developing country, is raising its economy nowadays. Today Companies like Reliance fresh, Walmart-Bharti have entered the Retail Market and also many other big companies are also waiting to enter the Retail as today there is a demand for more and more Retail sectors in India.

Ritesh:  This poses a very big opportunity on our hands where the employment generation potential is very high. Since the Indian Retail industry is in a nascent stage & is growing in size & potential, there will be lots of opportunities for people who specialize in Management to get good career opportunities. The various different avenues it offers is in niche segments like mall management, Retail real estate management, Retail chain Management.

D.Nag: Retail Management is definitely necessary in terms of taking valuable decisions such as Retail locations, Retail costing, customer satisfaction and promoting of higher sales.

Sucheta: I do not believe that Retail Management is a bubble phenomenon. With such a large share of the unorganized Retail sector this is one sector where there is tremendous potential for growth. Also within the organized sector Retail stores like pantaloons, Westside, lifestyle etc. are very niche stores and are not frequented by all. So in a way the organized sector is also very fragmented. So, one can say that this is just the beginning of Retail management.

Achal Arora: Hi friends as we all know that the Retail sector has been booming all over the world for quite sometime now, and following the path of the other countries, India has also allowed the FDI in Retail, although not to a large extent, but it is significant move by the UPA government. As a result of which we are seeing the Retail sector booming in India, lots and lots Retails stores, Malls coming up everywhere. Various corporations have started their Retail chains in order to tap this boom, like Reliance has come up with its Reliance Fresh, Bharti coming up in partnership with Wal-Mart etc. In view of all these evidences we can surely say that it is currently the biggest rage in the market. But what remains to be seen is the life of this rage, how long will it go, so before getting to some conclusion we should look at the various factors affecting this phenomenon

Ami: Well, I disagree with Kirti  as today also the middle class in India want to spend on the edge of their wage. Both India & Indians need the quality with the quantity and variety at the same time which is only possible if Retail Management is being done on a large scale that has been already done, right now, and it is not at all a BUBBLE phenomenon as it has the potential to win the battle.

Kirti Gupta: Let us discuss the features of Retail Management here:  The manufacturers cannot directly reach all Retailers in a particular geographical area. Therefore, the manufacturers cannot maintain the desired relationship with the Retailers, which in turn, make Management of the channel complicated. This also makes the possibility of a direct feedback loop from the Retailers almost remote.

Ritesh: Retail in my opinion, is here to stay. The burgeoning middle class, especially the younger generation in India is already spending huge sums of money on shopping which is second only to the US. This is only going to increase over period of time.

D.Nag: Retail Management is a part of the whole distribution system of marketing. Different shopping malls like BIG BAZAAR, multiplexes like INOX are spreading like wildfire and for managing such huge Retail chains Management is definitely required.

Sucheta: Now with the announcement of Bharti Enterprises to enter the market in joint venture with Wal-Mart and Reliance, planning to spend 2500 crore in its Retail business. There is tremendous potential for the growth of Retail chains and stores all around the country. And to manage these stores these major companies are going to need huge amounts of manpower in terms of Retail managers.

Tuhin Chaturvedi: In any developing economy, the quest for goods at a nominal rate is one of the characteristics. The benefits of growth percolate to the bourgeoisie who in turn try to increase their standards of living. India is now just at the helm of these affairs. Apart from this, the number of jobs which can be created by such a field of supply chain is quite unprecedented. So, apart from solving the problem of variety which small town people usually complain of in local stores, it’ll also mitigate the unemployment rates.

Achal Arora: I completely agree with D.Nag with regards to the various aspects of Retail Management, that the Retail Management is very much required in current scenario.

D.Nag: Also such Retail chains are opening huge job opportunities for the youth in the country. Thus growth in all means is taking place in the country.

Sucheta: With regards to the kind of investment that is being put in by reliance it is quite obvious that quite a number of jobs will be created in this sector.

Ami: Also, many foreign companies and foreign countries as well are being attracted to India and Indian market because Indian PEOPLE are welcoming the Retailers so warmly and ultimately it is a deal of profit on both the sides, even if a foreign company is collaborating with an Indian company, then too it is not disturbing our economy from any point of view, so it is also correct, Politically and also legally. So why not give a boost to the Retail Management? It is not at all a "bubble phenomenon".

Kirti Gupta: Yes Ami, This is what I want to say. Quality, quantity, variety these all needs to be provided by this strategy of Management and should be encouraged more by implementing it in big firms which are known by its brand name .

Ritesh: Retail Management will be a lucrative career option in the coming years as I have mentioned and the opportunities it offers will be very competitive. With Wal-Mart, Reliance & wholesaling giants such as Metro come in, they will bring healthy competition & help in raising the standards of our Retail Industry & in turn Indian Retailing companies will get to learn a lot from them

Gururaj : Yes because we are a country whose 77% population resides in villages. I  don’t think Retail Management can  perform well.

Achal Arora: But what I personally feel is that due to the coming of various players in the Retail market, it has become a fish market, and companies are picking managers to manage Retail chains like anything , but what after it , I don't believe that there will be much growth in the Retail Management . To go above a certain level in the Retail sector will be very difficult, there is like a glass ceiling in the hierarchy within this sector.

Tuhin Chaturvedi: With the fact that many Management institutes are coming out with programs in Retail Management, it can be inferred that they are preparing for the Retail boom that is about to introduce itself in the country. Problems of supply chain, logistics, storage etc can be solved by the budding managers who are the students of this course. I don't agree here with Mr.Gururaj in the sense that the e-choupal and project shakti have been very successful in the rural areas.

Sucheta: Also, Nowadays our country men have realized that organized Retailing is an assurance of quality and correct quantity. So people will also throng to these Retail stores. These Retail stores offer multiple products under one roof and in a pleasant ambience. Thus people are also gravitating towards these stores. Thus in the coming years these Retail stores will experience an increase in demand.

Ritesh: If there is a general economic meltdown there may be a situation where in the buying power of the people may reduce. This will in turn impact the Retail Industry. Will the Retail Industry be able to sustain such a setback as it involves lot of resources & supply chains?

Ami: Well, I completely agree with Ritesh, living in an environment of a healthy competition is the key to make one better and better day by day so that also our local and small scale companies can learn a lot strategies from the big Retail sectors and eventually, it would lead to make a big profit for all.

Kirti Gupta: And we need to work in this area a lot more. Here i agree with D.Nag that certainly its opening job openings for youth but also it is improvising the supply chain Management of big companies at a very cost effective way.

Gururaj: It good gets a good response only in the urban areas because development still has not reached the rural areas. Yes it may look lucrative during the initial stages but i don’t think it can sustain in a market in like India
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Ritesh: Farmers and suppliers will be able to sell their produce directly to the major Retailer and hence make more profit and have peace of mind with respect to payment. Big Retailers might collaborate with farmers and suppliers and inject the much required cash to make sure the supply chain is efficient and strong. The case for liberalization of FDI rules in the Retail sector can't be any stronger. We can see the enormous benefits that it will bring to the Indian economy and India should pay heed to this or else we will be left out

D.Nag: I do not think Retail Management is a bubble phenomenon because popular Retail outlets prove to provide all the necessities under one roof and that also at a very convenient location. At remote places people can now find everything under one roof and thus do not need to do a lot of traveling. Thus this sector need to spread throughout the nation in creating convenience, job opportunities.

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Sucheta: As i have already mentioned earlier that the share of organized Retail is very small and hence there is a lot of ground to be covered before the market becomes saturated. So, it will be along time before the Retail sector experiences a slowdown.

Tuhin Chaturvedi: The Retail industry thrived very well in the US during the oil shock of the '70s. If we consult Sam Walton's Made in America, it was this time where he was able to consolidate Walt-mart. The bad times proved a good time for him.

Ami: No, Gururaj, Ithink , you are not taking it in a very positive manner which you should in today's time, as now the time has come that we all should forget the ECONOMIC BOUBDARIES between the RURAL and the URBAN India as far as the Retail Management is concerned because the companies are already ready with no. of openings in various areas, be it rural or urban city. Also it is ready to make a good intake of Manpower from all sides. In fact, it would, rather, help the unemployed to be employed in the rural area.

Kirti Gupta: The Indian supply chain is more dependent on middlemen rather than on the Retailers unlike their counterparts in modern economies. This over-dependence can be attributed to the lack of power of Retailers in the channel, to reach the Retailers, the Indian manufacturers are to take help of other channel members like C&F, Distributors (exclusive or otherwise) and wholesalers among others to a great extent.

D.NAG: The Retail outlets also prove to provide every commodity at the cheapest prices as they mostly buy it directly from the company and thus eliminating any intermediate price hikes in order to provide the cheapest goods without compromising with the quality.

Kirti Gupta: Ya I agree with the point of customers being able to get their choice's commodity directly from the company

Ami: And moreover, the Retailers are not selling their products with so high cost, in fact it is quite reasonable for all to buy it and choose the best and of their choice from a wide variety of items.

Sucheta: In order to survive the competition the Retail stores will have to diversify selling specialised products like stores work selling vegetables, gadgets etc.  Thus the consumer will be spoilt for choices. Consumers will prefer to shop at these places as the competition will also result in lowering of the prices of items.

D.Nag: The Retail industry now has a number of investors thus an industry with huge competition. Thus to make an edge of one over other one needs proper management, and as the Retail industry is booming so does Retail management.

Ami: Surely, it is the right and high time to welcome the Retail Management in India and not to discourage it at all, if we really want to grow in terms of economy.

gururaj ligade: I agree with Ritesh that farmers would get benefited by selling there goods to Retail chains, but i don’t think Indian agriculture is doing that well to meet the demands of the Retail behemoths . In the age of climate disasters and famines how can a farmer supply efficiently if he is not producing enough quality goods.

Tuhin Chaturvedi: So basically it boils down to the fact that with Retailers provides great quality with good variety and at really affordable prices. As more and more players enter the fray, variety will further increase and the customer will get the best of all worlds. Consequently, I think that that's a great thing for the consumer

Sucheta: The prospect of an economic slowdown is a very far fetched one considering our country is growing at the rate of 9% and is predicted to rise to 10% of GDP. Even if that were to happen those retail stores that prefer low prices and deal with essential commodities will continue to function. Since they provide the basic necessities

Ritesh: The key issue here is not about whether the farmers can supply goods. If they get a fair price for their produce, they will be able to get into a financially stronger condition & invest more in improving agriculture too.

Ami: well, Gururaj, Retailers also have varied offers for people from various fields, if it is satisfying its customers it is also doing good efforts to make the rural employers happy enough to make their lives easy by offering them great deals.

Achal Arora: Regarding Gururaj i would like to say that once the farmers starts selling to the Retail behemoths and start making profit than they will have the financial backup to tackle the various adversities like famines and all , so it is still beneficial for farmers to sell to them.

D.Nag: Till date the farmers of our nation did not receive what they deserve due to number of intermediates before the products reached our hand ( a kilo of potato sold to us for Rs. 5  was bought at Re.1 due to a large number of intermediate hikes..) but the Retail directly buying from them provide them with higher prices.

Kirti Gupta: But it is not meeting the required efforts to fulfill the objectives of ECR (efficient consumer response)or QR(quick response) for example  food world outlet needs to maintain SCM very timely to clear the stock and at the same time provide just in time service to consumers.

Ami: Exactly, Achal, I agree, if there would be a backbone to all the rural employers, they would not depend on the other factors that much.

D.Nag: I agree with Achal, as now the farmers will have more economic independence, as they can make more profit.

Kirti Gupta: Similarly this happens with the farmers too. Their stock needs to reach the consumer within the season time.
 
Ami: Ya, it is true that India is a country that suffers a lot calamity and other such uncertainties but then do not these things happen in the other countries?

Tuhin Chaturvedi: Retail companies must also think of diversifying, a good point mentioned by Suchi, In this process the rural sector could such a case of not putting all eggs in the urban basket. As far as climatic problems and agricultural supplies are concerned, the farmers may rely on more than only one crop pertaining to the Retailer's demands. And they may not all be cash crops. For example a farmer who has his cotton crop damaged can still salvage profit if he is into making plastic goods.

Ritesh: A good supply chain can benefit farmers to a large extent. They will also be able to get forecasting on what crops should be grown in the next season to maintain the demand supply ratio. Advice & modernization can make our agricultural sector competitive.

Sucheta: It is true that the farmers have not got their proper dues due to unscrupulous middlemen. Direct using by Retail companies will eliminate that.

Ami: So does it mean that we should start blaming the Retail Industry which is actually doing NO HARM and MORE GOOD.

Achal Arora: Yes i completely agree with Ritesh that the R&D done by Retail behemoths will help greatly to the farmers of India. This will be a major boost to Agriculture sector in India
 
Gururaj : What i was trying to say is: instead of allowing FDI's in Retail sector, we need to improve our production infrastructure so that retail sector sustains which in this case doesn’t...

Sucheta: I agree with Ami. The Retail industry will provide more jobs, more choice to consumers at competitive price, at the same time take the development engine of our country forward.

Kirti Gupta: No, rather in this computerized era some tools should be provided to farmers or Retailers in rural areas , so that they be aware of managing their supply chain.

Ritesh: Processed foods are another industry which can grow to a large extent. Processed food do not have a good platform where they can exhibit their products. This is mainly in the case of companies which cannot afford advertising on popular media. The food Retail industry can become a very good avenue for them to sell their goods.

Tuhin Chaturvedi: Good point by Suchy again. A quest for fat margins coerced Wal-mart to avoid middlemen totally. Sam walton incorporated his love for flying by personally flying down to suppliers and giving them a proper deal. 

Ami: well, Kirti , they would still be able to manage it so very well that they can make their life stable than before.

Gururaj : Retail stores restrict themselves only to urban areas and as a result only people living in this vicinity get an advantage from this. What about other areas? Are they not legible to these kinds of services?

D.Nag: But as a course "Retail Management "  stands as subcategory to the "marketing" specialization of management and students feel more secure to pursue Management that has more scopes than specializing in a particular course with much lesser scope as compared with. So popularity of Retail Management in INDIA still remains a question.

www.UrPercentile.com: Request everyone to give a concluding statement.

Ritesh:  Retailing is currently on the upswing in India. The trend is expected to continue over the next decade.
Retail Management will provide a large amount of opportunities & will prove to be good career options.
Organized Retailing will help in increasing the competitiveness of the  Indian Retailing industry.
Retailing is a big creator of jobs for people with low skill sets & can be a key area considering India's current position.
Its contribution to GDP will only increase from its current state & help in developing India as a whole. The money hence generated will get passed on to sectors like transportation & the agricultural sector.

Ami: Well, as we have to conclude the topic, I would just say, in a nutshell, Retail Management in India is, at this time, definitely, a BOON not a BUBBLE.

Sucheta: Organized Retail is here to stay and so is Retail management. My dear friend it is indeed reliance industries plan to expand to every level possible including the rural sector because that again is a huge untapped market.

Tuhin Chaturvedi: I think that Retail will not be a bubble because of the fact that it is a logical process unlike the stock market or realty. It provides to those who seek what they may not get from more indigenous sources. Apart from this, continual competition will not let a monopoly set in. Just like the case of small time kirana stores existing, it will also become the vogue.

Achal Arora: Concluding the GD I would say that, Retail Management is certainly not a bubble phenomenon in India, it is here to stay, it is very beneficial to economic growth of India, it will help by creating lakhs of jobs for the Indian youth, it along with its robust supply chain system is going to be very helpful for our farmers and will be a major boost to agriculture sector in India. Wal-marts and all, Retail Management is certainly not a bubble.
 
Kirti Gupta: Yes Retail Management is certainly going to be a milestone in Management strategies  but as we have discussed here that it needs to reach the rural areas also for its popularity and at the same time  knowledge to manage the supply chain of production and fulfill supply-demand requirement can be met.

D.Nag: We can conclude that, the Retail industry is definitely a booming industry in INDIA at present and we definitely require a proper Management in the particular field in order to make development.

Gururaj : Retail management can only flourish in country like India only if it addresses the grievances faced by various sections of the society.

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