India is no longer just an “emerging country”. It has become much more than that. It is a big power and it has a strong voice in the world. The miracle of India lies in its economy. It has grown by leaps and bounds since there were economic reforms in 1991.
When you look back at the economic history of India, you will find a stark contrast in how the economy was back then in the 50’s and right now. When India became independent in 1947, Jawaharlal Nehru was elected prime minister. Nehru was a socialist more than anything and he tried implementing socialism in the country. He leaned more towards Soviet Russia in order to provide the Indian people with a good example of socialism even though Soviet Russia was a communist state. Nehru made really huge mistakes when he was the prime minister.
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Since he was deeply influenced by Soviet Russia and tried miserably in trying to mimic the soviet economy, he committed blunders in India’s economic policy which almost brought the country to its knees.
When he saw the Soviets base themselves with heavy industry than consumer goods, he did the same for India. He discouraged entrepreneurship because apparently it was against the very spirit of socialism. He established heavy industries and absolutely disregarded consumer goods. Due to his disregard for the private sector and entrepreneurs, many of them moved out and invested in other countries. Even though India was their home, their businesses were based in other countries and they were making lots of money. They wanted to go back to their country and invest in its resources, but the government policy towards entrepreneurs was hostile and they couldn’t do anything about it.
It was not that there were no proposals by Nehru’s advisers to reform the economy and open it up to the private sector. Many of Nehru’s advisers, most of them who were experts in economics asked Nehru to open the economy so that there would be competition between the suppliers and the Indian people will have more access to goods and services with more quality. But Nehru turned it down saying “ What’s the difference? I don’t want 20 varieties of toothpaste”
Thanks to his attitude towards “20 varieties of toothpaste“, the Indian economy entered a freefall. As successive governments came to power, it did not change a bit. It started falling all the more when finally in 1991, the NarasimhaRao government brought in some much needed reforms in the Indian economy.
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The retail business obviously got a boost after 1991. Till then, there wasn’t much of retail in the country. Retail outlets were there in big cities and that too wasn’t a roaring success as such. In rural areas, there were ration shops and maybe a few petty stores.
After the reforms, the economy boomed. It brought in more employment and more purchasing power. So people wanted stores to make it big in India. This was a great business opportunity. Few people started off in retail and slowly made it big. And now, there are many retailers in the Indian market. The ironical part is that no major retailing brand like Wal-Mart, 7-11 or Carrefour had made inroads into the Indian economy. There is enough competition by Indian retailers and there simply isn’t enough room for more.
But Indian retail suffers serious flaws.
When you go into a supermarket in India, you will not feel as if you are in the supermarket. It is altogether a very weird experience. Some of the reasons include:
1.Inadequate goods and producers
When you enter a chain store in India, you will find the place so dry. You may find yourself in a position where you say that there is nothing much to buy here in the supermarkets. There simply aren’t enough goods. And even the necessary goods don’t actually have a lot of sellers. So you are stuck with an average of 2 or 3 brands for every good that is being sold there. That doesn’t exactly provide the consumer with a lot of choice.
2. Inadequate stocks
When you go to any supermarket or any chain store, you expect the place to be well stocked with all the items which are needed by consumers. But in Indian retail this does not exactly hold true. Your chain store in India has a really high chance of depleted stocks. They do not maintain a huge stock of goods and as the demand for goods increases, it is not being replenished either. As a result, you have badly depleted chain stores where the store clerk is more likely to give a fake frown and tell you that they are out of stock.
3. Inadequacy of space
Of course, making profit is the ultimate objective of a corporation. However, in the Indian context, profits may be maximized by inconveniencing a customer. Many chain stores are cramped and built on very limited spaces. You may find yourself constantly bumping your shopping cart against store shelves and you may not be able to move around when there are 2 or more trolleys in the same aisle. Indian chain-stores are breeders of claustrophobia.
In every chain-store, there is a lot of employees, most of whom will be chatting away to glory and not working. There is way too many staff. You might find it very awkward when they are all around the place and they are doing nothing but jabbering away. This is because the labour costs in India are considerably less when you compare it with other countries. That is why major corporations hire more and more people to compensate for other things. However, this poses another problem. There is very low productivity per worker when you have a lot of workers in the stores. Not only that, many people may not get adequate training to handle the job they have been assigned. So don’t be surprised if you think the store clerk is behaving rude.
5. Indianization of brands
This is perhaps the most important reason why Indian retail is pathetic and that is the Indianization of brands. As we know, Indian tastes are indeed quite different. So in order to target the masses, every brand tries and modifies itself to suit the needs and tastes of the Indian consumer. Where on earth would you find chicken nuggets tasting like curry except in India? Where else would you find mint chutney being put in burgers?
This Indianization, though targeted to improve sales, is actually a big blunder. You cannot just ruin the original flavours to maximize sales. On any given day if you ask people whether they would prefer that brands sold things which are not touched by meaningless Indianization, they would definitely say yes.
Retail is here to stay. As everyday passes, there is constant improvement in the retail sector. However, Indian retail has miles to go. There needs to be constant improvement and change in the policies of corporations in order to provide the Indian people will good retail.
Copyright © 2010 AshwathKomath