Indian retailing industry is one of the most important
pillars of the Indian economy, together with agriculture, manufacturing and
infrastructure. Without retailing, what is produced or value added can never
reach consumers. Indian retailing sector is one of the largest in the world,
and is estimated at USD 500 billion annually, together with its mainstay of
logistics. It is also one of the most unorganized sectors with over 95 percent
of the shops being in owner-seller format, and dotted all over the urban and
rural urban landscape. Most importantly, it is one of the most valuable
employment generators, providing jobs for as many as 40 million Indians. Over
the last couple of decades, supermarkets and large format markets and shopping
malls have made an increasing presence felt but it is unclear whether they are
any more planned and futuristic than the unorganized ones, as this blog post
brings out.
What is retailing for sellers is shopping for buyers.
Shopping can be classified into two types; the essential daily needs and the
lifestyle needs. It can also be classified as planned and impulsive. Availability
of appropriate shopping formats is essential for generation of consumer interest
and conversion of interest into actual purchase. The shopping and retailing
process is so complex that it requires the best of management processes, from
supply chain management to customer relationship management, with data
analytics thrown in. While retailing is a growth engine for India with more
purchasing power being placed in the hands of the burgeoning middle class, with
cascade down to the indigent sections too, flux and mortality in the retailing
sector are a matter of concern. There is a need for a relevant hybrid model of
retailing and shopping in India. This blog post discusses a few issues and
proposes a few approaches based on certain examples from the Chennai retailing
and shopping space.
Off the mark
Several years ago,
Landmark was the most popular bookstore in Chennai. Its first and most favoured
store in Nungambakkam, a downtown shopping district was truly a landmark.
Landmark no longer is a store there. Landmark’s other two outlets in Spencer’s
Plaza and City Centre have also disappeared. Many would attribute Landmark’s
disappearance to the emergence of online reading habits on one hand and the
departure of original promoters and indifference of the new investors on the
other hand. Part of the truth is that Landmark’s decline also corresponded with
the decline of the host-malls. Many book lovers of Chennai feel sad about the
disappearance of Landmark. Yet, a new bookstore called Starmark (of Emami
Group), established in Chennai’s premier and now popular shopping multiplex,
Express Avenue has become quite a favoured place for book lovers. This seems to
be a case of brand ceding importance to location.
Viveks had, for decades, a flourishing retail business in
whitegoods and electronic goods in Chennai, located strategically in important
traffic intersections. Once famous for its store expansion and thronging crowds
for New Year sales, Viveks seems to be scaling down its operations due to lower
customer visits. Tata Group has its Croma chain of electronics stores in all
major cities. Of all the stores in Chennai, it appears that the one located in
Nungambakkam has the least footfalls. In contrast, Croma stores in Mumbai
airport seem to have the highest footfalls. Landmark, Viveks, Croma and such
other brands continue to be well known with high recall. Some of them are also
well located. The declining consumer interest is, therefore, more than a matter
of ordinary concern. These trends are
not company or retailer specific but are symptomatic of an emerging urban
shopping crisis.
Urban constraints
Surprising it may seem, Indian cities are not planned for an
expansive retailing and comfortable shopping experience. Indian cities and
towns are essentially mixed use districts with residential, office and
commercial entities located jowl to jowl. The concept, as in America, of
segregated shopping districts, residential communities and business districts
does not simply exist in Indian cities. The shopping districts in USA provide
for huge parking areas that can cater to parking of several hundred cars. In
contrast, old age shopping pioneers like Viveks have practically no parking
space while the newer ones like Reliance, Croma and Girias have very limited
parking space just for a few cars. Shops located in shopping complexes such as
Express Avenue and Phoenix Shopping Mall have general parking space of the
respective malls but it is all paid parking space. In other words, most
standalone city retail shopping places are designed only for walk-in shoppers
while in respect of newer shopping malls even window shopping would cost
something!
While this restriction and bottleneck has not caused any
specific migration from physical shopping to digital shopping, the potential
for exploiting full shopping potential and enhancing shopping ease is
completely compromised. Logically, this restriction should lead to construction
of more shopping malls with adequate parking slots and the conversion of
standalone shopping spaces into residential or building spaces. Possibly, shops
located on roads with high parking space (like those in Pondy Bazar) may be
able to still manage but shops in arterial roads with non-stop traffic
(example, Anna Salai) or in traffic intersections (like Viveks) have little
hope. As several thousand jobs and lives are dependent on continued prosperity
of vintage shopping spaces, urban constraints need to be addressed. Radical it
may seem, firms like Viveks may gain business if they convert their ground
floors into parking lots and move businesses upstairs!
Penny wise, …?
The Indian urban shopping crisis is symptomatic of lack of ‘design
thinking’ in planning and setting up social utilities. When Viveks acquired
additional land space in one of the showrooms, it has chosen to use it for
product storage and display rather than for parking. One of the leading
hospitals has been planned in Chennai with the least possible parking space
causing enormous hardships to doctors, hospital staff, patients and caretakers,
besides vendors. Even when a new hospital was set up by the same group several
years later, lessons of parking insufficiency were not incorporated. The way
facilities are planned in India, the premise is simple but not wise: land is
considered premium, to be utilized to the last centimetre to create business
assets. This is indeed a myopic view of business which does not put people
first.
The purpose of business, depending on its nature, tends to be
one or more of the following, illustratively: caring, diagnosing, curing,
entertaining, provisioning and educating. People are core and central to all of
these activities. Unless people are able to enter the premises comfortably,
leave their vehicles securely and circulate purposefully, people would be diffident
to enter unless essential. In trying to maximize space for business assets
firms are only sub-optimizing their own business potential. Indian service providers as well as service
receivers believe in ‘touch and feel’ physical form of buying and selling. With
India set to increase its dependence on personal transportation vehicles, the
pressure on parking space is only likely to increase. This characteristic can
only be protected by better spatial planning that balances people and assets.
Shopping districts
Fundamentally, India should come up with its own native
concepts of shopping districts where roads are out of bounds for vehicles and
are dedicated for pedestrians. Chennai’s Pondy Bazar is an ideal example of a
potential shopping district. More such districts are possible with some
innovative thinking on creating parallel vehicular ways, having elevated ways,
mass parking lots and comfortable connecting paths. This will not only reduce
vehicular transportation, congestion and pollution but also provide a clean
shopping experience to citizens. In addition, all large format shops should be
asked to create free parking spaces at land level and move the business up
(both literally and figuratively). New malls and supermarkets should, of
course, come with either ample basement parking or supplemental vertical
parking.
There must be special arrangements for direct to consumer
sales by setting up farmers’ markets and small and medium manufacturers’
markets in major halls, public grounds and stadiums in urban areas. This would
enable a significant level of disintermediation and give fillip to niche
producers, for example of organic products and handicrafts. As new highways and
industrial corridors get constructed, it should be part of the planning agenda
to construct integrated mini shopping malls and food courts alongside the
highways at critical points. Planned purchase and impulse purchases could be fully
exploited with such spatial planning. Taking a more conservative approach on
shelf space and planning more circulation and stay space for consumers and
their vehicles, retailers can create a win-win for themselves and their
customers.
Rural planning
Shopping should not be solely for elite consumer needs in
urban areas. Rural areas require significant retailing and shopping emphasis.
In fact, rural areas offer considerable potential for creating exchange
platforms and shopping districts. As development is sought to be brought to
rural doorstep with adoption of villages, it makes sense to allocate certain
amount of expenditure to create producer cum marketing yards and retailing cum
shopping platforms. This again would
enhance urban-rural connectivity. It is today considered appropriate to create
bypasses that skirt villages and towns. This actually is cutting them off from
the highway of development. To mitigate the situation, recanalization of
highways to the newly proposed yards would be helpful.
One of the many ironies of life is that space is not usually
where demand is. Yet, human habitats have grown as much horizontally (moving
demand to where space is) as vertically (creating space where demand is). What
is applicable for human living is applicable for retailing and shopping too. Any
new construction in city should provide for excellent parking avenues. Creation
of multi-brand retail stores in outskirts and earmarking a space in all gated
communities for shopping malls that meet captive and external needs are some
needed measures. A few decades down the road, existing urban areas will connect
with the existing rural areas. That should not be through existing unplanned
urban chaos, exploiting every square inch of space; rather, it should be
through a more scientific expansive spatial planning that puts people first.
Posted by Dr CB Rao on May 16, 2016
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