Global economic downturn and Mumbai attacks notwithstanding, it's clear that India is the next big thing. Within a couple of decades, it's likely to surpass China as the world's most populous nation, at least temporarily. The population in its four leading urban areas - the Golden Quadrilateral of Mumbai, Kolkata, New Delhi and Chennai - tops 53 million, more people than all of South Korea, South Africa, Spain or two Malaysias.
By 2015, India's economy is forecast to double. By 2040, India projects to become the world's second-largest economy, trailing only China. The world recession may slow the trend, but it won't change the tide. One reason behind India's success: with hundreds of millions of English speakers and tens of millions of university graduates, the country has a powerful, advanced services sector that many developed nations would envy.
But one key portion of that services sector remains underdeveloped - retailing. Of India's estimated US$410 billion retail spending last year, just $15 billion, a scant 3.8%, went to so-called modern retailing. Instead, much of it was spent in the country's 12 million kirana (corner) stores. By 2013, overall retail spending is forecast to increase 50%. But the share to modern retailing will grow 800% to $120 billion, bolstered by more than 500 shopping malls in various stages of development. Even that figure will represent less than 20% of overall retail spending.
Geoff Hiscock's India's Store Wars introduces the key players behind this extraordinary transformation in the making. Here, too, global economic woes may set back that timetable, but they won't reverse the movement described in the book's subtitle: Retail Revolution and the Battle for the Next 500 Million Shoppers. Soon, half a billion Indians now living in poverty will become new consumers eager to sample the temptations of the 21st century.
Future is now
The book is at its best portraying current retail leaders and contenders gunning to knock them off their pedestals. Today's master of Indian retailing is Kishore Biyani, leader of the Future Group that includes Pantaloon clothiers, Big Bazaar hypermarkets, Food Bazaar supermarkets, Home Town home improvements, EZone electronics, Depot books and music plus futurebazaar.com. The group targets every segment of the boom, including consumer finance through Future Capital, retail property through Future Space, even advertising through Future Media. Despite its extraordinary reach, Future remains focused, thanks in large part to Biyani's near-obsession with tracking consumer behavior.
Biyani modeled Big Bazaar after Saravana Stores, self-proclaimed "super store of the shopping world" with four outlets along Chennai's Ranganathan Street, "a halfway house for the Indian shopper's momentous transition to modernity" in Hiscock's view. Up to 100,000 shoppers a day visit Saravana's shabby seven-story 25,000 square foot original outlet, drawn by its promise of the "lowest prices in the nation".
Saravana's turnover of more than 2 billion rupees (US$50 million) makes it India's most successful retailer of its size. A family business founded by three brothers with roots in rice milling, one sibling now runs the renegade Saravana Selvarathnam store down the road promising to undersell his brothers. But Saravana remains a local phenomenon, destined to instruct the revolution rather than lead it.
Big Bazaar's rivals include traditional retailers Shoppers Stop and Spencer's Retail, but many others now want to join the party. Newcomers include India's biggest business names - Reliance, Bharti, Birla and Tata - as well as the low-price grocery leader Subhiksha, where a lack of air-conditioning is part of the no frills experience.
There are nearly as many approaches to modern Indian retailing as there are contenders. Shoppers Stop follows Future Group's model of stores across the full product spectrum. Bharti has partnered with Wal-Mart; India still bars foreign companies from independent entry into retailing. Tata has partnered with Benetton but hasn't yet synchronized the components of its vast own empire, such as India's leading watchmaker Titan, for maximum retailing impact.
Farm to fork
Reliance, India's biggest company, has the biggest ambitions. The group began its assault with a 452-strong chain of Reliance Fresh supermarkets, taking a "farm to fork" approach that it hopes will not only give its stores superior products but convert rural farmers into customers. It also aims to bring the kirana store into the 21st century through franchising.
All of these ambitions face obstacles as huge as the opportunity. India's road from farm to fork, for example, is often poorly maintained, crowded with unprofessional drivers in unreliable vehicles. The cold chain to keep food fresh is virtually non-existent; while India is now a world leader in food production, it's also a leader in food spoilage and an insignificant exporter. Retail projects on the drawing board will require 1.5 million new staff. There's also political opposition to homegrown corporate retailing, never mind foreigners in partnerships or, someday, on their own. Faced with these difficulties, it's not just aspiring retailers but India's Store Wars that often comes up short.
Author Hiscock presents a lengthy list of interviews and other close encounters with top business minds. He also wrote India's Global Wealth Club, but his new book has the feel of a cut-and-paste job. It's longer on facts and quotes than insights and analysis. Hiscock uncritically accepts what his sources tell him without questioning their boundless optimism or pursuing key issues they raise. For example, though the book repeatedly alludes to political opposition to modern retailing, it never says who those opponents are, what they want, or examines big retail's counter-strategies.
Turning the kirana
Similarly, India's retail competition doesn't just pit the top groups against each other, but it matches the modern stores as a group against kirana stores and other traditional retailers. Yet there's no detail about what a kirana looks like, how one operates and what makes it successful, nor any information on other retailers, such as traditional markets, that will still control 80% or more of India's total retailing by 2013.
In place of analysis and insight, like many businesspeople, Hiscock puts his faith in consultants. Overwhelmingly, they spout banalities. Occasionally they tumble into ridiculousness such as lists of top retailers featuring unnamed and non-existent companies. Consultants generally specialize in stating the obvious, yet, along with Hiscock, they miss the most obvious point of all.
It's not until four pages from the end of India's Store Wars that the book compares the challenges facing India with the experiences of China. Certainly these two billion-strong countries have unique characteristics, but retailing in China has faced many of the same hurdles now confronting India, including establishing supply chains, cold chains and other support infrastructure, staffing outlets and partnering with foreign firms, successfully and otherwise.
Many consultants make a living reinventing the wheel, so it's not surprising they might neglect to mention these parallels between Asia's two giants. Author Hiscock's failure is less understandable. A credible retailing analyst would understand that you don't accept stock answers off the shelf. More importantly, in retailing and beyond, you don't just buy whatever they're selling.
India's Store Wars by Geoff Hiscock, John Wiley & Sons, 2008 (paperback). ISBN: 9780470823514. Price: US$22.95, 200 pages.
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