India’s Retail Revolution

hi, if you find this massage is interesting, share with your फ्रिएंड्स India’s Retail Revolution: Question 2 Filed under: Business, Retail — Prashant @ 5:12 am How much lower are prices because of the new retailers? Are clothes and shoes at the malls and new retail stores in India much more expensive than in the United States? It seems that way, to me at least. For instance, during my last visit to Chennai, I bought a pair of Reebok sneakers having left my original pair back home in the US. This darn pair cost me Rs $125 (Rs 5,000) at the Reebok store in India, whereas the exact same pair cost me just $80 in the US. Around this time, a relative gifted me a shirt from ColorPlus. This shirt cost Rs $63 (Rs 2,500) versus $40 (if that) for an identical shirt in the US. I’ve experienced this “sticker shock” every time I’ve visited a store in India over the last two years. Questions1) What is your experience of prices in India vis-a-vis other countries, especially South East Asia and East Asia? 2) If prices are high in India, what’s the reason: a) Brand licensing fees: This might hold for Reebok or Levi’s but certainly not for ColorPlus or Indian brands. b) Real estate prices/ high rents: Perhaps. However, my guess is that while real estate prices in India have shot up recently, on average, retail space in the US is still more expensive than India. Besides, if rental costs were such a big component of costs, wouldn’t this create a huge opportunity for catalog/ online retailers? c) Import duties/ tariffs: Hmm? I thought these clothes & shoes were made in India. I’ve bought shirts, trousers and suits in the US that were made in India, which cost me 50% to 70% of what they’d cost me in India. d) Something else? Caveats:1) The only malls/ stores I’ve visited in India have been in Mumbai (Crossroads/ Vama/ some shops in Colaba & Fountain) and Chennai (City Centre/ Spencers/ Westside and a few others). In other words, my knowledge is limited and completely based on sporadic anecdotal evidence. 2) I don’t know much about prices for groceries - vegetables, fruits, grains — which is Reliance’s (initial) target, I think. Comments (42) December 25, 2007 India’s Retail Revolution: Question 1 Filed under: Basic Questions, Business, Labour market, Retail — Prashant @ 3:10 am How many jobs have the new retailers actually created? The Wall Street Journal, in an article last month, writes that jobs in India’s booming retail industry are a ticket out of the slums for many. The article, titled Humble Jobs at the Mall Are Lifting Legions of Indians Out of Poverty and told from the viewpoint of three employees of Pantaloon in Mumbai, goes on to say that Such basic sales jobs, unremarkable and often derided in the West, are providing careers, confidence, and a shot at entering the consumer class to millions (emphasis mine) of impoverished young men and women across India. As their ranks swell, these children of slum dwellers, servants, sweepers and others low on the socioeconomic totem pole are forming a new stratum of workers. They are likely to play an important role in determining the future of the world’s second-most-populous nation.….Firm data are hard to come by, but available statistics and anecdotal evidence suggest an explosion in service jobs. Over the next three years, says the Images Group, a research and consulting group in India, the retail sector will create more than 2.5 million new jobs in the country. India’s Reliance Industries Ltd. says it will hire close to 500,000 people to staff its new chain of supermarkets. Pantaloon Retail Ltd., India’s largest retailer with annual sales of around $1 billion, hires more than 500 people a month. [link - subscription required] The story seems very encouraging. However, I’m a tad puzzled at the evidence — it’s rather slender and the three data points don’t jell. Data point # 1: Pantaloon, India’s biggest retailer is adding 500 people a month (extrapolating, that makes it 18,000 over the next three years. An assumption, here) Data point # 2: Reliance will add 500,000 new employees. Data point #3: The Images Group forecasts 2.5 million new jobs in retail over the next three years. This might seem like a quibble, but are we to believe that a) Reliance will add 83 times more employees than Pantaloon — 500,000 vs 18,000 b) Pantaloon, India’s biggest retailer will add only 0.72% of the new hires — 18,000 out of a total of 2.5 million, or c) Reliance alone, with 500,000 new employees, will contribute 20% of the new jobs? Q) Any hard data available regarding employment growth in India’s retail sector? Update: Earlier posts on India’s retail industry– Protect The Chain But At What Cost– Kirana Will Still Rule– The Better, Faster Road To Development– The Wrong Behind– A Nation Of Self-Employed– More Bang For the Government Buck– FDI In Single Brand Retail– Rice, Roads And Regulations Comments (20)

The Smartest Unknown Indian Entrepreneur

hi, if you find this massage is interesting, share with your The Smartest Unknown Indian Entrepreneur Filed under: Business — Arjun Swarup @ 5:16 pm In an interesting article on Forbes titled ‘The Smartest Unknown Indian Entrepreneur’ , Sramana Mitra profiles Sridhar Vembu, the founder and CEO of an Indian firm called AdventNet. The firm today, is a ‘100%, bootstrapped, $40-millio-a-year revenue business that sends $ 1 million to the bank every month in profits’. The whole piece is worth a detailed read, but two points stand out. The first one is this: “We hire young professionals whom others disregard,” Vembu says. “We don’t look at colleges, degrees or grades. Not everyone in India comes from a socio-economic background to get the opportunity to go to a top-ranking engineering school, but many are really smart regardless. “We even go to poor high schools, and hire those kids who are bright but are not going to college due to pressure to start making money right away,” Vembu continues. “They need to support their families. We train them, and in nine months, they produce at the level of college grads. Their resumes are not as marketable, but I tell you, these kids can code just as well as the rest. Often, better.” (Emphasis mine). The second one is this: Vembu has a very exciting opportunity ahead of him. What the Chinese have done in manufacturing, he is showing that the Indians can do in software: undercut U.S. and European software makers dramatically. Not in information technology services. Not by body shopping. Vembu has done something few Indian entrepreneurs have been able to achieve–build a true “product” company out of India. This is not a head count-based business model (Emphasis mine). The first point is interesting, as it shows that the skilled manpower shortage, which is an issue many entrepreneurs (including IEB founder Prashant Kothari) have written about, could have some solutions, although a nine month investment from an employer is significant. The second one also shows that the general media meme of that all India is doing is capitalizing on low cost labour advantages to run body shops, and not building enough ‘brands’ or ‘product’ firms, might not be true(even if it were true to large extent till a few years back) .