India Inc. versus Rest of the World

The Great Indian Political Tamasha, the general elections are over and as we await the results and the new political equations to take shape, there is a positive vibe created in the business arena. The stock markets are breaking into new highs every single day and the likelihood of a pro-growth and investment financial policy is building the new hope.

The biggest talk is around a change in the FDI policy and we are still in fear about 100% FDI in retail sector. Retail is a primary sector catering to the billion plus Indians directly and while it might be the most attractive area for FDI, India Inc. has fears that it has the potential to destroy the domestic retail segment.

Honestly, I find this as no threat at all and have complete faith in the enterprising attitude of Indians. Retail in India may get organised, supply chain may get streamlined and middle men may find it difficult. But increases in competition from both national and international players is likely to erode the margins and pass on benefits to the consumers. But will it destroy the mom-pop shops or the local baniya- unlike many I don’t think so.

Organised retail in India has been around for close to 15 years and has had little impact on the so called unorganised retailers. Pantaloons and Future group along with Spencer from the south might be credited with the first noticeable impact in modern retail in India, many others soon entered the arena. Today, along with Big Bazaar, More (Aditya Birla Group), Reliance Super Mart, Star Bazaar (Tata), D-Mart are all selling from groceries to clothing under the same roof. Competition is growing with e-retail has now entered every segment (even groceries).

But this has still not eroded the local baniya, vegetable vendor or clothing store. Yes, there is a change in buying behavior from the urban middle class who have changed to modern retail. But there are some factors which are very intrinsically Indian which have kept the local retailers alive. I sight these as a reason for closure of some of the Big Bazaar outlets and change over to KB’s and the end of Subhiksha retail and Truemart (a now defunct retail chain by Piramal).

So what differentiates Indian compared to the rest of the world in terms of buying behavior? Three simple rules: Indian customer appreciates being treated like a king, shown a variety of products with a recommendation from the sales guy and that opportunity to touch and feel product before they buy.

Let me pick a small example of buying a shirt to illustrate. What consideration goes into picking a shirt? Colour, pattern, design, size and pricing- mostly standard. But what about variety? How often do you leave a store in a mall saying I didn’t like anything and how often does it happen in a local store? Spell a desire for X style in Y colour in a Z size and if not available today, a local store will get it organised in a few hours or a day. If there is time- they would even customise.

The difference lies in the attitude. For a store in a mall or a super market; you are just one customer; for a local retailer, the attitude changes to a feeling of being the customer. The difference in salesmanship from someone in a mall to a Sindhi/Punjabi salesman in Gandhi Market is amazing. I challenge anyone to walk into a store in the market and walk out not having bought something they wanted.

Let us talk groceries now. Most of the local groceries in Mumbai are run by the Kutchi or Marwadi communities. Stories about how these people manage their business and finances are legendary. But apart from being a shrewd business oriented (and not stingy as shown in movies) and community driven set, they are also enterprising beyond imagination. Let me just illustrate how well they function by a live example.

Bhandarkar Road in the prime Deccan area in Pune once had an outlet of Spencers, Trumart and an assortment of local kirana stores. The advent of Marwadi run shops slowly entered the area and simply based on their enterprising attitude and range of products eliminated shops run by local Marathi people (Not a difficult task considering they are known for not so great customer outlook and pride for ‘We have no branches’).

The next they took over the organised market; armed with very simple tools- service hours of 6 am to 11pm and free home delivery in two hours- irrespective of order value. Trumart meanwhile lost the plot under management issues and exited the arena, leaving Spencers to wage a lone battle against the local stores. This too did not last long and today has resulted in a scenario where the entire road has nothing but two Marwadi grocery stores catering to them.

Bottom line; Indians engaged in the retail sector are culturally very strong and enterprising to be subdued by any form of retail invasion from rest of the world. If any, it will only inspire the existing organized retailers into improving their standards and offer better quality, pricing and service to the consumers.

Have I made it BIG???

Since the time I took reading as a hobby (not too long ago), amongst the first novels I read was the Godfather. The impressionable mind was exposed to a like that comes in at the start of the book reading ‘Behind every successful fortune, there is a crime’. Though this line was talking how the Italian Mafia was formed when a good man takes to the gun in times of depression, it had no real impact on how I see things around me.

In the years that followed, I read the success stories of people who made it big in business in India or the world over. Some were pure genius in terms of talent and ideas while some exploited the loopholes in the system and made it big. Either ways, the journey from Zero to Hero in every case was fascinating. Not surprising then that a Branson losing virginity, the yarn spinning out from the polyester prince Dhirubhai or the great story of Indian retail from Biyani were of great interest.

It was not until very recent when I read two articles that got me thinking about what are successful fortunes made up of? I read two articles in Forbes; one on business tips from College dropouts and on Kishore Biyani and his Big Future Group Sale!!! Most of the success stories had people who rose to success in a matter of a decade or two; very few like Dell or Biyani who have risen in sectors where technology or software was not the deciding factor. But somehow, most of them have always been on the wrong side of the law at some point for monopoly, tax evasion, financial irregularities or just simply using their money might to kill off competition.

Amongst college dropouts; some like Michael Dell were in my opinion brilliant in understanding market dynamics. Dell was an assembler of PCs in a market dominated by branded computers. I’m not completely sure if anyone in India with a market dominated by assemblers could have succeeded in the same way; but his Just-in-time inventory concept was definitely path breaking. But when the article spoke of Zuckerberg or Bill Gates- somehow I always seem to find that at some stage, they did violate laws to grow. Both I say are genius as computer programmers. But the very origination of facebook began with the hacking of personal data off the college server for images. Microsoft, with its entire GUI succeeded due to a water tight monopoly with Intel and bundling of IE.

Sir Richard Branson is one college dropout I admire as I see his success coming from simple joys of life. I mean you have people like you who hang around reading about the Beatles and listening to records; but it took a Branson to write a youth journal or get into the records sale business. But the rise of Virgin was its music via mail order own records label, something which did see Branson step on the wrong side of the law. It was a temptation too strong to make more money by smuggling records from countries where the tax was low and selling them in UK.

Though Dhirubhai Ambani built Reliance Industries from zilch, somehow from his day in Aden, he was flirting with the law by smelting coins for silver, trading inside information on government policies or evading tax by importing machinery as spares. In fact chopping down competition by delays in port clearance to an extent where the machinery rots in the hold was actually the dark side of the rise. Biyani built the retail empire which has made the National holidays of 15th August and 26th January the days sending cash registers into a fit, the fact that the group had to sell Pantaloons (the mother brand) to offset debt is a reflection of how the vendors under the retail giant were being squeezed.

On a day I sit back and ask myself, ‘Have it made it big?’(no whiskey endorsed here), all I say is not having to depend on anything against the law, being honest and not squeezing anyone with the weight of the brands I have worked with is possibly how much I have invested towards enriching my life in the Biggest possible way.