Can an 'Amul' be done in Indian retail?
It may be the right time to do an 'Amul' in the Indian retail sector. The more I think about it and the more I talk to others familiar with Indian retail scene, the more convinced I get. It seems to be the only way to enable existing retailers to compete effectively with the Wal-Marts & Carrefours of the world. However, it took a V.J. Kurien to create an 'Amul' in the dairy sector. What is it going to take in retail?
3 comments:
I think this idea has a huge potential as it would provide small retailers with all the wherewithals required for taking on the retail giants that are about to enter India in a big way.
The Model:A mother organization would do all the procurement and distribution for all the small retailers in a city . This would mean that benefits of economies of scale can be effectively reaped as this would allow the small retailers to sell the products at the same rate at which big giants would be selling.The proprietorship of the outlets would still vest with the original owners;so there should not be much concern on this front.The added advantage would be that the small retailers would be able to leverage the relationships with their old customers and would in fact be able to sell higher volumes than the big retailers. This is only a rough idea of how the model would work and I hope to see this model further building on.
I have my doubts on the dynamics propsed by Binitesh. If the road map were to be as he charted out, very soon we would have monopolies or oligopolies- one mother org bargaining with suppliers, thus killing the attractiveness of the retail sector. Now its not dificult to see that if small retailers make a mother org to get leverage, it will not be far that suppliers too make a consortium and get together to sheild the attack of the small-retailer org. The we will have only 2 parties talking to each other. Boring...
Also, the plus point with Amul was that the suppiers - small milk vendors had lack of information, lack of access to markets and the suppliers were mostly illiterate or semi-literate at best. This is starkly different from the scenerio that is existing now, suppliers and consumers have more maturity and information.
I feel taht this organised retailing boom that India is witnessing will just be an extention of teh consumer experience. It will never be able to replace the corner store. If we take our own example, compare the number of times u go to landmark vs the number of times u go to any corner store like rustans, 7-11, mini stop etcc. Also compare the bill amounts. You will notice that these hyper marts are just an extention. Secondly they r good for bulk purchases only, done by institutions , large families, vacationners etc. As the trend of the future , there will be smaller families requiring smaller storage spaces and more living spaces,they would rather have 10 sqm more of bedroom than storage room.
All in all the idea of bulk purchases and hyper markets is good but not grand.
I think of some positive points though from the supply side- first,in india roughly 33% of our agri produce gets wasted due to improper storage, bad handling and inept management. With these hyper marts, i feel that this wastage will be reduced drastcially as these hyper marts will pick up all the stuff as soon as it is done - mostly at throw away prices and store it. Then using their supply chain , they will move the food around the country. second,this will defintiely leave some additional paise (not rupees) in the consumers wallet.
~ Yash
This is great info to know.
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