Showing posts from 2008

Gourmet Foods in India

Indians in a few leading cities have started taking to western gourmet foods. The market really opened up four years back when import restrictions got relaxed. Today, cheese (Cheddar and Edam being particular favourites), wine (both new world and French), extra virgin olive oils are available in quite a few places. Availability, awareness and affluence will be the critical factors in driving the business in future. The advent of fine-dine restaurants, global travel and deep engagement of the elite with western countries have helped in the spread of the gourmet foods.

There was an international exhibition on food and wine in Delhi last week. There were more than one hundred and eighty exhibitors from twenty-four countries showcasing their finest wine and other products and I am sure they did very well. This is the right point to enter India. Moet and Chandon is reaping benefits of an early entry and good publicity during its earlier entry.

I made a presentation on the gourmet food retail…

Blaming the Politicians

There is a lot of justifiable anger and frustration at the brazen attacks and the terrible loss of life in Mumbai. The Indian state is weak and ineffective and is not able to protect its citizens. The media and the public are pouring venom on the politicians of all hues. They are technically right because the ministers in the government are supposed to be the policy-makers and supposed to take the decisions. But they have failed to do so and on the face of it they are culpable.

But these politicians are elected by us and before we chose them we knew their capabilities and character and we chose them. They were neither expected to change overnight and nor did we think they would. So what is the point of spewing anger on them?

The politicians the society chooses are actually a reflection of the society itself. A semi-literate and caste and community ridden society will choose politicians which reflect its character and our politicians by and large are what we are .

Only a literate and eco…

What ails Indian writing ?

The Man Booker award to Adiga is a fine statement of affirmation of Indian writing. There have been previous winners too from India. But the Indian writers who have spent bulk of their lives in India still fail to fire the imagination of readers in the world.

Their stories are engagingly told and capture a time and place perfectly well. But the themes are not universal enough to connect to everybody. The writers lack the penetrating insight of a Naipaul, who harshly throws a searchlight into our souls. They do not have the suave urbanity and haunting themes of emotional loss of a Kundera. They do not provide the searing intensity of a Coetzee or the subtle romanticizing of a Mahfouz.

I think this happens because Indians grow up in protected environments. They live within defined boundaries and fail to explore the limits of their lives in relationships and in their own internal journeys. The society also tries its best to see that any behaviour or attitude beyond its five thousand years …

All That Additional Space !

A recent report in a financial daily says that the additional mall space in India is going to double in 2010 from the current levels. The additional availability in Bangalore, Hyderabad, Pune, NCR, Mumbai, Calcutta and Chennai is 16.2 mn sq feet in 2008. This is going to become 19.1 mn sq feet in 2009 and 32.4 mn sq feet in 2010. Does demand exist for all this space?

In the US, the first mall in the world came up in Minnesota (Southdale Shopping Centre) in 1956.Victor Gruen, a refugee from Austria, conceptualized this to provide the experience of a European city centre. He made the structure covered and air-conditioned to enable people to visit it round the year. This also helped the whites perfectly well to have a cloistered environment in the suburbs. Today, the rich whites are going back to city centres and the suburbs are getting more mixed. This is taking away the principal customer segment for the malls - the affluent, white women. The conventional mall is also facing troubled ti…

Who is to blame for the financial crisis ?

The conventional view is that the bankers and lenders were greedy and in their attempts to get their bonuses, went on a lending spree to unsuspecting borrowers. The Wall Street has been accused of being corrupt, stupid and irresponsible. Obama and McCain ensure that the message is repeated in every rally and sound bite.

Is this true?

The root cause of this crisis is in the sub-prime mortgages. And the fact is that the US government policies have led to this fall. Right from the days of GI bill, the government has followed a policy of encouraging home ownership at any cost, blatantly flouting sound economics. The borrower had the options of refinancing a long-term loan at his convenience for times when interests went down but staying at a fixed interest otherwise. This threw the mortgage lender into a crunch in the interest-volatile periods. In order to manage the interest fluctuations esp. after the seventies, the financial system engaged in significant financial engineering through mul…

Global Meltdown and India

The financial meltdown has sent shockwaves throughout the world. For many Indians, it is their first exposure to how integrated the world economy has become. This is a novelty for them when the newspaper headlines are not about the shenanigans of ministers or rantings by a communal organization but what is happening to Lehman or Morgan Stanley or even ICICI.

The Indian economy remains fairly robust despite the shocks. The banking system is very conservative. There is practically no use/misuse of financial instruments which have sent the Western markets to a spin. The drivers of growth like increasing liberalization, demographic advantages, low cost skill arbitrages and technology-led productivity growth in several sectors continue as they are. The stock market of course is getting battered due to fear, panic and flight of foreign capital (which is increasingly wary of emerging market returns).The overheated sectors like realty or the businesses primarily dependent on the Western market…

What is the noise in the retail industry today ?

The India Retail Forum concluded recently in Mumbai with proclamations about the great future of the industry. Most speakers, from newspaper reports, agreed that the next five years are going to be much better than today.

However, the media also flashes stories about various companies cutting costs, restructuring and not able to pay vendors. There are reports of top management moving out and confusion about the pace of the industry.

What is happening?

The truth is that the retailers entered the markets with untrammelled optimism. The metrics were based on models from other countries and the growth curve was expected to replicate that of the South East Asian countries. The real estate market also entered into a frenzy in line with the trends all over the world. The people, already in short supply, switched jobs merrily with multiplying salaries every time. The infrastructure continued to be in a mess. The technology solutions were not in place. The customers did not migrate to higher cons…

Which retail format is going to win ?

One of the big questions today is what kind of format is going to succeed in the country. Is it going to be the hypermarket or is it going to be the supermarkets? If it is the supermarket, then what is the right size?

The conventional thinking is that hypermarkets are going to wipe off the rest of the formats. This, however, is not true.

The Indian consumer is going to plug for the format which suits her needs. The primary drivers of this choice are access, price and range. The hypermarkets do score in price but the supermarkets, being located near the neighbourhoods are far more convenient. The range can be of quite a reasonable width in a smaller format also.

The Indian consumer for the modern trade unlike his counterpart in the west is hamstrung by clogging traffic, poor roads and lives in larger cities. The other factor in favour of a small-format store is the fact that she would prefer to buy in small quantities over the month and the average ticket size in India still remains low.


Some Media Stories

Indian Players Versus Global Corporations

The balance of power in the business world is shifting slowly but strongly. The era of domination by the global corporations is over. They have to fight for every square inch of space with their homegrown rivals. I believe the same story is going to repeat in the Indian retail space.

The global corporations earlier dominated by their capital, talent and expertise. The new financial order entails easy access to capital for everybody. The markets are more transparent and global capital today is chasing the best opportunity everywhere. The talent today is much more mobile and it has discovered that the domestic companies provide enough excitement, faster mobility and more opportunity to add value. The movement of talent also leads to faster dissemination of knowledge and expertise.

Besides these, the local companies have great local relationships and understanding. So today key players in India in retail others can match any corporation in financial muscle power. They would have acquired …

High Real Estate Costs and Retail

The real estate rates in the country today are truly stratospheric. At their basic, the commercial rates (both capital value and rents) reflect the profile and the potential of the catchment area. But rates get skewed by the demand-supply mismatch, the amount of black money (esp. in India), the market sentiments and the dynamics in other channels of investment.

The rates in India are amongst the highest in the world. The commercial lease rates in markets like Khan Market have crossed Rs. 12000/- per annum. The markets like GK1, M Block in Delhi or Linking road in Mumbai are close to Rs. 8000/- per annum for good real estate. This has been caused by low supply of good real estate, euphoria in India’s potential and huge inflows from abroad -from Indians, foreign funds and investors.

The lease rates are comparable to those in the richest countries. The market potential is nowhere close to them. This means that the retail business starts off with a great handicap. The businesses have to fin…