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  • Deepak Dhanotiya

India retail, time to disrupt!! Drama will not work, something dramatic will!!

Indian retail is witnessing remarkable changes. E-com, last-mile and on demand are new buzzwords of the industry, although they hardly impact 0.5% of the industry. Getting instant delivery, 1000s of e-com start-ups, 100’s of on demand apps, launch of 1000’s of new brands, key global retailer’s entry and continues coverage/discussions on FDI in retail are key indicator of hotness.

What has changed in change drivers?

As a consumer :

Understanding/awareness: Packaging to quality to content.

Lifestyle :Convenience , consolidation and help in quick decision making are required

Income: I am getting richer more importantly, I can dispose more now.

As a businessman(new gen-entrepreneur) : I see

Huge middle class growth with disposability

Retail is and will be there –it’s safer investment in portfolio

Retail is about size : India will be biggest soon

As a country and industry

E – Infra (Digital) penetration: Internet penetration (~ 19.2+ %), Affordable Smartphone (~21%)

P-Infra(Physical) : helping fast last mile and interstate delivery

Payment modes : access to banking and availability of new generation e-payment

Favourable demographics: Young (60% in 15-55 yr age) with 300Mn+ middle class

Key question, “is E-com going to engulf whole retail?” Obviously not (all passengers will never travel by flights) but % is going to increase for sure. Let’s see how the future of India retail looks like and where is the business.

Indian retail is projected to $1trillion in 2020 from $600Bn of 2015. It means there will be $400Bn growth in 5 year. This is big!! Let’s see where the growth is

Above numbers reflects a lot, if there will be $331 Bn sales increase in traditional retail why all buzz, news and coverage and investment on E-com. Investors are not fool they invest in disruption and they will keep doing that. So let’s try to understand disruption and how it can affect Indian retail.

Disruptive innovation: Innovation that creates a new market or value network and eventually disrupts an existing market or value network.

So Disruption can be?

New market and segment

New value network

Some more examples of type one and type two disruption.

What’s app vs. Skype – Big , part of day to day life

Everyone wants to chat not video call every day.

Uber vs. aviation : Big, part of day to day life

Everyone want ride on demand vs. fly every day.

Let’s draw a parallel with transportation industry to understand the same. Aviation in transportation industry was new market segment and future trend. It’s looked fancy, charming with lot of hot air hostess and shinning colours. With cutlets, drinks and video games in air, it fascinates everyone including customers, employees and immature investors.

What happened in transportation, when everyone was investing huge in aviation (and was in Air) something like Uber came and changed the game (on ground). Solving basic and big need with technology and innovation!! I will put that in second category. When problems are in day to day basics all resources should not be fascinated by rare required luxury of tomorrow. While 80% of public transportation was on ground. Investors, innovators were investing money and minds in Air!!

"Don’t fall in % trap “Small % of big is better than big% of nothing”.

Still new fields, sectors and innovations cannot and should not be neglected but do that if you find today’s opportunity small and boring!! Otherwise focus in today’s big and exciting.

So if E-com is the new trend of retail (category one disruption) and what is the basic, day to day and big of Indian retail?

I will ask again “is E-com going to engulf whole retail?” Obviously not, as everyone can’t access and then can’t afford flights!! What then? Will traditional retail remain the way it’s? Obviously not, as change is necessary evil!! But again traditional retail has to have something disruptive—affordable, scalable and self sustainable. Something which is day to day and grounded!!

" By 2020 having 12% share of Indian e-com ($3Bn) will be equivalent to just 0.3% share of traditional retail. 30 times bigger than E-com"

What will be real disruption? It will be in basics and in day to day? One thing is for sure it will be something in “traditional retail” –as it affect day to day life and it’s big ($800Bn by2020). Transforming traditional retail will be a disruption.

Understanding above facts and conclusion is not a rocket science it’s a common sense. Rocket science will be how of it? To disrupt you have to

Identify something big and day to day

Think smart and make it simple and win-win-win

Indian traditional retail is day to day and need transformation. Investment of minds and money will pay back as it’s one of the biggest untapped opportunities but key will be disruptive innovations with “day to day” and “scale” at heart of it. At Shopkirana we just raised hammer to create dent in Indian retail universe by Empowering stars of retail Universe i.e. Traditional Retailers!!

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