The Hindu Business Line : Jagadish Ramadugu, Business & Strategy Development Officer, Spencer’s Retail Ltd, Kolkata; Siva Sivani Institute of Management, Hyderabad

Industry & Economy - Education
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Jagadish Ramadugu, Business & Strategy Development Officer, Spencer’s Retail Ltd, Kolkata; Siva Sivani Institute of Management, Hyderabad

Mr Jagadish Ramadugu, Business & Strategy Development Officer of Spencer’s Retail Ltd, Kolkata, speaking at the BL Club function at Siva Sivani Institute of Management in Hyderabad.

Our Bureau

Hyderabad, July 20 The domestic retail sector will bounce back strongly and emerge as one of the biggest employers in the near future, according to Mr Jagadish Ramadugu, Business & Strategy Development Officer of Spencer’s Retail Ltd, Kolkata.

The slump in the sector now, which is seeing store closures, retrenchment and other problems is a temporary phase. After consolidation, things will start looking up again, he told students of management at the Siva Sivani Institute of Management (SSIM), here.

Stating that retail would be the next big thing, Mr Jadagish said the economic growth of India is set to be high in the next two decades. The projected market for retail by 2012 is $530 billion. In 2007, it was $340 billion and contributes to around 10-12 per cent of the GDP (Gross Domestic Product), he said.

At present, the retail sector has expanded only in the metros, state capitals and major towns. There is very little action in rural areas, which are potential markets in the coming decade, he said delivering the lecture organised by the Business Line Club on Saturday.

On trends in the retail sector, Mr Jagadish said lifestyle and food retail will drive the sector. At present, only 13 million of the 200 million households consume 60 per cent of the products. Private label products are slowly making their way into stores. Worldwide they constitute 17 per cent of retail sales.

The retail sector remains largely unorganised. Small, kirana stores dominate. It operates on very low margins. For example, most large retailers make 3 per cent at store level. Therefore, volumes are the only way out, he explained to a wide range of questions posed by the students.

Challenges

While organised retail players face market competition from small chains and kiranas as well as incoming global players, there are several internal challenges to be met.

The basic thing is to get the back-end operation organised. Second, issues of profitability need to be addressed such as leakages and inefficiency. Third aspect is to handle the problems of qualified manpower and productivity, Mr Jagadish pointed out.

Since it is well recognised that retail is real estate, with every sq.ft used optimally for business output, getting the right retail space at the right price, is a big challenge for retailers.

Interesting features

Giving a flavour of consumer behaviour and retailers efforts to scientifically organise stores, Mr Jagadish said men dominate retail shopping at present. Customers change stores, are price sensitive and loyalty is not the in thing.

Retailers on the other hand put in lot of planning in placement of products, attracting customer attention, making the shopping experience interesting and easy, he said.

Earlier, Dr V.G. Chari, Director-Academic of SSIM, welcomed the gathering and explained the activities of the Institute.

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