In an interactive session with the students of TAPMI, Mr. Avinash Parhi spoke about the organized retail market, the challenges faced by it to go with that of modern trade and how eCommerce is the way forward.
He brought out the reality in the retail market scenario in India, wherein Organized Retail Penetration (ORP) was only 8% as of 2015 as compared to a staggering 85% in the United States. Breaking it down further into categories, he brought into focus, the market shares of these categories followed by their key category USPs and how they had performed in various formats of retail. While Food and Beverages had a market share of about 70%, it had gross profit margins of around 3% to 14%. On the other hand, Home Décor and Furnishing, which had a market share of only 3% has gross margins ranging between 40% and 50%.
Moving ahead, he listed down the major challenges that the organized retail sector was facing that formed a hindrance for the growth of modern trade. The various factors listed down by him included the highly diverse demographics of the country, poor supply chain infrastructure, real estate concerns to go along with workforce related concerns. He also highlighted the bureaucratic and legal hurdles that Indian businesses face and was very vocal about the need for a single apex body to govern retail operations. In his opinion, the uniqueness of Indian customers was one of the biggest challenges of modern trade.
The solution to all such problems lies in eCommerce, which, according to him, is the next biggest wave in the retail business scenario. It takes care of all the major hindrances to modern trade while providing a wide variety of assortment and helping consumers save time. He also spoke of how foreign players, in the past, have tied up with local players to understand the Indian market better. Furthermore, he delved into the two buzz words of eCommerce, i.e., growth and profitability and even took the students opinion of how firms can manage both at the same time. To end with, he spoke about the various departments that typically make up any eCommerce organization and the various aspects of marketing involved in the industry.