June 2011


In an exclusive interview with the London Times (17 June 2011), Kishore Biyani, the founder of the Future Group (India’s largest retailer with more than 1,000 stores in 83 Indian cities), highlighted the problems facing International Retailers such as Tesco entering the Indian market: “They won’t be able to find spaces and they will find it tough to make their out-of-town outlets work in India. The roads are not good enough.”

The prize for International Retailers is clear: a slice of an estimated $350 billion retail market. However, market access is not easy. Land in the big Metros is at a premium – Future Groups cost of occupancy is 6 per cent versus 2.5 per cent in developed world markets – leaving tier 2 and 3 cities and towns as the only realistic target for foreign traders. This is where the well honed supply chain models of the top five global retailers will come unstuck. Indian infrastructure is notoriously weak and, with severe traffic congestion in urban areas so severe it is no shock that an estimated 40 per cent of fruit and vegetable harvests rot on the way to market. Tough territory for the ECR (Efficient Consumer Response) to build ever better, cheaper and faster supply chains.

In several conversations with Anshuman Singh of the Future Group’s Supply Chain Solutions business over the past year or so, we have discussed this theme in more detail. With over thirty distinct supply chains from Household to White Goods; Fresh Food and Vegetables to Fashion, the Future Group has to make unique Indian conditions work for them. Bullock carts and handcarts are as much a part of this picture as a sophisticated truck and, the stores themselves have more in common with the chaos found in traditional bazaars than in the manicured isles of developed world retailers.

It takes all sorts

(more…)

On Friday 10th June at the Hull & East Riding Business Week Event at Bridlington Spa, Terry Hill, the Arup CEO quoted Vince Cable, the UK Business Secretary: “Capitalism’s natural end state is when companies become monopolies”. Globalisation has driven huge consolidation in all sectors from aviation to retail; pet food to pesticides; cars to ports such that anything from 30 to 85% of market share is in the hands of the top ten companies. The danger here is that these companies are owned by shareholders who may not have the long term interests of the company at heart and have little interest in the local roots of the business or, even the staff themselves. Dog-eat-dog capitalism takes no prisoners but claims that this is the only way to do business are being challenged more than ever.    (more…)