RETAILoring !

the great 2007 buoyancy in retail which had seen a mad rush in the retail industry to sign properties , more stores was considered better , every new mall envisaged interest and signing , me too business models was ok , but all this heating up and the crisis in 2008 ,high inflation and a corresponding dip in customer purchases had to have its own hit in the market , and ..

... the past 6 to 9 months has seen the falling of some known names in the retail segment like Vishal retail ( change of ownership ) , koutons ( bifr ) , others must be surviving, but constantly in the lookout of business model changes or stores pruning etc .. In the sense Retailoring themselves !

Mass /semi premium retail business is a low margin and high traffic model , there is a constant struggle for balancing the margin mix and generating traffic ( walkins ) if both fail then the writing is on the wall sooner or later .. some of the steps for retailoring that one cud undertake are the following :

i ) increase mix of pvt labels share , to drive more margins , need to have an effective mix of big brands and pvt labels other wise walkins wud suffer , typically retailers operate at around 80 : 20 % private labels mix

ii ) change the contribution of inventory from bought to consignment model ... although the margins are lower in consignment model , the retailers don't carry the risk of inventory mark downs and carrying the inventory as this risk is of the brand /manufacturer

iii) Top heavy management .. most retailers have some very high personal cost especially in the backend and the their head offices , there could be an opportunity here

iv ) relook at your business model , and see whether it needs a tweak or a complete change to drive more per customers or more customers !

v) look at bench marking your stores and invest only in the top stores , look at the engagement model ie , own vs franchisee , let go the bottom and some of your middle level stores , and concentrate on being more profitable rather than top line alone .

Names like vishal , koutons , subishka are already part of the fall outs in the nascent retail Indian industry , looks like most retailers have learnt there lessons and are better prepared for the future , lets see , how retailoring helps