Sriram Recommends...

"You come up with a good value proposition, someone will copy it. But that's life." When R Sriram spoke these words in front of a motley of businessmen and members of the Confederation of Indian Industries (CII), I couldn't help break into a smile. I like Sriram. He's the man who co-founded Crossword, the bookstore that turned non-readers to book browsers (well, at least that!)

While Sriram's done well for himself. He sold off his Crossword shares to Shoppers Stop and set up his own consultancy Next Practice Retail. Having built a brand like Crossword in a nation that doesn't read much, Sriram knows how retail works. "It's the top 10 per cent of India that accounts for 30 per cent of its income and 35 per cent of consumption. Retail doesn't have to target all of India. If it targets just the top 10 per cent that's enough," he said. The audience nodded appreciatively.

For any retail company to work in India, it should value three concepts that are peculiar to the Indian market:

1. Concept of Freshness

Sriram said, "We will never make the same vegetables for lunch and dinner both. Our idea of food is: We make it now, we eat it now. We buy small quantities of veggies and we buy it often. Therefore, the supermarket should be close to our homes. Moreover, our dense public transport doesn't allow us to carry too many bags and not all of us can afford to take the car out to buy a few groceries from the supermarket. Thus, proximity plays a big role."

When the Apna Bazaar superstore came up at Agar Bazaar, Prabhadevi (Mumbai), my mom chose to go there for shopping veggies. She had good reason, she said. "You get chopped vegetables packaged in tiny dabbas. You can just pick up the veggies you want to cook for dinner everyday. It makes it so easy for the women who have offices here. They can pick their veggies up on their way home." Apna Bazaar has got it right. By keeping it fresh and small, it has provided a solution to a particular customers' needs.

Will next-door supermarkets ever rout the familiar kirana stores out of business? "The kirana works because it provides a solution to your needs. They will deliver the goods home for free instead of inconveniencing you by making you wait at the shop and carry all the packages. Supermarkets cater to different needs. They work on a strategy where they allow you to browse through a range of products (kiranas often lack that kind of space that will allow customers to browse). Identify the need, the customer and you can well be in business!"

2. Concept of Value

"We always want more for less. In the US, if you want more, you pay more and if you want to pay less you get less. The Americans have accepted this as way of life and their whole economy works that way." Sriram's right. In India, we're always looking at value for money. Not just what money can buy but how much more we can buy with that same money.

This is where the pricing becomes important. In retail, you need to keep on investing and geographically India is so large that if you want to reach out to everyone, you'll have to incur huge costs.

"Most people in this country pay more for the same products than their counterparts in other countries, simply because of this high cost of reach. And there are peculiarites even there. In the US, a movie costs $10 while a book costs an average of $6.99. Books are cheaper than going to the movies. In India, it's the other way round. A basic English-language paperback will cost around Rs 300 while you can watch a movie for Rs 100. Only mobile charging is cheap here. That's why the market has exploded to 50 million users."

If you want to be in business here, Sriram says, you should not be in the business of products but into the business of solutions. That's how you can offer value for money.

3. Concept of Space

"You need to build space to start a business. In India, it takes more capital than planned, more time than planned and you always get revenues that are less than what was planned for." The basic concept of a supermarket is space. It's not that there weren't bookstores in India before Crossword came along. But they didn't really encourage browsing. You had to tell them what you needed and they would give you the book. They'd probably suggest a couple more. But if you'd just step in to browse, the shopkeeper's assistant would peep over your shoulder to find out which book you'd picked up and then ask you if you'd found what you're looking for.

What Crossword did was offer you the leisure of browsing through books, even reading them while sitting in the comfortable sofas while sipping coffee (provided by an in-house cafe) and give you the freedom to pick up as many books as you wanted.

That's where the malls and More have failed. In order to combat the kiranas, they've built huge spaces, but they've had their floor assistants track you down and follow you as you browse through merchandise. It was ok for a kirana to tell your brand of shampoo or sugar wasn't available for the day and that they could get it for you in a couple of days. But at a supermarket, you expect things to be stocked up. If it's not available, you'll go back to your kirana (at least they deliver home!) Storing inventory is expensive but for supermarkets to survive in India, it's a cost they'll have to be willing to shell out.

When you talk about retail space it's not just the shop floor. It's shop floor + storage + toilets + back office + parking lot. The last is one of the most important reasons why malls have largely failed in India. Malls prefer to use that space for shops than parking lots. But in their bid to get revenues from rentals, they lose out on potential customers. People who bring a car to a mall are more likely to buy something than those who don't. That explains why in spite of high footfalls many malls have had to close. Footfalls don't fetch revenues, parking does. It's expensive but it's a matter of convenience and hence a solution. And like Sriram said, business is about solutions, not products.

Most of the points Sriram made were either straight out of management textbooks (read Kotler) or simply common sense. So why haven't retailers figured this out yet? "There has to be a shift from the supply side to the demand side. They still have to understand that!"