A milestone in retailing
Corporate retailing may see customer loyalty to the shop overriding the pull of a manufacturer's name.
The entry of Tata Sons into retailing, with a chain of stores dealing only in consumer durables and electronics, could one day be seen as a milestone in organised retailing by Corporate India. Professionalism in management systems, control of procurement and merchandising will of course be the obvious business benefits. The inclusion of computers, media and entertainment goods along with the usual mix of large and small household appliances, however, also suggests a new breed of superstore.
There are several trend-setting aspects in the choices proposed by Tatas, which is already into retailing apparel and other goods through another arm. Unlike organised food supermarkets already planned or launched, these stores won't be seen to be displacing any one category of small businessman or neighbourhood corner store. Above all, for a group hitherto seen as mostly into producing steel, chemicals, software and power, this will be an opportunity to strengthen its position as a pre-eminent business in the average householder's view. This matters in a rapidly growing consumerist culture, because the familiarity of a century-old name can be too much taken for granted. The Woolworth connection would be clearly an open window for an equity arrangement when the time is ripe.
Though the brand name is not Tata itself, it has a rather cosmopolitan and modern ring to it, which could be useful in entering overseas markets. Although food and groceries clearly represent almost two-thirds of the family's shopping, the choice of a range of high-ticket items is significant: It illustrates the management dictum that all strategy is also about sacrifice, that is, deliberately keeping away from certain activities, just as much as favouring some others. It is not inconceivable that more store branded products will become the norm as the loyalty to the shop overrides the pull of a manufacturer's name. Such a day may seem far off in some categories but the existence of a grey or informal and "assembler" segment even in the ICT world suggests that the new entrant might shift the power back to the channel away from the manufacturers.
This chain could establish many firsts, especially in the quality of the consumer shopping experience (so critical to the success of any new retail enterprise), in convenience and range of choice, and perhaps price. Still, durables differ from packaged goods in one important respect. Buying a refrigerator, washing machine or television set in India is not yet an impulse decision. It is pre-meditated and much debated within the family. But with rising incomes, a large affluent youth segment and easy consumer credit, leading also to multiple models of a product being owned in a family, India may be entering an era of rapid obsolescence and replacement, stimulating growth of sophisticated shopping centres devoted to such products.
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