Indian retailers look to global firms for best practices

In a world that changes almost as fast as the blink of an eye, Indian retailers also want to change. Earlier, they used to look up to Future Group 's Kishore Biyani, who led the retail revolution in the country, but now they have reached a point where inspiration within the nation is just not enough. Their approach has now turned global and they are trying to replicate the best practices that have worked or are working internationally.

Electronic product retailers such as Croma, which is run by Infinity Retail division under the Tata Sons umbrella, and Reliance Industries' Reliance Digital are making sure that they give customers the best possible offers and services so that they are able to better compete with other brick and mortar stores, or the fast-growing ecommerce portals. They seem to have chosen the world's biggest player to do so-Best Buy, the US consumer electronics MNC.  

Best Buy, which operates close to 2,000 stores across the US, Canada, China and Mexico, has been struggling over the past several years, losing customers to deep discounts from the likes of Amazon and Walmart.

Under its 'Renew Blue' transformation campaign, which has been operational since the fall of 2012 with Hubert Joly at the helm, Best Buy has been bringing in a number of initiatives to lure customers back to its stores, thereby boosting sales. The company operates the 'Geek Squad' brand, under which it offers services such as technical support, repair and installation. Reliance Digital, under its 'Reliance resQ' operations, manages installation, maintenance and repair for its customers.

Taking best practices from Best Buy, which is attempting to script a turnaround, the domestic players have already figured out the various threats and are working towards avoiding a difficult situation. Croma opened its 101st store in Mumbai recently. At the launch Ajit Joshi, Managing Director, Infiniti Retail, announced a slew of new initiatives, starting with a new 13,400 sq. ft. store. Several other initiatives resemble the ones undertaken by Best Buy.

Best Buy has a store-within-a-store approach to give customers an experience before buying the products, which the newly-opened Croma store in Mumbai is also offering. This approach will also be extended to the new stores that Croma will be opening shortly. Croma has set a target of 10 to 14 such stores, most of them being large format, in 2014/15.

Croma is also harping on its omni-channel approach, under which it offers customers facilities such as in store pickup, wherein a customer can pick the product at one of its 16 stores after ordering the product online. It is something that Best Buy has also rolled out under its 'ship-from-store' initiative at more than 1,400 of its outlets.

While there are similarities, the Indian players have also chosen a different path. Croma, for instance, will not offer discounts just to compete better with ecommerce players, unlike Best Buy, which has chosen to fiercely contend on product pricing. "I know the margins that are there. Those on mobiles are paper-thin, so how can you provide a subsidiary of Rs 4,000 to Rs 5,000," asks Joshi.

The company has, however, partnered with online market places such as eBay and Amazon to sell its products online to help them reach customers beyond the 16 cities in which it currently operates in.

The Indian companies are also focusing on the increasing business that private labels are offering them. Croma with its 'Croma Life Accessories' brand, and Reliance with its 'Reconnect' brand sell more that 200 products at its stores as well as online. For Croma, its private label business was Rs 180 crore in the last fiscal, compared with Rs 128 crore a year earlier.

While they are not being complacent, the companies will have to continue to reinvent themselves to stay relevant in the fast-changing world of retail.