Crossing the Chasm - India Retail

Retail boom in India is a reality. And, every corporate retailer is eyeing a big pie. However, there is a fear among the retailers entering the next phase, a situation that led marketing consultant Geoffrey Moore to term the transition as 'Crossing the Chasm'. The difficulty of crossing the chasm in current context means many corporate retailers who were comfortable in initial years of organized retailing are now finding it difficult to expand to the mainstream of the market. The story line of this case study will throw some light.

First time when I met the king of India retail at a retail summit, he looked very aggressive seeking feedback of his fellow retailers on a recent happening in the industry. Just two days back, the biggest retail firm globally had announced its entry in India with a new tie up.

During the course of the day at the retail summit, I could see exchange of heat between the king of retail and the CEO of the Indian firm which had tied up with the biggest retail chain. The king of Indian retail was stressing on having consumption led growth for the Indian retail and thus preventing hasty market entry of the big conglomerates in the sector. I heard him saying the words 'who knows what matters' when some body asked this future oriented retail king about the success mantra of organized retailing in India in its next phase.

I am sure corporate retailers will see a cut throat competition once the industry moves on the S curve ahead. I am really not sure if Indian corporate retailers would be thinking in terms of Blue Ocean Strategy. Many are waiting for the year 2009 when stores and malls of many corporate retailers will be ready to open. However, it should be understood that 2009 will not be a decisive time for Indian retail as many retailers say but the 'now' when every one in the market are working on ideas of launching innovative retail formats to be started 2009 onwards and which will supposedly satisfy a real consumer need 'then'.

Mind well, in the next phase of Indian retailing, the consumer will be more demanding and corporate retailers have to show strong evidence of value and ethics. First mover advantage will not help alone as red queen effect on competition will be stronger. Moreover, the unorganized sector will be creating barriers to the entry of corporate retailers in the market.

Corporate retailers looked really concerned when strong agitation started against a chain of fresh stores of a corporate retailer recently. Chief of Retailers' Association suggested that there should be no distinction between organized and unorganized retailing and the industry shift towards organized retailing should be looked as a step toward modernization of the industry and the society. Although I am not very clear on this suggestion of his but one thing is very clear that he was not sure of a adaptation strategy for the next phase.

For managing the uncertainty, I suggest all corporate retailers to concentrate on a single niche of the market while making transition to sell to the mainstream of India. Don't spread your resources too thinly across many activities or formats. Cross the Chasm with right strategic positioning in the next phase. Start riding the S curve in small steps with increased market segmentation. Build on success stories. Promote innovation in agriculture, infrastructure and related technologies, Understand aspirations and needs of mainstream again with a new insight. Have a robust resource management and a risk management strategy to avoid waste of efforts, unnecessary expenditures and corporate failure.