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Retail: The pain points

Zafar Anjum | Feb. 24, 2015
In this interview, Bikash Kumar, the founder and Managing Director of Integrated Retail, discusses at length the challenges faced by the retail industry.

 a.      Challenge to the traditional brick and mortar retailers from new on-line and mobile retail

b.     Global deflation in prices especially on lifestyle goods

-       Our estimates are large part (at times > 60%) of a merchandise range put out by a fashion retailer gets sold at very deep discounts and fire sales, leading to margin erosion

c.      Deal driven consumer shopping

-       Deals and discounts are the key sales drivers

-       Consumer loyalty is taking a back seat and in absence of deals, consumers tend to switch quickly

d.     Brand equity erosion and diffusion, especially for lifestyle brands

-       Name brand apparel companies are facing huge erosion in brand equity as new challenger brands are emerging with equally good product offering

-       The considered set of brands for a brand conscious consumer has expanded considerably, as a result the consumer spends is getting spread across multiple brands.

e.      Very rapid technology changes for a retailer

-      Payments are changing with myriad competing technologies being offered : NFC, Apple Pay, Pay Wave, Google Wallet, Paypal Beacon etc. etc.

-      Technology platforms are changing rapidly: Windows, Android, iOS, Cloud based systems, Hybrid systems

-       Challenges of integrating myriad systems invested into at different times e.g. new cloud based payroll system with traditional POS feed for commission calculation

-       Technology obsolescence

B.    Localized Challenges - Challenges specific to retailers in specific geographies, apart from global challenges

a.      Challenge faced by retailers in Singapore

-       Labour availability

-       Labour availability

-       Labour availability

b.     Challenge faced by retailers in Indonesia, Thailand and Malaysia and India

-       Shrinkage (losses at retail because of theft, pilferage or poor processes and documentation)

-       Huge pile-up on inventory

-       Labour productivity. Retail traditionally has been the largest employer sector in most economies, the surplus labour pool (unlike Singapore) leads retailers to over-staff, and adversely affect the productivity

 

 

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