Wednesday, August 08, 2007

In India, chaos equals retail sales

The Wall Street Journal published a really fascinating article about Pantaloon Retail (India) Ltd., India's largest retailer, and their discoveries that western retail innovations don't always translate neatly to other countries with different ideologies and histories. In fact, even simple, seemingly common-sense features like quiet stores, wide, straight aisles and fresh, clean produce (basically the hallmark of a good supermarket here in the US) take on decidedly different meanings in India. Says Kishore Biyani, president of the firm, "The shouting, the untidiness, the chaos is part of the design." The WSJ provides some further explanation:
[When] Mr. Biyani tried that in Western-style
supermarkets he opened in India six years ago, too many customers
walked down the wide aisles, past neatly stocked shelves and out the
door without buying.
Mr. Biyani says he soon figured out what he was doing
wrong. Shopping in such a sterile environment didn't appeal to the
lower middle-class shoppers he was targeting. They were more
comfortable in the tiny, cramped stores -- often filled with haggling
customers -- that typify Indian shopping. Most Indians buy their fresh
produce from vendors who keep vegetables under burlap sacks. Even the dirty, black-spotted onions serve a function. For the average
Indian, dusty and dirty produce means fresh from the farm, he says.

Yet while he has worked hard to de-westernize the customer-facing portion of his operation, Biyani has adopted many high-tech innovations to optimize things behind-the-scenes, using fancy ERP software and just-in-time inventorying to maximize profitability and ensure that his company runs as efficiently as possible.

Interestingly, Biyani notes that while the market-style approach of his grocery stores is designed to appeal to lower- and middle-income Indians (who make up the vast majority of the population), he has had success introducing Western-style stores (with clean floors, air conditioning, and well-merchandised goods) catering to more affluent Indians, so exposure to other cultures -- and probably the "brand image" that those cultures carry -- does seem to play some role in shoppers' expectations of how a store should look, feel and function.

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