Bringing Back Retail Realism

(An addition/comment to a report on Retail and the over optimism around it which was published in Mint on 27th August 2008)
http://www.livemint.com/2008/08/27002851/Bringing-back-retail-realism.html ... for the full post

Having dealt with the large retail houses in course of doing business, i was fairly confident that the exuberrance@retail was shortlived and was over stretched. Come to think of it from a business perspective
1. There were lot of instances of delayed payments by these chains ... leading to order cancellations from the vendors.
2. There was always a working capital crunch and huge credit cycles which were never resolved. 3. These chains had punted a fair amount on the vendors abilities to extend credit and run promotions
4. Competition never ran by any rules of retail management.
5. Consequently there were 3 or 4 players in the same catchment trying to woo consumers
6. Consumers were sploit for choices
7. Most of the shopping that happened was price discount based instead of value based
8. The stores competed on promotions and price offs rather than understanding the consumer better
9. By arm twisting the local vendors into greater margin sharing, these stores stocked up goods which were not the quality the consumers expected from the stores.
10. Quality thus became a concern from these stores. (No one believes jeans @ Rs.199 stories from these stores on quality)
11. The assortment of goods carried, the inventories and the personnel required to run the chains involves huge outflows which the profits dont make good.
12. From the consumer psyche, window shopping is all that he does in these stores. The real purchase happen at 50% and more "off" sales.

Thus in trying to be everything to everybody many of these stores loose on consumers. So then whats working?

1. Would applaud the Nokia, Bose, Sony stores which focus on a narrow merchandise but good depths
2. The Walmarts and the Tesco's of the world dont only do retail management. They have huge vendor/supply management fundamentals. Its like Frito Lays paying farmers to cultivate the Potato for the Lay's Chips.
At this level, of price discounting, promotion and bargain hunting, the story is doomsday for these stores.