Indian Retail Naysayers & Specialty Retail

I am really tired of Indian Retail Naysayers, these days.
Their typical 2 comments are on these lines below:

1. X, Y & Z companies had announced that they will open 500 stores each. Ha! They've opened just 50 each. And, they're shutting down 5 of them. (What Losers!)
2. Food & Grocery Retailers are struggling - Despite all their investments, Ha! They are not able to offer the same or superior proposition (Fresh Food, Credit, Home Delivery) as compared to the Vegetable Hawkers & Kirana Shops littering the streets of India. And this is true for all types of Retailers.

I have these thoughts to convey:

1. Yes - X, Y & Z companies majorly erred in projecting their business plans. When the likes of Walmart & Tesco, with all their retail experience & resources, speak about opening only tens of stores a year, it was really silly for Indian Retailers to talk about 100s of stores every year. But, as I have noted and quite a few peers & seniors of mine have confirmed - these figures were always supported by the Top Management & Consultants across the Retail industry. It was almost a case of "Emperor's New Clothes" - where everybody was afraid to call the Emperor's Bluff. These people were recruited to guide and execute the business plan, but they did not deliver. Everybody just played along with fantastic numbers and experimented expensively, as long as the Promoters pumped in money like there is no tomorrow. It was only when the Promoters started looking at Returns and efficiency of their Operations, did everybody start screaming that this current business model is unsustainable. And now, everybody's applying full brakes, because they do not have an estimate on "real" demand. I have this to say - forget comparing the retailer's achievements with respect to their business plans, but look instead at their achievements from Zero. One might have achieved only 10% of the grandiose business plan of 500 stores, but 10% still means 50 stores out of nowhere in 2 years. And they are generating revenue, if not the bottomline just yet. So, big deal. It only means that the plan is delayed and the proposition flawed. Reworking it should help stabilize and grown the industry again.
2. Because Food & Grocery Retail constitutes the majority chunk of the Indian Retail scenario today and was the focus of most Indian Retailers who wanted an easy win (and probably even wanted to make a difference) - notable failures in this section are used to paint brush the entire Retail industry as a failure. However, note that there is something called as "Specialty Retail". I think specialty retailers (Electronics, Apparel, Books & Music, Footwear and so on) are doing pretty well and the growth of "organized specialty retail" figures (extracted from IRF 2009 Report) below highlight my reading:

• Apparel Retail - 13.6% (2004) to 22.7% (2007)
• Footwear - 25% (2004) to 48.4% (2007)
• Health & Beauty - 6% (2004) to 14.3% (2007)
• Consumer Durables - 7.8% (2004) to 12.3% (2007)
• And so on.
• (Food & Grocery Retail is the smallest lot with only 1.1% as Organized).

So, while Food & Grocery Retailers may be struggling, I see a silent & steady move by customers towards Organized Specialty Retail Players.

The neighbourhood J.K.Textiles & Gohil Tailors are being steadily run out of business by the likes of Shoppers Stop & Pantaloons. The neighbourhood Adarsh Chappals is being steadily run out of business by the likes of Bata & Metro. The neighbourhood J.K.Electronics is steadily run out of business by the likes of Croma & Vijay Sales. And you are telling me that organized retail is failing in India. I don't think so.

In fact, going by the above reading, I actually think all the Indian Promoters should really look to spruce up their presence in Specialty Retail rather than chase volumes in the Food & Grocery (and where anyways the requirements of people change every 1 km). Specialty Retail not only gives better numbers, but growth trends above also show that it is the place to be in.