The financial year 2011-12 has been highly beneficial for retail companies across India. The like-to-like sales of these companies have reached new highs owing to the right product mix and location. Retail giants like Arvind and Raymond have been leaders of the pack. Whereas Arvind registered the highest like-to-like sales at 18%, Raymond, K-Lounge and Shoppers Stop followed the queue.
Retail firm Raymond registered a competitive 15% growth whereas K-Lounge and Shoppers Stop saw a store growth of 15% and 7%, respectively, during FY12.
Experts feel that there are various factors that contributed to the growth of the sector. Among the determining factors are favourable consumer demand, the right mix of products and also proper location.
Region wise, the north was witness to the highest like-to-like sales growth for Arvind followed by the south, east and west in terms of the total number of stores.
The basics behind the growth of retail firms like Arvind have been simple. Instead of concentrating on each and every corner of a region, these companies have their retail outlets at important parts of the city and also prefer to focus on specific sections of the society.
Adoption of innovative techniques
Companies have also become more conscious about the adoption of innovative marketing strategies in order to boost sales. ‘Theory of Constraints’ (TOC) is one such technique that has been popular among retail companies.
According to Prasun Chowdhury, director of Avenir, a well known consulting firm in India “TOC is a management system and philosophy that has been enunciated by Dr Eli Goldratt. The concept plans to release management capacity and capability in a short time. The highly enhanced management productivity is focussed on initiatives that try to build and leverage on creating a Decisive Competitive Edge for the organisation which would be very difficult for competition to emulate. In order to achieve this, TOC provides a structured framework for management to shift their paradigms and view the organisation as a synchronised value chain whose weakest link has to be leveraged in order to bring about exponential growth on a sustainable basis.”
What is significant to notice is that this growth came in inspite of the inventory costs being higher than it has been in previous years. Industry insiders say that the pioneering strategies on part of the company have been instrumental in making it possible for the company to withstand the pressures of increasing inventory costs.
For companies like Raymond, the store count as on March 31, 2012 stood at 853 stores across various formats including 39 in the Middle East and SAARC region, covering over 1.6 million sq ft of retail space.
According to Sourya Roy, a regular buyer of Raymond’s apparels, “The company has successfully launched retail spaces in areas that are densely populated. This has primarily been the reason behind the growth in its sales.”
Even shopping malls that house outlets of retail firms have learnt the right product mix. In addition, some other foreign companies have also fuelled this like-to-like sales growth.
However, the road ahead seems gloomy for these retailers as the economy is about to be confronted with a tough situation. Factors like Eurozone crisis and declining value of rupee are the major roadblocks that could create problems in the near future.