The interest shown by the major business houses in this sector and the quantum of size and numbers being planned will change the way things are transacted along the entire supply chain. Nothing will be left unchanged - The players, the commodities, the prices, the policies, the strategies ... nothing.
It is important that all the links of the supply chain – right from the manufacturer to the last mile shopkeeper – understand the affect the new retail mantra will have on their business before it is too late. Even the most “secure” will have to sit up and adapt to sail safely through changing winds of new retail.
Following are some of the changes that I can envisage in the consumer retail sector …
- Mega deals will be struck at the manufacturing level. The new players, especially those that are coming up with chains and mega mall projects will strike deals for bulk purchases at the corporate headquarters itself.
- The burden of sales, which is presently on the manufacturer, will be shifted to the retailer in exchange for a larger share in the profits.
- For an additional share in the profits the retailer may take up the responsibility of distribution of the goods for his chain of outlets at the national, state or city level depending on the number of stores and size of the market.
- The volumes and the margins of the distributors (the stockists and the undercutters), in the present supply chain, will be compromised.
- The number of the intermediaries in the supply chain will be reduced.
- The customer will be offered lucrative merchandizing schemes, incentives and discounts in exchange for his loyalty.
- The growth in the incomes of the consumers and easy availability of goods supported with the right advertising and pricing strategy will support growth in the size of the consumer market.
- The local shopkeeper will stand to loose some of his clientele and in turn some of the pampering received from the manufacturer.
- The manufacturer may end up pampering the new retail giants.
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