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Retail (and consumers) will be king: Kabir Lumba

Going omni-channel will be the key as both brick-and-mortar and ecommerce businesses venture beyond their comfort zones to offer consumers an enhanced experience

Published: Jan 19, 2016 06:07:52 AM IST
Updated: Feb 27, 2018 09:38:19 AM IST
Retail (and consumers) will be king: Kabir Lumba
Image: Chaitanya Dinesh Surpur
The author is the managing director of Lifestyle International Pvt Ltd

We have had a good 2015. The Indian economy is in the right direction. GDP growth is on track at 7.4 percent for the second quarter of FY16; commodity prices worldwide witnessed a downslide, strongly benefiting a consuming country like India. This has resulted in benign inflation, giving the Reserve Bank of India (RBI) adequate elbow room to cut interest rates. These positive trends have relieved some of the pressures we faced during the last couple of years. There is a positive sentiment in the economy, and breathing space for the Indian businesses and consumers from rising costs of doing business or running a household. Consumers are in the mood to shop as the economic outlook is looking positive and they benefit from the pickup in salaries and jobs.

As 2016 arrives, there is a mood of optimism and the world is once again looking at India with renewed interest. We are a country of over a billion people and a large untapped market, offering immense potential. With a median age of 26 years, this large young population has better earning opportunities than their predecessors and is predisposed to consume. They want to own the best of brands and are willing to spend. Social media, cinema and TV are acting as catalysts to drive the aspirations of these young Indians. This represents a large canvas of opportunity for the under-penetrated modern retail industry in India.

For the retail industry in India to thrive, there are four critical components that need to come together. These include a vibrant economy that supports consumption, rapid development of retail infrastructure, easy mobility of goods within the country and an unambiguous, fair and transparent policy regime.

India’s consumption story looks promising. However, India urgently needs world-class infrastructure. And good infrastructure does not come cheap. It is in this context that recent FDI policy announcements targeted at enhancing investments in the construction/real estate sector score. We need more such measures, where capital can flow in and help create bridges, ports, flyovers, roads and malls. Specifically, we need enabling policies that will accentuate the creation of malls. Currently, the number of approvals that are required are too many. This puts enormous pressure on retail businesses, as no amount of planning will help in navigating the uncertainty arising out of delays. This needs to change. ‘Ease of doing business’ means enabling policies, clear timelines for every process and a more transparent regime.  

Our approach to policy on FDI in retail and ecommerce is laden with ambiguity. Imposing sourcing norms on single brand retail was never going to be practical, while the intentions may have been noble. The recent relaxation of the sourcing norms for certain categories clearly indicates this. Why do we create policies based on the source of capital? India should be a level playing field where the consumer’s voice should ultimately decide who survives and who exits, where the products are sourced from and where and how they get sold.

While on the topic of regulation, another ambiguity is on the current ecommerce platforms. Why turn a blind eye to serious work-arounds? Billions of dollars of hot money is chasing startups. Ecommerce is a great quick-fix that can help accelerate consumption. Removing policy ambiguity and ensuring free flow of capital will help ecommerce transform the Indian retail landscape even further. We should have a policy that lays down the ground rules in an absolutely unambiguous manner. ‘Interpretation’ of rules and exploitation of loopholes does not do any good.

The Goods and Services Tax (GST) is a gamechanging initiative. This will immensely facilitate the easy movement of goods, reduce red-tapism, improve productivity of our transport and create a unified market. At the time of writing this article, the fate of GST is unknown. I sincerely hope that all political parties rise above party lines and support this.

Retail (and consumers) will be king: Kabir Lumba
Image: Getty Images
India needs enabling policies for malls to boost the under-penetrated modern retail industry


With a buoyant economy and a rapidly evolving consumer willing to spend more money, retail will continue to grow and expand. The Indian retail industry will continue to create millions of direct and indirect employment opportunities. A buoyant retail industry will contribute towards the improvement of manufacturing and creation of infrastructure, as it strives to create a seamless and efficient retail supply chain that reaches the farthest corners of the country.

The service and customer experience levels in the country, too, are bound to upgrade further. With the changing dynamics of retail in India, the huge investments in ecommerce, and entry of international brands into the country, the existing players cannot take the customer for granted. The need to focus on ‘customer experience’ is stronger than ever before. Thus, 2016 will witness a further intensified period of competition during which the brick-and-mortar players will continue to expand, improving on delivering great customer experience and unparalleled service levels, while the pure-play ecommerce players, too, will look to further strengthen their delivery mechanism to reach the customer faster. There will be some transition in the business models too, as we saw this year, with ecommerce players launching physical retail stores even as the brick-and-mortar brands foray online to offer an omni-channel experience to their customers.

The Indian consumer will continue to be the biggest beneficiary. Equipped with the power of a smartphone, they can choose when, where and how to shop, decide when to have the products delivered and how to pay.

The Indian economy is at an inflection point and the retail industry is suitably poised to claim its rightful position as the one that shapes the aspirations of over a billion consumers.

(This story appears in the 22 January, 2016 issue of Forbes India. To visit our Archives, click here.)

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