“Indian consumer has surely come of age”

PETER BAKER, CHIEF EXECUTIVE OFFICER, H&B STORES, DABUR

Though retail outlets have mushroomed across the country, the industry is still in its nascent stage in India. However, for consumers it’s a gala time ahead...

Last year Dabur forayed into retail by rolling out ‘new-u’ stores with a focus on health and personal care products. And after one year, in a free-wheeling conversation with 4Ps B&M’s Angshuman Paul, Peter Baker, CEO, H&B, Dabur discusses the current state of affairs of the Indian retail industry and where they are...

Where do you think does Indian retail industry stands when compared to its global peers?
There are lots of differences. Indian retail industry is still in a very nascent stage when compared to its global counterparts. Logistic and supply chain is an issue which many players often ignore. I mean, abroad, much more emphasis is given on setting up a supply chain before opening a retail outlet but that doesn’t happen in India.

But compared to Europe or US, isn’t infrastructure a major challenge for Indian retailers?
Yes, that’s a key challenge as transporting things from one place to the other requires at least seven days and this delays the retail cycle. Moreover, to get your goods ordered much in advance, you also need to create a good storage system, which actually very few retailers do in India. I think when it comes to focusing on back-end operations, Indian retail industry’s standard would be just 50% as compared to 100% of global retailers.

Is skilled manpower a bottleneck for Indian retailers?
Earlier skilled manpower was a major challenge in India. In Europe the retail has been happening for more than five decades and people are willing to take this as a profession. But in India retail was just picking up and no fresher was willing to enter this industry. But now things are changing as Indians are realising the importance of retail industry. So, I don’t think that finding talent is a major challenge now.

Do you think Dabur has been able to address such issues?
Yes we did and that’s the reason we took so long to set up our first ‘new-u’ outlet. We did our homework, we were well equipped with everything. It was then we decided that now we should open our first store.

But didn’t you miss out big time as Fortis HealthWorld has already rolled out about 50 stores?
No, there are examples of players across various segment, which have entered five years late than any other players, but yet they are doing so well. The market is growing and there’s potential for many players. Health and beauty retailing is growing as the well-being market of the country is annually fetching an extensive business in billions.

Tell us about the current penetration level of ‘new-u’ across the country.
Right now we have nine stores. Three in Hyderabad, three in Delhi, and two in Bangalore. We would be opening 12 more stores in this fiscal and 30 more stores in the next fiscal. At the initial phase we believe in going slow. But we will be investing Rs.1.4 billion in retail and in next five years, & we would be having 300-400 stores. Right now we want to concentrate on selected metros.

In the next five years what changes do you expect in the Indian retail industry?
The next 12 to 20 months would be tough due to rising real estate cost. This might even force many small players to shut down their stores. Hence many small players will leave the market. But the next two years following that would be great time as the retail industry would be in its boom. From consumer’s perspective definitely there is much great time ahead.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).