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India retail faces challenges

News, 20 May 2015
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NEW DELHI: India's retail sector is set to boom according to recent reports but evidence is emerging of problems that bricks-and-mortar stores and online retailers will need to overcome if the predictions are to be made real.

A new report from property consultant JLL India highlighted the fact that many of the country's shopping malls are performing poorly. Altogether there are 255 operational malls in the top seven cities, with the Delhi-National Capital Region accounting for more than one third of the total.

Pankaj Renjhen, managing director/retail services at JLL India, described Delhi-NCR as "the default mall capital of India". But of the 95 operational malls identified he reported that just 12 were successful.

Mumbai had a better strike rate, with between 10 and 15 of its total of 45 malls performing well.

JLL pointed to a range of factors at work, including location, design and layout, a mall's brand positioning and how well they cater to the needs of their target segments.

"Also, whether or not they have been able to evolve into family destinations rather than just remaining shopping centres plays a big role," Renjhen added.

Online retailing, meanwhile, is taking off as internet penetration grows, but the sector has yet to fully crack the logistics side of the business.

The Economic Times reported that a number of online furniture and grocery retailers are building their own delivery networks to meet the particular needs imposed by these categories – in terms of size for the former and speed for the latter.

And the last mile is also emerging as a challenge, as finding suitable personnel to deliver to customers becomes increasingly difficult.

"Whether it's someone like Grofers or Flipkart, the delivery component is the business – the delivery person is now representing the brand behind it," said Vir Kashyap, COO of blue-collar jobs platform Babajob. "If you don't get that right, it would ruin the whole business."

Nor is it just a case of finding the right person, it may soon become a case of finding anyone at all. "I don't think there are enough delivery boys," said Bhavesh Manglani, cofounder and chief operating officer at ecommerce logistics startup Delhivery.

"At the rate at which we are growing, we will be running out in the next year-and-a-half."

Data sourced from Financial Express, Economic Times; additional content by Warc staff

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