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India, the land of miracles,
witnessed a retail revolution in
the past decade. With a number of foreign brands entering the
Indian landscape and a lot many
Indian companies also foraying into the retail sector, the future of
organized retail looks bright and shinning. However, with the growth
of the Indian organized retail sector, the competition has also
intensified. A diverse culture, varied people, different needs and
above that escalating competition are all acting as challenges for the
retailers. It is no longer an easy task for the retailers to survive and
become successful. In today's customer-centric era, most of the retailers
have to concentrate on providing maximum value to the customers
to overcome competition. By offering large discounts and
implementing lucrative sales promotional offers, retailers have to try their best
to attract the customers and generate loyalty amongst them.
However, apart from concentrating on the sales promotion programs,
which happens to be one of the most essential activities in business,
retailers should also focus on undertaking and implementing other
activities that can improve the internal operational efficiency and also
provide additional value to the customers. The following seven
strategies, if implemented efficiently, can contribute to a great extent in
improving the overall performance of a retail organization.
During turbulent times, cost reduction and management is
inevitable but implementing strategic decisions keeping a long-term
perspective can prove to be fruitful. Today's scenario is characterized by
an economy that is recovering from a slowdown. In this scenario, it
becomes imperative for the Indian retailers to manage their costs in a
way that improves their efficiency, which will enable them to transfer the
benefits of reduced costs to the customers. One of the ways adopted
by many of the companies is laying off staff, which might prove
detrimental to the company in the long run. On the other hand, many
organizations have shown that there are better ways of managing costs. An
example of the same is the revenue sharing model. A few retailers
have been using this model to efficiently manage their costs. A revenue
sharing model is a location strategy that enables a retailer to operate at
a prime location and also incur expenditure commensurate with
the income. In usual circumstances, when a store is taken on a
rental basis, a fixed amount of rent is paid for the same on a monthly basis.
In case of a new retail store, this rent can prove to be very heavy for
the retailers if the store has just started picking up sales. The revenue
sharing model allows a retailer to operate a new store on a
variable amount of rent. This variable amount is calculated as per the
sales generated in a particular month. Higher the sales, more will be
the rent to be paid that month and vice versa. Many big retailers
including Future group, Vishal megamart have adopted this model. "We are in
the midst of clinching a deal under revenue sharing model. Although
this is going to be our first deal, in the future most of our deals would
be under this model only," said Ambeek Khemka, President
of Vishal Retail. |
