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Here are some of the key factors for success for organized retailers.

Location of the store: Location is the most important factor determining the success of a retail store or a chain. Selecting a wrong location and then changing it can have heavy strategic and financial implications.For instance, in the food and grocery vertical, the Indian consumer prefers a neighborhood convenience store to the international trend of an out-of-town one-stop shop.

Penetration across verticals and geographies: Growth in organised retailing will come from increased penetration in different verticals and the dimensional rise in geographical reach. Moreover, this will also diversify risks and improve loss-bearing capabilities. A retailer with a presence in several verticals and higher number of stores will be in a better position to manage slow sales in some locations.

Managing scale: This calls for synchronizing various aspects of operations: front-end, back-end, supply chain dynamics and infrastructure. Therefore, players with good execution capabilities, deep pockets and financial flexibility will be able to scale up their operations much faster.

Apart from all these, lot also depends on how you position the products / brands SKUs within your store.

In an interview yesterday, Levis Strauss Indian Marketing Head, Sukhramani said that,
Consumers today want more, better and more frequently. In what may well become a game changer in the organised retail industry for premium branded apparel, the new EMI scheme announced by Levi's allows consumers to get into their favourite Levi's whenever they please, as often as they please, as much as they please, at no additional cost, and from anywhere in the Levi's brand's wide network of exclusive stores. This enables many more young adults across the country access to the Levi's brand.

We disagree with Sukhramani as he should know that Banks and FIs are rapidly cutting on consumer credit avaibality in the form of Credit Cards due to High delinquency ratio. Infact, the industry will witness a negative growth this FY. So does Mr. Sukhramani want similar kind of trouble when consumer default or does he want to get into the recovery business ?

Titan Industries Ltd has revisited its extensive store roll-out plan across segments in view of lower-than-expected growth in volumes. The company has put on hold the further launch of GoldPlus stores until demand for gold jewelry improves. In 2HFY10, the company plans to open only three large format Tanishq stores unlike the earlier model of multiple smaller stores at different locations.

It has also cut down on its target for the Titan Eye+ stores to 90 by end-FY10 from its earlier target of around 120-130 at the beginning of the year. The company is currently relocating seven of its existing eye-wear stores to smaller locations in order to save on rentals and improve the profitability of these stores.

There is no proven recipe for success in retail, however, certain factors do help.

Proven and tested formats: One of the peculiar aspects of the recent retail boom was the rapid scaling up of untested and unproven formats by new entrants as well as existing players in the pursuit of space growth. In terms of store level profitability, Pantaloons seems to have the widest presence with Big Bazaar, Food Bazaar, Pantaloon and Central being well established formats with proven profitability. For Shopper's Stop, only the core department store format seems to meet this criterion. Koutons' two main formats (Koutons and Charlie Outlaw) seem to be profitable.

Diversified formats: The Indian market is large and diverse with traditional classifications around product line and target customer profile being overlayed by major differences across the large metros and smaller towns and cities. Retailers whose offerings target the largest proportion of the customers wallet are better equipped to scale up and capitalise on growth
opportunities in the sector. Amongst the retailers under consideration, Pantaloon seems to have the potential to capture the largest share of the consumer wallet with offerings spread across categories as well as income segments whilst being a little weaker on geographic spread.

Working capital efficiency: Organised retail as a sector has been hamstrung by low return ratios for most players (sub 15% ROE' are the norm). One of the main drivers of this has been the high working capital requirements of the business, driven by high inventory levels and rental deposits. Amongst the companies under consideration, Shopper's Stop is the most efficient, underpinned by tight stock management, whilst Provogue is the least efficient with high inventory alongside an unusually large loans and advances figure.

Gili, the well known Diamond jewellery retailer is planning to expand its portfolio to include eyewear, perfumes ans scarves under the Gili Lifestyle brand.

Gili which currently retails using its 20 exclusive outlets and 175 departmental stores has been able to establish a niche name in the segment. The company initially targeted smart and hardworking Indian women and teenagers with average selling price of Rs 15000. Buoyed by encouraging results, the company kept on adding value and designs and currently the average unit price is as high as INR 50000.

Gili is also planning to launch 22K plain gold jewellery under the Gili Gold brand. The company's share of high value jewellery is 50%. The ultimate goal of the company is to create a high segment brand and also a lifestyle brand yet affordable to teenagers and other Indian consumers.