In an interview with Economic Times, Jamshed Daboo, CEO of Star Bazaar identified, among other things, the challenges faced by Star Bazaar. With the understanding that the challenges are symptomatic of the larger industry, Retail Angle summarized the challenges as below:
i) Location: Food retail needs to be within a 5 km radius of the customer. Given high real estate costs, and unavailability of large sized retail space, if one wants to be closer to the customer then the format will need to shrink. This is do-able since customers in India tend to shop in a narrow range of 3,000 SKUís. The 50,000 SKUís that are available at hypermarkets are designed to grow consumption in the medium run.
ii) Staffing: Though in the case of hypermarkets and in food retail, it is not critical, because it is a relatively self-serviced model. However, in food retail, it is an entry level job and no one wants to be there forever. They want to move to apparel or jewellery retail. But as you go higher up the value chain, in apparel and electronics, it becomes an acute situation. Generally, there is a problem of qualified people and attrition is high. Modern retail however, creates urban jobs. At Star Bazar, the business employs about 150 people per store.
iii) Property: Availability in the right size, at the right rentals, at the desired location.
iv) Supply Chain: The current system is geared towards traditional retail, with a lot of middle men executing deals that eat into retailer margins. The supply chain needs to be shrunk and made more efficient.