I was doing some reading on retail industry in India and watched a presentation Kishore Biyani (of Future Group / Big Bazar / Pantaloons) made in 2008. He made a comment that got me thinking!
Retail is booming in India, and people are building millions of square feet of properties. But where is the demand? It’s only 25% of customers going to modern retail. So how can retailers create this demand? Will customers reduce spending at classic retail stores and move to malls?
No! Instead of diverting their spending, increase their spending.
To increase spending, reduce savings.
Move people away from saving their money (34% of income is saved as per Biyani). Induce people to spend their money.
If they don’t have money, borrow it to them. Follow Brazilian model where retailers are more like financiers than stores. Let them purchase on credit.
That’s how retail will boom!
I am startled. At the same time, the argument is very logical.
What do you think will happen?