Ivy League discusses growing importance of MBOs

The 5th Ivy League organized by CMAI recently discussed about the future of Indian retail and highlighted how MBOs have an edge over other retail formats. The panel discussion moderated by Sanjay Vakharia, Director Spykar Lifestyles, had eminent

panelists including Gaurav Mahajan, CEO, Westside, Suresh Patel, Owner G 3, Surat, Chirag Gada, Owner, Trios and Prashant Agarwal, Director Wazir Advisors.

The essence of the panel discussion revolved around growing competition in the retail industry given the new FDI policy on single and multibrand retail and how MBOs as a retail format could gain competitive edge. Talking about the Indian retail scenario, Gaurav Mahajan, CEO, Westside said, “The retail industry in India is a very large playground and there’s enough space for everyone. It’s a very large and promising market. But there’s a huge regional variation. India is less a country and more a continent. There are cost differences between various areas. You have to interact with a lot of international retailers who want to come to India. There are all kinds of taxes and levies and regulations. But in spite of all challenges, India is an extremely attractive market. It’s tough but if you know how to operate it’s a wonderful opportunity.”

Suresh Patel Owner G3 spoke about the retail industry in Gujarat and how MBOs have a competitive edge over other retail formats. “In a market like Gujarat, a lot of people are entering. There’s a lot of scope for EBOs and large format stores. Buying power is very high. I expect a lot of growth in three or four years. However, I feel MBOs will always have a competitive edge over other formats as the kind of service an MBO can offer no other retail can compete with that kind of services.”

The domestic garment market size is one billion dollars and by 2025 it is expected to touch two trillion dollars. “If we are facing challenges now, future challenges will be much bigger. You will have competition with international brands. These brands have a lot of resilience. They have a lot of sustainability. We have to be prepared for that competition. International retailers will bring product variety. We have to innovate,” opines Prashant Agarwal, Director Wazir Advisors. He feels, for MBOs the key to success is the product and the kind of variety they provide within the store. There will be more growth for MBOs as compared to other retail formats. “It’s not about how deeply you understand the consumer. It’s about how your designers work on the product and bring in innovations into the product. You have to be innovative in what you produce so that the consumer comes back to you. We are in a world of fashion. The fashion industry is not merely a product supplier. You have to make people more fashionable. MBOs have to focus beyond distribution and service. We have to provide product variety that EBOs and big retailers are providing. Product is the king in the retail industry.”

The panelist also stressed on how large format stores and big retailers have carved a niche for themselves by offering on spot delivery and discounts to consumers. Mahajan points out that manufacturers and retailers have to work in tandem. The future lies in strong capability of manufacturing. Speed and innovation is the key. He gave the example of how Zara has managed to be such a successful brand. “Zara is the most effective retailer in the world today. This has been mainly possible because Zara has a very strong backend and an equally quick response team that helps them reacts promptly to market changes and growing consumer demand. The next Zara will come from India. A lot of smart investment has brought them to where they are. And today everyone wants to copy Zara. The next great brand will be someone very strong on the manufacturing side. The brand has to be nurtured,” adds Mahajan.

On the other hand Chirag Gada, Owner, Trios, stressed on how MBOs need to focus on offering a good ambiance for consumers. “Store size and ambiance play a key role in retailing. Consumers go to large format stores and EBOs precisely because while these formats offer good product variety and discounts they also offer a good store ambiance which is conducive in nature and helps the consumer shop at his own comfort.”