It is only a week since I blogged about Indian retail in for a heady mix. Now, we have the case of Subhiksha which is battling for survival. Subhiksha which was started with 1 store in 1999 has grown to more than 1000 stores by the end of 2007.
Its founder R Subramaniam is a IIT Chennai and IIM Ahmedabad alumnus. That the best combination of pedigree from India there can every be.Subhiksha has ICICI Ventures and Wipro’s Aziz Premji as its investors.
Everything seems to be in the right place. What could possible go wrong?
There are several things which went wrong in Subhiksha’s case but 2 points are staring at me:
- Expansion against consolidation : With the availability of free capital and the irrational exuberance of the markets, people tried anything and everything to just expand without actually looking back at what they have become.
- Lack of Focus : This to me is the biggest thing every other company in India faces. Once they see profits they quickly put on their Ambani/Tata hat and try to become a conglomerate. It is just not one company they will run but they will create offshoots, Strategic Business Units, what have you and do all kinds of stuff. In the end they forget what they really want. Satyam is the best example for my case against conglomerization. That is the reason why I like Infosys for their extreme focus. In Subhiksha’s case though, it is not conglomerization but the lack of focus on the product mix they are offering.
I know retail is a different thing which might be confusing for anyone to focus on. But, before opening the 500the store shouldn’t they be checking whether people are buying medicines from them or going to the medical shop round the corner. Before opening the 1000th store shouldn’t they be checking whether people are buying a mobile from them or from a specialized mobile store.
On both occasions they answer is yes. I would rather go to a store which has a specialization for the thing I want to buy. I just don’t want to waste my time in a shop which offers me everything and anything only to find that they don’t offer a thing (which I want).
That to me is the bigger issue ailing Indian retail not just Subhiksha. Subhiksha happens to be a case study for the future and current retailers.
Enjoy this great presentation by Manas Ganguly
Presentation dugg via pluggd.in
PS : I just coined a new word : conglomerization. This is a bug, the whole India Inc is suffering with. This is where I want to recommend everybody a book called Small Giants by Bo Burlingham. If you have to choose between being big and being remarkable – choose remarkable. If you look at any Indian company it is bound to have a subsidiary in a totally different vertical.