Recently, the local department store closed down in my home town. This retail chain was the first to envisage the growth of larger, all-in-one convenience stores as early as 1990, and pioneered the growth of organized retail in our state. Last month, after nearly 55 years in operation, it closed down almost 59 of its stores all over the city.
Growing up with the first Varkeys Department store around the corner, I have always been amazed at their ability to create one of the finest and most loyal customer bases in Kerala. Used, as we were, to go to the local kirana stores to buy rice and dal from huge gunny bags, and walk through slushy pavements to get fruits and vegetables from the local market, Varkeys changed the very elements of shopping – hygienically packed goods and produce, clear pricing, good customer service, and the ability to walk through a single store and buy everything from erasers and candy to imitation gold jewellery and vacuum cleaners!
And then came the “evil” brands from outside the state – Subiksha, More, Spencers, Nilgiris, and Reliance. When Reliance offered to buy up Varkeys (and were politely refused) I heaved a huge sigh of relief. What do global retail chains know about my shopping habits and tastes?
5 years of rapid globalization of our retail scene in Kerala later, I am forced to change my mind. While some Nilgiris stores and Subiksha stores have closed down, I could not believe this could happen to Varkeys too. But by now I was used to deep discounts, attractive give-aways, and free delivery (not to mention the air conditioned stores with its wide aisles and products from all over the world – salsa and chips anyone?) and am ashamed to admit that I valued these conveniences more than loyalty to my childhood brand.
So why did Varkeys close down? Whatever the true reason may be (some say it was over-expansion, while others talk about real-estate scams), as a customer I know of only one reason – they ignored the dangers globalization (read: competition) brings. Unfortunately in today’s Indian retail market, where the organized retail sector is growing by CAGR of 5% and contributes to almost 39% to the GDP, a 420 billion USD market is sure to attract cut-throat competition, and an all-out price war. Amidst this scenario, no retailer can afford to be ignorant of the dangers of global competition, or take their customer base for granted. No one.