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Retail: Entering to succeed – Mapping the policy landscape

, May 17, 2017, 0 Comments

retail-landscape-policy-marketexpress-in Entering an evolving market is akin to stepping into a minefield. How does one exploit such a market with enormous potential, but where the risk of policy quagmire is also equally probable? One way is to avoid such markets till the policy landscape is fully evolved and transparent.

The other, more arduous, way is to track the policy changes and align the organisation to the changing landscape. The second option, while exposing the organisation to frequent shifts in the operating environment is also the more rewarding with the benefits of early mover advantage.

The case of an international sports good retailer is illustrated in the attached infogram. The infogram captures significant milestones in the policy landscape for retail trading in India. The response of the firm to every policy initiative is listed in the box marked in color.retail-landscape-policy-info-graphics-marketexpress-in

The firm has been sourcing and exporting from India since 1998. It procures a wide variety of finished sports goods from India currently. As per the mandatory sourcing norms for single-brand retailers, it has to source 30% from domestic sources by 2018, ‘preferably’ from small and medium enterprises (SMEs).

Firm initiated its B2B – Cash and Carry, a channel in 2008. Effective April 2009, it had launched its e-commerce website for reseller and commenced a wholesale cash and carry trade in sports accessories, apparel, goods and equipment. Dictated by laws and regulations which restricted foreign retailers to sell directly in India at that time, it chose a B2B presence which did not fit into its global business practice.

A year after the Government of India raised foreign direct investment (FDI) cap in single-brand retail to 100%, it opted to become a retailer. It had won government approval for 100% FDI to undertake the business of single brand retail trading in sports equipment and accessories. Subsequently, its cash-and-carry stores were converted into large-format, single-brand stores.Though it had to wait till recently for the B2C connect, its existing operations and presence ensured that it did not miss a single day in moving over to the retail format. It converted its B2B e-commerce platform to serve retail customers, as soon as this was allowed.

While there are other factors too, that contributed to the firm’s success in India, its decision to align its strategy to the policy landscape and position itself for exploiting any window of opportunity played out well for it.