Retailing in 2017 - a Recap

It’s customary for us at the end of each year to take stock of the months gone by and possibly predict what’s to come in the New Year. I'm not attempting the later but here’s a quick roundup of key events that shaped the Retailing Industry (mostly) in our country.

1. January - The country has not yet recovered from the demonetization impact. Organized Retail is initially impacted - however sales numbers are gradually returning to their original levels. ASSOCHAM predicts that online customers in the country will cross the 100 million mark. India also expects to add 11 million square feet of Brick and Mortar space. Ironically in the same month, Jumbo Electronics announces their intent to leave India for good. Meanwhile in the US a very uncomfortable change of government has the whole world on tenterhooks. The world is about to learn a new term – ‘Fake News”. India is awaiting FDI in multi brand Retail.
2. February – Oracles foretold future in olden times. The modern day Oracle (of Omaha), Warren Buffet chose to sell off almost all of his Walmart stock. Does it signal the death knell for the offline model or is the Oracle predicting future for Walmart? Rumours are rife that Saks is planning an Indian debut with ABRL. Government is threatening to launch GST on April 1. No one is prepared and industry pushes back. On the very last day of the month government announces postponement of GST to July 1. The industry collectively exhales. Everybody is waiting for the D’mart IPO – and FDI in multi brand Retail.
3. March - D’mart goes public and scores what looks like a double ton on debut had the game been cricket. The IPO is oversubscribed 104 times and has the effect of driving up the market price of other publicly listed “dukandars”. The much respected Pradipto Mahopatra (ex-RPG group) widely regarded as the pioneer of organized retail in India leaves for his heavenly abode. Retailers start adoption of UPI and other digital payments also go mainstream. Myntra opens its first offline store in an early signal that online and offline retail are converging. The apex court ruling that alcohol cannot be sold within 500 meters of national highways dampens spirits. Innovations to get around the rule including de-notifying national highways make their way into news. The minister of Food Processing says that the government is “actively” considering proposals to allow FDI in food and non-food items. The industry is now actively awaiting FDI in multi brand Retail.
4. April - ET calls D’mart the most “expensive retailer in the world” on account of its market cap being 5.6x sales. Everyone is now busy with pre-GST chores. Companies rein in their merchandise buying in anticipation of reducing unsold inventories come July 1. All Retail IT teams are busy working on making their systems compatible with the new tax regime. Finance teams are getting acquainted with GST filing – a new activity that they must now comply with. No sign of FDI in multi-brand Retail. Tick Tock.
5. May - Ecommerce sites cut discounts as they are now gunning for profitability. Flipkart almost having patented the word “Billion” reportedly makes an offer of the same amount to buy out the beleaguered Snapdeal. Fashion retail sales pick up. IKEA “breaks ground” for a 430,000 sq. ft. store at Navi Mumbai. The Retail industry start getting interested in AI. Everyone’s still hoping for FDI in multi-brand retail.
6. June - Thirty more days to go for GST rollout. All departments are feverishly working to make the deadline. Buying teams are tasked with the difficult job of keeping the stores from looking under-stocked while ensuring that there’s not too much pre-GST inventory to be liquidated later. IT teams are testing their systems for GST compliance and the Ops making sure that stores are liquidating stock quickly. Clearance sales are announced. Marketing shifts into extreme action mode. The Indian customer, known to never let a good deal go, flock to stores in droves. Several Retail Chains report “Diwali like” sale numbers. There are predictions that Diwali in 2017 could be “soft” on account of customers bringing forward planned purchases. The flagship Retail Technology event of the year - Retechcon is held in Mumbai with several path breaking innovations being show cased. GST preps have pushed back FDI in multi-brand Retail to the background. But everyone’s still waiting.
7. July - GST era dawns on July 1st and all hell breaks loose – or does it? Apart from a few random glitches everything’s fine. Customers don’t understand the nuances at first but catch on quickly. Snapdeal sells Freecharge reportedly at a 90% discount to Axis bank. Cross pollination of executives between online and offline models of Retail had already started earlier in the year and to underscore this comes the news of offline retail veteran Ajit Joshi joining online furniture retailer Urban Ladder. FDI in multi-brand retail happening? Or not?
8. August - Amazon announces its entry into physical retail by acquiring Whole Foods in a 13.7 billion deal. The online behemoth ominously promises to integrate the store chain into its larger business driving down stocks of other listed offline retailers. Closer home, Flipkart’s acquisition of Snapdeal comes a cropper. Apparently the Snapdeal founders called it a “no deal”. They want to have a go at mending the business model themselves. Softbank consoles FK by topping up their investments in the online retailer making it their largest investor. Perhaps FDI in retail will happen only in this way.
9. September - News about Future Group acquiring Shoppers Stop owned Hypercity trickles in. The month traditionally has been seeing the online titans Amazon and Flipkart spar with each other for customer wallet share. This year is no different and both organizations report healthy like-to-like growths on the usual parameters. Uber launches its food delivery service UberEATS in the NCR region. In further proof of online – offline marriage, Shoppers Stop announce sale of 5% stake to Amazon. As a deal sweetener SS signs up to merchandise its products on AMZ. FDI, where art thou?
10. October - Diwali month! Make or break time for all Indian retailers. This year we’ll know the real impact of GST and the discounting that immediately preceded it. The government helps by withdrawing a rule that requires jewelers to report transactions exceeding 50k INR. Organized retail says that the impact of demonitisation and GST is positive – the cash trade disagrees. Bill Gates vacates his long held position at the head of the Billionaire table to a retailer – Jeff Bezos who is now reportedly worth 100 Bs. In more convergence news, Amazon partners with Kohls to open shop-in-shops in the latter’s stores. The trade makes dark predictions about the future of this marriage. Amidst all this, nobody is even talking of FDI in multi-brand retail.
11. November - The central government announces a major re-jig of tax structure. It’s not clear if Gujarat elections next month is the reason. Restaurants which were earlier in the 12-18% bracket would now be taxed at 5% only. Additionally, over 178 daily use (creams, cookers, chocolates, coffee, etc.) items are brought into the 18% bracket from 28%. Your face may or may not launch a thousand ships but it can definitely now launch your Iphone X which goes on sale in India along with rest of the world. Interest in FDI even in single brand retail seems to be waning.
12. December - The stock market seems to scale new heights every day. The last trading session of 2017 has the indices at all-time highs to set up the perfect mood for Year-end parties. The fire in Kamala Mills sobers sentiments - a horrific reminder to how so much of our growth has been at the cost of human safety and the environment. Without any warning the central government increases MDR on debit card transactions to 0.9% from the earlier 0.4%. The industry led by its advocacy body, RAI protests and the announcement is rolled back. A victory for the industry as the clock on the year is running out. Retailers roll out the Red Carpet for its employees on Dec 12 also known as Retail Employee Day. Greetings from several central ministers pour in on Social Media platforms. Everybody decides not to hold their breath on FDI and concentrate on festivities that are in order after twelve months of non-stop action. But there’s always the next year.

Here's to looking at a fruitful and fulfilling 2018. Happiness to you and yours. And cheers to Profitable Growth! <clink>