According to studies, the retail industry in India accounts for over 10 percent of the country’s Gross Domestic Product (GDP). India is the world’s fifth-largest global destination in the retail space. India’s retail market witnessed investments worth $800 million by private equity firms and wealth funds in 2017 and was also ranked first in the Global Retail Development Index in the same year. The Indian retail industry has immense potential as India has the second largest population in the world, with an affluent middle class, rapid urbanisation, and growth of the internet. Though running a retail startup could be very challenging in today’s competitive scenario, it has to be built on a sustainable model.
The ever-growing competition keeps the entrepreneurs of the retail segment on their toes and not everyone tastes success. Here are a few tips and guidelines to abide by to sustain in this competitive market of retail:
Invest in the marketing wisely
Going all out on marketing can seem like a good idea and is very tempting initially. However, a startup can drain out its cash flows too fast this way. It is usually a good idea to keep aside 20-25 percent of your total sales revenue for marketing and spend the rest in enhancing the product. Always remember that marketing will show its effect only when the product is of superior quality, and not vice-versa.
Do not go overboard with promotions
Retail is one of the fastest growing sectors in India and is expected to grow at a 10 percent CAGR from $641 billion in 2016 to $1.6 trillion by 2026. The past two decades have seen a growth in demand and awareness in terms of the brands and fashion in India. However, the customer is also much more aware and educated in terms of global trends and prices. Promotional deals and discounts do work well in all the segments in the long run, but it is the customer's loyalty that helps the brands sustain among the growing competition at the home ground. Meaningless promotional deals will only result in draining the revenue.
The ability to innovate and consistently evolve in doing something new is a risk that every startup needs to take in order to stand out in the competitive market. Our traditional retail market is opening up and getting more and more receptive to innovation and technology, be it trying new brands or styles. As every retail brand wants to stay in the competition, it is important to implement innovation and avant-garde ideas on a regular basis.
Impeccable customer service
Customer service should top the priority list! At every stage, the startup should have trained staff to be able to handle the customer queries and resolve any complaints because earning the trust of a customer is very important for sustainability. The customer service care team should be well informed about the brand so that they are fit enough to handle the queries deftly.
Try and try till you succeed
Lastly, the ability to shift resources from what is not working for a startup is very important. Despite all the failed efforts, the ability to stand up again on one’s feet and keep trying is what will help a startup pave a successful path in its journey. Failure might come on its way, but the power of resilience will determine if the startup will stick around.
The future of the Indian retail industry looks promising with the constant growth of the market, government policies becoming more favourable, emerging technologies facilitating operations, and entrepreneurs creating a niche for themselves in the retail segment.
Ranu Bathwal is the Founder and CEO of Popup Galleria.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)