Monday, 29 September 2008

Road infrastructure and the development of retail trade

Very brief note.

I looked back on some thoughts i had scribbled 10 years ago. A question I had asked during a company sales conference to the head of sales. He was emphasising in the late 90s the emergence of organised retail and how chains like Shopper's Stop - Subhiksha would become a dominating force changing our distribution approach.

My question: Where in the world has retail trade ever preceded the emergence of good road infrastructure and suburban connectivity?

The point i was making then is valid even today:
Does "organised retail" not look to capitalise on low rental costs in the suburban areas and then attract people willing to drive the 20 Km to their shops?

When will Indian roads permit a family to cover 20 Km in roughly 20 minutes?

If you're an organised retailer located in the city- forget it.
1. Your rentals will always put you at a disadvantage compared to a kirana shop.
2. Your size will never be large enough to exploit the scale effect.
3. You will always have competition within 3 minutes walking distance.

No comments: