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BW Businessworld

The Rot In Retail

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The organised retail sector in the country is just over a decade old, and it is still finding its feet. Many of the more prominent retailers have grown very rapidly, but most of them have not grown all that profitably. A combination of high real estate costs, inefficient supply chains, an inability to fully understand shopping habits, and high-cost debt have ensured that many of the retailers are losing money hand over fist even as they open more and bigger stores. Many of them have also had to refine formats, close shops in areas that were not doing well, and reengineer business models to survive. While all these issues are fairly well known, few people focus on another problem — that of dishonest employees and shoplifting customers. While this is a problem all retailers face globally, Indian retailers report the highest losses as a ratio of their total sales because of pilferage.

Last year, the organised retail sector in India lost an estimated Rs 3,200 crore because of pilferage and other similar issues. Just to put that number in perspective, it is almost as big as India's e-tailing market. If pilferage in Indian retail is brought down to global levels, it would save several hundred crore rupees and turn at least some loss-making retailers profitable.

So what can retailers do to handle the problem of shoplifting and theft? Assistant editor Vishal Krishna worked with correspondents Suneera Tandon and Priyanka Pani to put together our cover story this issue. Read it on page 30.

On a completely different note,  Husk Power Systems in Bihar was one of the winners of our Young Entrepreneurs Contest in 2010. The company basically figured out a model of providing enough electricity for the basic needs of people living in remote villages in Bihar with no availability of grid power from the state. The rice husk fuelled power plants set up by the company were not competing with conventional power plants — but they were uniquely suited to meet the special needs of specific areas.

Two years after we first wrote about them, how is the Husk Power experiment going? Principal correspondent Chhavi Tyagi talked to the founders, managers and customers to bring out a report on one of the most innovative power projects in the country. Read about it on page 40.

(This story was published in Businessworld Issue Dated 14-05-2012)