Devangshu Dutta
October 15, 2008
(Written in September 2008)
Over the last few years India has had one of the highest GDP growth rates, across the world, and consistently. In the last two years GDP growth is estimated to have been 9.6 per cent (2006-07) and 9 per cent (2007-08).
A combination of private and public investments in recent years, as well as steady liberalisation of regulations, has created a situation that is unique in India’s history as an independent country, where business growth has lead to individual prosperity which is, in turn, leading to explosive growth of further business opportunities. Although India’s per capita income still places it in the list of “developing countries”, a significant population has emerged that is truly middle-class.
Rising incomes have created visible shifts in consumption patterns. Certainly, more Indians regularly consume cereal flakes, processed cheese and fruit-based drinks for breakfast than did ten years ago. A generation has grown to adulthood wrapped in ready-to-wear clothing (with visits to the tailor mainly for wedding trousseaux). And, yes, Indian consumers are increasingly welcoming modern retail environments over the traditional
These economic developments have attracted the attention of both domestic and international consumer-goods companies and retailers, and several of these companies have seen annual growth rates 20-50 per cent in the current decade. Many of the new entrants into the retail sector are large business groups that have set up modern retail chains whose share, although still small, is growing year-upon-year.
This growth of modern retailing is also having an impact on the processes and the infrastructure deployed for the retail sector. These businesses are run as true chains which require processes and systems similar to any chain-store business anywhere else in the world including merchandising, sourcing, human resource management, logistics and store operations. These modern retail stores demand Grade-A buildings for shopping centres, with associated infrastructure and services within them.
Therefore this, in turn, has created a growing opportunity for companies that are manufacturers or vendors of consumer products, suppliers of other goods that are used within a retail business or companies providing services to the retail sector.
In the rush to grow, while challenges have been acknowledged, none of them have appeared seriously debilitating in the long term, until possibly now.
During the years 2003 through 2007, news headlines mainly focussed on joint-ventures or strategic alliances, new store openings, new format launches, and mega-investment plans. If human resources were mentioned, it was about the apparent domestic shortage, about the expatriate talent being pulled in, and about incredible salaries. If shopping centres and retail space was studied, it was the phenomenal growth in square footage and the increasing scale of the new malls that was the focus.
Suddenly, however, the tide in the press seems to have turned. There’s mention of “slow” growth plans of major retail joint ventures. There’s whisperings and denials about lay-offs, accompanied by some high-visibility exits.
It would be tempting to read the signs as evidence that the previous growth was based on hype, which has run out of steam. It would be tempting, and it would also be too simplistic.
The fact is that macroeconomic factors are also acting as dampeners in 2008, and the year may be marked in the recent history of India’s modern retail sector for the dawn of realism. Just as the growth of the retail sector was reaching into the not so profitable geographies and beginning to ride on not very efficient structures, economic growth has begun to slow down dramatically. From a 9 per cent-plus growth rate in previous years, a variety of agencies expect GDP to grow between 7.5 and 7.9 per cent in 2008-09. Further, the Prime Minister’s Economic Advisory Council forecasts a GDP growth rate of 6.8 per cent in 2009-10.
What’s more, 2006 and 2007 have brought about phenomenal increases in two critical cost heads: real estate and human resource.
So on the one hand, retailers are facing dramatically higher operating costs, and on the other hand demand seems to be weaker than they have expected. For businesses that have been launched in the last 5-7 years, such a situation is completely new.
Estimating the Demand – Still an Art?
Since the early years in the decade, most retail chains have grown quickly by identifying new sites and replicating existing successful business models and formats. Typically, the growth was limited in its geographic spread, and the underlying consumption pattern differences between the existing markets and the new locations were not stark enough to be immediately visible. Much of the growth, in fact, came from new stores in the larger cities, including the metros, mini-metros and the next tier markets.
This high replicability has allowed the businesses to rapidly scale up into becoming truly national chains, and the presence of modern retail formats has become visible among the larger cities and towns.
As the companies have begun to feel “saturated” in the larger cities, they have gradually moved towards the smaller towns, with their existing product-price-format offer tweaked slightly.
However, the ethnic, linguistic and cultural diversity of India’s 28 states and 7 Union Territories makes it less like any other single nation-state and more like a collection of countries such as the European Union. The result is sharp differences in income, tastes, habits, and culture, all of which present a challenge for consumer products and retail companies in terms of product and pricing mix.
Most European brands do not approach different markets within the EU with identical strategies. So why should we believe that the business formula that works in one part of India will work in exactly the same way in other parts?
A bigger issue is the realistic estimation of the target population. There are cases where the demand has been grossly overestimated, and the business infrastructure and investment plans are over-weighted by these expectations.
Estimates of 200-300 million middle class (50-60 million households) sound very attractive, but by what measure of income and spending standards?
Going by the pricing of many of the brands in the market today, it would be logical to use developed market income standards. If we use global income standards the middle class numbers are much smaller. The number of households earning truly middle class annual household incomes (not adjusted for Purchasing Power Parity), is less than 5 million.
Of course, the upside is that the growth rate in this income class is estimated to have been over 20% a year during the current decade and this group is forecast to comprise of over 3.7 million households or about 20 million individuals by the end of the decade. There are few other markets in the world where the target population displays a growth of over 20% a year! Moreover, the annual growth rate of the incomes earned among this population is also the highest in the country. Further, a large proportion of this population is concentrated among the metropolises, as mentioned earlier.
So it is a nice market to be in, if the business plan is sized appropriately. You can expect some homogeneity based on the socio-economic classification, and the geographical reach is also limited, allowing for organic growth.
A specific challenge for companies wishing to enter with a “western” business model or product mix is that, even through its most controlled years, India has been a market economy (unlike China’s decades of a completely centrally controlled economy). Therefore, in most consumer products there are several domestic brands and Indian avatars of foreign brands available, even if the choice is narrower than on the shelves of western supermarkets. Competing offers are available, whether from Indian companies or Indian subsidiaries of global consumer products companies. In that sense, India is not a virgin market. There is already some (or significant) amount of marketing noise and clutter, created by the existing competition.
It is vital, therefore, for any company to identify the true overlap between its offering and the most appropriate consumer segment(s) in India to assess the real short-term and mid-term potential for its retail business.
The Urban Retail Opportunity and Challenge
While we are on the subject of the cities, it is very pertinent to look at the spread of the urban population.
As India’s population moves increasingly into cities, it is the larger cities (Class 1, with a population of over 100,000) that are growing the most. From 308 Class 1 towns, the number of Class 1 towns and cities in India had grown to 643 in the 2001 census, and are estimated to hold about three-quarters of the urban population.
These cities are also economic magnets. No matter how attractive the new boomtowns may sound, the larger cities still pull in huge numbers of immigrants from the smaller cities, towns and villages, keeping the ecosystem vibrant.
Within these, in terms of economic potential for retail businesses, it is the Tier 1 cities (metros and mini-metros) that are the still unmatched. In 2001, the top-8 cities were estimated to have 40 per cent of the urban disposable income, and despite rising costs and rising competition these remain the most attractive market for a company looking to establish a new retail business. In socio-economic terms there is more homogeneity available to a brand wishing to tap into a critical mass of customers, discretionary incomes are higher (in absolute not just percentage terms), and the infrastructure available to service the consumer is better.
Of course, the side effects of the population overloading are now visible, ever more, on the cities’ infrastructure and governance. And some of the overloading is contributed by the development of shopping centre space.
The growth of modern retail has brought with it a rapid expansion in shopping centre space. This is both an opportunity and a challenge.
While the extraordinary growth of shopping centres has provided more space for brands and modern retailers to grow their business, much of the growth has been concentrated in the metropolises.
Almost half the shopping centre space by the end of 2007 is estimated to have come up in the conurbations of Mumbai and Delhi. This “over-shopping” could potentially lead to the failure of a significant number of these malls. The failure may not result in outright closure – the better sites may change ownership, while others might get repurposed as office blocks or other commercial projects – but it will be painful, nevertheless.
Paradoxically, despite the proliferation of malls, for retailers and brands high real estate rental costs are the possibly the biggest headache. In many instances, brands have signed-on high-rent shops with the aim of balancing their portfolio over time, and fully expect these shops not to make money in the foreseeable future.
Further, the intensive development of malls, without adequate zoning and planning of support infrastructure such as roads and public transportation is now stressing not just the city, but the malls themselves. Even if there is adequate parking space within the mall (as compared to a few years ago), what good is it if a two kilometre stretch of road before the mall is choked with traffic moving at 2-3 kilometres an hour? The convenience of shopping under one roof is totally outweighed by the inconvenience of spending thrice the amount of time on the road, and is a critical deterrent to a serious shopper who is being targeted by the tenants of the shopping mall.
Tier 2 and 3 Cities – A Work in Progress
A recent study by NCAER and Future Capital Research compared 20 cities, and classified them into the Megacities (metros and mini-metros), Boomtowns and Niche Cities. The naming of these groups is quite telling.
Megacities on this list include Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad and Pune, and have approximately 50% of their income as surplus after household expenses (other than Kolkata and Pune which show surpluses in the 30s). They have large populations, and combined with the surpluses, this up to a massive economic opportunity.
However, the smaller cities have been developing into economic hubs in their own right. If population is a key factor, then Surat would be classified as a metro. It has a high average household income, as well as a high surplus. Similarly, Nagpur, with its logistically important location is also developing into an important market. Along with Lucknow and Jaipur, households in these cities have seen double-digit booms in terms of income growth since 2005, a trend also seen in the Megacities.
This trend of income growth, infrastructure development, trickling of business hubs into the 2nd and 3rd tier cities, will continue to broaden the base of modern retail and distribution further outside of the major cities. On the other hand, while households in cities such as Chandigarh and Ludhiana have high surplus incomes comparable to the Megacities, the much smaller base of population would force marketers to treat them as niche markets until a critical mass develops over the next few years.
Thus, while much has been made about the boom in the smaller cities and towns, the formulaic approach of rolling out the same business model will certainly not work.
The signs of overestimation of demand in Tier-3 and Tier-4 cities is visible in instances of downsizing of store-space by prominent retailers, as well as relocation or closure of some of the new stores which have not performed to expectation.
The Tug of War to Modernise Retail
In my opinion retail is fundamentally an organic business.
Countries that have displayed inorganic growth of modern retail through large-scale corporatisation tend to be economies that have developed rapidly in the last 20-25 years. Among these are the East Asian economies and the former communist Eastern European countries. Three critical factors that have enabled the disproportionate and rapid growth of corporate retail in these countries are: financial muscle, a bank of real estate and strong political linkages. In other countries the high share of modern retail has grown over many more decades.
In other countries such as those in western Europe and North America, retail consolidation has happened over many more decades, boosted occasionally by phases of economic boom (such as the 1920s, the 1950s and 1960s, and then the 1980s).
Many observers have imagined that India’s retail growth would follow the East Asian and Eastern European countries’ pattern, and have projected that India will reach a state of significant consolidation through corporate retail businesses by 2015.
If that were to happen it would be a rather sad “monoculturisation” of the business. Fortunately, I believe, that it is not likely to happen easily.
Firstly, the modernisation of retail trade has typically moved in step with broader economic and infrastructural development. If we use per capita retail sales as a surrogate measure for the overall economic development of a country in conventional terms, the share of modern retail is closely correlated with that (see the accompanying table). Viewed through that lens, the Indian retail sector is still very far down on the list, and is likely to remain fairly fragmented for some time to come.
Secondly, India has a strong entrepreneurial and organic retail ecosystem (not just retailers, but also suppliers and support organisations). Given the diversity of the market, and the sustained fragmentation of consumer needs, I believe the growth of India’s retail sector will not be driven by large companies alone, although they are helping to accelerate the process of sophistication – indigenous, non-corporate retailers and their suppliers have a strong role to play in the ongoing development.
I believe the Indian retail sector will evolve along a path that may be a hybrid, and in fact, may be closer to the European and American model, with a significant amount of entrepreneurial competition dominating the landscape.
Therefore, it is important for the executives in corporate retail organisations to think innovatively, as an entrepreneur would – think truly like a “dukaandaar” (shopkeeper).
Would a dukaandaar open a store in a place where he has no hopes ever of making money? Would he consistently follow this strategy for years? Would he believe that he is building brand equity and goodwill by doing so, that will sustain him in the future? The honest answer to all those questions would be an unqualified “no”.
Any long-term strategy can only be built on the premise that the business will be sustained into that term. If the short-term cashflows are not available to keep the business alive, no amount of long-term thinking will help, as some retailers have recently acknowledged while shutting stores or entire businesses.
It is also important for the corporate dukaandaars to continue to evolve relationships with the fragmented supply base, and support the growth of indigenous national-scale suppliers.
Models for Inclusion
Inclusive growth has become a buzzword in recent years. However, I believe India is one of the few major economies where it is more than just a buzzword.
In 2006, at the National Retail Summit organised by the Confederation of Indian Industry I expressed the concern that we were getting too preoccupied with the western model of urban economic development and consumption and we were ignoring the gap that was creating in India (the text based on that presentation is available on Third Eyesight’s website). To my surprise, I had no fewer than 60 conversations during the day about the subject, many of them with senior managers in large consumer goods and retail companies.
Clearly, the thought of sharing the growth and prosperity more widely does strike a chord with many more Indian urbanites than one would realise. What’s more, quite a few companies are actually taking a direct approach into bridging the gap.
There is no one single model that is applicable to creating these bridges.
Some – large companies such as ITC and Mahindra or smaller ventures such as Drishtee – have created retail businesses that also act as local exchanges of services and goods in the villages. Many of them include villagers as co-entrepreneurs through franchise structures, thus helping to generate and retain wealth within the locality.
Others – such as Fabindia among the visible, or Khamir and Dastkaar – are channels for rural artisans to participate in the economic growth as suppliers to the burgeoning urban demand.
Food retailers have started co-opting farmers into supplying to them directly, where possible. The attempt is to bypass middlemen who act as aggregators, thus making more margins available to both retailer and farmer. Many farmers are indeed happy to put in some extra investment in minor equipment and some effort, to help grade, sort and clean the produce, so as to get a still better price.
Yet, certainly, more could be done. For instance, how about if the largest modern retailers in the country created a permanent display for regional crafts in all their stores, and took these along as they grow their chains in the coming years?
And how about retailers growing businesses through demand generated by economic growth in the much smaller towns? By encouraging regional suppliers and local buying (as opposed to the central purchase mindset), not only would retail chains be better merchandised for local needs, but also be plugged more into the local economy.
Let us not ignore the possibility of local retailers who are right now “flying under the radar” to become important factors in the growth of these smaller towns.
Demand generation in Tier III towns and semi-urban areas will accelerate as the logistical connectivity improves and shipping costs decline through multi-modal transport. There is significant investment happening in both road and rail connectivity, and the newly well-connected dots on India’s map are visibly more prosperous than earlier.
As these developments continue, we should fully expect strong retail chains to begin building up, first locally and then regionally.
When we speculate about who India’s Wal-Mart might be, we shouldn’t forget that the world’s largest company emerged from sleepy, semi-rural locations in the US, and similar developments might happen in India as well.
Facing the Challenges
The Indian retail sector also has some distinct environmental challenges that are bigger than the specific economic blip it is facing right now.
For instance, to my mind retail is an integral part of urban infrastructure, but in most cities retail is a sideshow for urban planners. Either the space provided is too little, or laid out in such a manner that no sensible retailer can expect to have a sustainable and profitable store in that location. Or, if a large space is provided for the private development of shopping centres, the public transportation connections are next to nil, while the car-carrying capacity of the connecting roads is usually poor.
Some of the other challenges are related to the Indian government regulations controlling the sector. As an example, in the area of fresh produce, some states still have regulations that restrict the wholesale trading of the commodities to the mandis, or controlled market yards. This means that the consolidation and processing of farm produce is more difficult and expensive.
Real estate costs are an ongoing challenge for retailers, especially those that wish to develop mall-based businesses. Some mall owners have begun evolving from being “builders” to mall managers with a long-term view on creating a business of shopping centre management, and have begun linking their rentals to the revenues actually generated by their retail tenants. However, in several cases, the real estate costs are still in the double digits.
Reacting to the high real estate costs, brands have begun looking at the possibility of generating higher gross margins to compensate. In most cases, this has meant that selling prices are pushed up, rather than sourcing costs being reduced. While the consumer has been largely transparent to these increases in the last couple of years, I don’t believe this to be a sustainable margin strategy. The cracks are already showing, in the steadily increasing volumes sold under discounts, and the emergence of discount retailers who sell off-season and surplus branded merchandise. The message, clearly, is: the real, sustainable, price is at least 25-40% lower than the MRP. The market looks ripe for the emergence of every-day-low-price business models.
If I were to list out my top priorities for retailers in India, these would be:
1. Realistic demand estimation
Many chains are grappling with too much square footage in a certain geography in the form of very large stores or too many stores. While allowing for the fact that the market is significantly different from what it was 10-20 years ago, let us not expect entire populations to have increased their consumption multi-fold. Sales expectations need to be realistic.
2. Store productivity
For an entrepreneurial business, each store needs to produce results. Sure, there will always be some superstar stores and other locations that are a drag on the bottom-line. The performance needs to be analysed on an ongoing basis, and fairly dispassionately. Store productivity is a function of merchandise availability, store operations, advertising to build customer traffic and a host of other factors. However, unless the store is a marquee location (which very few are), there is no excuse for sustained losses. Fortunately, Indian management teams are today less scared of damage to their reputations, and more business-like when it comes to taking hard decisions on resizing, relocating or simply shutting doors.
3. Pace your growth
Think of a teenager who gets into a growth spurt, and suddenly adds length to his legs. The gait becomes ungainly and he doesn’t really know what to do with the extra inches. Many Indian retailers have gone through a similar disproportionate growth spurt. While stores have grown, the sophistication of the business has not. Let’s remember, the race for retail market leadership is a marathon, not a sprint. The appropriate rate of growth should be determined by organisational capabilities, rather than what others are doing in the market.
4. People
There is no shortage of people in India, as one of the leaders of the industry pointed out a few months ago. Let’s stop creating an artificial scarcity. There are people around who have been in modern retail trade in India for decades and are committed to it – they have the experience. There are others who have only recently entered but need direction and training. The investment in these two sets of people will possibly provide longer lasting returns than artificially inflated compensations for round-robin resumes.
A major “macro” risk to my mind is that retail is seen through narrow lens both by itself as well by as the government and its various arms.
In most cases, the governments various departments continue to treat retail as an incidental trading activity, or as a milking cow through indirect and direct taxes. The outlook towards retailing needs to change beyond the few government luminaries who can be identified as the retail sector’s friends. Whether it is provided “industry status” or not, the fact is that retailing is an industry in India, and needs to be treated with more respect. Even the local kiranawala adds significantly to the community and even the fragmented the market association keeps a vital part of the local ecosystem alive and ticking.
The other side of the story, the retail sector’s perspective of itself also needs to change. Retailers need to look beyond promoting short term consumption. As they grow larger, they are beginning to have a disproportionate impact on society, lifestyles, income distribution and the broader economic fabric of the country. In most developed markets retailers realise how much change they can drive, and many are using this power to benefit themselves and their societies at large. As Indian retailers grow in scale, I think it would be wise to build the “corporate social responsibility” gene into the DNA at this very early stage.
Looking to the Future
Given recent developments, some people may feel that the retail boom is over and it may already be too late to enter the Indian market. I beg to differ: I believe there is still a lot of steam, a lot of energy in the Indian market.
In fact, it would be most appropriate to quote Shah Rukh Khan from Om Shanti Om, “Picture abhi baaki hai, mere dost!” (“The movie isn’t over yet, my friend!”)
The road to modernising the retail sector in India is long, and we have only taken the first few steps yet. Economically difficult times are wonderful opportunities for shedding flab, challenging existing business models and assumptions, and also provide great frameworks for building efficient and lasting companies.
In closing, I would like to borrow a theme from the two great growth sectors in Indian retail: food, and fashion. Both thrive on change. Both thrive on freshness. And that could be the winning theme across the Indian retail sector.
Here’s to a fresh start in 2009!
Devangshu Dutta
October 8, 2008
The title of this post is from a Winston Churchill quote that I came across a few days ago. I thought this is a must-have on the desk of every entrepreneur in the current times to look at every day, maybe several times each day.
But why only entrepreneurs? Any one and everyone who has been touched or fears being touched by the economic downturn needs to keep this thought in mind.
A few days ago I heard an impassioned monologue from an entrepreneur, founder of a mid-sized listed brand manufacturer & retailer in India, when the first two of the big investment banks in the USA collapsed. He repeated one theme of despair several times – “How can there be wealth / money available at the closing of the business day, and then suddenly in the morning such a well-established institution is no more – all the wealth seemingly lost overnight? Is nothing certain?”
Sometimes an important part of building a great business may just be having the ability to live through a downturn.
Here’s another quote from a Forbes article titled – “The Greatest Risks They Ever Took”: …Kit DesLauriers, the first person to ski from all seven summits. Of her descent from the top of Mount Everest, she says: “There were no safety nets, no fixed lines established, freezing winds. We had to spend an unplanned night at 26,000 feet, with very little food and water. The next day, we skied the Lhotse Face, 5,000 feet of blue ice on a 50-degree slope…At one point, we ran out of oxygen. I kept telling myself: “Don’t sit down and die. Just keep going.’ It’s really easy to let your mind get a hold of you, but the journey taught me we are much more than our minds.” (The whole article is available here.)
Times like these are mainly about mind-games that we play against ourselves – the daily newspaper, the stock ticker on TV, the conversations in the hallway all contribute to the feeling of helplessness. But the biggest freefall is within us. So, remember Churchill’s thought: “If you feel you’re going through hell…just keep going.”
Devangshu Dutta
June 10, 2008
Why do entrepreneurs start companies? Why do individuals form organisations?
An obvious reason is that they cannot do everything themselves. Another is that they don’t have all the resources / skills that are needed to grow the business. If they work well, teams can certainly achieve more than individuals alone.
However, another compelling reason comes to mind for creating an organisation – the concept of immortality.
All living beings are susceptible to the phenomenon of “death” at some point of time or the other, and immortalise themselves through producing the next generation through reproduction.
Just as reproduction is a way to immortalise the genetic code of the species in our next generation, organisational development is a way to immortalise the “genetic code” containing ideas, principles and philosophies.
However, this can only happen if the leader / founder / entrepreneur faces the Big Reality: “I am mortal”. Once he or she faces that fact, there are two choices for him / her – the organisation / business can die with him or her, or there can be another generation to carry on the genetic code.
Mortality is the root / route to immortality. If one is truly wedded to the principles of the organisation, one will create the framework and the environment for the next leadership to emerge, and will nurture the next generation to the leadership position.
The route / root to Immortal is “I M Mortal”!
A couple of great resources come to mind, both from Jim Collins and his co-authors: “Built to Last” and “From Good to Great”. (A great concept from the latter book is that of “Level 5 Leadership” which is well worth a read.)
Devangshu Dutta
February 8, 2008
In several conversations recently, there has been reference to how much contribution comes from small-medium enterprises, the need to protect the small-scale industry (SSI) to provide diversity etc.
After all the conversations, one thought keeps coming to mind. While small businesses need to be enabled, and an ecosystem and environment created for them to thrive, there is no reason to keep them from growing.
Entrepreneurship is organic, a business is a living thing. Basic high-school biology teaches us that living things (as opposed to non-living things) grow. Preventing a living thing from growing is going against its very nature.
But that is exactly what reservation of certain manufacturing sectors for small scale does – it creates a government-regulated ceiling beyond which the business cannot invest (and, therefore, cannot grow).
The apparent objective of the policy is to “protect” the industry sector from competition from large companies. The underlying assumption is that large companies compete unfairly, and that small companies in the reserved sectors effectively cannot compete against larger players.
However, many industries and sectors in India are paying the price for that policy. For instance, even after the clothing sector was allowed a higher cap of investment in plant & machinery, and then finally removed from the list of SSI-reserved list, it struggles with its fragmented structure, against larger-scale and more efficient competitors based in China , neighbouring Bangladesh and other countries.
Obviously, in global trade, restricting the growth of domestic industry does nothing to make the country competitive. It only protects it from itself, and makes it inefficient.
So every time the list of industries reserved for small scale is reduced, in my opinion it improves the potential competitiveness of Indian industry. In that light, the government’s announcement this week of removing some more industries from the list is an occasion to cheer.
The government has identified mechanical equipment, electrical goods and stationery as the categories to be opened to larger scale manufacturing.
Consumers, retailers and consumer products brands have something to look forward to, considering that this may include products such as steel cupboards, doors, windows and ventilators, steel furniture, locks, steel and aluminium utensils, builders’ hardware, sewing machines, kitchen gadgets, and pens.
We await the final list with bated breath. And look forward to other consumer goods also being removed from the SSI-reserved list and being opened to higher investments.
Devangshu Dutta
February 7, 2008
For those who are familiar with Kutchh, and its people, there is no doubt that it is one of the most active hotbeds of entrepreneurship. A lot of the business in India’s financial capital, Mumbai, is in the hands of the ‘kutchhis’ (those from Kutchh). Many of India’s largest companies and financial heavyweights are from this region, while Surat has been a force to reckon with in the global diamond trade. Amidst all this, one of the most interesting group that I have come across are the craftspeople and artisans working with traditional methods of craft – textiles, metal, wood, leather etc.
Beyond the timeless creative wealth that traditional craft creates, a conversation with one such craftsman – a handloom weaver – highlighted to me the value of crafts as a force of entrepreneurship. While talking about the world in general, his choices in life etc., he said that the strongest reason for him to stick to his family’s handloom tradition was the fact that he was an entrepreneur. He was his own boss, not reporting to anyone else, and his fortunes not subject to the whims and fancies of some better-educated higher-up in “a company”. To him, the sense of dignity from creating his own products and running his own trade was far more important than ‘earning more in a safe job’. An important learning to keep in mind during these times of hectic corporatization of Indian business.
The other aspect that is specifically important to the fashion / lifestyle products sector is the diversity of product base and the product development edge it provides the industry. The product development, design and merchandising capability is a backbone for the lifestyle / fashion / soft goods industry in India, that keeps it in the global competitive arena despite wheezing infrastructure, rising costs and other competitive inefficiencies.
