In India there might be much more family involvement in franchises and so on. For Indian farmers there would be a higher return with products reaching consumers with less waste
Sir Terry Leahy is the former CEO of Tesco, Britain’s largest retailer and the thirdlargest in the world with annual sales of £72.4 billion. During his 13 years at the helm, annual pre-tax profits cleared the 1 billion, 2 billion and 3 billion marks in succession, financial and customer marketing services were added to retailing and its market share in the UK grew from 20% to 30%.
Leahy spoke to independent marketing consultant Kamini Banga in London about his time at Tesco, his views on Indian retail, and the importance of customer and employee focus.
On the case for modern retail in India
While it will mean change for corner shops and middlemen, for hundreds of millions of Indian consumers it will bring better products at cheaper prices. This pattern has beenrepeated time after time across the globe; in America in the 1930s, in Europe in the 1950s, in Brazil and in the emerging markets from 1970s through to the 1990s. Modern retailing need not abandon cultural traditions, for example in India there might be much more family involvement in franchises and so on. For Indian farmers there would be a higher return with products reaching consumers with much less waste. A well-developed modern retail means a well developed agricultural sector, good examples are the UK and
Holland. Currently, foreign retailers have the capital and the know-how. However, given that the nature of retailing is local and so mass driven, it is one of the industries that local players can do well in. You want to encourage local businesses to grow using best
practices.
On FDI in retail in India
I think one of the effects of all the discussion on the subject has been that foreign retailers are not certain about whether they are welcome in India or not. You may obviously want to say that this is our country and this is how we need foreign companies to contribute and operate but you definitely want to give the message that this is a good place to invest and to do business in. So, I think, reassurances on that front would help. Interestingly, in the early years in China, people were uncertain because the Chinese had not decided themselves how they were going to control foreign retail investments, and it caused uncertainty. Now it’s much clearer and that has helped. The Chinese were also quicker to open up to foreign retail. They learnt and emulated and now have the best arrangement because they’ve got local knowledge and international best practice.