Retail productivity Concepts and analysis for an emerging retail sector:

Abstract

In this study, there are three major objectives. Firstly, I intend to conceptualize the construct "Retail Productivity" and develop a model to measure it from the existing literature. Secondly, I want to validate it with appropriate industry feedback to establish its usability in current retail scenario and emerging economies. Finally, I want to extend the theoretical and practical (on-field) dimension of retail productivity academically and develop few propositions as directions for this line of study further. One of the prime reasons for undertaking the study of retail productivity is the existing retail scenario all over the world and specifically in emerging economies like India. All over the world, there is lack of growth in retail sector and retailers in India are showing rather poor results for the last few years in spite of quite creditable growth. According to ICRIER (2008), the GDP of India was expected to grow at 8 - 10 % per annum in the next 5 years. Consequently, the retail business in India was estimated to grow at 13% per annum (from USD 309 billion in 2006 - 07 to USD 496 billion in 2011 - 12. However, during this period, we have observed steady decline in year - on - year sales growth from 62% to 11% (KPMG, 2009). We have also observed increase in working capital, decline in inventory turnover and rather drastic reduction of net profit margin (3.9% in 2007 December to 0.3 % 2008 December) during this period (KPMG, 2009).While looking at their performance data and analyzing the reasons, one gets quite confounded with the lack of commensurability of their performance score. Even though majority of them do talk about retail productivity as the performance measure, probably each one of them means different things by it. Retail productivity is equated to store productivity, profit, sales per square foot, employee turnover or even return on investment. Interview with the store owners / managers failed to clarify this multiplicity of retail productivity concept. Hence, there is complete lack of clarity for retail productivity at the conceptual level and the powerful construct that it is; there is surely a need to explore it further.