Departmental stores near dead end

As the retail business continues to grow by leaps and bounds, department stores, the most traditional form of organised retail, may have to struggle for survival.


GURGAON/NEW DELHI: As the retail business continues to grow by leaps and bounds, department stores, the most traditional form of organised retail, may have to struggle for survival.

In an industry prediction, shared exclusively with ET, global consultancy firm AT Kearney fears that 4-5 years down the line, there will be major encroachment of specialised formats or ‘category killers’ and discount retail in the business of department stores.

Which means well-known retail players such as Ebony and CnM, may soon have to go scouting for other options. AT Kearney principal Raman Mangalorkar told ET: “The present situation in India is comparable to that in the US a couple of decades ago. With the emergence of more specialised formats, termed category killers in industry parlance, department stores subsequently died out.”

He pointed out that department stores are a congregation of various categories. As such, they cannot offer the variation that a specialised retail outlet can. “For instance, a store dealing just in consumer durables will have many more brands as well as variants on offer than a generic department store,” Mr Mangalorkar added.

He pointed out that the other big competition will come from discount formats, which form one of the biggest business models for retail majors Pantaloon as well as the upcoming venture of Reliance. Companies in the business of retail feel that though department stores may be wiped out in the future, their end is not imminent.

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“The situation here is different from that in the US, where department stores were also phased out to a great extent after the emergence of super regional centres. These are formats which have still not come up in India,” said Ansal Plaza Mall Management Company head Abhijit Das.

According to Lalit Kumar, CEO, Ebony Retail, it is more a question of time frame. “However, I don’t think there is any need to panic immediately. Even in the US, it’s not a dead format. It’s just that it’s not growing as fast,” Mr Kumar said.
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