India’s retail industry is on a strong growth path, with Global Data projecting a 13% compound annual growth rate (CAGR) through 2027. The sector, spanning over 19,000 pin codes and 780 districts, with nearly 12 million outlets, reflects the vast diversity of the nation’s consumer landscape.
Yet, it remains largely fragmented — as per Uni Commerce and Wazir Advisors, organised brick-and-mortar retail accounts for 12%, online retail 7%, while traditional unorganised trade continues to dominate with 81%.
Adding to this momentum, a Deloitte–FICCI report titled “Spotting India’s PRIME Innovation Moment” estimates that the country’s retail market, valued at $1.06 trillion in 2024, will nearly double to $1.93 trillion by 2030, growing at a 10% CAGR.
This surge is fuelled by robust domestic demand, expanding digital adoption, increasing premiumisation, and a fast-growing e-commerce base. The spending power of Gen Z, with direct consumption estimated at $250 billion, is also reshaping market confidence and encouraging Indian brands to expand globally.
Negotiations at every cost touch point is the magic formula to profitability and business success: Yes & No
Retail operation costs lie in the Cost of Goods sold (COGS), occupancy or rental costs, inventory management costs, logistics costs, marketing and promotional costs and front-end retail manpower costs. Retail economics says that negotiations at every cost touch point is the magic formula to profitability and business success.
With increasing competition and stagnated retail prices, this approach gets into the muscle memory of most retail custodians across industries. Somewhere in the rush for cutting costs across the chain, they end up compromising the front-end retail manpower costs, including the quality of selected staff and their training. Because that’s the easiest touchpoint to be under the rack.
In the entire retail operation chain, this is one box that doesn’t involve many negotiations with any external stakeholders. You reduce the hiring quality, and the costs can be reduced without any severe negotiations. But what the retail management leaders forget is that they are thereby compromising both the topline and the bottom line, which is a function of the front-end retail manpower motivation and subsequently their performance.
While savings in the cost architecture strengthen the operating profit, it should not come at the expense of value delivery at each touchpoint and particularly in the penultimate and last point. The retail store and customer service.
Today, even in consumer goods retail, the customer expects a higher service value in the final stretch of the retail operations, forget about lifestyle, fashion and luxury retail, where it’s extremely crucial.
Quality and trained talent define differentiation and customer experience
With competition now hovering in dizzying spaces, the differentiation lies in the quality of retail store manpower in the front-end retail. Customers have numerous options and alternatives in the same product categories.
Consumer purchases have become far more impulsive, even for fashion and high-end products. For example, fast fashion is today dominated by Zara, Uniqlo, H & M, Marks & Spencer & Shien. The use of artificial intelligence and predictive analytics has streamlined inventory management in stores.
Refillment and reorders in retail stores today are automated. But that’s not all for effective inventory management in saving costs and time. The logic and rationale behind the CRM techniques used is equally important for a smooth, sustained and consistent operation. A trained and intelligent manpower can be more effective in understanding the retail mechanics.
A retail store’s accounting and finance is also tech-driven, but you need well-trained finance personnel to handle it efficiently and avoid leakages. Visual merchandising is not just window or store dressing. It’s the science of multi-sensory visual mechanics, and only a management or fashion school-trained person can do it effectively to generate consumer interest and desire.
Luxury retail stores apply the strategy of “Less is more” and visual storytelling in their monoband and flagship stores. A Louis Vuitton or a Hermes window reveals volumes with minimal display.
The Sales associates, assistants and store managers are very important to drive the topline. The consumer profile for fashion and luxury retail has witnessed a paradigm shift in recent years.
Empowering store-level leadership to build trust and drive loyalty
A vibrant, high-turnover and profitable retail store must be treated as a Separate Business Unit (SBU) in itself. It cannot be managed by a remote leadership team sitting in headquarters. They are there for policy guidelines and strategy development.
But everyday business operations at the store level demand real-time decision making and action. A customer is today on the hunt for a quick, end-to-end solution and not a mere product. So, the most valuable touchpoint is the final consumer interface where the purchase decision is made. Today's educated and informed consumer has a latent need to interact with a knowledgeable and emotionally sound Retail Sales Associate who can assist him or her as a consultant to make an informed decision.
Therefore, front-end retail, particularly in fashion and luxury, seriously requires pre-trained, qualified retail specialists who would have the ability to sell products and brands with a compelling story and offering honest solutions to customers. The big survival quotient today is winning the trust of the consumer and thereby his loyalty. Products can be copied, but not services.
Human expertise remains retail’s ultimate competitive advantage
According to a 2022 survey by McKinsey, inadequate career development plans in front-end retail is the second biggest reason for the high attrition rate of store employees. According to reports, the churn rate in UK retail stores is 40% while in the United States it is as high as 50%. The scenario in India is not very different.
It’s high time now that organised and big retailers must hire specialised retail management graduates to manage their retail stores because that is where customer conversions, loyalty and retention emanate. Avoid saving costs in hiring retail store manpower or in continuously upskilling and reskilling them. Retailers must adequately invest in Store Associates managing their retail stores because they generate the store revenue. Retail employees who are emotionally invested in the company work harder and better.
For leadership positions in the organisation, hire from within. Retailers can only do that if they have hired qualified personnel at the entry level. If retail companies can transform front-end retail into a career of excellence, then it has the potential to multiply their topline revenue and thereby lead to higher profitability. The current CEO of Walmart, Doug McMillon, rose from the store floor itself. Started as a Summer Associate and then, once he completed his MBA, rejoined as an Assistant Manager in the store and was then absorbed into the company headquarters.
Don’t squeeze at the front end, because fortune lies there
Don’t squeeze at the front end, because fortune lies there where the gross merchandise value can be scaled up. The time is ripe for big Indian retail companies to appreciate and create excellence in career planning for the store employees and groom them to take leadership positions later. Only then can they attract talent and reduce their attrition rate significantly. Make front-end retail an excellent aspirational career choice rather than an optional last resort for trained retail students.
Sephora provides a clear career path for its front-line retail employees with mobility between departments, stores and lateral senior positions. Beauty advisors can become General Managers. Walmart, too, has a very structured career plan for their retail store employees. Indian retail companies like Aditya Birla Fashion Retail (ABFRL) do the same in their lifestyle and fashion stores, like the Collective & Jaypore, their artisanal lifestyle retail store brands.
Uniqlo and Rivoli have an excellent program to pick retail management students from leading B Schools and ensure a lucrative career path for the performers. The Indian retail companies’ mindset and approach are indeed shifting because they do realise that fortune in fact lies in the front end. Money invested here will breed more money.
(Article written by Prof Dr Jyoti Sankar Das, Birla Institute of Management Technology (BIMTECH) )
