Thursday, May 24, 2007

Of Retail Chain and Big Corporates

Shop keepers, what they call Retail chains, become big corporates sometime. So Big, at times, that a string of shops started buy a shopkeeper called Sam Walton is today's Biggest Corporate, with revenues more than the GDP of any medium sized nations.

And so are some other retail chains.
At least in the US, and Europe where Big businesses have thrived, and some Asian countries where Big businesses have begum to thrive, Big businesses have rarely tried to build a retail or shops of thier big corporates.

I mean Retail Chains have become Big Corporates, but have seen any big corporates becoming retail chains? GE, The GM, Nike?

For that matter even Virgin?

Then, why are all the Indian Corporate Biggies rushing into the Retail bandwagon?

I will bet on pantaloon Retail and Subhiksha anyday over Reliance and Birla.
Bharti!!! They are the smarter of the lot, are they? Supply Chain and Intrastructures and all that?
In the californian Gold Rush, the ones who sold shovels made the fortunes.

Why I am worried about Big corporates going retail is that Retail is a low margin Business, and many Many Retailers going bankrupt in the past. Only one retailer can squeeze the margin, and it hits the rest.

For a traditional company making an X% ROI, starting a new venture from scratch, that will give less than X% ROI don't make too sound business sense, does it?
Core Competence anyone?

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