Value creation is a colloborative process

During times of economic downturn, when the consumer turns cautious, the best way to get him to spend is by delivering enhanced value. This may come in the form of lowered prices/discounts.

The lesson to be learnt in trying to do this, is that, the onus of this delivery does not just lie on the shoulders of the business entity (read, retail firm) that merchandises and sells the product in question. Instead the initiative must be driven by every business entity in the value chain.

Take the case of Aditya Birla Retail. As much as they are shutting down a few of their non-viable stores, they are also opening up new ones with a new format. The ones that don't face a shutdown are the ones that have their property owners willing to renegotiate rentals. A dip in rentals can help Aditya Birla run their stores with a lowered cost structure that could in turn render their retail operations viable. A store where the property owner is not willing to budge could be one that's shut down. The process of creating retail value for any retail customer lies equally in the hands of property owner as much as the retailer.

This is in stark contrast to what Subhiksha is facing. Several landlords who gave Subhiksha retail space have taken the discount retailer to court to recover rent allegedly not paid for months. I guess this may have happened because of their patience wearing thin at non-payments, but I also wonder how many of these landlords would have tried to sort things out for Subhiksha so as the keep their retail act from folding up?


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