Views and Trends
Canteen Stores - Reform India's largest retail chain
Did you know that the birth of the organized retail revolution in India as we know it took place 60 years ago in 1948. This was when the Canteen Stores Department was set up for Indian Defence Services personnel, both serving and retired and their families ?
Welcome to the Canteen Stores Department (CSD), which today boasts of more outlets than any other retail chain in the country. CSD is one of Asia's largest retail chains, with over 3,500 branches spread across the country. CSD has a branch in every city or town's cantonment area, with an annual turnover in excess of Rs 5600 crores. In fact, it is a retail service that operates in the highest altitude of the world – Siachen Glacier and has the largest number of outlets higher than 18000 feet.
We are all proud of this service that CSD provides to the defence services personnel which commenced its services out of sheer compulsion as there was no other way for defence personnel to obtain their essentials. Clearly, for the selfless work that our defense services provide for the society and the social challenges of living away from their homes , this is the least that we can do for them. The Government does its bit by waving off all taxes for products sold through CSD. This combined with the economics of large scale procurement and guaranteed customer base provides the defense personnel, products at some of the best prices in the country.
However, we all know that size in retail is a huge enabler of highly competitive prices, phenomenal variety and choices, a great ambience to shop and many other associated conveniences. Does the CSD offer all this to our armed services personnel ? My opinion is that while it may serve basic needs, the CSD is not top notch in terms of all these three aspects as one would expect of retail operations elsewhere in the country. I have heard vendors of CSD express that while they represented the largest single customer to most organizations in the FMCG and durables market in the country, they clearly had a long way to go in terms of arm twisting vendors for best terms. In fact , they clearly admit that the private sector retail professionals were able to get more bang for the buck especially so when they had the size. I would like CSD’s operational expense ratio not to be comparable to the best in industry but to aim to be the best in the world in any environment. I would like the quality and levels of customer service and choices on offer to be the best in class The Retail revolution with all its manifold intricacies is new to India and so is professionalism in the areas of supply chain and logistics, marketing and visual merchandizing, global sourcing and customer service. While CSD may have a good modern inventory system, the paradigm of retailing is different from that of a Store. Defense Personnel feedback is that the only attraction to prefer CSD is the price and many a times the range of brands available is limited and is most cases, the CSD outlet is a convenience commissary and nothing more.
When you try and seek out a parallel, breaking the monopoly of the government and bringing in competition has always benefited the customer. In the telecom sector from a shortage bureaucracy laden ecosystem to one of the most advanced in the world offering the best value, the sector has expanded the market multiple times with huge benefits to the end customer. Opening up the media has thrown up a plethora of choices to the customer in the form of radio stations , TV Channels and opened up new markets and customers. Opening up the aviation sector has improved connectivity and the competition has resulted in multiple product choices at competitive prices.
Why not do the same with CSD ? Our defense personnel deserve the best in terms of choices, prices and shopping ambience. A major reason for the reduced prices is the tax waiver and I sincerely doubt whether other advantages of size beyond this subsidy have been fully exploited.
Today, with its size , wooing CSD is top priority for all vendors and they will want to do business with it regardless of any constraints. Does CSD have the right talent and skills to drive home the best for its customers? I doubt it. Just imagine, if CSD went in for reforms and opened up the sector just as the other sectors did, the benefit of the ever evolving skills of organized retail could result in a huge benefit to the soldier. In conjunction with other service providers, the benefits of professional retail through synergistic / bundled offerings could be even more attractive to the soldier and families of defense personnel There would be challenges in terms of some of the territories but a well thought through bidding process like the telecom sector can safeguard all interests of the beneficiaries. While the contributions of CSD over the last six decades cannot be denied, prudence today demands that CSD introspects and explores its own reincarnation and turns truly professional. Our soldiers deserve this and more.