Indian Budget Shopping Malls - Ignoring security & Inventory management

I have been visiting various budget shopping malls in India like Big Bazaar, Vishal Mega Mart and recently in Home accessories like Home Town etc.

These Mall's business model is to offer cheaper products under one roof attracting Indian Middle class for shipping. Indians are very price (as well as Brand) sensitive.

The way these malls are designed and being managed raise questions if they are taking care of the Security and inventory management. Some points of concern are ...

- The design of the mall is very different where you may not need to pass thru or even near the billing counter to exit the mall. You can bill your goods anywhere in the mall and the cashier package the goods in a polythene bag (many a times open) and let you move around the mall and then exit. It is very easy for the people to pickup more product and put it in bag. In department stores in foreign countries this is not so, where mostly you exit after billing.

- Camera surveillance is not installed in most of these malls. Also at some places where its installed is insufficient. Also I do not think there is enough trained manpower available who can use CCTV to identify theft and understand consumer behavior.

- Instead of deploying cameras malls have selected to employ numerous employees (probably at very low wages) . I think these employees are on third party contracts and with low or little loyalty to the mall as they do not have any assured job with them. I think these employees themselves can be a great danger to the mall, as they will know all the loopholes and will recommend their friends how to exploit such loopholes. These employees are normally form low income families and small thefts are very common in such income class.

- Tags - Bar code Price Tags of the products are not properly mounted and easily removable. One can easily remove the bar code tag of a lower cost product and put it on the higher cost product and getting the item legally billed with very low chance of identification even if its rechecked.

- Inventory management - I do not think these malls have proper inventory management and tracking/auditing. Many boxes keep lying in the parking lots , and inventory withing the mall keep changing places.



Some events I observed:

- When Big Bazaar newly opened, I bough a jacket, after going to home i observed that the security EAS tag was there on the jacket. It took me many days to remove it. It means that the Big Bazaar security tag system was not working.

- In visual mega mart I regularly saw that they need to improve security and security checks at exit every few months. This is surely due to lot of theft that might have led them to use more and more security measures..

- Recently when I went to a leading mall to purchase Curtains, a contractor employee who stitch the curtain gave a very surprising offer. he said that instead of buying 18 meters cloth as required for the curtains, just bill for 10 meters (and pay him Rs.200 bribe in cash) and he will still get the 18 meters curtain stitched and delivered. He said he has freehand to take any amount of cloth and people deployed to monitor him does not even know how to measure the cloth. It means that the company is not monitoring its inventory...

- Many of these malls come up with astonishing offer of discounts some of them are quite complex for consumers to understand. In these situations employees are given a lot of rights to make decisions.. Also there is little track of inventory that is to be used as free gifts or included with the offers...




Some articles I read mentioned that these malls are operating with just 4% margins to increase their sales volumes..

- I think these inventory losses are at least 10%
- If they are charging 4% margin after taking case of their inventory losses, then they are charging probably 15% or more actual margin
- If they are not able to account for their inventory losses in price, they they are working in loss.
- In fast growing market they might feel good with their balance sheets, but one the downtrend start their will get hit badly by these losses. some of them start accounting for it when they see their their profitability is less and sales not rising significantly..


Need to learn more lessons ...