Retail Dude

Wal-Mart has its own way of doing things. When people were stuck with traditional mom & pop stores, it ventured into big formats, and know when all retailers are talking of big formats, it has ventured into small format. And I am sure that it will succeed here also. Yes, Wal-Mart recently jumped into Small Format Retailing with stores called Marketside. It’s the second time that Wal-Mart is not using its name since in format. First time it did it with Sam’s Club warehouse stores. Tesco has already ventured in this space with ‘Fresh & Easy’. These small format stores aim at providing fresh and prepared foods in a convenient neighbourhood location.

-          Rajeev Damani

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We in India are talking of about 30% compounded growth for Retail Industrty,but scenerio in other parts of world is not so. Retail Sales has fallen to record low in UK for the month of August, because of wet weather and downturn of the housing market. As a result of falling Retail Sales, retailers are resorting to job cuts. Stores selling furniture, carpets and household goods were the worst affected with every single shop reporting falling trade in August. Super market is the only format which has shown growth but still it is also growing at a decreasing rate.

Even in USA same store sales are falling due to preesure on consumer spending. So, it seems that emerging market is the only option for the Global Retailers to grow. (Read: Global Retail Opportunity : http://bimtech-retail.com/blog/2008/global-retail-opportunity/ )

-          Rajeev Damani

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“TATA’s Khet Se, Which is a 50:50 JV between Tata Chemicals and Total Produce, Ireland is expanding, Reports suggest that they are opening up another distribution center in Mumbai “

 Previous posts related to “Rural Retailing” got me thinking! We all have read and acknowledged the fortune at bottom of the pyramid! So whenever a biggie (Read: Reliance) enters the market at the bottom! The numbers would just juggle me up! What is “Rural Retailing” after all? Is it organizing the retail mechanism in the rural parts of India? or is it about bringing rural India close to urban India? Where is the actual “Fortune”?

So I ended up “Googling” a bit about both the scenarios, while rajeev posted about “Reliance” entering the rural market, I stumbled across the news of TCL’s “Khet Se” setting up a DC in Mumbai. Both the players have the word “Rural” intact! One is going to the rural market, setting up a store there, and will provide agricultural inputs, Groceries etc. On the other hand “Khet Se” is playing a role reversal by bringing rural products to urban India, They are gambling upon revamping the way farm fresh products are warehoused and distributed.

“Khet Se” has its focus on registered B2B consumers, Which range from local fruit/vegetable vendors to local retailers, Who can directly buy farm fresh products from khet Se’s DC. In terms of value addition Khet Se is providing the technical know how to the farmers, to help increase the output and overall quality of the end product, While they are working on a efficient supply chain as well.

Now we just have to wait and watch, Who gets to the fortune first! Which model is more beneficial for the “Rural India”? My bet is with Khet Se! How about yours?

- Sarthak

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On the internet i came across a list of top 10 retailers not top because of their sales figure neither because of their revenues and bottom line etc. They are top in applying green thoughts to their organization and lead with the green banner in their hands. This also astonished me as i came to know that this green bug bite some of them way back in 1998

An electricity supplier focused on renewable sources — Juice Energy Inc.– picked the following companies as frontrunners in green business :-

Patagonia
In 1998, Patagonia became the first California-based company to buy electricity from 100 percent renewable energy sources and achieved LEED gold certification for its Nevada distribution center. Additionally, Patagonia is a leader in recycling, with its Common Threads Garment Recycling Program, which recycles used fleece for use in new products.

Kohl’s
Kohl’s is the second largest retail purchaser of green power and the largest among department stores, using 201,396,000 kWh annually. Kohl’s is also working to complete the largest rooftop solar project in U.S. history next year, with installations at 63 of their 80 California locations.

Whole Foods
Whole Foods, a leading natural and organic supermarket, purchases green power equal to 100% of their electricity usage, over 509,100,000 kWh annually. Their green power usage earned them the distinction of EPA Green Power Partnership Power Partner of the Year 2006 and ranks third among all green power purchasers. Whole Foods also gained LEED Silver certification for its Sarasota, FL store, the first supermarket to earn the designation.

prAna
In 2005, the outdoor and lifestyle apparel wholesaler prAna launched their Natural Power Initiative to purchase green power equal to the electricity usage of all 250 prAna retailers, the company’s corporate headquarters, and the homes of all their full-time employees, equaling 29,678,000 kWh annually. Now prAna plans to purchase wind power for their entire North American dealer base of approximately 1,000 retail partners in addition to its contracted U.S. - based sewing facilities.

REI
REI, or Recreational Equipment Inc., purchases green power equal to 100% of their annual electricity consumption, totaling 63,080,000 kWh, which ranks 9th among retail purchasers. REI has also committed to reducing CO2 emissions by 1/3 from the 2006 baseline by the end of 2009.

UPS
UPS operates the largest alternative fuel and low-emission fleet in the industry, with 19,647 such vehicles worldwide. UPS is also reducing its emissions by purchasing 2,949,545 kWh of green power for its California facilities and streamlining delivery routes resulting in the elimination of more than 28.5 million miles of driving to date.

Timberland
Timberland recently introduced Green Index tags on a number of its products, which rate products based on environmental factors such as greenhouse gas emissions, the use of solvents, and organic content. Timberland also plans to become “carbon neutral” by 2010 and recently changed all packaging use for its footwear to 100% post-consumer recycled boxes and soy inks.

Nike
Nike has set a goal to be “carbon neutral” by 2011 and currently purchases 79,820,000 kWh of green power for its World Headquarters, representing 72% of annual consumption. The company is also designing its footwear to meet targets for waste reduction, elimination of volatile organic compounds and increased use of environmentally preferred materials by 2011.

Wal-Mart
Wal-Mart has made a commitment to reduce overall GHG emissions by 20% over the next 8 years and set a long-term corporate goal to purchase 100% of their energy from renewable sources. Wal-Mart has also set a goal to increase fuel efficiency of its fleet by 25% over the next 3 years and is currently the largest single purchaser of 100% organic cotton products.

Target
The discount retailer, Target, became a certified organic produce retailer late last year and now offers more than 500 choices of organic certified food. Target also reduces waste through food-donation programs, giving away nearly 7 million pounds of food last year. They also have four buildings in California using on-site solar electricity, with systems under development at 14 additional stores.

- Prateek Katiyar

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It seems that Reliance Retail will leave no stone unturned to succeed in its Retail foray.  After trying its hand hard across many verticals of Retail, now they are venturing into Rural Retail through rural-business-hub (RBH). Reliance has already faced a lot of revolt in many of the states in India. So, to be on the safer side they are starting from their home state i.e. Gujarat this time. Moreover for its RHB business, the company aims to avoid difficult states such as UP, West Bengal and Bihar. This model will compete with existing players in Rural India like DSCL’s Hariyali Kisan Bazar and Biyani’s Aadhar.  

Reliance will provide farm input, food, grocery, consumer durables, and financial and health services. It will also provide farmers a platform to sell their produce, an equivalent of village haat. A community hall and entertainment facilities will form part of the hub.

A typical RBH would be spread over 3-5 acre and require an investment of around Rs 5 crore, besides the cost of land.

The major challenges which Reliance might face in this business can be:

·         Competing with the existing players like Hariyali Kisan Bazar and Aadhar.

·         Managing village politics as local politicians are quite influential.

·         Success of health services can face major challenge as government already have made huge investment and is still facing problems.

-          Rajeev Damani

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Reliance BIG TV DTH, a wholly owned subsidiary of Reliance Communications, announced the launch of a revolutionary feature, Picture-in-Picture (PIP) that would enable viewers to watch twelve TV channels at the same time on any TV set in the country.

BIG TV DTH service is available at 1 Lakh retail outlets, including over 240 Reliance World and 2000 Reliance Mobile Stores, across 6500 towns in the country. The country’s largest distribution and customer service infrastructure for Home Entertainment Service built by BIG TV DTH enables it to serve over 5 million new customers every year. The customer service and support infrastructure comprises of an army of 5400 specially trained installers, capable of installing over 15,000 connections daily and within 48-72 hours of every customer order.

“In a market where close to 80 Million out of 120 Million homes already use Cable or DTH; explicit differentiation of service and enriched applications is of prime importance. BIG TV’s Picture-in-Picture (PIP) feature would bring in a revolution of similar magnitude on TV sets what SMS brought on a Mobile Phone”, said Mr. Mahesh Prasad, President – Application Services Group, Reliance Communications. “The Mosaic application, which enables the PIP feature, changes the ease in selecting the program of choice from the bouquet of over 200 channels using BIG TV’s unique Picture menu. The 12 screen Picture Menu overcomes the significant constraint of demographic and geographic variations which a Text-based menu cannot”, he added.

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I know you must be amused by seeing the title of the topic, but my dear friend it true now days. Let us start by explaining what Pareto Principle and what Merchandise Planning are at a very high level.

Pareto Principle in respect of Retail means that 80% of sales can be attributed to 20% of Products a retailer carries.

Merchandise Planning is a Systematic Approach aimed at maximizing return on investment, through planning sales and inventory in order to increase profitability. It does it by maximizing sales potential and minimizing losses from mark-downs and stock-outs.

Let’s note some of the Key Points here:

–        Systematic Approach

–        Maximize ROI (Return on Investment)

–        Planning Sales & Inventory

–        Increase Profitability

–        Maximize Sales

–        Minimize Losses

So, traditionally when we didn’t have advanced merchandising softwares, we were not able to extract quality data from our sales. With all advanced applications from JDA, i2 etc, now we can assemble data from POS and other critical customer touch points and determine the effect of different merchandise plans objectively. These applications help us to come up with rational sales and merchandise plan which would maximize the profitability by increasing our sales manifold and controlling two of the extremes of merchandising inefficiency i.e. Stock Outs and Mark Downs (Over Stocking). It does this by helping us place right product at right time at right place for right customers.

Traditionally, in a store 20% of the products use to have a high turnover and they often use to suffer from stock outs. This was because they were not able to build quality data and lack of good analysis tool. Result was loss of opportunity for sale. At the same time rest 80% of the products which didn’t had much turnover use to pile up, building higher space cost for them. So, when we use to allocate profit we use to find that actually 100% of profit can be attributed to those 20% as the contribution from rest 80% use to get adjusted with their space cost.

But with advance applications, we are now able to arrive at optimal product mix for our stores. This negates the Pareto Principle as now contributions are quite uniform and the cost associated with slow moving goods are minimized.

So, we can say that Pareto Principle is actually the result of merchandising inefficiencies…

-          Rajeev Damani

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The U.S. has Wal-Mart. France has Carrefour. Each country has a retailer that has become the biggest and best, and the one to catch up to. From the 11th annual “Global Powers of Retailing” report compiled by Deloitte Touche Tohmatsu and STORES Magazine, this is the list of the retailers who are leading the way for the retail industry in their homeland. (This list is arranged alphabetically by country, not according to sales or revenue.)

Australia – Woolworths Ltd.
Convenience/Forecourt Store, Discount Department Store, Electronics Specialty, Other Specialty, Supermarket

Austria – SPAR Oster-reichische Warenhandels-AG
Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket

Belgium – Delhaize Group
Cash & Carry/Warehouse Club, Convenience/Forecourt Store, Drug Store/Pharmacy, Hypermarket/Supercenter/Superstore, Other Specialty Supermarket

Brazil – Comanhia Brasileira de Distribuicao SA Grupo Pao De Acucar
Convenience/Forecourt Store, Electronics Specialty, Hypermarket/Supercenter/Superstore, Supermarket

Canada – Loblaw Companies, Ltd.
Cash & Carry/Warehouse Club, Discount Store, Hypermarket/Supercenter/Superstore, Supermarket

Chile – S.A.C.I. Falabella
Department Store, Home Improvement, Hypermarket/Supercenter/Superstore

China – Bailian Group
Convenience/Forecourt Store, Department Store, Home Improvement, Hypermarket/Supercenter/Superstore, Supermarket

Denmark – Dansk Supermarked A/S
Apparel/Footwear Specialty, Department Store, Discount Store, Hypermarket/Supercenter/Superstore

Finland – S Group (SOK)
Apparel/Footwear specialty, Convenience/Forecourt Store, Department Store, Discount Store, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket

France - Carrefour
Cash and Carry/Warehouse Club, Discount Department Store, Hypermarket/Supercenter/Superstore, Supermarket, convenience/forecourt store

Germany - Metro AG
Apparel/Footwear Specialty, Cash & Carry/Warehouse Club, Department Store, Electronics, Specialty, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket

Hong Kong – AS Watson & Company Ltd. SAR
Discount Store, Drug Store/Pharmacy, Electronics Specialty, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket

Hungary – CBA Kereske-delmi Kft.
Supermarket

Iceland – Baugur Group hf.
Apparel/Footwear Specialty, Cash & Carry/Warehouse Club, Convenience/Forecourt Store, Department Store, Discount Store, Drug Store/Pharmacy, Electronics Specialty, Other Specialty Supermarket

Italy – Coop Italia
Discount Store, Hypermarket/Supercenter/Superstore, Supermarket, Hypermarket/Supercenter/Superstore

Mexico – Organizacion Soriana S.A. de C.V.
Cash & Carry/Warehouse Club, Hypermarket/Supercenter/Superstore

Netherlands – Koninklijke Ahold N.V
Convenience/Forecourt Store, Discount Store, Drug Store/Pharmacy, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket

Portugal – Jeronimo Martins, SGPS SA
Cash & Carry/Warehouse Club, Discount Store, Hypermarket/Supercenter/Superstore, Supermarket

Russia – X5 Retail Group N.V.
Convenience/Forecourt Store, Discount Store, Hypermarket/Supercenter/Superstore, Supermarket

South Africa – Pick ‘n Pay Stores Ltd.
Apparel/Footwear Specialty, Convenience/Forecourt Store, Drug Store/Pharmacy, Home Improvement, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket

South Korea — Lotte Shopping Co., Ltd.
Department Store, Hypermarket/Supercenter/Superstore, Supermarket

Spain – El Corte Ingles, S.A.
Apparel/Footwear Specialty, Convenience/Forecourt Store, Department Store, Electronics Specialty, Home Improvement, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket

Sweden – The IKEA Group
Other Specialty

Switzerland – Migros-Genos-senschafts Bund
Apparel/Footwear Specialty, Convenience/Forecourt Store, Department Store, Discount Store, Electronics Specialty, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket

Taiwan – President Chain Store Corp.
Convenience/Forecourt Store, Department Store, Drug Store/Pharmacy, Other Specialty, Supermarket

Turkey – Koc Holding/Migros Turk TAS
Discount Store, Hypermarket/Supercenter/Superstore, Supermarket

United Kingdom – Tesco
Convenience/Forecourt Store, Department Store, Discount Department Store, Hypermarket/Supercenter/Superstore, Supermarket

United States – Wal-Mart Stores
Cash and Carry/Warehouse Club, Discount Department Store, Hypermarket/Supercenter/Superstore, Supermarket

- Prateek Katiyar

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You must be wondering that what I mean by Astrology Mall. But let me correct you that you are thinking on the right line. Yes it’s a mall specialized in astrology. Soon Bangalore will have supermarkets that will house astrologers, numerologists, palmists, tarot-card readers, horoscope specialists - all under one roof. It is first of its kind in the country or perhaps world. So, if you want to know your future, you just need to step in this super market and know all predictions. Bangalore gonna have 10 such outlets called ‘Star & Planet’ and they will be carrying astro-related materials like Rudraksha beads, gems and stones, yantras, puja materials and books relating to astrology.

“It is not just about fortune telling. If an astrologer suggests a puja, the supermarket will arrange it for you. The concept is like a multispeciality hospital where all specialists are available under one roof”, says promoter Ramesh Tulsian.

One of the toughest challenges in success of a format like this is the authenticity and precision level of the fortune tellers which it will be housing. In order to deal with it, promoters have decided that they will select them based on a written test and an interview. They will have to face an expert panel in order to set up shop in supermarket.

So, with this New Service Development (NSD), we have a scope of another academic course i.e. Future and Fortune Management

- Rajeev Damani

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I am not going to give you  tips on becoming HULK But as I talked lot about the green initiation and sustainability plans of the big retailers and the future strategies of the small retailers to become eco friendly in the near future, but what about you as a person are doing to help our mother earth? No no no don’t worry I am not going to give you a check list of items saying switch off the lights, use solar power, say no to plastics etc. I am gonna tell u a simple step in which without doing u will become eco friendly. As everyone of as use computers as a part of office work or as a entertainment medium in home or to find location of friends home on google maps, we all use PCs and PC use power to run. So here is a freeware which can tune your PCs power usage as per your parameters and also help you to save energy as well as your money. Edison ( ya the name will make you to recall man who invented bulb to use energy but ironically in virtual world is helping in saving energy) will help your PC to go Green. Edison allows you to set different energy preferences for work and non-work time, then choose the times you want each profile to run. The power settings determine how long your PC should wait before turning off the display, powering down your hard drive, and suspending your computer. After you set your preferences, Edison also estimates your yearly savings in terms of money, energy, and CO2 emissions. Edison is freeware, requires .NET 2.0 and an email address for registration.

You can find this freeware here

Just give it a try

-Prateek Katiyar

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