Retail Dude

A pretty well known newsmailer writes this morning “Rural and bottom of pyramid (BOP) markets are being considered the next big thing after a considerable saturation in urban markets”.

Being considered? Next big thing? Considerable saturation?

Note that the operatives we are apprehensive about - Being, Big & Considerable!

The same article says “companies are increasingly focusing on customising their products to the needs of consumers” .

Amazing, isn’t it? We should be collectively grateful that “focus on consumers” are finally “increasing”!

On the article we also see another interesting finding - “Sachet marketing has also found favour as it not only makes products affordable, it also helps build brand loyalty”. Must admit it’s a little too late a finding! As early as 1996, a small & ambitious start-up, originally named Beauty Cosmetics, introduced the world’s first “pillow pack”, a transparent 20ml sachet, priced at Re.1. Pioneered by an oft forgotten visionary, Mr. Ranganathan.

The start up morphed into a 300 crore+ FMCG major, renamed Cavinkare Limited. They also were the 1st hair-care brand to introduce a 50p sachet.

Thousands of MBAs had to study this unique case-study, as the concept was unique, made unprecedented inroads into rural India, was a phenomenal success & most importantly - adopted as THE most innovative packaging by almost all FMCG MNCs, worldwide.

It’s obvious that after the 24 months spent in acquiring the “qualifying” suffix, most marketing hot-shots have conveniently forgotten about the case & why they had to study it, in the first place. Yesterday’s news you see!

It took an institution like Mr. Prahlad (interestingly his initials are CK too, as in CKL) to “remind” our brand-custodians that India IS in its hinterland.

Ranganathan, being a humble middle-class innovator, with no vowels next to his name, is history! No media-adorned marketing whiz-kid will bother to pay any respect to this man who not only had the vision way before CKP did, but, made it work! 

Do the “operatives” still look benign to you?

- Arnab

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Malls have always faced the problem of more browsers than buyers, but in the first of it’s kind report, more retailers are pulling out of malls for the want of sufficient footfalls. As seen historically any store in the mall gets a conversion of around 18-30% depending on it’s location and accessibility within the mall. And, if the mall is not able to attract large number of footfalls, any retailer would find it hard to earn enough to match the rising rentals along with the cost of operating the store. With little or no support from the mall developers in marketing the store this has become a spiraling problem for not only the large houses but even the smaller ones.

Another area which the article brings to light is the lack of understanding an imperative (from a retailer’s point of view) concept of “tenant mix”. The term simply connotes the mix of retailers who are present in a particular mall. It is palpable that in a single mall the kind of retailers should similar to each other, in terms of their price points, demography of their target segment and in some cases the merchandise on offer (eg. Gold Souk in Gurgaon). But, as retail professional I can only feel sorry for those retailers whose professionals fail to analyze these considerations before they zero-in on a particular mall.

Well, one of the recent examples is happening right now in my city, Dehradun. Looking at the tenant mix of the mall (one of the first) one can only wonder - Would a brand such as UCB, Reebok and Big Bazaar, be able to generate similar kind of revenue operating out of the same mall? If you ask me I’m more than dubious. Though, the company would have done the indispensable study of the catchment and the competitors but still the point that they missed out was the understanding the majority of customers who would visit the mall, considering that it’s anchor tenant is Big Bazaar.

Like a ubiquitous silver lining, there a lesson in this whole episode too. It’s time for smaller retailers, who are bent on following footsteps of their larger and more established counterparts, to step back and think again. It is crucial to decide on any location only after asking oneself a simple question –Would my target customers be comfortable to shop at the selected location and subsequently, would they return to the store every now and then?

-  Vivin

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Hi guys,

Have you read the latest update, right from King Singh’s office? PMO, for the uninitiated.

Check it out & tighten your seat belts before you do.

May be it’s also time you rid yourself of your socks, if you have managed to pull them up all the way up to your…

Reminds of those “moles” (which the much cosmetic-uplifted lady had on her cheeks) in the face-lift joke!

Hope we will soon see a “responsible retailing revolution - RRR”, to our collective relief.

Reference: http://thedailyretail.com/Retail_news/Indian_rn/article/index.php?article_name=22sep01&mailer=1

- Arnab

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Is it the kind of correction we need in the retail segment? In Kolkata, retail sector seems to be in problem. With inflated real estate prices which are not matching to returns in retail sector, and all round protest against organized retail in Bengal, developers are converting their commercial retail space into office space.

Park Street tower that was meant to be Calcutta’s first exclusive mall for women, turned it into an office address. The Gariahaat Mall, which flopped as a retail destination, is reinventing itself as an office. The latest high-profile conversion from retail to office space is DLF’s proposed Grand Mall in New Town, Rajarhat. These are some of the many cases of conversion in Kolkata.

“There is no denying the fatigue factor in retail at the moment. A lot of retailers may have ramped up their businesses too fast. On the other hand, the demand for premium office space has grown manifold,” said Ajay Khanna, the managing director of DLF Retail Developers Ltd.

- Rajeev Damani

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Seeing the all round protest against organized retail players, I think 100% FDI in Retail is something unattainable. This is because it’s not only the unorganized players who are afraid of FDI but so called Retail Biggies like Mr. Biyani are also scared of it.

Some of the strongest enemies are politicians, biggies as mentioned above & unorganized players. As far as politicians are concerned they understand things but pretend as if they don’t. Because it’s not growth of country rather swell of their polls is what matters them. Biggies are afraid rather scared of competition which global retailers will bring in. And the unorganized players are opposing may be because others are doing so.

But why are we worried when in retail industry across the globe, local companies have been leaders. Be it US, UK, Europe or any other nation for that matter. Some of the examples are Wal-Mart (US), Tesco (UK), Carrefour (France), Metro (Germany), Lianhua (China) and many others. So, why are Indian Retailers and Biggies afraid?

As far as politicians are concerned, they have their own theories which are illogical as well as impracticable. Aren’t they aware of the millions of employment and additional capital it will fetch to India? Can’t they see the growth it will bring to ancillary industries? FDI will bring the pending rationalization in India. It will ensure that middlemen are eliminated from the supply chain and consumers receive better bargain. At the same time it will benefit poor farmers with better and fare margins on their produce which are traditionally eaten up by middlemen’s. It will reduce suicides by poor farmers. But who cares? To say we are an independent and democratic country but we are dependent on opinions and mood of political leaders and their autocracy.

Indian Retail Industry is currently characterized by inflated real estate cost, bad infrastructure, local protests, unpredictable consumer behavior, unskilled staff, inefficient supply chain and logistics, political drama, higher taxation, loss making malls, proliferation of unplanned convenience stores, unfit formats, lack of optimizations, pilferages and wastages. Opening door to international organized players will result into moving up in our value chain. Indian retailers have to eliminate the above inefficiencies from their business system in order to sustain. And don’t you think that Indian being one of the fastest growing economies with rising consumerism and expanding middle class have right to experience better proposition?

- Rajeev Damani

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The India Retail Report 2009 compiled by research group Images F&R Research is again optimistic about Indian Retail Industry. As per the report, spiralling income and rising economic growth (I don’t know where it is) will fuel the growth of industry and it will touch Rs. 18,10,000 crore by 2010. Organized Retail is expected to constitute 13% of it i.e. Rs. 2,30,000 crore. The report says that though people are perceiving that organized retail will hit mom & pop format hard, but modernizing retail will generate employment for 15 million people in different activities.

The report is based on rising economic growth rate of 8-9 per cent and a hike in average salaries by about 15 per cent which may trigger the rate of consumption. But with subprime crisis in US, Indian companies are also affected in big way, and even stock market is suffering. We hear news of cost cutting and layoffs daily. So, I don’t know how far it is right to believe growth rate of 8-9% and hike of 15%.

Food and grocery dominated the retail segment with 59.5 per cent share valued at Rs 7,92,000 crore, followed by clothing and accessories with a 9.9 per cent share at Rs 1,31,300 crore.

-          Rajeev Damani

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We all agree that supply chain is a backbone of retail business, but if retail is all about customers centricity and for the past 10 years it strived hard to change its product centric strategy to customer centric strategy and developed a face, a face that cares about customers, for whom customer is a king, then it definitely need its behind the scene player i.e. their supply chain to be customer centric. That strategic shift has weathered recent economic uncertainty, and we have seen it grow in both scope and complexity as retailers look to tackle localization and customer service that increasingly crosses channels. But this strategic shift from supply chain 1.0 to supply chain 2.0 have lots many hurdles in  its path, and one of is as usual the evergreen challenge that is getting the forecast to match demand. Apart from that due to globalization the supply chain is extended and require more resource to operate effectively, moreover the virtual stores also depend on the supply chain for their proper operations, these increases the pressure on precision in planning and execution of supply chain. The other challenges that are there on the way to shift are localization of assortment, SKU proliferation, and even customer demands for more supply chain precision – are putting new and different pressures on supply chain.

Now if we talk about solutions or about what will be new in the supply chain 2.0 than I will like to say that “the visibility” is what is a one word answer from many problems that supply chain faces today. With the help of latest technologies like RFID, intranet and real time information movement/Electronic Data Interchange (EDI), data synchronization and defined Universal Product Code (UPC), evolved and more enhanced and powerful Transport management systems (TMS) & Warehouse management systems (WMS) and other optimizer packages, the face of supply chain will definitely changed. But along with these technology enables the supply chain require to work out of their silos in collaboration with retailers.

Ultimately the customer will be satisfied with the combined efforts of both the retailers and their supply chain.

In last what I think I forgot to mention one big block in the path of supply chain 2.0 to be implemented in India is the infrastructure, so along with visibility the Indian supply chain requires good support from the infrastructure of the country.

-Prateek Katiyar

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Last weekend I watched Rituparno Ghosh’s The Last Lear, a movie which got critical acclaim from many of the film festivals that it has been shown. In the movie Amitabh Bachchan played a man living in the memories of his legendary Shakespearean performances, those impressive dialogues from the plays of Shakespeare were beautifully delivered by the bollywood king Amitabh. And those articulated words made me think about the lessons we as a retailers can learn from the Shakespeare, the lessons in leadership, management, conflict resolution and change management. Shakespeare clearly articulated human nature and relationships, and retail business business involves people, and people - fundamentally - don’t change. By studying Shakespeare’s works, it can allow you to gain insights on the each of the characters that you will encounter in your daily retail business life - from your customers, investors, consultants, vendors, distributors and other players.

Shakespeare looked deeply into what it takes to be a leader, and how leaders need to act under demanding and extreme circumstances. Leadership is not something that developed in last 40 years, Shakespeare demonstrated 400 years ago different roles a leader can take and different skills those leader require. and we all know without leadership any management or any organization will fall, so we need leader in every organization to carry its flag forward, those leader become the face of the organization like Kishor biyani for future group and Steve Jobs for Apple and there are lots many examples to quote, but i will like to quote something from Shakespears’s work -

When we have march’d our rackets to these balls,
We will, in France, by God’s grace, play a set
Shall strike his father’s crown into the hazard…

…So get you hence in peace; and tell the Dauphin
His jest will savour but of shallow wit,
When thousands weep more than did laugh at it.

The same aggression i can see in some of our retail players who are on store opening spree.

Apart from these lessons, one can learn the strategies also from the work of maestro, in Shakespeare’s play, King Henry V of England gained valuable information when he disguised himself and walked among his soldiers the night before a battle. Unlike the sugarcoated advice he got from his lieutenants, the leader didn’t always hear what he would have liked from the rank and file. AOL learned that lesson after an outside consultant said it was on the wrong track to increase sales. So AOL gave the consultant the reins and the result is the now successful Web network iVillage.com.

The same thing is there for the retailers where for the customer insight they have mystery shoppers, who can collect the data by pretending customer. Moreover we have many technologies now to track customer right from their entrance in the store to their happy check outs.

For the retailers in India there is a long road ahead and at every mile they have to learn new things and to apply them as to successfully march forward on their way. In my opinion if we can learn from Sam Walton, so we can from Shakespeare too.

-Prateek Katiyar

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IBM Retail Store Solutions has been declared winner of the 2008 Point of Sale Green Excellence of the Year award for its SurePOS 700 series of point of sale systems from Frost and Sullivan. This showcases IBM’s outstanding efforts in energy conservation and safeguarding natural resources. SurePOS 700 system is powered by high-performance; energy-efficient processors that help customers reduce system energy consumption by nearly 36 percent.

-       Rajeev Damani

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Every time there is an explosion in the busy thoroughfare or a high street I am reminded of the scene from the bollywood flick Mumbai Meri Jaan where a poor man, in order to avenge all the discrimination against himself by the higher class, starts making threat calls to the police from various malls across the city claiming that a bomb has been placed in the mall. As expected, what happens next is panic stricken populace start running in all directions to get out of the premises. Though, he was simply playing with people’s emotions/sentiments, in his ignorance,was causing much harm and inconvenience to the retailers as well as the general public.

Face it. Retail sector has to pay the price for any fracas happening in the external environment. Though, one can’t definitely say how much impact would the growing number BMW ‘hit and run’ cases, in the capital, on the sales of this much coveted car brand. But, what can be undoubtedly said is that people do react to these external happenings, mainly by cutting down their outdoor trips, and much to the displeasure of the retailers. Take for instance, the recent blasts in Delhi, which resulted in losses of “Rs 24-39 lakh” when the money had to be reimbursed to the people who had done their bookings in advance.

Different cities react to these disturbances in different ways. While “Ahmedabad and Bangalore recovered in less than a week” observes Future Group CEO, Kishore Biyani, in “Hyderabad it took almost two months for sales to recover.” At a time when the biggest buying season across the country is fast approaching such terror strikes can certainly hurt the earning capacity of the retailers. The need of the hour lies in reassuring the customers of their safety. If the need be, join hands with the government to tighten security arrangements at all shopping malls and more importantly high streets (which came out as major targets for the blasts) that attract large number footfalls. This might involve shedding some sweat in order to develop a set of new SOPs (standard operating procedures) which focus only on consumer safety and ensuring that the customer feels secure while going out with his family.

- Vivin Wason

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