Retail Dude

Few weeks earlier we heard that fruit and vegetables vendors have said no to Subhiksha on account of non-payment. Now it’s turn of FMCG companies. Majors like Emami, Dabur, ITC, Coca-Cola and Marico have delayed or blocked supplies to Subhiksha on account of mounting outstanding bills. Now the question is what Azim Premji saw in Subhiksha and invested? Subhiksha is possibly looking for an exit route too. Future Group and Reliance Retail have approached it for a buyout. With Azim Premji buying 10% for Rs. 230 Cr, its value can be estimated at Rs. 2300 Cr. But analysts feel that it has been overvalued. It seems that consolidation is picking up in industry. 

-          Rajeev Damani

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Finally, a step from the Confederation of All India Traders (CAIT), aimed at combating the organized retail giants. For some this might be one of the most laudable moves, by any such body, in the recent times. Well, a skeptic like me, can only wonder, how much relief would a move like this bring to the widely spread network of traditional retailers? You may ask, the rationale for behind such a thought? And my modest answer, a figure, which any retail professional can answer even if coaxed in his sleep. The figure of 12 million or 15 million (depending on which report you refer to), i.e. the number of traditional retailers in our country.

And, subsequently, the questions that arise - How many small kirana stores can we manage to train through a handful of “retail schools”? By when do we except to see even a transient shift in the way these stores are managed? According to Praveen Khandelwal, CAIT secretary general , the retail schools would aim at equipping “them adequately to retain their present hold and help them grow.”

Another area of concern lies in the “key areas” of focus for these retail schools. The aim is to include modules such as - improving the image of stores, planning of product range, reducing cost through stock management and cash control, and building customer loyalty. If I look at all these areas objectively, apart from stock management with main focus on ensuring optimum quantity at these stores, other areas seem to have more of a conceptual appeal rather than a practical one.

For instance, improving store image would certainly cost an additional investment. At the same time, for planning product range again demands investment in researching your customer’s preference, finding adequate suppliers. Not to forget, most of the traditional stores lack flexibility along with insufficiency of funds required to be spent on effective POS systems for keeping track of the inventory. Therefore, restructuring the product range for kiranas would be just like spending more on advertising of an already insolvent company. Finally, as far as customer loyalty goes, it’s an area where, in my view, none other than these very kirana stores already ‘rule the roost’. Rather, the mom and pop stores might have some useful tips for our modern retailers, who are willing to take the consumers by storm.

Mr. Khandelwal, your response please.

- Vivin Wason

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The title of the article has been borrowed from the article found at Knowledge@Wharton, Which helped me answer some of the questions running in my head regarding the complex consumer class in India, The statistics are right about India, its our third consecutive year at the top of GRDI and our consumer goods market is expected to reach $400 Billionby 2010, but we are the same consumer class, who have readily accepted the 100 bucks pop corns at PVR’s but bargain with the auto wallah on our way. We are the same class who have far exceeded any one’s expectation in the mobile market but still have the least mobile Internet penetration, The question is simple: How to capture this complex consumer class?

The article suggests that although the attitude is shifting towards consumerism, being individually poor but collectively rich is what differentiate India from rest of the world, with a large part of the population living below the mark of $1 per day, India still holds a tremendous untapped middle market, and this is what we all will agree to! Its our population which has turned out to be a boon for us, be it the outsourcing mania or now retailing, its the numbers which is making the heads turn towards India!

We can notice the changing trends, as more and more families gain economic independence because of the continued industrialization of the country, the focus of the consumer is shifting from the basic amenities like food and clothing to more advanced consumptions like mobiles and health care, but to capture these markets, retailers need to adopt to strategic mix of pricing and values, as we still are guided by both. A casual surf around landed me at the case of Ram Das Mohan Lal Maheshwari which has strategically crafted this proposition of both price and values, thus firming up the belief. The store, established 60 years back, has over the time offered an optimum mix of price and values, Which so far has skipped out of the hands of the new organized retailers, but this doesn’t necessarily means that the organized retailing is entirely at fault. Rising real estate pricing, and fresh money in the hands of the young consumers have made the numbers go wrong.

Although, Pricing and Values are a sure shot strategy of winning this question, the article suggests that recent researches have shown that the Indian consumer is fast shifting over to the products which are relevant to there experience, As Rajeev Karwal has cited in the article:

“Karwal cited the mobile phone as an example of a product that offers a high degree of functionality at a good price. “It is equipped with features such as a dust-resistant keypad and a built-in flashlight that not only aid truck drivers on India’s poorly lit highways, but also take away the villager’s embarrassment over the lack of electricity. Customized to the Indian market and reflecting the importance of price and value rolled into one, the mobile phone now serves as a great benchmark for market penetration. It is no wonder that the number of mobile phone subscribers far outweighs the number of Internet or credit card users in India”

So, its still a war out there, between pricing and values, and now a different virtue - Experince, Which is although new to a majority of Indian Consumers, but is fast catching up!

India stands as a challenge to all to management theories, I have the numbers, do you have the strategy?

- Sarthak

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As Retail Industry in growing in India, retailers have started considering it more as a science and are making all efforts to increase sales and returns. In the race of opening larger number of stores and showcasing their presence throughout India, they are missing the essence of Retailing. I visited a nearby convenience store by one of the most famous retailer in India, and what I observed was dirty store, entrance blocked by cartons, empty shelves, sore staff dressed shabbily, stinking, they don’t know where a particular product is kept and there is lot more to say. I know this was not a unique experience, almost every one of us must have seen it in your neibhourhood organized convenience store by so called organized retailers. I was just amazed that why are they doing so, then only my friend pointed me out that this store has increased the number of store they have and have increased their market presence at least on papers. Now they can proudly say that we have ‘n+1’ stores .

So, coming back to my topic, what I mean to say  that as everyone is considering science aspect of retailing and they are interested in only increasing numbers be it sales, returns, number of stores etc. There is no differentiation whether we compare malls or departmental stores or a convenience stores or any other format for that matter. All Malls give same kind of experience and feel as there are limited retailers who can afford to buy space there with inflated real estate prices. Consequently Retail mix is same in every Mall. Same Adidas, Reebok, Levi’s, Mc Donald, Pizza Hut etc. etc. everywhere. Similarly in order to stretch margins, all departmental stores also work on similar cost cutting strategy and give same kind of experience to consumer. All of them have similar kind of promotions, look and feel and similar brands other than their private labels. And private labels are generally such that you won’t feel like buy anything of them (this is where they are lacking in art of retailing).

What they need is to look Retailing as an art and try and make them unique and different from others. Developers of Malls need to rethink their Retail Mix and see what their competitors have. They need to find out ways that how can they differentiate from other. For example, there are many Malls in East Delhi, but EDM has tried to differentiate it from others by opening a section where small and local retailers can come and setup their stores. It sold shops to them at comparatively cheaper price and had a unique Retail Mix having players from both organized as well as unorganized sectors.

Apart from differentiation, the ‘Art of Retailing’ focuses on improving customer experience. Rather than investing on new stores, retailers need to invest on improving customer experience in the existing stores. This means better atmosphere, circulation, disciplined executives, nicely stacked shelves etc. 

Indian Retailers should learn ‘Art of Retailing’ from Wal-Mart. Despite being one of the most dominant player in their space, they decided to slower the pace in which it was opening store and invest on improving customer experience in existing stores. Needless to say that Wal-Mart is already way ahead of all his competition in all these aspects. But still it took such strategy.

-       Rajeev Damani

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Impact Retail a newly incorporated company is all set to share pie of $ 13.3 billion Indian Consumer Electronic Market. “We plan to open 30 exclusive Xcite consumer electronics showrooms in top 15 cities in the country by the end of 2009 with an investment of Rs 200 crore,” Srikant Gokhale, chief executive officer of Impact Retail, told media persons, after inaugurating the company’s first store in India at Hyderabad on Wednesday.

A typical Xcite store will have carpet area of 20000sqft and will house 3000 products from 150 national and international brands. It will also sell private label products under the brand Wansa. The store will give competition to retailers like Jumbo Electronics, e-zone etc.  

-          Rajeev Damani

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You guys must be thinking that I am crazy about Wal-Mart. But actually I can’t help it; there is always so much to post about this retail giant. According to analysts, Wal-Mart is currently reaping benefits of the strategies it took almost a year back. Almost more than a year ago, Wal-Mart decided to slow the pace of new store growth. Recently they have also decided of remodeling the existing stores.

H. Lee Scott, president and chief executive officer, re-emphasized the company’s plans to invest more in remodeling as it continues efforts to improve the shopping experience when he addressed retail analysts Thursday at a conference in New York.

As I have discussed earlier that Wal-Mart reported 3% growth in August sales which was almost double of Analysts anticipation, it was more because of its ability to foresee the future and take decisions.

Indian Retailers need to learn from Wal-Mart that it’s not important to open a store in a day or week rather it’s important to invest in improving customer experience in existing stores.

-          Rajeev Damani

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NSHM - Knowledge Campus, Kolkata & Lavasa Corporation Ltd. have entered into an agreement to establish India’s first Retail, Media and Thinking Management University in association with RAI (Retailers Association of India) at Lavasa, Maharashtra. The 20 acre campus at Lavasa is scheduled to commence from 2010 and the intake will be around 1600 students including international aspirants for wide range of courses.  

-          Rajeev Damani

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Azim Premji has acquired 10% stake in Subhiksha in a deal worth Rs. 230 crores. He is already having minority stakes in some other retailing companies like Koutons & Himatsingka. So, what’s cooking in Premji’s mind? Is he also interested in jumping into Retail band wagon?

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As a next step after resolve of Singur issue, Tata Motors is planning to use Hub & Spoke model for their most awaited Rs one-lakh car – Tata Nano. As per this model company’s dealers (hubs) in the city will be responsible for maintaining touch points through spokes in the hinterland. This model is generally used by two-wheeler companies (like Baja Auto is using it) but since Nano is targeting people using two wheelers too, this model will be beneficial for it. This model will ensure a deeper market penetration by Tata Motors. 

-       Rajeev Damani

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The title is “borrowed”, from S Mitra Kalita’s latest column on Mint.

Borrowed, simply becuase it touches a very sensitive chord. The opreative words are very & sensitive here.

Now, the columns had nothing to do, directly, with retail! So, why am I using its essence here?

Simply because retail, like most other “new” business processes in India, hinges almost entirely on human resources!

Yes, its a fact that we (the humans), most of the time, take humans (ousrelves) for granted!

We talk about globalising supply-chain systems, just-in-time procurements, lean-models and so many other techno-babblish topics. BUT, very rare;y about “us”!

Let me ask you a few very straight questions:

1. Out of the last 10 meetings & high-level forums that you have attended, how many were about hr?

2. In these forums / meetings, how many instances do you recall where you’ve found BIG honchos hunched together & discussing industry specific soft issues they MUST address? and

3. While a debate / round-table / presentation was on, what percentage of time was spent on the hr angle of the subjects?

Now, I do expect you guys to  sift out the contents from pure-play hr forums of course.

Be honest.

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