Retail Dude

What has caught up television in the last few years is the advent of Direct To Home services from some big industrial firms in india. Spwaned with poor and unreliable cable television services, the DTH technology have notched up a major share of the indian television distribution network. With the launch of Airtel’s service today, the space is sure to hot up.

At retail dude we are not intrested to give you a snapshot of the war that is there but of the war yet to arrive and the potential it holds for its marketing. Lessons learnt at each step. Tata Sky played an ace of timing to this market to become the clear leader. When Doordarshan and Dish Tv did all the hard work of educating the customer and creating this base, Tata Sky with its better service and superb launch timing, snatched the pie. A master stroke indeed. With communication firms dropping into this zone, this space has a lot of untapped features that will open soon to the customers.

Content development for individual DTH operators is yet to pick up. Exclusive channels can be easily be pulled of the sleeve for these operators. Having own daily soaps, news and more to your own channel. Showcasing, localised sports club events to zonal events can be aired by the operator which hold the rights to showcase it. Most operators are communication giants and have legs dipped into the movie business as well (Dish TV with Ecity Ventures, Big Tv with Adlabs and Sun TV with its regional distribution) and can come out with exclusive showcase of its banners. We have Future Media and Times media which already have become common at our retail outlets featuring brand advertisements. An individual subscriber base of a single operator, gives any retailer the power to touch them every single day. Advertising through the DTH service will be a boon to them. Nevertheless for this, the operators will have to shift a bit of their focus to the content development as well.

Now imagine you playing, Counter Strike on your big screen without having to move an inch from your couch. On demand services will open the flood gates to personalisation related to entertainment (movies,songs,videos) as well as work (reminders, meetings, emails). Just being able to connect through to the internet through your set top boxes will add a new dimension all together. Internet Protocol TV will make all of them possible. Aksh Optifiber have already launched iControl in Jaipur with BSNL partnering it. Since broadband penetration is not that high, DTH services are still slatered to score more in the near future.

Having said that, they may also be able to sell merchandise by just a few clicks of your very own remote buttons.(Imagine Tata Trent bringing their whole store through iTata Sky!). Customer feedbacks lie in front of you while you keep track of every single purchase made. Retail at its best!

I am certain this is not a distant dream. Happy viewing everyone!

Sudip

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We here at Retail Dude strive hard to provide you up-to date retail information, and along with that we come across a lot of research papers, news items, and get to know different retail personalities. So keeping in mind all the “valuable” things we come across, we have decided to offer you a new “Downloads“ section, where we would maintain all the downloadable retail information, which can be used by you at a later stage.

To begin filling up this section, we have uploaded our recent interview with Mr. Madhav Maheshwari, of Ram Das Mohan Lal Maheshwari, which is an well established brand in ethic wear segment in Hapur. RDMLM has been featured on IndiaRetailing before, as the shop has been able carve out a niche for itself during such competitive times, so we decided to have a follow up with Mr. Maheshwari himself, and get his take on the most debatable topic: Traditional or Unorganized V/S Organized sector in India. Grab yourself a read

- Sarthak

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Almost a year back, retail was most attractive sector and seeing the opportunity in the sector retailers were hiring in bulk. This hiring spree was nothing but an effect of their expansion spree. But now they are feeling to get rid of their extra flab. With slowdown in entire economy, everyone is looking for the way to cut cost. And as we know that biggest cost centre for any company is their employees, they are reducing it to counter slowdown. Apart from this companies are making internal transfers among group companies to meet requirements rather than hiring. 

Future Group has begun shuffling people among group companies. Around 200 people from Pantaloon Retail have been moved to other group companies. “We have moved 80 people from Pantaloon Retail to Future Learning and Development, which gives training for front-end staff,” said Sanjay Jog, head, human resources, Future Group. “Similarly, 65 people have been moved from Pantaloon Retail to Future Knowledge services while 35 people have been moved from Pantaloon Retail to Future Logistics.”

But strangely companies are also experiencing high attrition. If retailers are not hiring then where is this crowd moving? Are they changing sector? Or is it panic of slowdown?

-          Rajeev Damani

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Well the time of the year for which every retailer (no matter big or small) awaits eagerly is finally here. And how!!! Amidst all the terror threats, protests from the small store owners et al unwelcomed circumstances the organized players still look ‘bullish on the festive sales’. I believe it’s not just the big retailers who are sanguine up for the festivities in the air. Even the traditional retailers would like to cash in as much as possible in the days to come. In order to take the modern players head on here are a few tips which might come handy for such stores

Ø The Visuals – Looks Can Kill – And of course, bring you back to life (that is if your store has been facing a hard time in attracting and retaining customers). Though it is not advisable to overspend on your store décor, but who said only expensive looks good. Simple things like improving the store lighting, keeping the aisles clear and unblocked, and arranging a merchandise in a manner in which it is convenient to locate, is sufficient. Another useful advice would be making your salesperson dress in a more presentable manner and if there is no particular uniform then probably carrying a tag which say “How can I help you?” or “Allow me to make shopping easier for you” would sufficient to make your customers leave your store with a smile.

Ø Innovative & festival-centric services – Customers are more tempted to shop at stores where they find services which suit the occasion. For instance, around the time of Diwali offering a box of chocolates on every purchase (depending on the amount spent by the customer) or any other sweet would ensure a good word-of-mouth publicity along with more sales. Also it would give out a signal to your competitors that you are prepared for the occasion.

Ø Coming up with a shopping theme for your store – It’s not as hard as it looks. In fact one of the simplest things that can differentiate you from the clutter. In case, you are not as innovative, you can bank upon the mythology of the reason for which the festival is being celebrated and it is sure to give you a bunch of ideas.

Ø The Music – Please don’t stop the music. But, at the same time ensure that it makes the customers spend more time at the store, which in direct proportion to how much spend. Loud music with a lot of beats is not advisable as it could lead to customers spending less time in retail outlets, which could prove detrimental to sale figures.

Ø Connect emotionally with your customers – Touch the emotional chord. And, who better could execute this other than the traditional retailers. With long history of implausible relations with the customers, it is the easiest thing to ensure that the customers spend more than they actually intended to. Simply having a donation box at the cash till or having customers donate their old goods for a strong cause (for instance flood victims) and in return providing discount on a new merchandise (which you were anyway planning to give) is sure to do the trick.

Still not convinced. Try them and you will know.

- Vivin

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RNCOS has recently added a new Market Research Report titled, “Booming Retail Sector in India”. India is one of the most attractive destinations for retailers from all across the globe. Thanks to the entry of corporate, changing consumer behavior & lifestyle, increasing influence of western culture and rising income, the Indian retail industry has seen phenomenal growth in the last five years (2001-2006) and organized retailing has finally emerged from the shadows of unorganized retailing and is contributing significantly to the growth of the overall retail sector, according to the new RNCOS report.

Key Findings:

- Organized retail market in India is expected to reach US$ 50 Billion mark by 2011.
- Number of shopping malls is expected to increase at a CAGR of more than 18.9% from 2007 to 2015.
- Rural market is projected to dominate the retail industry landscape in India by 2012 with total market share of above 50%.
- Organized retailing of mobile handset and accessories is expected to reach close to Rs. 5000 Crore by 2010.
- Driven by the expanding retail market, third party logistic market is forecasted to reach US$ 20 Billion by 2011.
- Apparel, along with food and grocery, will lead the organized retailing in India.

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It’s official now, The Indian government has imposed a ban on smoking in public places with effect from 2nd October, 2008. I am not a smoker, and the ban really didn’t make me think twice, although some of my friends were of course furious about all the fuss. This got me thinking, about all the small cigarette wallah’s you can find at every nook and corner of Indian streets, some of whom depend totally on tobacco sales, although I doubt whether this point was taken into account by the Indian tobacco major ITC, while filling up for a stay order, but this really is concerning for me. This is something I used to consider as the magic of Indian retailing, think of a cigarette, and its there, not the whole pack, but just the amount you want. This is something which could explain the deep penetration of Indian market, and along with the tobacco business came different options, you could always find normal grocery stuff at these touch points.

I doubt whether there business is going to go down, as I have always doubted the implementation policies of Indian Govt. Still, if in force, will it effect the unorganized retailing in India? Whats your take on it?

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- Sarthak

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Retail Practice of McKinsey & Company recently released their report named `The Great Indian Bazaar: Organised Retail Comes of Age in India’. The report mentioned that organized retail in India will grow from present 5% to 14-18% of total retail market by 2015. It is expected to reach $450 billion. Apart from placing it among top 10 markets in world, it will also create 1.6 million jobs. As per the report, retailers can create a profitable operating model in five ways:

• Integration of real estate in their business model
• Creating and maintaining an effective and scalable Supply Chain
• Increasing Average Basket Size of customers by shaping and influencing their consumption pattern
• Talent Retention
• De-risk Margins

After giving deep thought to all of above points, I realized that there are few more factors which need to be taken care of. Firstly, Promotion Optimization as we see the average retailers these days millions of money in it and are hardly able to determine it’s effectiveness. Secondly, learning from present closures in retail, there is a need of strong Market Research. It costs a lot to open a new store but it’s more costly to maintain an ailing store.

Apart from it report said that retailers need to influence regulation to ensure proper development of retail sector as a whole. It also emphasized that Indian retail cannot grow by ‘cut & paste’ of global formats. India need to come up with formats specific to itself. This is evident from present condition of convenience store format in India.

However this doesn’t mean that unorganized players will go out of business. As per a report by ICRIER, though unorganized players are hit by organized players but still only a portion of them have actually closed because of competition. McKinsey’s report also suggests that 64% of buyers don’t mind paying more for convenience.

- Rajeev Damani

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“India will ‘certainly’ look at removing the cap of 51 per cent in single-brand retail”, Industry and Commerce Minister Kamal Nath said.

India already has 51% FDI allowed in Single-Brand Outlet, whereas 100% FDI is allowed in Cash and Carry business. However there is no FDI in case of Multi-Brand store in India due to wide political opposition. Allowing 51% FDI lead to entry of many luxury retailers into India like Louis Vuitton, Cartier, Armani etc. But now these brand is looking for 100% FDI. President of Louis Vuitton Yves Carcelle, who raised the question of removing the FDI cap, said, “Why will anybody come unless they allow 100 per cent?”

Apart from Single-Brand store, government is also pondering on allowing 51 per cent FDI in multi-brand retail of electronics goods, computers, sports goods as well as watches. But this wont be an easy task for them. However government will protect groceries and consumer goods for Indian Retailers. This move will come with various conditions like mandatory sourcing from Indian Vendors.

This move will lead to entry of brands like IKEA, Curry’s, Sports Direct etc in India. It will also motivate existing players to expand their presence in India. Louis Vuitton entered India in 2003 but still they have only 4 stores compared to 25 in China. “We would like to have the right to own 100 percent of our retail company rather than 51 percent today that is our request and we will continue to talk to the Indian authorities,” Louis Vuitton Chief Executive Yves Carcelle said. A recent survey done by the United Nations Conference on Trade and Development (Unctad) on 300 international retailers found that more than a quarter of them have either opened or are planning to open their stores in India if the country relaxes the norms further. Allowing 100% FDI in Single Brand store will encourage more luxury retailers to enter India as they will have a stronger foothold in one of their biggest untapped markets to date, potentially worth $15 billion.

- Rajeev Damani

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“Defination (Dhaba): A roadside eatery, quiet common in India providing scrumptious food to hungry stomachs, even at odd hours, with a cup of tea and that too at dirt cheap rates”

Highways give me a high, and the passion of driving runs deep in my veins, No, this post is not about my driving experiences, but about a more concerning topic - Food! Yes, I know, yours truly has another passions as well, delicious, scrumptious food, and this weakness has made me look out for the best roadside eating joints available on the roads less travelled, and food retailing of course is one of the sectors I keenly look out on.

I belong to the North part of the country, and a simple drive down from Chandigarh to New Delhi, would allow me to practise my passion of exploring food, now I can go on describing the best eating joints on NH-22, but that’s not the whole point. Somehow the government has woken up to the profits being made by these Dhaba’s - sans the taxes, and popularity beyond the control of the organized retailers (a.k.a Reliance A1), and then there was a demolition drive along my favorite parts of the highway! and then I moved onto new roads, Mumbai - Pune highway, I couldn’t locate many eating joints, but the emergence of some “organized” retailing was evident, with eating joints teaming up with petrol pumps, and providing one stop solution to the hungry stomachs, and during this interrogation I simply, unknowingly and unconsciously ordered my favorite Nescafe Frappe, had it and decided to move, and pat came the price - 40 Rs. - Freakin 40 bucks- for my regular cup of frappe? Was it not 15 bucks I last checked? Convenience charge eh? Inflation you say…

Somehow then, the glorious images of the dhaba menu card started circling around my head, how did they manage it? They were providing convenience as well, and some smiles along with it! and yet, I ended up paying for a service which was pathetic. They lived on numbers! and stick-ed to the traditional methods of bringing down the cost, which apparently is not visible to so called organized retailers, who are busy shifting stores more than providing the experience, and they blame it on inflation.

A simple search about “Dhabha” on Flickr landed me with more images of Dhaba’s opening up abroad, than India. We are somehow, in the rush of differentiating organized with unorganized are forgetting our core competency, we were always the cost cutters, the trend maybe a hit around the globe, but we have always had it, and it was visible in our Dhaba trend, a place where the whole of India, would sit under one roof, from a truck driver to a Mercedes benz, and enjoy a meal which would pack our stomachs, but would still go on. This is the fortune at the bottom of the pyramid, the books talk about, not the consumer but the retailer, and this is where the organized retailers need to hit upon, we are still a price + quantity + experience + relationship oriented market.

- Sarthak

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In my last post I added some P’s like “Planet” and “Profit” to the standard 8P’s of marketing mix, because like the old P’s - Product, Price, Place, Promotion, Packaging, Positioning, People these P’s also help retailers to understand their business and help them to reap the profit out of it. Most retailers just refer these P’s at the time when they find some difficulty in forming strategy for their business, basically these P’s form the pillars for the business of retailers. But something is there that can stumble these pillars and these are again….. P’s

Yes again P, Now you folks will say I am obsessed with letter P, yes you can say that as that my name starts with this letter but actually there is P Vs P situation quite prominent in Indian retail. Some P’s that act as a pillar for retail are now joining some new P’s and standing in front of retailers as a challenge. According to Steve Gilman, chairman, Big Idea, UK, there are 4P’s that are plaguing Indian retail. These P’s that are becoming challenge for the Indian retail sector are -

1. “Politics”
2. cost of good talented “People”
3. development issues of “Property”
4. supply of “Product”

Politics which is quite prominent from the scenarios of retail in U.P.  and W.B., every domestic retailer is bound to approach differently in different states. Apart from that is we ignore this internal and national politics and see the big picture in terms of international retail in India, they have limited options of franchising or wholesaling or operating as a single-brand identity in India and this is not what the international retailers want. Politics is very much affecting the retail scene in India.

Retail forms a major part of the service sector in India but still not able to get that much recognition as sectors like agriculture, manufacturing and IT. Ultimately not able to attract younger generation and experienced crowed to look retail as their career for future. There are very little recognised colleges that offer courses in retail and even those college don’t have any planned way to go about that course. Thus this growing sector is still thriving for good talented people.

AT Kearney’s GRDI makes India a booming place for retail. What does this mean more international players want a pie of Indian retail? but FDI is limited…. On the other hand what about the developers, if retail will grow obviously the retail space too. Mall space, from a meagre one million square feet in 2002, is expected to touch 40 million square feet by end-2007 and an estimated 60 million square feet by end-2008. Thus many international developers want to reap benefit out of it as soon as real estate prices are soaring high. But these developers take this as a pure business thing they just develop a mall and either sell out or leased out to retailers. Neither at the time of development nor after leasing out they involve retailers so that they can help them out in their strategies of finalizing location or partnering a consortium of other retailers to negotiate for space or even creating spatial design and layouts can cater to retailers needs.

I don’t think I have to explain the scene of infrastructure of India which is affecting badly the supply chain and ultimately the movement of products. For retail, a business of product selling garnished with service, this issue with the product supply is a big problem.

So these are the guilty P’s, I quoted the problem but didn’t pointed any solution because many of these P’s are not in the control of retailers, these are the national issues and  should be addressed nationally.

-Prateek Katiyar

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