Retail Dude

Guest Post:

When we say that the market is changing we should ask ourselves who is changing the market? If it is not you, changes done by your company will not yield significant gain.

I am going to discuss changes in market dynamics with respect to introduction of new products. If a company is not leading the product innovation in the market, company is bound to compromise on the bottom line. In such situation the new product will be new to the portfolio of the company only but not to the market. A real new product introduction means surprise to market.

In one of my earlier post I discussed the correlation between new product introduction and market share. I listed some variables like working capital of channel, rotation of working capital and pace of introduction of new products should be properly planned well before laying out the product road map. It seems theoretical but I convincingly suggest to focus on following parameters at the time of introducing a breakthrough product to make sure that the planed gains are intact:

1. Pace of introduction: It is a philosophy of a company’s strategy which defines dynamism and youthfulness. High risk with high returns. If executed properly, it will establish a product leadership image of the company. Every successful introduction will fetch a yield, during its life cycle, much more than the cost incurred in ten mediocre or failed introductions. When we say pace, it’s important to assume the competition will copy it in no time. Pace is introduction of real products in the market, consistently with a motto to surprise expectations of the customer every time. In competitive environment it will give you a first mover advantage with better sales realization and in monopolistic environment it will increase barriers on entry of competition. The pace of introduction can be decided based on the intensity of existing competition.

2. Working capital of channel: Only new product introduction may not give the desired growth. Think this in a way that if cumulative working capital of all the channel partners is constant, the retail will only replace the existing portfolio with new one. This may give better top line because of higher realization from new product but overall volume will remain constant. If a company’s thrust is to expand, the sales volume will increase only with increase of selling capacity of the channel. This can be done with penetration into untapped market. More distributors or more retailers means more working capital. If such distribution plans are in place the real volumetric growth of new products can be assessed.

3. Cycle time: Or the speed of rotation of working capital of selling channel. This is the area which any company in any industry will love to improve. This is also a measure of supply chain performance. With the proposed implementation of GST (in India) we will see a radical shift in collaborative supply chain management with better distribution at lower cost. A longer term strategy on depot and inventory planning in line with product road map and futuristic capacity planning is required.

This is a guest post, the original article can be found here: http://santoshsrivastava.wordpress.com/2009/10/24/surprise-expectation-of-consumer-every-time/

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It is considered as a part of CRM but actually it will empower retailers to uplift their bottom lines. The new trend is here and it’s known as Social Commerce. It’s not long back when we heard about e-commerce and m-commerce, many retailers are still experimenting and evaluating these concept. And this Social commerce is an add-on to these previous concepts. In the market there is lot of buzz and talk about social commerce but some analysts are predicting that the concept will take over market by early 2011. But you can visualize some minor elements of social commerce even now like rating system on most shopping websites, customer’s testimonials and their blog hosted on retailer’s website etc.

Forrester analyst Jeremiah Owyang told CRM magazine about the past, present, and future state of the social Web, and he categorized it into five overlapping eras –

1. The era of social relationships: Beginning in the mid-1990s, people signed up for online profiles and connected with their friends to share information.

2. The era of social functionality:As it exists today, social networking is more than just a platform for “friending,” but one that can support a broader array of what Owyang calls “social interactive applications.” However, identities are essentially disconnected silos within individual sites.

3. The era of social colonization:By late 2009, technologies such as OpenID and Facebook Connect will begin to break down the barriers of social networks and allow individuals to integrate their social connections as part of their online experience, blurring the lines between networks and traditional sites.

4. The era of social context:In 2010, sites will begin to recognize personal identities and social relationships to deliver customized online experiences. Social networks will become the “base of operation for everyone’s online experiences.”

5. The era of social commerce: In approximately two years, social networks will be more powerful than corporate Web sites and CRM systems, as individual identities and relationships are built on this platform. Brands will serve community interests and grow based on community advocacy as users continue to drive innovation in this direction.

Click on Image to enlarge it

-Prateek Katiyar

Source: CRM magazine & Forrester Research

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“Organized Retail to touch $ 45 billion mark by 2010”. Does this sound outlandish to you? Well, this was the headline in a daily publication called Midday dated 11/1/07. And, the figures are taken right out of the India Retail Report 2007, released by Retail Association of India. Looking at the present day scenario whoever projected these figures might want to look back and certainly make a few corrections here and there. As it stands today, the retail business amounts to only $ 18 billion. If we peak a bit more in the past in 2006 Retail was projected to grow a handsome 37% in 2007 and 42% in 2008. Any guesses as to how much did it actually grow? “We had assumed a GDP growth of 8% to 10% during 2007-12 in the report” adds Joseph who headed the ICRIER team researching on the impact of modern retail on small outlets as per the directions of the Union Commerce Ministry. He sums it up by saying “this is now impossible, at least for the current year 2008-09 and the coming year.”

So that gives us a good idea as to why a number of retailers felt like packing their bags while others just started pulling back their resources. “We had expanded rapidly; most of the growth was debt-led. The company had planned to raise equity during 2008 and was close to doing so in September when calamity hit the global markets” says R. Subramanian, MD Subhiksha (once India’s largest retail chain). The first evident rationale is the erroneous projections or rather over-projections, as most of these organizations went by things as they looked on the face of it, eventually having to face the music as none of these projections came true.

Second, imperative reason for the failure of retail chains has been splurge of investments in real estate. Though, the retailers cannot be exclusively blamed for this reason. Even till date there is no governing authority which controls circle rates for properties, and restricts them within a reasonable limit. “Those who had big expansion plans had [acquired] real estate earlier at much higher prices. They are now re-looking at their expansion plans and renegotiating the rates” observes Gibson Vedamani, Director, RAI. Why would they no, Mr. Vedamani?

Third, the delusion in the mind of organized retailers, that with the advent of organized retail the consumer focus was bound to shift. “Mom-and-pop stores could become part of the system, benefiting everybody.” Personally, I would not agree with the fact that the retail sales of the kirana stores shelves has actually gone down in the past few months. It’s just that the anticipated pace with which the companies expected to the consumer to shift from unorganized to the organized stores which did not quite realistic. This specifically applies to smaller towns and cities where value retailers like Vishal are sailing in troubled waters.

Fourth, the only value proposition which most of the retailers relied on for luring their consumers was discounts. Many a times this lead to drop in quality of the merchandise being sold. All but a few retailers tried to introduce promotions that went beyond price offs.

Fifth, would be a coalesced effect of the a number of factors such as insufficient investment in strengthening back-end operations, inability to retain talent, in turn leading to high attrition, lack of sufficient support in logistics and infrastructure, inefficient supply chains and lower quality produce.

If you are a retailer..don’t sigh. Just hang on for the next post as it’ll be the answer to all that has gone wrong in the past. And, surely enough I won’t be projecting any figures.

- Vivin

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So it’s about touch point, about reaching customers, about giving them information with experience and in return collecting information of customer to ensure future communication’s standard and again a good experience in that for the customer & it’s also about conversion rate, about an appeal to a potential customer to become a customer. In this tech. and digital age retailers have lots many tools that they can use to enhance customer experience and can increase their reach. But when, which and why they should use these tools is totally dependent on their requirements and return on investments. So I am not going to provide any guide on how to approach these tools but instead going to introduce a new touch point for the retailers which can be beneficial for their business. The tool named mobile and cellular marketing(also involved interactive marketing), which were there for some time now and retailers were using them partially like sending text message alerts , using bluetooth to send new offerings and offers etc., but with the launch of iPhone (touch and 3G) boundaries seems to be limitless. But now you wonder whats their in iPhone for a retailer. So some facts and figures for you -   Apple surpassed a number of  12 million as far as its sales in 2008 was concerned and this surpasses the expectations of apple who decided to achieve a mark of  10 million as a sales for 2008. This growth is coupled with 93 percent of iPhone owners who have added an application, it is clear that brands have a new and powerful marketing channel that they should embrace, as this will provide them a base of 10+ million potential customers whom they can reach with only one application in iPhone. There are thousands of applications in Apple’s Appstore and more and more are added daily. Some retailers already taken a step of initiation and launched their application for iPhone, to name some are – Amazon, Target, Gap and Sam’s club and many more on their way to do so.

Now the question is what kind of application a retailer is supposed to develop for an iphone. So a retailer can opt for an application with features like –  

1.        Get location of a nearest store even direction to reach there (using iPhone’s GPS), or call the store directly.

2.       Get a Detailed catalog of products and services as well as hours of service for a store.

3.       Get an update on offers/schemes/events etc.

4.       Promote products and use apps as a channel of marketing.

5.       Capture details of customer for CRM/Database.

6.       Food retailers/QSR/restaurants can get order from iPhone and get the food ready while the customer arrives. This will reduce delivery time a lot.

7.       Fun filled apps mostly seasonal and used to promote specific products

Apart from this there is no limit of how creative you can become in terms of application.

So far I talked about iPhone applications but as more and more smartphones are venturing into market the same principle can be applied albeit with a different feature set,  as Research In Motion launches the BlackBerry Application Storefront and Application Center, and Google’s Android gains wider adoption, also Nokia is planning to launch its music and application store this year. So this new medium should be leveraged as this involves less investment and greater returns plus reach - a digital touch point for retailers.

-Prateek Katiyar

P.S. - Readers are invited to

• Give viewpoint on “Whats there in digital touchpoint for Indian retailers”.
• Provide ideas for applications you want to see from your favorite retailers(Indian+global).

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Before proceeding to the main topic let me build up some context. I will first of all like to define what touch point means for a retailer.  Actually touch points are the instances of interactions between retailer and customer/potential customer. But take these interactions into broader meaning, because in retail if a window display attracts a customer to a store, this eventually comes under an interaction. So keeping retail business in mind I categorized these touch points in two broad categories –

1.       Active touch Points

2.       Passive touch points

Now the active touch points are those where a retailer/associate/customer facing group has a face-to-face/phone/email interaction. But a passive touch point includes advertisement/windows display/store atmosphere/word of mouth etc but these also have equal amount of influence on customer as compared to active touch points. Further these two touch points can be divided into “Managed touch points” like store atmospheres and the customer facing group these things a retailer can managed according his own wish and can also manipulate things , but there are some “Non-managed touch points” like word of mouth on which the retail don’t have any control.

But now in this era of technology one more dimension has been added to the touch points for the retailers. Now we can classify touch points for the retailers into –

1.       Traditional touch points

2.       Digital touch points

Traditional touch points are the touch points which include store display ambience etc, customer facing group, and TV/banners/Radio advertisements. But the digital touch points are those which involve websites/email/mobile SMS/MMS or Mobile applications.

Internet is here for many years now and maximum retailers now know the potential of web and are using it as a good touch point for their customers. This not only increases the reach of a retailer but also facilitates customers in many ways most prominent of them is convenience and time. But with the evolution of smartphones and the launch of much talked and promoted iphone this interaction/touch point reached a new height about which I will talk in my next post till then happy reading guyzz ………

-Prateek Katiyar

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And now, George Bush is the new proverbial ‘boot dodger’. The newfound proverb applies on a person who gives a last shot at saving his a** after making false promises and fake pretense. The surprising fact about ‘boot dodgers’ is that one can find them in all walks of life be it cricket, politics, business et al. Though, the concern for us, retail professionals, remains the increasing number who belong to this category.

Some of us might be able to relate this concept to the ‘Gap Model’ under retail marketing. For those unaware, the gap model constitutes four types of gaps viz

• Knowledge Gap
• Standards Gap
• Delivery Gap
• Communication Gap

All but the Communication Gap pertain to the internal loopholes within any organization. Communication gap more about the company’s positioning in the consumer’s mind. Simply put the communication gap means the gap between what the retailer advertises and what he offers. A boot dodger situation arises when the retailer makes big promises, about his service/quality et al, without having the sufficient resources to fulfill them. Though, he does manage to generate a few footfalls, but in the deal causes consumer’s disappointment, which can cost him plenty in the longer run. So in order to revive his sales the retailer gives a last shot at regaining the lost consumers with the age old trick – ‘discounts’. For some it does work, but for most it’s too late, as someone has already taken the retailer’s hot seat by then (pretty similar to what happened in the Bush case).

Moral of the story

For Retailers - Honesty is the best policy

For Consumer – Identify a ‘Boot Dodger’ well in time

- Vivin Wason

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Why should a consumer pay for cheese and get butter? Why should he be charged for a pen that does not write; a refrigerator that does not cool and an LCD which has already been used by store staff (reff– Rajiv’s article 2^nd dec)?

Many a times we come across goods and services that are not up to the mark and do not meet our expectation. (By expectation I mean those features which the producers or service providers promises to deliver or should deliver). Some times the problem can be resolved by accelerating the issue to higher level but at times these measures are unavailable or they simply don’t work. A layman is handicapped and wishes some system; some mechanism must be in place to punish the retailer, to pacify the action and to give justice to the biggest player of the industry – The consumer!!

If we refer to the Indian Legal structure we have Consumer Protection Act, Sales of Goods Act, bla blah!  But knowing the Indian legal system I guess hardly some fraction of our population is seeking relief via such routes. Though the three tier consumer dispute forum is useful many a time, they take lots of patience and time. Another problem with this system is many of us do not know law and hiring a professional service is an expensive choice.

Having said that it doesn’t mean that choices for consumers are limited and they have no way to deal with these kinds of situations. The first remedy is to always bring the issue to the notice of senior management. Well that at least is a benefit of buying from the organized market. The staff at store level might be inefficient but it doesn’t imply for the entire company. Many a times I have got amazing response using such mode.

If this doesn’t work there are blogs where you can post your experience and the company responds to it. It works as in this competitive market no one can afford to lose their reputation in the market. Im sure Rajiv must have posted a word at Big Bazaar blog, and if not his article here will sure reach the right ear soon.

Finally even though our legal system is not very consumer friendly there are lots of NGOs who provide professional services for a nominal fee of Rs. 200 – Rs. 500 p.a. and takes care of all legal proceedings on your behalf (obviously this you resort to when the problem is major) Many a times it works wonder as people get on their toe after receiving a legal notice and are ready to settle the claim at the earliest. Besides, various industries such as banks and telecom have separate grievances handling bodies and complaints to these bodies can be made online through the links provided on their websites.

But all these measures are insufficient and what can actually remedies the problem is the efficiency and diligence on the part of individual, companies and management to understand that they are part of the big value chain and if everyone does the work they are supposed to do effectively we can force changes.

-Roli

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Being a Post-Graduate in Retail and a RetailDude, I was not able to avoid writing this post. It basically covers my experience in Big Bazar near one of the busiest area in Bangalore i.e. ITPL. It’s a big huge outlet but lacking at all the so called customer touch points.

During my Post-Graduation, I was lucky to be taught by one of the most renowned name in the field of CRM i.e. Prof. Mukesh Chaturvedi of Birla Institute of Management Technology (BIMTECH). I will not write about him in this post as this space will be less and I won’t be able to do justice to his Knowledge and Experience. But the insight he gave us on how can we increase customer service by using customer touch point to our (Retailers) benefit helped me to understand that how bad is Big Bazar at it.

I and my friend Pranshu went there to buy a 21” Television which was already selected on net and we just went there to pay and pick. My dissatisfaction begin from the baggage counter (1st touch point) where the person refuse to keep helmet of my friend and said that it can be kept only if we can adjust it somehow in our bag. Anyhow we carried the helmet with us. Then as we went inside, air conditioner was not working and store was stinking. People didn’t had much idea that where exactly electronics department is located in store. Somehow we managed to know that it is in 1st floor. When we went there we find some televisions with a layer of dust over it, but no executives to assist us. After a little bit of search we found that all executives were busy watching a South Indian Movie in LCDs which were displayed for customers. I can’t tell you how badly they were using that LCD. How can someone buy this used LCD at the price of new one? When we went there we asked the department head that we want to look for a 21” television. That dude didn’t even bothered to look at our face and pointed an executive to assist us while he continued with his movie. We were feeling very much sorry for the executive whom we interrupt in mid of the movie. So, he asked us what you want and very quickly told that what the options they have are. He was actually in hurry as he was missing important scenes of the movie. Somehow we felt that we should not disturb him anymore and we decided to go back.

I came down and enquired for customer service desk. Thankfully it was in ground floor only. There I find a group of employees chit-chatting. I went and briefed my experience. They said this is something which is happening on regular basis why don’t you write a complain. I was shocked to know this again. I wrote a complain and left with a feeling that nothing will be done for this complain.

I don’t have any enmity against Big Bazar. I have earlier had good experience in Big Bazar near my home in Delhi at EDM. It is just the result of expansion drive with which they are not able to provide uniform experience at all of their stores which is ultimately reducing customer loyalty. It’s happening in almost all the companies in this format. We cry that we don’t have sales, cost are increasing blab blab. But this experience shows that how we lose customers who come with a fix mindset of buying a pre-decided product. Result was that we went to a local dealer and bought the television where we had a very good experience. And I don’t think that I will enter any Big Bazar store in near future!!

- Rajeev Damani

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