Retail Dude

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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We just “love” acronyms! ASSOCHAM, FICCI, IIT, NatGeo, SET et-ce-te-ra.

Oops! Forgot MBA completely ;-P  Oh My God, the title above can also be called MBA. Just joking!

There was this article on Mint, yesterday (read at http://epaper.livemint.com/Default.aspx?selpg=883&selDt=12/15/2008&BMode=100 ). Many other news-media have been reporting similar analysis, of the “Organised Retail” scenario, one after another.

Factually, retail takes 3rd place after economy & terror, on print media!

At the same time I find bold expansion plans or entry plans of new corporations, into this same hot-spot! What’s up guys? Agreed that organised retail has a very long way to go, from the measly 5% share. Also agreed that retail real-estate prices/rentals have “corrected” by at least 20%. And I do agree that FMCG consumption is likely to remain bouyant too.

Even then, how does it make sense to sink fresh investment in retail, at this juncture? Specially by the “unititiated”? If you read the Mint article carefully, you’ll find definite insecurities (about the industry), expressed in very subtle terms. Example: “If the organised retailers get on to the right model, it can grow by 20-25%”. Key words here - If, right model, can. All very “iffy”.

Big bosses like KB & others are all doing some “cutting-shutting” (remember that ad featuring two kids?) Which is very appropriate. Surgery is almost always the 1st resort. Chemo comes closer towards the end.

This scenario is very dicey! Who has so much surplus funds, to let them earn returns on such a long-tail cycle? If they do, why aren’t they investing the same in much safer (in the short term at least) ventures? Is there a grey area here?

India cannot afford to lose more money chasing bad. The effects will be catastrophic! I really hope we are not turning into a country run by Blind managers, following in the footsteps of our blinkered politicians.

Belt up, we are perilously close……

- Arnab

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I’ll start with a quote

“Collaborating with competitors involves yin and yang, two opposing and simultaneously complementary facets of a single phenomenon. This balance can create substantial value, particularly when the collaboration involves common processes that provide no competitive advantage.”  By Evan Rosen.

This was used, as recently as yesterday, by none other than the doyen of Modern Indian Retailing, Shri Kishore Biyani. He was concluding his key-note address at the Retail Summit : 2008.

Collaboration remained the agenda of his speech, which he admitted, was a very different strategy in today’s “New World Order”. In the same breath, he also admitted that his own speech, last year, was based on the ”Old World Order”.

It’s a pleasure. To find that our retail-gurus have finally removed their blinkers, in a hurry!

Hang on, hang on! Have they? What are the possible “collaborations” he’s touched upon?

Sourcing of merchandise, HR, Real-Estate & some other necessary services required by all organised retailers. Now, I’m not sure if ”these” could be called ”collaborations” in the real sense of the world or even by the quote above! This looks more like another word that starts with the alphabet C too: Cartelisation!

The Sales-Logistics-Marketing gurus attending the seminar would have definitely risen in unison when KB closed his address. To applaud. After all, terms like “collaboration” have this unavoidable connotations with others like “teamwork, networking, partnerships etc.”, all very “current”.

Our neighbouring country is keen to collaborate with us……on burning issues.

The august congregation inside the auditorium were, hopefully, sharp enough (sharpened by their enviable alma-maters, then their fast-track career demands & so on so forth), to read between KB’s bold lines. So, the applause must have been genuine!

Yes, we all love collaborations, as we all were born of at least one (notwithstanding Mamma Mia)!

Borrowing again from Rosen “yin and yang, two opposing and simultaneously complementary facets of a single phenomenon”, I’d have thought a different way to collaborate, for “real-success”.

Have the doyens considered collaborating with millions of mom-and-pop store across the country, ever?

That, can really turn out to be the latest definition of “collaboration”.

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These days came to fill some colors to the black and white balance sheets of american retailers, or we can say black, cyber and mobile days came to save the holiday season in this weak economic period. And as a result retailers not only got huge footfall but also an awesome sale. Some store managers quoted –

“Morning traffic was “awesome”, and “even better than last year.”

“I’m guessing it was about 85 percent credit and 15 percent cash,”

“People are happy, and few — if any — mention the economy.”

 As soon as I heard about these black Friday and cyber Monday, one thing came into my mind and that was Big Bazaar. It’s the only retailer in India who leveraged these similar occasions in India like “Maha Saver theen din” on Dhanterash and something similar even on Independence Day(I am not saying other retailers don’t do these kind of promotion but the kind of advertisement Big bazaar do just overwhelm all others). And because of this it made huge retail sales, regardless of razor thin margins due to offers there was profit, reason was volumes. But there is negative aspect of these days and that is handling tremendous traffic and rush, which Big Bazaar many a times failed to handles and same happen on Black Friday, retailers were unable to handle rush and on Cyber Monday most of the retail websites goes down too often causing inconvenience to customers. But in the last what matters were the sales for retailers and special offers to consumers.

And whats there in this for Indian retailers – a lesson to form a community not a competition and organize these days nationwide and organized retail wide, together they will be better equip to handle rush and to make profits.

- Prateek Katiyar

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http://thedailyretail.com/Retail_news/Indian_rn/article/index.php?article_name=25nov01&mailer=1

The first one, as usual, took a long time coming! Big boys, you see, use all the resources to extend the first rapture. The “partner” should not feel cheated or dissatisfied. If that means an IPO viagra, so be it. One BIG, shattering run on board then?

http://thedailyretail.com/Retail_news/Indian_rn/article/index.php?article_name=25nov03&mailer=1

Not as explosive as the 1st burst. But longer, sweeter, mellower. Took more effort as most of the stored resources were spurted out in the “urban, glam retail” push-ups (debut). But this is a wonderful lingering feeling, makes one a wee bit “floaty” and the ambience feels surreal like a foggy winter early morning. BUT that’s fine, as we will either need to follow the tail-lights of that huge 16 wheel tractor trailor from Wisdom Roadways ahead of us. Rest can stop for a while, have a cat nap & move with renewed vigour when the sun’s up and strong. It always is…..

http://thedailyretail.com/Retail_news/Indian_rn/article/index.php?article_name=25nov02&mailer=1

Almost Heaven….FMCGiana, no-ridge arbi chips, bathing by the river….

A slightly mutialted line, borrowed from “country” king Denver. So, finally we are all singing the same song…country roads! We had to take a looooong break before we could regenrate our anatomies, before they could rise to the real challenge again. BUT what’s important is they DID. Hansa (remember Khichdi, the terrific comedy series?) would be saying “suppukk” & the ever-confident “Prafuls” have most probably been “blown” (mind Silly) away by now! That article was close to Nirvana, almost….

http://thedailyretail.com/Retail_news/Indian_rn/article/index.php?article_name=25nov04&mailer=1

As expected, this was hardly pleasurable! But, nevertheless, this was the least I could do, while NOT being in Texas. Oh! How I want to convert, to the Church, under that “godly” Bishop…. No, there was no glamour, no Givenchy, no Satya Pauls, but pure “truth” in the new, toned six-packs we see around us, dragging carts, drawing waters, hammering red-hot sickles. They are glistening, without any make-up. Ready to give me my final bliss of the day.

My eyelids are getting heavy…I am fading out….my dreams are on their way.

India can & will shine, brighter, stronger, longer than any other state. We just needed a little re-orientation, to look at the market, rather than “marketing”. 

Thank you guys. 4 in a row is ”rare, very rare”. BUT you guys must get it “well-done” this time around. Not all the cutleries are as sharp as their B-Schools claim

- Arnab

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“While nothing is certain in India’s future, we can be reasonably sure that consumption will grow rather than decline… Every rupee in the hands of the millions at the bottom of India’s consumption pyramid means another meal, another purchase, another incremental boost to growth – no matter how miniscule it may seem. That is what the retailers are counting on.”

Borrowed from The new book by John Wiley & Sons (Asia) Pte Ltd, India’s Store Wars: Retail Revolution and the Battle for the Next 500 Million Shoppers.

While I am in complete agreement with the words italicised in the opening para, I am not very sure if the last sentence in the same para holds water!

Take a look at the day’s “retail” headlines:

ADAG goes e-comming: http://thedailyretail.com/Retail_news/Indian_rn/article/index.php?article_name=24nov01&mailer=1

The Indian retail sector will feel the heat of the global financial crisis, though growth momentum may stay in some areas, experts feel: http://thedailyretail.com/Retail_news/Indian_rn/article/index.php?article_name=24nov00&mailer=1

There will be many more I am sure. Naturally. Obviously!

It’s never easy to shallow pride, more so when the bold headlines even 2 quarters back gave the unassuming junta a very different story.

Don’t tell me that the “experts” on boards of various “respectable” retail ventures never saw it coming! That they had no idea how the shamefully unorganised Mom & Pop across the country will unite and deal heavy blows and that they were completely oblivious of the Indian economy heading for a well-synced chaos, in tow with the world markets!

IF they were, it’s time they returned their high-value certificates to their supposedly unquestionable alma-maters! It may actually be a good idea for such institutes to start a buy-back scheme. They can take the papers back & return a percentage of the fees they had charged, after factoring in PBITDA and other mouthful management terms.

IF the certified guys were actually in the dark about the imminent future, in any case they’d need all the fund soon, to put brakes on their quick slide, from Blackberry Class to Fevicol Bus-back Class!

Worse, however, is IF, IF, IF they “knew” and still decided to have a party with stakeholders’ money!

In this case, the stakeholders should ideally use their gym-toned, trainer-adorned right feet to target specific anatomies of such managers and put out full-page colour ads with mugshots etc., to pre-warn future promoters. Yes, I do agree that the job market can hardly afford another such literally knee-jerk, kick-123 shock, but then, there will not be too many to go to press with.

By the way, too few “talent” hunters were / are willing to undertake ample due-diligence anyway! So, they can, safely put their fat packets in Fixed Deposits & live on the 10.5% interest rates, for a while.

Wishful thinking….even fantasies you may say!

I will agree, for once. Nothing will happen. Very few will ever take the pain of exploring “their illusive” BOP and promoters will only be too happy to woo such mavericks.

It’s the public’s money sweetheart!

Another Sting of that exotic Tequila anyone….? No…then let’s sing…Roxanne….!

http://www.lyrics-now.com/S/Sting-lyrics/The-Very-Best-Of-Sting-_AND_-The-Police/Roxanne.shtml

- Arnab

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You heard it right, in coming months, this is what you could be ordering at your favorite cafe coffee day, or CCD as it is lovingly known. The news is in, that CCD is pushing the bar, and now plans to open 900+ stores by 2009, and with that, some new formats too, and this is not it, out of these new stores, they plan to open at least 50 of them outside the Indian boundaries. They currently have 595 cafes across 100 Indian cities, Three in Vienna and Two in Karachi.

Some of the planned store formats include, Cafe Day Square and Cafe Day Lounge, While the square format would be the flagship outlet, specialising into single origin coffee’s, The lounge format would be where they will experiment to give you a dine-in feature, by coupling food with coffee, and a slow ambiance for you to settle down. The third, but yet-not-disclosed format is speculated to be a coffee bar, with right attitude and music.

This article should be of a help to settle down your CCD’s exapansion queries, while I keep my fingers crossed, that the expansion plan is not inflated, and they don’t end up like starbucks, coz I love my Tropical Iceberg

- Sarthak

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This news did bring a wide smile to my bearded face http://www.indiaretailing.com/news.aspx?topic=1&id=2755

No, it was NOT the comment by Mr. Goenka’s, who generalised “his or his group’s own pov” as that of the Indians’! I am surprised by his “understanding” of the Indian “Consumer-Set” at the same time.

Anyway, what does make me happy is use of the following sentences, by very “qualified” retail managers:

1. it is the bottom of the pyramid where innovation will lead to sustainable consumer markets,

2. An encouraging regulatory environment and more physical investments are required to stimulate development,

3. No such thing as ‘average consumer’ exists in today’s consumer markets. It is very important to understand the diversity in terms of the type of consumers along with connecting to the consumers locally,

4. Customisation according to the local needs of the customer and simultaneously tapping the existing global opportunities is a big challenge facing the Indian retail business today,

5. Several resource constraints will provide the opportunity to rethink existing business and product models. Diversified product range, recreating value chain according to consumer needs & that India needs more innovative models like e- chaupal developed by ITC.

Though I am no visionary, I must blow my dusty, rusty trumpet sometimes!

It was around Jan/Feb’08, when I floated the idea of retail and real-estate entering dead-end-ahead lanes, on my Linkedin page. I also, in the same breath “publicly” offered a “fresh & unique business-model”, which could (and still would) add real-bottomlines to the retail business. If implemented, the model would have added at least 800 Crores to the wise retailer’s kitty, this fiscal. WITHOUT adding almost any cost! The messages should be available even now, in case you’d like to verify claims from a minnow.

Though I took pains to send the proposal to ALL retail big-wigs in India, no one bothered to even reply! As a matter of fact, my good friend Rajeev Karwal, who was tuned-in to this model, went to the extent of suggesting that I go ahead, on my own!

Today, when the big guys are feeling small in front of the mounting debt burdens, skyrocketing interest costs & dwindling productive footfalls, I do feel a perverse sense of vindication. Though it’s not really a sentiment I admire, there’s little I can do to be stoic about it!

Along with the times, the dimes that “can” keep organised retail “rolling”, if not “rocking”, have switched wallets…no, pockets!

Well, loose-change, in India, will always be the ONLY constant!

- Arnab

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As the store rents have dropped as much as 35% in last one year, retailers across the verticals have decided again to expand. But I hope this time they are doing their complete homework before reaching to any conclusion. Otherwise it won’t take much time for things to change. And we have already seen effects of such unplanned expansion earlier with closures in Ahmadabad and many other parts of country. I agree that rentals form a substantial part of a stores expense sheet but it’s not the only part. Apart from rentals there are many other expenses which a store needs to meet effectively like human cost, inventory cost, infrastructure cost, maintenance cost, electricity, etc. And at the end purpose of opening a new store is not just meeting expense but is to earn profits.

Here is expansion plan of some of the retailers:

SOURCE: http://www.rediff.com

-          Rajeev Damani

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At this time of great global economic hit, where everybody is trying to predict the future of retail, I thought to look back and have a peek into the history.

So folks, let me ask you a question – “Which is world’s first original department store?” I know answers will vary from Walmart to Macy to J.C. Penney but none of these are right. However, department stores were not conceived by Americans. Those were French who created Department stores and then Americans followed their example. Allow me to introduce a man who had the first real department store in Paris, France. A man named Aristide Boucicaut. His dry goods store was called Bon Marché and it was transformed into what we now call a department store.

Aristide Boucicaut, born on 14 July 1810,the son of a banker, he began as a simple clerk in Bellême before he left to become a fabric salesman selling shawls. In 1829 he settled in Paris. He set up Le Bon Marché as a goods store in 1838, but his innovations in distribution became most noticeable after 1852. After this the store grew to be among the, if not the, largest in Paris, where he spent the rest of his life. The World’s Fair in 1855 gave him further ideas on how to innovate. These involved the notion of browsing, greater advertisements, fixed prices and in 1856 a catalogue. His wife also played an important role in expanding the business.

Bon Marche differed from the specialty and dry goods houses that came before in four significant ways.

First, the initial theory of dry goods houses was to sell items with a high mark up and a slow turnover of goods. Boucicaut sold his merchandise at a small mark up. Compensating for this smaller profit margin was the high turnover of goods. The volume of goods sold and the speed at which they were sold differentiated department stores from the ordinary specialty shops and other dry goods stores. Another difference was that goods were offered at a fixed price in Bon Marche. The prices on goods would be the same for every shopper; a certain kind of equality was offered. Previous to this, bargaining in stores was not only allowed but expected. The third conceptual change made by Boucicaut was the custom of free entrance. Every person could enter the shop, inspect the goods, and be free from the obligation of purchasing anything. This denoted a shift in expectations; people were obligated to buy something upon entering the specialty and dry goods stores that came before this. The last major change that was instituted by Boucicaut involved the idea that customers could return the goods they had purchased. If they wanted their money back they could get it or if they preferred to exchange their returned item for something else they were allowed.

Boucicaut’s success was impressive. He went from a total of a half- million francs in sales in 1852 to five million in sales in 1860. Because of this boom, Boucicaut diversified his lines of merchandise. He started by selling only piece goods, and expanded to offer dresses, ladies’ coats, underwear, and shoes. These new lines were carried in the same store but in separate departments. This change occurred around 1860. Boucicaut’s new handling of goods and how they were offered represented the first real department store.

The United States was the first country to follow the French example. Though there were many successful apparel and dry goods stores, many of them did not immediately follow Bon Marche’s model. Stores like Lord and Taylor (1826), Jordan Marsh (1841), Macy (1858), Wanamaker (1861), and Marshall Field (1866) still limited their merchandise to dry goods and the traditional retail lines. The first stores in America that followed the Parisian example were A.T. Stewart of New York (that was later a part of Wanamaker), Wanamaker of Philadelphia, and Marshall Field of Chicago. This occurred in America in the 1870’s. These stores refer to Boucicaut as their source of inspiration.

Source: Virginia University

-Prateek Katiyar

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