Retail Dude

So everyone is in recovery mode now after such a long and dark tunnel of recession we are able to see the rays of light coming toward us from the end of it. We are in a transition, and retailers are looking for a platform to jump quickly on the other side. While US retailers are waiting for fall festive season, in India its already festival’s aroma in the air and Indian retailers are leveraging it to it’s extend.  

Indian retail market which is US$ 511 bn. in size and is the fifth largest retail destination globally is becoming lucrative market for international retailers. But due to regulations on FDI in retail, they are still standing on the edge to enter India, and trying different back doors to get them involved in emerging economy which has been ranked as the most attractive emerging market for investment in the retail sector by AT Kearney’s eighth annual Global Retail Development Index (GRDI), in 2009. Ecommerce is definitely the one channel that provides retailers a global presence, but because of physical distances between countries, custom duty and merchandise shipping laws these etailing website ultimately divided into local domains and just serve local countries.

Indian ecommerce market worth approx. US$ 2 bn. and predicted to grow to around $6 billion by 2011. Currently out of which the major chunk comes from travel industry. Etailing only accounts 12% of total ecomm market of India. India’s etailing also divided into two categories –

1.       Online retailing like futurebazaar.com

2.       Online auction/marketplace like ebay.com

While online retailing websites are still struggling for their space, online auction/market place sites rules the virtual market and Ebay is the king of online space of India with about 1.5 mn. unique users per month but still its lame as compared to US ebusiness. Ebay still need to reach the critical masses and this only happen when Indian ecomm business is actually accepted my more people. There are many factors which restricted Indian population to use online channel for shopping but people are overcoming this and are willing to try this channel.

Ebusiness is supposed to be a global visa for retailers and utilizing the same ebay initiated “global easy buy” platform just in the mid of festival season which allows Indian shoppers to buy from international Ebay merchants directly (currently Ebay US) with international shipping and handling facility for all products. But for the international product you have to customs duties and international shipping charges which definitely make that international product little expensive but still u can enjoy global deals while sitting in your home, and even get Harley Davidson jacket delivered just before you going to blow a cracker on diwali. This is not it, ebay is also providing free gifts with your purchases and a mega gift in a lucky draw. Now these freebies can change your perception on international product’s prices.

Ebay again with its innovation trying to dig deeper into virtual market of India to reach the gold mine hidden below it. And I hope as a leader it will soon be able to see the tipping point of it.

Readers give ebay global easy buy a try and happy diwali to you all.

- Prateek

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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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Marketing today has become synonymous with pushing the brand in people’s face. What many forget is that branding is more about creating an awe for the brand through some unusual marketing ideas. Companies targeting niche always have innovative concepts up their sleeves. The 4^th outlet of Hard Rock Café in a short journey of 3.5 years which started in Mumbai in January, 2006, clearly augurs that the company is cautiously planning to map the length and breadth of the subcontinent by spreading it’s network across the country. The new 7,000-square foot cafe and retail outlet, India’s fourth Hard Rock Café, operated by franchisee India offers guests American fare in a rock ‘n’ roll ambience. HR Café is a name that resounds rock music in all it’s forms. Apart from being a cool place to hangout for the youngsters and enjoy their favorite contemporary rock artists, HR Café also caters to the taste of the old timers by housing a grand collection of greats such as The Doors, The Beatles, Jethro Tull, Jimi Hendrix, Led Zepplin and many more. HR’s story is a case study for many. The first lesson is to shift the focus to doing good rather than just sales boosting promotions. When more and more brands are promoting ‘Consumerism’ this organization still has it’s focus on ‘Altruism’.

The strapline, ‘Doing well by doing good’ is appropriate to represent its philanthropic strategy as put by Annie Balliro Sr. Director, Hard Rock Café. For Hard Rock Café, corporate social responsibility isn’t a primary marketing strategy – it’s an extra piece of the puzzle in the global business that helps strengthen the company’s brand. Every Hard Rock Café has what it calls a ‘local ambassadors’ programme, where employees – from waiting staff to marketing managers – choose their own outreach initiatives for their local community.

Another bizarre yet inimitable marketing concept that I came across was the Heart Attack Grill restaurant, which serves Quadruple Bypass Burger, Flatliner Fries and to wash it all down your body there’s Jolt Cola and not to mention No Filter Cigs!!! Jon Basso, owner of Heart Attack Grill Restaurant in Tempe, Arizona, has his own innovative way of doing things. Throwing away the traditional forms of advertising Basso chooses to advertise his joint by means of creating a controversy. I don’t think it’ll come as a surprise to you that he’s created an international fan following for his draconian sounding cuisines. All this without even spending one dollar on advertising.

Last but not the least, a London restaurant chain, which has declared it will not give any customers a bill during February. Instead, the customer pays whatever he or she feels the meal is worth (drinks are not included in the offer). Well, I’m sure the finance Gurus are straight away going to discard the proposal as totally delirious. On the flip side an innovative marketer, such as me, would look at it as a wizard of an idea in an economic downturn. Struggling restaurateurs would not be too comfortable taking a call on this. Maybe, just like HR Café, it is a philanthropic gesture too?
What do you think?

- Vivin Wason

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As all of us know that entire world’s economy is ailing because of recession. Companies are not able to beat the slowdown and are registering negative growth consistently. Though there is a glimpse of recovery but same is being look on as a temporary phenomenon as everyone is having pessimistic notion of the future.

To sustain in consistent slowdown, most of the retailers are trying to consolidate their business to cut down cost and register more profits. They are afraid of red figures in their books and are doing so to maintain there stock prices and shareholders. Many feel that this is rationalizing there business and will help them to have a long term sustainability.

But if we analyze, there has been a common trend among all companies who have gone out of business during Recession – “All of them went into Cost Cutting before dissolving”. It doesn’t mean that companies who are involved in cost cutting will go out of business. But then this process needs to be a rational one.

For instance, if a retailer decreased the number of store staff from 10 to 7 to cut down store cost, and as a result of this few customers are unattended during peak hours, then cost of lost sales should not be more than the cost saving from layoff. And this need to check by aggregating the result for a period having all kind of trends like peak and dip. As result may be favorable in dip and unfavorable in peak. Similarly many other factors need to be considered before taking a small decision otherwise the effect can be awful.

But there are some brands that are very much optimistic about recession and are considering it as an opportunity to expand optimally. Levi Strauss & Co. is one of such brands. Even after reporting losses, they are expanding there presence and opening as well as acquiring new stores. And I think that this approach is very wise as all resources are cheap during recession. Retailer can get cheaper real estate, merchandise, labor etc. Moreover, this will generate a sense of job security among employees which will in effect increase their loyalty and reduce the attrition rate during boom. Retailer will be able to have more market presence and visibility. And this will strengthen the market share during boom.

As per a study, 30% of the retailer will lose their business by the time recession ends and the remaining 70% will be stronger than ever. And only the retailer who will be doing things differently will be able to include their name in these 70% retailers.

- Rajeev Damani

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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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With slowdown in growth and Real Estate slump, many of modern retailers are resorting to rent renegotiation as a measure to reduce and control cost (fixed). Rent contributes to a major portion of a Retailers Fixed cost. As supply in Real Estate is exceeding demand, retailers finding it a good opportunity to renegotiate and reduce rents, which in turn will again contribute to the Real Estate slump. Retail majors like Future Group, Reliance Retail and Aditya Birla Group are renegotiating rent and they think that it is a part of long overdue correction in Real Estate sector. They have purchased or leased properties in peak periods for much more price than worth. Renegotiating rent will help them to reduce their cost by 20-30%.

Retailers are negotiating rent between 10% - 35% and even 40% in some cases and have determined that if rents are not reduced, they may relocate. For Future Group, rent accounts to 6% of sales which it intends to reduce by a percentage. Whereas Vishal Retail has been able to renegotiate rent for 500000 sqft of property for past three months. They have renegotiated rent by 20-25% and are saving Rs. 30 lakh per month.

- Rajeev Damani

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Rajeev’s honest post calls for a round of applause. Honest being the key-word. Here and Now.

It will not be untrue to say that the average urban consumer has lost significant trust / faith on the average business. We all seem to know that a Nike or Reebok “can” be bought at heavy discounts & why! That, unfortunately also means that apparently very “robust” brand identities have lost much of their values! And that we all seem to be in the know that what Koutons does, as an USP, is not very different to what the Benettons of this world offer, at Factory Outlets or Clearance Sales. Too many brands are on “upto XX%” discounts, for too long, to pull the perceived premiumness off!

So, what’s next?

One - Why can’t we (marketers) broaden our user-base, significantly? It’s already proven that FMCGs, which cater to almost the largest user bases worldwide, are the least affected by slowdowns. Yes, it IS definitely much easier to sell one garment & make a killing but then, let’s not crib when that “one” customer walks away! Premium should now become a dirty, very dirty word. Across products, services & realty!

Two - Having decided on #1, the second action comes naturally. Penetrate! No, Adidas does not need to do a Bata, yet. But, that’s the way to go. There were times when MNC brands & their custodians used to crack jokes about Bata. I am sure the tables have turned since. The kind of low-cost presence Bata has across most of India, the level of trust people still have in the brand, much more than make up for its decidedly stodgy marketing. Bata & Raymonds are two great retailing examples which have stood the test of time and even geography. There are many wonderful learnings we can pick up from them. And no, it’s NOT unfashionable to replicate success formula, even that of “grand-dad” brands.

Three - In steps one & two we may have managed to Buckle our Collective Shoes. Like Johnnie Walker & one Mr. Gandhi once preached….let’s start walking now! Walk the talk. Let our brand communications not try to project the “unachievable” aspirations any more. The bluffs have been called off, time & again. Why spend shooting in Monte Carlo when the buyer cannot possibly afford to fly to even Mumbai? Every bloody product & service went “aspirational” with a vengeance, in the past 3/4 years. It “was” easy, as the heavily misused (term) TG was so easy to fit-in, into such communication! That same TG is now nursing its deep wounds from Dalal Street to Wall Street, via Chanchalaguda Prison. Let’s get real boys!

Four - The foreplay ends here & out comes the unpalatable truth. We now know that ballistic rates of increments or career paths are History. So are possibly the obscene bonuses & incentives. How about a little bit of real, hard work? You know, it feels good, really good, to “earn” the pay-cheque every month. Try it, and you’ll sleep a happy one tonight. Well, if that erodes market-cap of sedative marketing companies…good riddance

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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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It’s nice to see Retail Dude getting into the role of adding value, to retailing professionals. Not many sites give away knowledge / insights without coughing up some fees. So, the effort is definitely worth recognising, more so in today’s context.
However, there are some very basic concepts which require to be understood-internalised-encoded to the retail gene, before anyone even aspires to be successful in this field. Unfortunately, most of such basic funda are never found on nicely bound text or reference books and somehow the much glorified “retail gurus” fail to mention “them”, either.
As I am not paid for parting with any useful knowledge (I do get paid for saying what I am “expected” to say, at august gatherings of bright managers) and also as the scenario looks very messy, I am tempted to share some of my basic gyan.
Whether they are “useful” or not depends entirely on the reader! As far as I am concerned, I do admit that most of them have served me very well, at the marketplaces, all over India.

1. India is NOT US or Europe - Therefore, all of us in retail MUST stop referring to such geographies, immediately. India is not even close to the Bangkoks or Singapore for that matter. But we do have some similarities as far as the captive audiences are concerned.
Therefore - Look inside & start from within. It’s a good idea to start with a month-long sabbatical, tour semi-urban & then semi-rural locations. Tour “with a purpose”. Observe with keen eyes HOW Indians buy, sell, merchandise, promote, hop across mandis with their wares, frequency of haats etc.
I can take a bet that after the trip, you would have learned much more than in the two years in your PGDMB or whatever stamped you “OK” for retail.

2. Now that you are back, try the following : Walk in to any decent organised retail, preferably during peak hours (it may be different across geographies). Once inside, rank “categories” by the number of shoppers actually “touching them or reading the labels”. Avoid “scheme or on-offer” merchandise, just for this exercise.

3. Come out, find out a CCD and compare the following : Which “categories” had similar interest, across the tour-markets & the organised retail outlets? Are they very different? Remember to discount seasonalities that affect consumer behaviour, if necessary.

4. IF you have found even one category where consumer attention is equally strong in both scenarios, you have a winner. Analyse why. What’s special about that category? Or is it one of the basic requierements in any household?

5. Have you learnt something? Great! Eitherway, do let me know.

6. This is only for the bright ones ;-P. How can you apply the same learning to create “more” attention in categories down the list? Are some categories not making any sense at all? You may be right there too!

I am eager to help, to re-orient those who ARE really interested to “master” retailing.
Those who were just riding the wave……well good luck to all of you.
May God create another wave for you.

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Here is a great opportunity to grab all the insights and tools you need to climb to the top. It is for those of you who are serious about making your mark in Retail Management and serious about getting results. Here are a few guides specific to retail success. Have a look at this “Success in Retail” bundle by DMSRetail and you will realize this is better than squeezing out retail logics from management fundas as most Retails Institutes still do!!

There is something for all of us (Professionals, Strugglers & Aspirants) in this success bundle. Let me go Profile by profile though I firmly believe no categorization in learning should be made. In retail there is a new challenge every day.

Retail Buyers, Merchandisers, Category Managers, and M.I.S people; the biggest nightmare for you all I’m sure is Retail Maths. DMSRetail has developed a Retail Math eBook for retail management. This book will give you all of the information you need to start using retail math with confidence. You will understand how to make the Common and not so common retail metrics, their formulas and calculations and what to do with the answers you get.

Store Managers, Floor Managers, and Category Managers; challenge is planning and developing a winning culture in the store. There are books which help you plan your store, design planograms, manage work hours, manage manpower and business.

Area Sales Managers (ASMs), Region Sales Managers (RSM’s), and Retail Operation Managers (ROMs); still wondering how to staff your stores and train them to achieve sales targets and goals.

Retail Recruiters and Human Resource Managers; always wondering how to evaluate retail employee performance and skills and hone them further. The book named “I succeed” employee evaluation system will help you identify employee issues, Set a truly motivational program in motion, Understand how recognition of employees’ strengths can benefit your business and confirm that your current organization is still working for you.

Customer relationship Managers (CRMs) and Customer Care Associates (CCAs); Customer service is never enough, it never seems to satisfy. Anyone who reads the ‘Retail Customer Service Fundamentals’ guide will know how to create a proper shopping experience at every touch point with the customer.

Retail Strategists and Retail Analysts; do you want a formula to step up your sales by 20% in next 6 months. Quantitative information will help retailers understand their customer potential and qualitative intelligence will improve marketing, messaging and targeting strategies. Combined, this intelligence offers retailers a data-driven strategy to increase profitability.

So guys if you are interested you can get hold of this DMS Retail Success guides by ordering online or even at some chosen book stores. Go ahead and benefit.

Happy Reading!!

-Roli

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