Retail Dude

Retail was synonymous to word Boom in India before Recession. But like all other sectors, it also felt the heat of recession.

Now when India Inc. is recovering, it again seems to be the sector which is regaining its position with maximum pace. Many retailers feel that Retail was not that much affected by recession. It was only in the month of March 2009 that they felt downturn but from April, again things improved.

As per AT Kearney’s 2009 global retail development index, India’s largely un-modernised retail sector remained attractive to both domestic and international retailers, in spite of government regulations that prevent 100 per cent foreign ownership of retail stores.

We are witnessing inflow of large number of international brands in India. Walmart opened its first store last month in Punjab, and Tesco and Carrefour are also looking for JV’s. IKEA is waiting for Govt. decsion on FDI. Hopefully FDI in Retail will be relaxed in the forthcoming Union Budget.

With all these in place, I will like to ask readers whether they feel that there is a re-boom in Retail ?

 - Rajeev Damani

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Hello Readers,

We have opened our new Poll. Please feel free to give your response. Our new Poll topic is:

“Will Govt. increase FDI in Retail in Budget’09 ?”

Readers can post there views and comments on this topic as a comment to this thread.

Thank You,

-Team : RetailDude

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It was hot summer of Chennai which made me realize of this unique pricing strategy of Cola Companies. Few days back while quenching my thirst in a local cola shop in Chennai, I discovered how these Cola companies have strategically shift there pricing by selling 200ml of soft-drink at the cost of 300ml. I had to quench my thirst by consuming 2 bottles huhhh!!

It was few years back when these companies come up with the concept of “Chota Pepsi” or “Coke” for that matter. They offered consumers 150 ml of soft-drink for Rs.5. It was well accepted by consumers who were use to drink 300 ml. At this point of time both 150 ml and 300 ml (for Rs. 9) were available in the market.

Then after some time they increased the volume and price of small bottles to 200 ml and Rs. 7, though 300 ml was at same price. These companies discovered a new trend in consumers. They realized that still consumers prefer small bottles. This appeared as a great opportunity for them. Bingo!! The result of this we are seeing now.

Finally, these companies are now selling same “Chota Pepsi” or “Small Coke” at the price of “Bada” i.e. Rs. 9. And we without realizing this have happily accepted this. And the price of pet jar i.e. 500 ml has just increased from Rs. 18 to Rs. 20, where as the prices of 1.5 liters and 2 liters have been decreasing or is mostly with some offer like free my can or something. 300 ml bottles have almost vanished from the market now.

Hats Off to the pricing strategy of the Cola Companies who have been successfully able to sell 66% of the product at the cost of 100% almost in a phased manner and making consumer habitual and unaware of the increased price.

- Rajeev Damani

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Microsoft Internet Explorer, the most penetrated Web Browser in market with lion share of 72.2% is releasing Internet Explorer 8 today.

10 reasons why should we switch to IE-8:
1. Speed: MS claims that this new browser will be faster in all respect.
2. Accelerators Feature: It will allow a users to highlight text on a website and choose from a variety of functions, including search engines, language translation or map displays.
3. Private Browsing Mode: It allows to people block ads from companies that track their Web surfing habits across a number of sites, a practice known as behavioral targeting. 
4. Enhanced Security: Will provide protection against malware and known phishing scam sites.
5. Search Suggestions: Will help you to get detailed suggestions from your favourite search providers and browsing history.
6. Compatibility Mode: Allows user to switch between IE-7 and IE-8.
7. Web Slices: Will allow the user to subscribe to frequently-updated portions, or “slices,” of certain websites.
8. Enhances Tabbed Browsing: It will keep related tabs together, a feature from Google Chrome.
9. Favorite Bar and History: Helps user to keep better track of their Favorites.
10.Automatic Crash Recovery: I guess no explainations needed for this feature.

 
And the good news is that it can be downloaded from Microsoft’s website from 9:30 p.m. Indian time, for free by users of licensed Microsoft operating systems.

- Rajeev Damani

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In a move that takes inspiration from Apple and Sony, Microsoft recently announced that it’ll open its own retail stores “to create a better PC and Microsoft retail purchase experience for consumers worldwide.” The software giant looks very serious on this front, that’s why it has already appointed David Porter as corporate vice president of Retail Stores who is joining Microsoft from DreamWorks Animation SKG, where he was head of worldwide product distribution. No word on when the first store will be opened or what’s gonna be on the shelves, but looks like the main reason why MS is pushing so hard is “to create deeper engagement with consumers and continue to learn firsthand about what they want and how they buy.”

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Hi friends, there is a famous theory in retail that a customer shares his good experience with 10 customers whereas he shares is bad experience with 100 customers. By now you people must be aware that I love sharing my experience both good (Rathna Stores post) and bad (Big Bazar) on Retail Dude. Being a Retail Management professional as well as post-graduate, I can’t resist myself from writing whenever I experience extreme of customer service, be it good or bad, though max of time its bad

As the title of post suggest, it’s about me and my friend Pranshu’s’ (same guy who was victim in Big Bazaar’s case) experience with the famous makemytrip.com, which actually took our trip. We made one of the biggest mistakes by booking a ticket with makemytrip, rather than cleartrip, which we generally prefer. As we came into payment gateway of makemytrip, there was option for either credit card or net banking. We chose net banking and proceeded. It took us to our bank’s page where we made payment and after which it was directed back to makemytrip for booking information. This was the time when ‘java error’ occurred and we were not able to see booking details.

This is a very common thing which happens in online booking, I have faced it in cleartrip too. But in cleartrip, their customer care associates calls within four hours and get the thing done. Or else you can easily reach their customer care and get the thing done. But in makemytrip, this is like a big crime which you have committed. We called Bangalore office of makemytrip, which we got from their site. There the person who picked up suggested us that we should call on a toll free number which is only for Airtel users. So, again it was a big crime for us as both of us are not fan of SRK, and don’t use Airtel. So, she gave us a number of Gurgaon and asked us to call that number. It was a STD call for us but we had no other option. We called at that number almost 5 times, each time we were stuck in their IVR where a lady was speaking ‘Dear customer, all our executives’ are busy with other customers. Your call is important to us. Kindly hold the line.’ But though my call was important, it was getting disconnected after every 15 mins of hold. So, we wasted 1 hour and more than 100 bucks in it with absolutely no response. Therefore, we called back the Bangalore office. The gal their said that she can’t help us as it is not headquarter and hanged the line. I was amazed then why this number was displayed on site?? We called her back and asked if we can talk to someone senior in office. We thought that he must have some good solution. That lady connected us with a manger called Mr., Reddy and he was again a confused guy. He first said that the Guragaon number is a toll free, which was not actually. Then he said that all this happened as we used our debit card and bet banking, which is not properly well and so we should have used credit card. I was not able to understand that why they had that option on their site when it was not working at all??

Mean while we were able to catch hold of an Airtel mobile of a colleague and tried reaching their toll free number. We were connected once told all details and that guy was not able to help asked us to hold the line and finally hanged. By now we were completely frustrated, we decided to give a last attempt otherwise we will either go their office or will forget this booking and book with cleartrip. Luckily after 30 mins again a gal picked the call, we shouted a lot on her and explained. That gal said that her system is too slow, but she will help us by generating a booking number and we should hold the line. We refused to hold and requested to be online only. She took almost 45 mins to generate the booking number between which I was enjoying celebrations of some party in their call center too. Finally I got the booking number but I was said that confirmation of ticket will take 24 hrs. We are still waiting for the same.

I guess it’s high time and company like makemytrip should realize that they are in service sector and people intensive industry. So, they need to hire more as well as talented customer care executives and should render proper customer service. I still expect bad service from call center people but how people sitting in regional office can behave like this??

- Rajeev Damani

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A very Happy Republic Day to all our readers from Team Retail Dude.

This day for some years now is as synonymous with Big Baazaar’s “Sabse Sasta Din” which has now been revolutionized by increasing the number of days and other retailers following the same value sale for us Indians. But Value Retailing is usually a function of the frequency of the inventory being cleared by the retailers. The faster, the better.

2009 as we all know holds the adjective ‘downturn’ plaguing almost all sectors.But for retailers these are hard times to come, since they are at the end of the value chain. Organised retail is expected to reach $43.8 billion in 2009-10 compared to $7.5 in 2007-08 and clearly value retailing will be the growth driver. The retailers have a cut out task to create events for consumption and to make the consumer feel satisfied by making him feel, he saved money.

To quantify some recent events and news, Big Bazaar conducted an event called Flag Sales where prices for some 10000 SKU’s were slashed in Mumbai. Red flags were a 50% discount followed by Yellow (33%) and Green (20%). The stores appreciated an increase of 35% in sales. This was followed by the “Great Indian Shopping Festival” across formats with assured gifts in all purchase and now the “Sabse Saste” days. Clearly they are the forerunner of such events. To recall some more events which garnered value, was Trent launching an entire new collection under the tag “Fashion Yatra” to cater to the low income groups. After Maruti, Mahindra’s it was Tata’s who made headlines opening by their pre owned car business ‘Tata Motors Assured’ launching their first store in pilot basis across 15 cities. Infiniti retail launched “Croma Zip” an outlet which will only host fast moving goods in the shelves identified by the merchandising team. This is surely an effort to reduce the store size, maximize sales and increase margins. Croma also have now introduced their own private label as well to keep up with the margins. As most of us have been saying Private Labels will be another driver which will boost value retailing in the coming years. Even MNC’s have not discarded the idea of Value; Pepsi recently announced the launch of “Nimboo Maarke” flavor to be added to their Tropicana basket, which will be the lowest priced item in it, targeting lower segments and will rely only on volume sales. Surely this a glimpse of Value Pricing. But at some point there has to be a drawn line to ensure that the brand value is not eroded.

To increase Value proposition, Hypercity has now a “No Questions” return policy in place within 14days of purchase. As rightly quoted by Rajiv Nair (Hypercity) that “Value pricing can’t be the only USP, retailers must look beyond.” In fact international retailers like Walmart and Target have leased out excess space to McDonald’s and Starbucks respectively which again a brilliant way to cut costs from the retailer perspective and increase footfalls.

Thus the magic mantra for the retailers would be to grow more value for their own assets and increase value to the customers spends. We are sure to see many new initiatives in the months to come from our retailers, so we better reserve some cash for the best. After all, we know now that VALUE is the KING.

Cheers!

Sudip

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I got into an interesting debate with one of my friends, about how EMI’s are partially responsible for the current recession, and how they are like worms for the economy. Not having reached any specific conclusion, I have decided to throw the debate open to all the Retail Dude’s, Let me hear your views about EMI, is it or is it not the real culprit. Use the comments section.

Cheers!

- Sarthak Taneja

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Hello Readers,

- Retail Dude Team

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Shakespeare aside, we know that “what’s in a name” does matter when we talk of brand loyalists and switchers alike. Private labels have been in the recent past a force to reckon with when it comes to organized retailing. Till very recently, private labels where just another showcase in the apparels category mostly belonging to designer wear. But for now, you name it and they have it. Be it Food, Toiletries, Home Care or Electronics, retail houses have churned the shelf space to their very own brands to increase their bottom lines. Historically it came as a shocker when Pepsi’s Frito Lays had negotiation problems with Food Bazaar and thereby refused to supply welcoming the birth of Big Bazaars own brand Tasty Treats. For them, they say it has almost captured 16% of the markets.

Renowned retail chains have created brands which are sold from their own outlets along with the other national brands—but are up to 40% cheaper. They might not just cause envy but certainly saves precious cash from your wallets, and at the same time prove mighty beneficial to the retailers as well. “During financially tough times, people don’t mind picking up an in-house brand, particularly in the FMCG category,” says Harish Bijoor, CEO, Harish Bijoor Consults Inc., a private label consulting firm.

The retailers then take the necessary expertise of local manufacturers in some categories like food and grocery which has in fact given them a reason to smile. And since necessity is the mother of invention, local suppliers and manufacturers try out innovative products and ensure proper delivery of goods just to make sure they don’t loose a client. “In food, private labels are 25-40% cheaper than national brands, whereas in apparel, they are 15-20% cheaper,” says Atul Takle, head, corporate communication, Pantaloon, Future Group.

But doesn’t that necessarily mean that they are of inferior quality. Actually retailers are now offering guarantee and have after sales services to their brands as well, just to shake up that myth of quality. So if it’s more of product value and quality, in-house brands provide you with more choice and a lesser hit in the pocket. It also provides a strategic advantage to the retailer (unique products, pricing, demand control), since it can control movements and play with the cash available. The private labels are not advertised, which gives much more breathing space, which gives you an idea why are they cheaper. For instance, in apparels, a national brand spends up to 35% on manufacturing, about 7-20% on advertising, 6% on distribution and the remaining on sundry costs, besides retaining a margin of up to 15%.

The brands Stop from the department chain Shoppers’ Stop, and Fresh and Pure from Food Bazaar have become fairly strong labels. And by the same token, manufacturers might attempt to invade the retail space themselves as Raymond has in garments, or even set up their own channels for the consumer as Unilever did with Sangam, an online grocery service. So we never know that Private Labels can splinter up yet another revolution with the manufacturing firms themselves. Rest assured that the common man is again the gainer.

His insights into the private label way of retailing can be found in this presentation which was delivered in a PLME conference in Dubai last year. The presentation has great insights. Please find it here. http://www.4shared.com/file/77514158/e398cf6/PLME.html

The emergence of organized retailing has definitely made Private Labels a reality; however there are greater need to knowing the role and timing of these in-house labels. From across formats to the retailer push to promote them, there is a galaxy of things that can be done.

But certainly “What’s in the name” if we can save a few greens uncompromisingly.

Wish all our readers a Merry Christmas!

SUDIP 

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