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

 Email  Print Make a Comment »

Dear Readers,

As rightly said by Prateek and carrying it forward, the social commerce moves are definitely undergoing a facelift and change.

The change is also evident on how the cookie crumbles when it comes to marketing and business development. India over the decade has seen the boost of growing entrepreneurs which is a direct equivalent to the potential of the growing markets and the innovative quotient. The advent of social and professional networking seems to have opened a whole new platform of business development. The latest to join the bandwagon is Twitter, whose convenience of access through mobile phones and short text formats have yet again changed the way of communication.

It all started with the advent of Ebay who filled a gap of providing a platform for online sales to individuals. And now social networks are touted and been proved to be the next gen marketing tool.  Although the usage of a particular network is a bit sporadic shared by My Space, Orkut, Facebook, Linked In and now Twitter to be the lead flavor of the season. Although there aren’t standard rules but each of them uses their own policies and thus the exploitation of the community. If the service or product is too niche or too rural then the social vehicle is definitely not the medium to promote it. The best thing about this medium is the level of personalization that it can create to every individual user. It’s like a big loudspeaker that has enough takers online. These are the ‘Mavens’ who being the prospective customers are not afraid to explore and are hungry for information.

Imagine the benefits to organization that are actively using these mediums. Every community can be specific to a set of clients and customers. The website traffics could also be reduced significantly through these branches during recession and also amplifies during a product launch easing out costs complementing an effort to go green. Advertising revenues per click also gets a new face. These communities help build healthy leads for a sale or association. The new breed of entrepreneurs couldn’t have asked for a larger audience to be heard and cater to.

Social media is as good as word of mouth and therefore has its own share of the bad. Organisations like IBM had interpreted this very early and therefore set up a special team, that looks into major forums, sites and communities looking for every feed on IBM, either for a product or service. This group monitors every discussion trying to filter a genuine concern to bogus reviews from a rival. Although it provides a great test market as well to acceptance, but at the same time runs the risk of discomfort to a brand presence. You might as well have seen founders and CEOs who also are actively present in these networks only reiterating a fact that these groups needs decisive inputs from the decision makers themselves since it’s almost like a media release.

Social networking is definitely the next big thing if taken care of until the 3G networks hit India which would surely see a burst of M Commerce and application, all hand held for the KING.

Here is a small presentation that peeks into some other forms of marketing tools that are still strongly present although getting a little old. But old is still gold. http://www.4shared.com/file/124057358/5129e2da/Alternative_Marketing_Vehicles.html

Cheers

Sudip

 Email  Print 3 Dudes Commented »

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

 Email  Print Make a Comment »

Hello Readers,

A sudden brew in the coffee mug of India spurred this article!

India forever has been a contemporary tea drinking nation than anything else. Although coffee was predominantly popular down the southern states, the up class nature of coffee bars made it popular across the country. What clicked with all the retailers was the young and deep pocketed urban youth of India. These cafes perfectly filled the gap of a nice comfy place to hang out with your pals or that sophistication of breakfast meetings.

Clearly, with India’s middle class aspiring to be in sync with the global culture almost all the major coffee chains of the world (Starbucks is still in the picture) were hungry for the country. An express growth lured all of them. That led to the “superlative experience” of these outlets. Products in a wide range of variants that included not only hot coffee, cold coffee, coffee add ons, powder coffee etc but also other drinks and snacks. Actually in most joints tea also made to the menu, which would be touted as adapting to the local environments. The chains have also been adopting state-of-the-art store formats and some even offer wi-fi access to their customers. As a step forward, CCD has incorporated formats like music cafés, book cafés, highway cafés, lounge cafés, garden cafés and cyber cafés targeting a diversified customer profile. Some also went ahead to sell merchandise through their outlets. A prominent feature into Bollywood sponsorships only made sipping a cult. Infact the bug also hit some prominent retailers like Shoppers Stop (Brio), Reliance (Time Out) who had coffee joints introduced to their outlets. Tata Coffee, Indias largest exporter also couldn’t wait to open up Mr Bean Coffee Junction in Chennai recently. FMCG majors like Nestle already had their kiosks well placed when coffee retailing was happening.

Some of the prominent names like CCD, Barista (now acquired by Lavazza), CBTL, Costa Coffee, Barnies and Coffee World are still vying for market share and have very unique expansion plans. Barista in a recent outrage to gain back market share have gone veggie in all outlets of Ahmedabad and are serving udipi menu in the likes of dosas and uttapam! They have also applied for liquor licenses for their ‘Creme’ outlets in Delhi and Mumbai where they plan to keep international varieties of beer and wine. Whereas robust plans of CCD are just enthralling as they have identified 6 new verticals to serve your favorite coffee which also included hospitals. From Highway outlets to more luxurious outlets will include recently launched CCD Squares and Lounges, CCD with its current 720 stores and an addition of 20 -25 every month looks to remain firm on the top.

There is also news that FMCG major HUL is eyeing this lucrative market as well. It will be interesting to see whether HUL gives some spill or chill to the established players.

We all know, a lot can happen over a cuppa coffee.

Cheers

Sudip

 Email  Print 1 Dude Commented »

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

 Email  Print Make a Comment »

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

 Email  Print 3 Dudes Commented »

The “I” is now synonymous with the retailers, having accepted the change needed in the hour to “Integrate” processes of the business with “Information” technology.  With the increase in the scale of operations of retailers and the globalization of the whole business, Indian retail could only bank upon Information technology to come to its rescue. From the point of sale to the point of supply, the seamless working can only take place with the IT bone in place. However it’s the, retailers who must make sound decisions supported by a rigorous business case that delivers quantitative benefits far greater than the costs with the multiple technologies in place right from RFID’s, touch screens, smart shopping carts to interactive consumer consoles.

Most of the retail operations in functionality are complex and highly customized to the format or the chain itself. The high degree of product complexity, supply chain dilemmas all along with the multiple touch points that retail face (manufacturing, C&F, distributors, retail outlets and the customer himself) calls for an integration which can only be process driven through systems. But in reality retailers who do not manage the IT systems effectively will find that this becomes the pain point more than the alleviation of it. IT networks effectively impacts the cost of goods sold, through better management of critical processes like inventory management, supply chain management and to an extent merchandising activity. We all agree that retail scope varies across geographies even within the same borders. The only way to address this variability will be to track, measure and implement the optimum products at the right places. We cannot imagine doing that effectively today without information systems in place.

There will also remain a need to maintain a proper data architecture since many a decisions are accumulated from past records ie the measure of a given sales scheme or a particular seasonal discount in the past years that was successful. Some of the most critical decisions based on data warehousing will be forecasting of trends. Our new mantra of customer centric retail is unfinished without a CRM database for that matter. A strong base of customers is what all retailers look for; and in fact the Govt felt the need of a “Do Not Disturb” policy for the telecom products. Effective use of such databases for service retail is essential, although having such a huge database of customers is nothing short of a goliath act.

Retail analytics is one of the emerging fields to conceptualization of the business from scratch to its improvements, mainly a field based on numbers and its dynamics. Most large chains of the world like Wal-Mart, Tesco, Sears and likes had set up back offices way back into early 2000’s just to support their sourcing activities in India and now slowly foraying into their front ends once when their system architecture is now robust enough to compete. ERP’s have now become a necessity to most retailers than just a showcase for better and effective management, since the prominent retailers now have a vertical integration of their products. Life is surely made easier even when your products are outsourced. Optimization can only be achieved when you can track real time. RFID’s the next gen technology can only lead to smarter supply chain and inventory management. Touted as the revolution, we have previously seen what a smart store connected to your kitchen can do. The only dampener which is the cost will surely see a reduction in future.

The cost of implementation of IT structure as said earlier has to prove its mettle and managed properly. The initial set up cost is certainly high, which reduces over time as we head towards a more profitable business reaping its benefits. Other challenges in the IT landscape would be to manage the lack of standards to move to a universal platform or towards highly customized solutions which escalates cost. This is a double edged sword to walk for the sector. However to talk of its intangible benefits, the knowhow of an advanced retail solution can be relevant to the retailer’s long-term strategy and competitive positioning. Some of the mentionable aspects would be the brand perception (by using cutting edge technology to stay up beat), to a more brand evangelist and heightened brand or store experience for its customers.

So to say, that IT can support the strategic decisions, the operational moves and the customer interfaces is only a pool to be dived into. Certainly the way ahead will be to re integrate the IT structure itself from the customer POS to the back end supports. We could productively see spends on the store itself being the hallmark of a customer experience and also the point of customer delight. We could see more value added services like Mobile POS and intelligent systems which identify the store loyalists in an informed world.

To keep up to the shifting consumer spending patterns and trends, IT is definitely IN.

 Cheers!

Sudip

 Email  Print Make a Comment »

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

 Email  Print Make a Comment »

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

 Email  Print Make a Comment »

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

 Email  Print 3 Dudes Commented »