Retail Dude

A close look at the technology, which we believe is going to be the choice of a lot of leading retailers. Microsoft has released a new technology called “Surface” which would enable retailers to have virtual showrooms hosted on there display tables, allowing customers the browse and customize options. Have a look!

Original Video: http://www.youtube.com/watch?v=D1IpDStL23M&feature=related#watch-main-area

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CRM (Customer Relationship Management) is regarded as key to the success of any Retailer. Most of the retailers across the globe are investing in Customer Retention and Loyalty Building Programs. In case of a Specialty Retailer who caters a niche variety of product, these can be achieved by well designed CRM Program. But in case of Large Format Retailers like Wal-Mart, Tesco, IKEA or Big Bazaar for that matter, it will not be solely depend on CRM, though it plays an important role. Customers of such Retailers expect Best deal in comparison to others and 24X7 Availability of products. Thus Supplier Relationship Management (SRM) plays pivotal role in success of Large Format Retailers.

SRM is a process which helps Retailer in identifying there key suppliers and integrating them in there business to create a win win situation for both the parties. SRM fills the gap between suppliers and retailer’s understanding of market demand and thus create a win win situation by aligning retailer’s sales plan and supplier’s manufacturing plan together. It ensures that retailers get the best contract and suppliers get long term commitment. Moreover it eliminates the possibility of any kind of dispute between both parties by bringing them on same page in regard to all policies like returns, facing, pricing etc.

The process of SRM can be penned down as follows:

• Identification of potential suppliers based on qualification required.
• Evaluating and selecting suppliers on various parameters like product, price, capability, background, brand etc.
• Entering into agreement with selected supplier in terms of price (term of sale); return policy, ordering policy etc.
• Identifying key suppliers in different product categories based on sales volume and demand of product.
• Selected strategic suppliers will be CPFR (Collaborative Planning Forecasting and Replenishment) Vendors and will have limited access to Retailers Sales Plan so that they can align there Manufacturing Plan accordingly.
• Retailer need to regularly monitor the performance of Suppliers.

In my next post I would be discussing on CPFR in detail

_______________________________________________

- Rajeev Damani

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Dear Readers,

A set of three new rule books for businesses in the country is going to transform and affect a company’s operations. Welcome GST, IFRS and DTC!

GST (The Goods and Service Tax) will be the one whole sole tax that the Government has proposed that will swallow all other indirect taxes that we end up paying. GST will treat as one market in terms of taxation and thereby only a single rate for products. Currently companies pay the central excise duties, the VAT imposed by the State Govt. Not to mention there are entry taxes and interstate taxes that is burdened upon. The proposed date of application of the GST is April 1^st 2010, although it’s almost ready to be postponed for sure as the Centre has a huge task of bringing all the States to the same page. Not to mention that the companies have a hefty back end work that will be needed to complete, this means aligning business documentation, supplier relationships, distribution, compensation policies, loan agreements to name a few. The benefits are major as the GST (proposed to be around 16% - 18%) will significantly reduce the total combined taxes (currently around 35%-40%) that are prevalent today to any sale of product or service provided. Talking about impacts, the first to flash is lowering of prices, this will increase demands. A single price for any product or service across the country which gives consumers a great relief. Talking of benefits to organizations, having regional warehouses instead of having one in every state impacts supply chain costs and capital investments. You will see a real application of the ‘hub and spoke’ model where a single warehouse caters to a lot many states at retail too. A significant change will be lower capital required to match the same level of production owing to consolidating the excise duty in GST.

IFRS (International Financial Reporting Standards) is a new basis of accounting that is more transparent being followed globally. About 100 countries have adopted it, which then makes comparison of statements across companies much easier. This will eventually replace the Indian GAAP structure. Again the adoption date is effective April 1^st 2010. Companies listed and unlisted will now have to consolidate their accounts, not just subsidiaries but associate and vendors they control (GAAP defines it as total control, but IFRS states that it could be partial control or directing activities too) . “Fair Value” accounting is to be adopted where all transaction or entry will be reflected in the current market value. This also means reporting for intangible assets like, manpower, copyrights, brands, patents, customer base etc, therefore a constant evaluation of assets take place. This will result in a wide variance in income and profits as companies will not be able to dump their losses into subsidiaries and associates. It is sure to have a big impact on FMCG, Pharmaceutical and the Automobile industries where a lot of vendors are implied. It’s sure to change a way of business in India.

DTC or the Direct Tax Code is a proposal to take an effect 2011. Under this regime the proposal is to cut the corporate profit tax from 34% to 25% all inclusive including surcharge and cess. The change in MAT (Minimum Alternate Tax) from the current 15% of booked profits to 2% on the gross assets for non banking firms. This simply means a loss making venture also can’t avoid this tax, but the losses can be carried forward too! These rules will even the playing field. Economics and not incentives will decide locations of new units. Tax holidays and Special Industry, what’s that? Location based incentives will be a passé. Special industrial zone status like (Baddi in HP) where a lot many FMCG and Pharma Co’s have their setup without much competitive advantage or Export oriented incentives/ SEZ’s or Software Parks / Infrastructure companies ( Sec 80-1A) rebates that they all enjoyed so far will be flushed out. However 9 businesses have been exempted like oil and gas, SEZ developers, power, cold chain, warehousing, hospitals (in select areas), fruits and vegetables, oil pipelines and infrastructure, as they are considered high risk developments. Although the incentive will on the amount invest and not where they invest.

Overall, the new regime if implemented on the deadlines will affect the way corporate houses do business and in the right way. There will be much more accountability and will be a change in which companies measure its customers. Pushing towards mere financial gains will come hard by. A better collaboration of industries will soon happen and therefore a better consolidation. The customers are sure to laugh their way back home.

Cheers to One India!

Sudip

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Guest Post:

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

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

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

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

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

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

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

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Dear Readers,

Let me wish you on behalf of the Retail Dude Team a very prosperous year ahead. Let it be a year of change.

With the advent of new modern technology and business methods, one thing that most organization does is to create wealth for themselves. In primitive a few companies did go public and created wealth for its shareholders and gave a handsome to employees as esops which of course strengthened our national economy. But today a new economy has emerged the one of Social Economy where entrepreneurs make a far greater impact to a societal section primarily the disadvantaged ones. Slowly but steadily Social Entrepreneurs are the new wealth creators and I believe they are far more innovative in approach that can be a lesson to the government and companies alike.

But do not make a mistake of realizing that they are just mere charities for they use all modern methods and technologies and yet are not greedy but have a drive of creating a social impact. Some may quote that bigger companies do their bit by funding and resolving issues of the communities so called as CSR, but the prime difference is that a handful actually are sustainable!  I am yet to quote a few notable existences of people who have transformed this picture and yet can find that they have managed to evolve themselves even in the shades of the bigger corporate giants. Almost like a phoenix have created values and wealth from dust.

“DesiCrew” is one of the efforts of Saloni Malhotra who started this venture of a rural BPO in the villages of Tamil Nadu in 2007 and managed a turnover of over 2 crores last year. Not to mention Satyams Gram IT was already in place by then, but today the winds of change have hit Kollunmangudi and created a big social and commercial impact. “Bamboo House India” of Prashant and Aruna Kappagantula realized that bamboo art comes naturally to the tribes residing in Tripura and the fact that most bamboo furniture sold in the country was made in China! After they setup their company, the earning potential through a cultural art has thrived in the region and has a potential to bail almost 5 million people above the poverty line. The bamboo ecosystem also revitalizes the environment, a classic triple bottom line result.

“Industree Crafts” created by Gita Ram and Neelam Chibber (NID) set up in 1994 is another tale of how the modern economics can fortify the rural talent. The chain of Mother Earth stores which stands proud today is no more than a market linkage of the urban demand to the rural artisans. In fact they also managed to bag orders from global brands like Ikea, Crate&Barrel and Interface boosting the lives of more than 350 artisans groups.

Talking of crafts and hand work none can challenge Fab India’s niche and its vast network of over 100 retail outlets.  Set up by John Bissell, today Fab India supports more than 30000 artisans and over 17 small producer / community companies. Through their sourcing of materials, has also boosted cottages industries spread across geographies. It actually recorded over 300cr as revenues for FY09, truly FAB!

The focus is not only on delivery but also on affordable innovation as “D.Light Design”  and “Selco” have done to bring in cheap solar powered led lamps that run up to 12hrs a day with a minimal charge. The innovation also was a hit with poorly electrified states with items like mobile chargers, cookers etc using all but using solar cells. The dilemma and the question that lies unanswered now is that if such technological advances can take place to help the poor, why isn’t it being used as an alternative power/ fuel solution to the urban?

To talk of young entrepreneurs, none match Dr Vikram Akula creating “SKS Microfinance”, which today has disbursed over 3000 Cr as loans to 3.95 million lives. SKS single handedly changed the face of microfinance which even the state owned banks couldn’t do.  Nearly 4 lakh Sangam members of the Company own Kirana or small grocery stores. The Company has launched this project to provide working capital finance to help these Sangam members to buy Fast Moving Consumer Goods (FMCG) and groceries through a dedicated vendor. The Company has partnered with METRO Cash & Carry India Private Limited, one of the world’s most-reputed wholesalers, who deliver 13,000 SKU (Stock Keeping Unit) at competitive prices and standard quality at their doorstep. Insurance is yet another feather which SKS has added. No matter how significant the business idea may be, it is SKS that did lay out the very foundation to carry it out, by economic empowerment through small credits. No wonder that they still have a 99% credit recovery record.

And who can forget the firebrand Ela Bhatt’s “SEWA” which had helped millions break the bonds of poverty in Gujrat setup in 1972 and now into more than 8 states. From financing small rural entrepreneurs helping them earn a livelihood to healthcare, insurance, schooling, eco tourism SEWA has done it all. In fact it also set up Rudi multi trading company a marketing channel for the rural by the rural. Bajaj Electricals uses packaging made by Rudibens. SEWA also broke the national barrier with it importing 10Tonnes of dry fruits from Afghanistan creating a market for them whilst a market for us. Guess where her next stop is? Africa!

Social entrepreneurship describes a set of behaviors that are exceptional. These behaviors should be encouraged and rewarded in those who have the capabilities and temperament for this kind of work. We could use many more of them. We need social entrepreneurs to help us find new avenues toward social improvement as we enter the next century.

Cheers!

Sudip

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“Shopper’s stop BUT Women won’t…!”

For some it’s a hobby and a must for some. When they are happy, they shop… when they are sad, they shop even more. Shopping gives them a new focus and uplifts their moods. When real life can’t solve for them, “Retail Therapy” comes as a solution.

Financial freedom is one of the top priorities of Indian women, especially in the urban cities and with financial freedom comes the choice of leading a lifestyle that suits ones tastes and preferences. Women like to wear expensive jewellery, carry high-end gadgets and buy apparel and footwear that make them look good, feel comfortable and also exude their style statement in a subtle way.

Times have changed now and for the good. With factors like growing number of working women, changing fashion trends, rising information level and media exposure, and the foray of famous foreign brands in the Indian market, Indian women have become more conscious about the range of brands that should fill their wardrobes. They are more interested in benefits and features of the products. They want to know how the product can enhance their lifestyle or make their lives easier. They need time and space to make their choices (without forcing them to make quick choices). They need to know plenty of product information too, such as colors and styles, and a variety of options to make their shopping decisions easier. Most women like top-notch customer service, and nothing turns them off faster than difficulties with issues such as returns (so handle them with extra care).

Consumer shopping statistics reveal that women are responsible for 83 percent of all consumer purchases, including:

• 92 percent of home furnishings,
• 92 percent of vacations,
• 91 percent of all homes,
• 51 percent of all consumer electronics, and
• 60 percent of all car purchases (they actually influence 90 percent).

To capture the woman buyer you have to understand the woman psyche. Women live with a never-ending to-do list, and the pressure to get that list under control triggers stress. They have a different perception of value and at the top of their list are trust and respect, or they won’t buy. Women want you to help make their lives easier and to experience enjoyment in the buying process. Some key perspectives around women, trust and loyalty. Women believe:

• If I trust a brand I will recommend it-83-percent belief factor
• Selecting a brand I trust saves me time-75-percent belief factor
• Selecting a brand I trust makes my life easier-72-percent belief factor
• I am willing to pay more for brands I trust-70-percent belief factor

Marketers know that trust is central to loyalty for women. While advertising generates buzz, women generate talk and a lot of it. Women rule the checkbook and the credit cards, and they are having an impact on your business every day. It’s time to start considering what women want and how to capture this consumer group.

Satisfied female customers are much more likely to network (needless to say that) about your products. Women will share their experience with their friends (envy them to an extent that those envious women will buy that product in no time), and your sales will grow as the word spreads.

“Whoever said money can’t buy happiness simply didn’t know where to go shopping” - All Women on this earth

- Dipti

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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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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

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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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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

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