Retail Dude

 

“Defination (Dhaba): A roadside eatery, quiet common in India providing scrumptious food to hungry stomachs, even at odd hours, with a cup of tea and that too at dirt cheap rates”

Highways give me a high, and the passion of driving runs deep in my veins, No, this post is not about my driving experiences, but about a more concerning topic - Food! Yes, I know, yours truly has another passions as well, delicious, scrumptious food, and this weakness has made me look out for the best roadside eating joints available on the roads less travelled, and food retailing of course is one of the sectors I keenly look out on.

I belong to the North part of the country, and a simple drive down from Chandigarh to New Delhi, would allow me to practise my passion of exploring food, now I can go on describing the best eating joints on NH-22, but that’s not the whole point. Somehow the government has woken up to the profits being made by these Dhaba’s - sans the taxes, and popularity beyond the control of the organized retailers (a.k.a Reliance A1), and then there was a demolition drive along my favorite parts of the highway! and then I moved onto new roads, Mumbai - Pune highway, I couldn’t locate many eating joints, but the emergence of some “organized” retailing was evident, with eating joints teaming up with petrol pumps, and providing one stop solution to the hungry stomachs, and during this interrogation I simply, unknowingly and unconsciously ordered my favorite Nescafe Frappe, had it and decided to move, and pat came the price - 40 Rs. - Freakin 40 bucks- for my regular cup of frappe? Was it not 15 bucks I last checked? Convenience charge eh? Inflation you say…

Somehow then, the glorious images of the dhaba menu card started circling around my head, how did they manage it? They were providing convenience as well, and some smiles along with it! and yet, I ended up paying for a service which was pathetic. They lived on numbers! and stick-ed to the traditional methods of bringing down the cost, which apparently is not visible to so called organized retailers, who are busy shifting stores more than providing the experience, and they blame it on inflation.

A simple search about “Dhabha” on Flickr landed me with more images of Dhaba’s opening up abroad, than India. We are somehow, in the rush of differentiating organized with unorganized are forgetting our core competency, we were always the cost cutters, the trend maybe a hit around the globe, but we have always had it, and it was visible in our Dhaba trend, a place where the whole of India, would sit under one roof, from a truck driver to a Mercedes benz, and enjoy a meal which would pack our stomachs, but would still go on. This is the fortune at the bottom of the pyramid, the books talk about, not the consumer but the retailer, and this is where the organized retailers need to hit upon, we are still a price + quantity + experience + relationship oriented market.

- Sarthak

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A pretty well known newsmailer writes this morning “Rural and bottom of pyramid (BOP) markets are being considered the next big thing after a considerable saturation in urban markets”.

Being considered? Next big thing? Considerable saturation?

Note that the operatives we are apprehensive about - Being, Big & Considerable!

The same article says “companies are increasingly focusing on customising their products to the needs of consumers” .

Amazing, isn’t it? We should be collectively grateful that “focus on consumers” are finally “increasing”!

On the article we also see another interesting finding - “Sachet marketing has also found favour as it not only makes products affordable, it also helps build brand loyalty”. Must admit it’s a little too late a finding! As early as 1996, a small & ambitious start-up, originally named Beauty Cosmetics, introduced the world’s first “pillow pack”, a transparent 20ml sachet, priced at Re.1. Pioneered by an oft forgotten visionary, Mr. Ranganathan.

The start up morphed into a 300 crore+ FMCG major, renamed Cavinkare Limited. They also were the 1st hair-care brand to introduce a 50p sachet.

Thousands of MBAs had to study this unique case-study, as the concept was unique, made unprecedented inroads into rural India, was a phenomenal success & most importantly - adopted as THE most innovative packaging by almost all FMCG MNCs, worldwide.

It’s obvious that after the 24 months spent in acquiring the “qualifying” suffix, most marketing hot-shots have conveniently forgotten about the case & why they had to study it, in the first place. Yesterday’s news you see!

It took an institution like Mr. Prahlad (interestingly his initials are CK too, as in CKL) to “remind” our brand-custodians that India IS in its hinterland.

Ranganathan, being a humble middle-class innovator, with no vowels next to his name, is history! No media-adorned marketing whiz-kid will bother to pay any respect to this man who not only had the vision way before CKP did, but, made it work! 

Do the “operatives” still look benign to you?

- Arnab

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Finally, a step from the Confederation of All India Traders (CAIT), aimed at combating the organized retail giants. For some this might be one of the most laudable moves, by any such body, in the recent times. Well, a skeptic like me, can only wonder, how much relief would a move like this bring to the widely spread network of traditional retailers? You may ask, the rationale for behind such a thought? And my modest answer, a figure, which any retail professional can answer even if coaxed in his sleep. The figure of 12 million or 15 million (depending on which report you refer to), i.e. the number of traditional retailers in our country.

And, subsequently, the questions that arise - How many small kirana stores can we manage to train through a handful of “retail schools”? By when do we except to see even a transient shift in the way these stores are managed? According to Praveen Khandelwal, CAIT secretary general , the retail schools would aim at equipping “them adequately to retain their present hold and help them grow.”

Another area of concern lies in the “key areas” of focus for these retail schools. The aim is to include modules such as - improving the image of stores, planning of product range, reducing cost through stock management and cash control, and building customer loyalty. If I look at all these areas objectively, apart from stock management with main focus on ensuring optimum quantity at these stores, other areas seem to have more of a conceptual appeal rather than a practical one.

For instance, improving store image would certainly cost an additional investment. At the same time, for planning product range again demands investment in researching your customer’s preference, finding adequate suppliers. Not to forget, most of the traditional stores lack flexibility along with insufficiency of funds required to be spent on effective POS systems for keeping track of the inventory. Therefore, restructuring the product range for kiranas would be just like spending more on advertising of an already insolvent company. Finally, as far as customer loyalty goes, it’s an area where, in my view, none other than these very kirana stores already ‘rule the roost’. Rather, the mom and pop stores might have some useful tips for our modern retailers, who are willing to take the consumers by storm.

Mr. Khandelwal, your response please.

- Vivin Wason

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The title of the article has been borrowed from the article found at Knowledge@Wharton, Which helped me answer some of the questions running in my head regarding the complex consumer class in India, The statistics are right about India, its our third consecutive year at the top of GRDI and our consumer goods market is expected to reach $400 Billionby 2010, but we are the same consumer class, who have readily accepted the 100 bucks pop corns at PVR’s but bargain with the auto wallah on our way. We are the same class who have far exceeded any one’s expectation in the mobile market but still have the least mobile Internet penetration, The question is simple: How to capture this complex consumer class?

The article suggests that although the attitude is shifting towards consumerism, being individually poor but collectively rich is what differentiate India from rest of the world, with a large part of the population living below the mark of $1 per day, India still holds a tremendous untapped middle market, and this is what we all will agree to! Its our population which has turned out to be a boon for us, be it the outsourcing mania or now retailing, its the numbers which is making the heads turn towards India!

We can notice the changing trends, as more and more families gain economic independence because of the continued industrialization of the country, the focus of the consumer is shifting from the basic amenities like food and clothing to more advanced consumptions like mobiles and health care, but to capture these markets, retailers need to adopt to strategic mix of pricing and values, as we still are guided by both. A casual surf around landed me at the case of Ram Das Mohan Lal Maheshwari which has strategically crafted this proposition of both price and values, thus firming up the belief. The store, established 60 years back, has over the time offered an optimum mix of price and values, Which so far has skipped out of the hands of the new organized retailers, but this doesn’t necessarily means that the organized retailing is entirely at fault. Rising real estate pricing, and fresh money in the hands of the young consumers have made the numbers go wrong.

Although, Pricing and Values are a sure shot strategy of winning this question, the article suggests that recent researches have shown that the Indian consumer is fast shifting over to the products which are relevant to there experience, As Rajeev Karwal has cited in the article:

“Karwal cited the mobile phone as an example of a product that offers a high degree of functionality at a good price. “It is equipped with features such as a dust-resistant keypad and a built-in flashlight that not only aid truck drivers on India’s poorly lit highways, but also take away the villager’s embarrassment over the lack of electricity. Customized to the Indian market and reflecting the importance of price and value rolled into one, the mobile phone now serves as a great benchmark for market penetration. It is no wonder that the number of mobile phone subscribers far outweighs the number of Internet or credit card users in India”

So, its still a war out there, between pricing and values, and now a different virtue - Experince, Which is although new to a majority of Indian Consumers, but is fast catching up!

India stands as a challenge to all to management theories, I have the numbers, do you have the strategy?

- Sarthak

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Just few days back I posted that Walmart is entering SFR (Small Format Retailing) with Marketside chain of stores ( http://bimtech-retail.com/blog/2008/wal-mart%e2%80%99s-marketside-small-format-retailing/ ), and now its turn of India. Vishal Retail, one of the biggest retailers in India has ventured in SFR with first store opened in Indore last week. They are planning to open 250 such stores by the end of this fiscal and 2000 by end of 2009-10. The company already has around 140 hypermarket in 80 cities.

These stores will be of smaller size (1000sqft – 1300sqft) and will be under franchise model, and will be located in metros, tier II and tier III cities. The store will be of three types:

·         FMCG Stores: Vishal Dailymart

·         Apparel Stores : Vishal Fashion Mart

·         Durables & IT Stores: Vishal Technomart

SFR has been majorly part of unorganized sector, but this initiative by Vishal Retail will fuel the growth of SFR in organized retail sector too.

-          Rajeev Damani

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