Thursday, December 31, 2009

Organized Indian Retail – yesterday, today and tomorrow...

As I write this column while the first decade of the new millennium is transiting, I can’t but recall the way the last ten years have gone by for the Indian Retail Industry. As a child, I used to visit the PDS outlets to buy rice, sugar and kerosene (to heat water on a pump stove). A few years later, I would cycle a couple of kilometers from my house to a particular shop in Mandaveli, where a modern PDS store was opened – called Subiksha. Although organized better than a PDS outlet, the charm of shopping still didn’t exist; the concept was driven on the premise of “value”. Almost everything that was sold was 10% cheaper than many other grocery stores and the owners had played well to the sentiments of the price-conscious Madrasis. In 1996, the first wave of Organized Retail actually started off in India. Calcutta based Goenkas (of The RPG Group), who had interests in music, tea and tyres ventured into modern retailing. Accepting the invitation of their former CEO Mr. Raghu Pillai, Ace Carnatic musician, late Ms. M.S.Subbulakshmi inaugurated the first organized kirana store called “Foodworld” at RA Puram, an upmarket neighborhood of South Madras. And the rest, as they say is history.

A few years later, I had the rare opportunity to work in that same store for more than a year as Store Manager. It was at this place, my love for retailing and consumerism was born. As the store was already five years old, a relayout was being planed and I played an important role in that activity. With my own hands, I drew the relaid floor plan and planogram – the former Controller of Operations made me do that exercise outside his cabin – to plot various categories in a Supermarket in a manner in which (men and women) consumers would shop. That’s when I understood what Organized Retail was to be, how people shop. I am still trying to get clarity – don’t know when I would.



RPG had already tied up with DFI – Dairy Farm International (Hong Kong) as regards the FDI regulations and the foreign entity was providing backend support for various formats that was launched by the group. In 1997, two new formats were created – Music & Leisure and Personal Care & Grooming under the trade names of “Musicworld” and “Health & Glow” respectively. During the same time, when the internet revolution was taking off, Mr. VG Sidhartha, a visionary businessman set-up internet coffee cafes at Bangalore to cater to the growing need of youngsters who were trying their best to catch up with the Western world. Today, his efforts have paid-off – with over 840 cafés across the country and a handful in Austria and Pakistan, Café Coffee Day is the largest coffee café chain in the country today!

Meanwhile, elsewhere in Kolkata, a shrewd Marwari businessman who was toying with the idea of selling trouser lengths and shirt bits had already entered into Organized retailing with a readymade garment store, called Pantaloon Shoppe. Sensing the bigger opportunity that lay ahead, he conceptualized a new model called “Big Bazaar” – a Hypermarket which was the first of its kind in the country that sold everything that one wanted to purchase for the household at prices that were cheaper and better compared to similar local wholesale markets. While the Goenkas tested the Supermarket format in the south, Mr. Kishore Biyani tried his Hyper concept in 2001 in Kolkata – another conservative consumer segment. The idea though was simple and common to both businessmen – if it could work in such sensitive markets, it could work in bigger open markets too. A large format Pantaloon Department Store that had everything to drape for the whole family, was opened in the crowded neighborhood of Gariahat, also in Kolkata. In 2002, the first ever Hypermarket in South India was launched in Hyderabad under the name “Giant” by the RPG Group. A new wave of consumerism had already started off. Mr. Biyani launched his new grocery model Foodbazaar in 2002. The Times Group (a media powerhouse which publishes newspapers and manages TV channels) had also ventured into organized retail – by opening a music store in Mumbai called Planet M. TATAs, whose business interests range from steel to salt, and the most respected business family in the country was also testing waters into organized retail. With its first family department store “Westside” already working well in Bangalore, there were plans to extend the business to other cities. And Rahejas, whose already successful department store concept “Shoppers Stop” was the first one to expand on a pan-India level under the able leadership of its former CEO and Customer Care Executive, Mr. BS Nagesh, now the Vice-Chairman of the Retail entity which has multiple formats under its fray.



And many other local retailers such as Viveks (in Chennai) and Vijay Sales (in Mumbai) were expanding in their respective geographic regions. The next few years saw a flurry of Retail Stores being opened – across various formats. The Organized Retail Industry, which was not even approximately valued till 1999, was estimated to be around $ 2 Billion in 2001 and has now grown to over $ 135 Billion (in estimates, including services). Biyani once again launched a new format – a seamless Mall called “Central”, loosely based on the iconic Bangkok Central. The specialty of the Mall was all the brands were next to each other, without walls, but had common billing points in the same floor. This saved time and effort for shoppers and the size of the mall need not be too big. Again, I was fortunate to be part among the core group leading this revolution, since its inception. Meanwhile, the other players had strengthened their presence across verticals. India’s oldest organized retailer Madura Garments from the house of well respected Aditya Birla Group, had grown by then from strength to strength with hundreds of points of presence across the country and had two large formats – Planet Fashion and Trouser Town under its operation. They entered the food and grocery retail formats with More. Supermarkets and Hypermarkets – an attempt that has still not taken off the way they had wanted it to. Another manufacturer cum retailer, Arvind Brands, had also scaled up its retail presence and was fighting head-on with the international fashion brands such as Benetton, Levi’s, Pepe, etc. who were consolidating and growing their respective businesses.

Electronics Retail was the next big bet – with mobile call rates having fallen to single digits per minute, and mobile handsets becoming more popular than landline telephones, selling mobile phones was not just a fancy, but the easiest thing (atleast many thought so!). And with higher GDP rates between 2002 – 2006, consumption increased, which witnessed better Demand-Supply match and hence, electronics manufacturing became more and more viable, leading to crash in prices. For example, a 29 inches Samsung CRT TV that cost upwards of Rs, 20,000 in 2004 fell to less than half its price by 2008. And so was the case in laptops, refrigerators, etc. Home appliances such as Mixer Grinders and Iron machines were no more planned annual purchases – were more “by the way” ones. In 2006, India’s largest business house by size, Reliance Industries ventured into organized retail, experimenting various concepts – grocery at Hyderabad, Technology at Bangalore. Meanwhile, several luxury brands entered India – they couldn’t ignore this market anymore.



The period from mid-2006 to late 2008 saw the highest realty rates in the market. Mall Developers were quoting lease rates that defied conventional logic – and Retailers were embracing them with both hands. There was a stupid competition of one-upmanship especially among the Fashion Brands – who paid more for a particular property – as merely being present was everything. No exaggeration, I have seen it personally, even present in a few discussions. Bizarre! During this period, many businesses changed hands, some saw M&As, some ventured into Retail just for the heck of it.

Also it was the time when the first Greenfield Private Airport at Bangalore was pioneering the newest business concept in India – Travel Retail. The Airport’s Retail areas today are testimony to the continuous efforts taken by the Management Team at BIAL – the airport operator, to create the best Retail footprint among the airports in India. This is among the most cherished and most fulfilling professional experience for me till date. The challenge was to explain to the head honchos of various established Indian Retailers and propose to them to lease space at the airport – these were the most evolved and well-travelled individuals, but most of them failed to believe in the dream. Very few were convinced and for them, it has worked superbly. Around the same time in 2006, global retailers of repute, including Walmart, Carrefour and Tesco were considering India seriously. Metro AG from Germany which had entered India in 2002 with its Cash and Carry model couldn’t grow beyond its first two stores in Bangalore for a few years due to FDI regulations. They still do not operate more than five outlets in India – a similar fate that Walmart had to face when they opened in Germany in the 90s and eventually closed. Walmart entered into a strategic tie-up with Telecom major Bharti Group, while Carrefour preferred to go on its own with its C & C model and is said to be in advanced stages of talks with Mr. Biyani’s Future Group as of last month.

And then Aug. 2008 arrived. The sub-prime crisis in the US had a cascading effect. Millions lost jobs in the US, Europe and Far East. Countries which were feeding western consumption like China and India took a hit on their exports – India especially on the IT / ITES front – an industry that provides direct employment to over a half a million people in India. Consumption slowed down; no growth rates for Retailers. 2009 was the worst year for the trade. Mr. Biyani was recently quoted saying “I think 2009 came in and gave a slap on our face.” So true. Several Retail businesses tumbled. The non-serious ones exited quietly while the focused ones grew their might with perseverance and continue to remain in business to explain their successful efforts.

Thousands of people are already working in the organized Indian Retail Industry to-date and this is only expected to increase – to about 15% of total employment in the country by 2020, if not earlier. What has happened seems like a true roller-costar ride. Over the past 45 minutes that I have been typing this article, I could remember only a few best moments of the Great Indian Retail Story that is yet to be fully told. The next decade would answer that, for sure. And you and I would be a part of this success story, I hope. The world will watch in awe the way Indian consumerism has taken off and would take lessons too. As the most prominent figure of Indian Retail often says, “We are a country of shopkeepers and hence we don’t need outsiders to teach us the way we do – we will do it our way”.

Long Live Indian Consumerism! Long Live Indian Retailing. Jai Ho!

Saturday, December 26, 2009

WorldSpace – R.I.P.

I was shattered to receive a mail on Christmas Day - Friday the 25th Dec., from WorldSpace Inc. – that they will discontinue their services in India w.e.f. 31st Dec. 2009. More than the subscription money lost, I was pondering over the inability of such a service to sustain, especially in India. WorldSpace Corporation was founded in 1990 by Noah A. Samara, Chairman and CEO, with a vision to provide digital satellite audio, data, and multimedia services primarily to the emerging markets of Africa and Asia. To implement this vision, WorldSpace conceived and built the first ever satellite radio infrastructure in the world. In the past 12 years the company has built three satellites and launched two to provide audio, data, and multimedia broadcasting coverage to Africa, Asia, The Middle East and Western Europe. With the global headquarters in Washington D.C., Worldspace created the initial proprietary technology and programming infrastructure that both WorldSpace Satellite Radio and XM Satellite Radio are built on. In fact, 2003 saw WorldSpace Satellite Radio technology become the fastest adopted new consumer media in America since the DVD player. Until today, WorldSpace Satellite Radio provides 5% of XM Satellite Radio programming. JVC, XM Radio, Hitachi, and Panasonic are registered marks used with permission. In 2006, AR Rahman, India’s first Oscar award winner (2008) and Brand Ambassador of WorldSpace created a signature tune for the brand which was used extensively in its marketing and communication efforts.



Although I subscribed to their service only in March 2009, I first heard WorldSpace way back in the year 2001 when I was working for RPG Retail. There was an exclusive arrangement between both the companies to play their music across the Foodworld stores in the country. While the idea was to familiarize shoppers with the concept of satellite radio, it was also a great advertising opportunity for the service provider. If one may recall, that was also the year when the Private FM Operators started their commercial operations (until then, the Govt. owned Prasar Bharti was operating the FM channels exclusively) across the key cities in the country and even today, only the Govt chanels can provide “News” content – a monopoly that the private operators are trying their best to break. There was (and still continues to be) intense competition among the Radio channels that today, people prefer to keep their personal radio on their mobile phones, their cars and homes tuned in all the time.

WorldSpace was, according to me, one of the best things to have happened in the field of entertainment. Using Satellite technology, one can carry the receiver anywhere within the country and to certain countries abroad, keep the antennae facing a certain azimuth (an angle at which the antennae receives signal from the satellite) and bingo – hear live content being played 24 hours a day… Of course, the antennae must always be facing the satellite in a particular direction and hence, it cannot be heard while on the move (like in a car). But WorldSpace had been working closely with FIAT in Italy to provide such a solution which was to be unveiled sometime next year. Until, it all fell apart. WorldSpace filed for bankruptcy in the US in Oct. 2008 and has now officially announced that it would be shutting down its services in India.

The crux of WorldSpace was its subscription based listenership. At the moment, India has over 300 radio channels (and increasing every month) which play regional languages as well as Hindi and English 24/7/365. As per the existing Govt. norms, the ad space should be around 20% of an hour’s airplay - that’s approx 12 minutes of advertising and the rate per minute varies for every city and the radio station. Assuming the average duration per song is 5 minutes, not more than 12 songs could be played an hour – but the stations modify the song (reduce the overtones) and create a playlist of 10-13 songs including advertising in between. For large cities like Delhi, Mumbai, Chennai and Bangalore, this makes so much sense as the traffic during the peak hours is very high and in effect, listeners get hooked to their private radio sets. Cut to contrast, WorldSpace offered over 55 minutes of music interrupted only by the voice-over of the RJs who explain almost every song – the lyricist, the composer, etc.

I believe the main reason for such a service to die an unnatural sudden death – is simply timing. Satellite Home Television has picked up in India in the recent years and has two dominating operators – Tata SKY and DISH TV with the new entrants Airtel, BIG and SUN entering the fray aggressively in the past 18 months. Viewers have realized that the reason to switch over from conventional Cable TV to the Satellite form is not just novelty, but actually the purpose – of no-interruption and absolute clarity while watching. What we haven’t realized is that we still pay for the subscription but are done to death with the advertising content – especially during festive days and special events like cricket matches and entertainment shows. The difference – WorldSpace was creating and hosting most of its programmes itself without any advertisements while the Satellite TV marketers buy the content from established TV Channels including the advertisements. And people have accepted the pay and use over the years while with WorldSpace, consumers were never fully convinced to pay for such a service.

One reason why WorldSpace is facing this destiny today in India where over 90% of its subscribers are based, is its positioning, the others being its location of hosting and points of sale. Clearly, the product (or service as you may call) was positioned as a one-up above the Radio over the years and there was probably not too much of an effort to take it to the middle-class masses. Unsurprisingly, Satellite TV marketing companies are selling their products at leading Retails stores in the country. A great example in recent times is SUN Direct Satellite TV. While they have done it to the extreme, by making the pan-wallahs and mom-and-pop grocers as their distributors, the strategy has somewhat paid-off. Contrast to WorldSpace, which made almost no major Retail presence except for a handful of distributors here and there ans some in-store Demos. I am not sure if they underestimated the power of Organized Retail today, but surely one didn’t see that approach. While subscribers to the service were acting Brand ambassadors (like me) who preached the greatness of the service, a new wanna-be subscriber never knew where and how to buy. Simply speaking, it was not available off-the-shelf at a Retail store nearest to you. And they were hosting the service from the US – I got to know this recently and am somewhat confused why they chose not to host from India.

I would assume that there is still a rebirth possible, provided the Brand takes a new approach and aligns itself with modern Retailers in India. There are over 5,000 Organized and semi-organized Retail stores in the country today and millions of shoppers visit these outlets every month. And that’s the opportunity. Whether WorldSpace (if and when it is reborn) or someone else in a similar segment will grab this opportunity is yet to be seen. Until then, WorldSpace – Rest In Peace.

Tuesday, December 8, 2009

Gift vouchers and spread smiles this festive season…

It’s very Indian to gift – we actually do not need a reason to gift. Be it a birthday or an anniversary, new addition in the family or a new job, gifting is a given thing. So much so that a famous confectionery brand had launched a campaign a couple of months ago to gift chocolates during the beginning of every month – as one get’s his or her monthly salary! It is also widely believed that gifting existed in our culture for very long. For example in our Kannadiga culture, guests who attend a wedding are actually given some money and food on the last day of the wedding – the idea being that once they return home, they don’t have to cook food and the money given to them is for their conveyance back. Strange, but is still practised. They are also gifted clothing or cash equivalent during the course of the wedding as a token of appreciation of their visit and guests would even wear the same new clothes during the wedding. Similarly, we have many other examples in each culture and community.

In modern times, gifting has taken a different route. It’s quite common to see women shopping for their men – father, brother, husband or friend. And similarly, men shopping for women in their lives – mother, sister, wife or friend. So much so that luxury diamond brand “Carbon” successfully created “guilt-shopping” where men buy diamonds for their women without even understanding the jewelry – it was fashion jewelry and hence, not to much of thinking or analysis (like how women would do while buying jewelry) was required. And the result – the concept is a great hit and their flagship outlet is now at the “Bengaluru International Airport” where over 80% of customers are men! Although Jewelry, watches and accessories are quite common to purchase as gifts, consumers tend to weigh back on apparel. This is mainly due to size inconsistency among people and the brands and their fits. And add to that, color preferences. So usually, apparel is refrained from gifting, except for t-shirts and other fashion wear.




This is where the concept of “Gift Vouchers” fit in. It’s quite common to see today people rushing to buy such vouchers from leading retail stores, especially Department Stores and Mono Brand Apparel/Accessories Stores. A few years ago, the Future Group introduced “Central Vouchers” which could be redeemed across the Central Malls in the country and sometime ago, launched vouchers that could be redeemed at their home improvement retail concept – Home Town. Even café chains like Café Coffee Day have vouchers that could be redeemed across the 800+ outlets in the country. If there is one segment where it is not yet present in full measure, it’s probably at the Supermarkets. However, these vouchers are usually sold through institutional sales – typically a B2B activity where the Retailer sells the vouchers at a discounted price to Corporates who in turn pass them on to their staff members on special occasions such as birthdays or anniversaries. And the common belief is that the user would buy more than the voucher value and the retailer would benefit from it. Well. If only it was so true! My friends in the business would agree that while the redemption is sure, the difference in the final purchase price and the cost of the voucher is not very high. It could also be because the consumer didn’t find anything as exciting or the validity of the voucher was shorter and he/she didn’t have anything to buy at that time.



While Shoppers Stop has created a big opportunity among its customers through branding and communication measures, many retailers haven’t done this yet. I would rather say, they haven’t “tapped” this yet. Imagine, Christmas and New Year is around the corner and you may want to be gifting something to your loved one – but may not know what to. So, that’s where the Voucher comes in. But do Indian consumers believe so? Probably not. And the reason is simple. When you buy a product and gift, it is generally perceived not to be valued monetarily. For example, if your give a flower bouquet and a vase, then there is no value that is attached. Instead, if you give a 500 Rupee voucher, then the receiver would “feel” the value of the gift – something that is not very much in our culture. Although, we contradict ourselves a bit in reality. In Indian marriages, its quite common to give some money as gifts. Probably for other occasions as well. This is usually instead of a product as gift. While this is commonly accepted, Retail gift Vouchers are not. Reason? They are probably not so well marketed. Starbucks recently had a scheme where when a person buys a gift voucher, the buyer gets rewarded… So, with a US $ 100 voucher, the buyer gets a US $ 20 voucher – that’s a 20% Discount. It still works to the benefit of the café chain as they make higher margins. This could be a bit of a challenge for traditional retailers but still, certainly worth a try.




And the key to this is marketing and communication. The concept must be communicated to potential consumers in such a way that it induces them to buy gift vouchers. I am already dreaming of a day when consumers would flock to their favorite Retail stores to buy vouchers during a particular day or week because of attractive offers like how they now buy during the End of Season Sale. I would imagine that consumers would stock up these vouchers at home and would use it as and when an occasion arises. Or they would find one where they could gift it. Whichever way, gifting is good – brings a smile to the giver, a bigger smile to the receiver and yes, helps us, the Retailers.


So, whom are you gifting this festive season? Make a list and remember to count me in…

Monday, November 30, 2009

Braving the Indian winter – Best of Luck…

Talk of global warming and every one around seems to have one common observation – winter this year is quite peculiar with unusual chillness during the nights and sharp sun rays during the day. I felt this myself when I was in Delhi last week. Thankfully, I was carrying a blazer at the insistence of my colleague, lest I would have certainly caught up with severe flu. Delhi winters are famous for their biting cold – in India, that’s 2-3 degree Celsius. (which is not the case in the US or in Europe!). During the months of Oct – Jan, sales of winter related merchandise see an increase substantially and premium brands such as Benetton and Tommy take advantage of this by bringing some of their iconic international collections that are otherwise non-saleable in Indian conditions. Sales of cold drinks, colas and even ice-cream take a dip during these months and the Brand owners try several promotions to entice consumers to buy their products. While it is usual for consumers in the western world to have ice-cream during winter months (temperature sub-zero), it is not the case in India. I remember the long discussions that we used to have while I was in Bengaluru International Airport – to have or not Ice-Cream as a concept as the sales in winter months was less than half the average in summer months. Though it made business sense (the summer’s steep sales offset the losses in winter), it was always a question on top of mind.



Branded Ice-Cream market in India, according to various estimates is in the range of INR 800 – 1,000 Crores and the super-premium bit is about 25% of the total. Haagen Dazs is the latest entrant in the market with its Indian franchise partner and is expected to open its first outlet in Delhi in Dec. 2009. Although the ice-cream varieties were present in India through gourmet stores and restaurants since quite sometime, it was out of reach even for the discerning middle-class due to its upwardly pricing, that’s 2-3 times than its Indian counterparts. This is mainly due to import restrictions, like in many other products that are brought into the country. The history of Haagen Dazs dates back to the 1920s when Mr. Reuben Mattus, the founder, worked in his mother's business in New York, selling ice-cream in horse-drawn carriages. Later, he spun off the business into a company and named it Haagen Dazs. The business grew rapidly and spread globally as distribution logistics and popularity of the brand increased. In 1983, Haagen Dazs was bought over by the Pillsbury Company of the US. Haagen Dazs has a range of traditional ice-creams, frozen yoghurt, gelatos, sorbets and frozen ice-cream bars in its product range and is the most favorite ice-cream for the Americans.

The prevailing popular international ice-cream brand “Baskin Robbins” story in India began in 1993, when it opened its first store in Mumbai. Today they are spread across the country with more than 300 outlets in over 60 cities and catering to other premium channels like star hotels, leading airlines, malls, multiplexes and top retail chains across the country. The Baskin Robbins story began with two brothers in law- Burton – “Burt” Baskin and Irvine – “IRV” Robbins. Burt and Irv strongly believed people should have choice, so they offered 31 flavours - one for every day of the month. And they believed people should be able to try any flavour without cost - a belief that led to the iconic pink spoons. Their ideals live on at Baskin-Robbins even today, where they now possess a flavour library that consists of more than 1,000 ice cream recipes. By the way, I used to be a scoping boy at Baskin-Robbins in Madras 14 years ago – my first job to say so! In my experience, 7 out of 10 customers who tried the ice-cream actually bought it. Those days, a scoop of 33 gms of ice-cream used to cost INR 45.00. And the sales were not bad at all. The franchisee used to make us try a scoop everyday (on the house) so we actually knew what it felt like and we could convince our customers to buy them. That parlour shut because a flyover construction began on the road opposite to it and the Location which was once considered lucrative turned into a dead spot.



Ice-Cream in India is available from as low as INR 5. Many local brands – some even city specific have been quite successful in this aggressive, yet challenging market. AMUL, part of the Gujarat Cooperative Milk Marketing Federation is the single largest popular Indian brand of ice-cream that’s available across the country while ARUN ice-cream is market leader in South India. McDonald’s single scoop is affordable available although only at a few places across the country. Walls, from Hindustan Unilever is the most popular packaged ice-cream brand, mainly drawn by the distribution strength of the core business. Nestle SA, which recently bought over the Movenpick Swiss Ice-Cream brand has not launched it officially in India although the previous India franchisee has several outlets across the major metros, many of which were shut due to poor patronage.

So, there are two main challenges in this business – Price and Climate. Even if one is favorable, there is no surety of success. And between the two, it’s almost impossible to say which one is riskier. Given the scenario, the big daddy of the business is venturing into India during the infamous Delhi winter with the highest price per ml. Bravo! I hope this venture takes off well, like how they have in many other countries. My sincere best wishes.

Friday, November 27, 2009

When LOOTing is legal and fuels consumption

This article comes after a long gap - mainly due to my hectic travel over the past week to the two most important markets in the country, Mumbai and Delhi. There is something very special about these two cities, the former is the financial capital of India and the latter, the political capital. (And all the states and their capitals beleive they are "the nerve centres" to the administration of governance in the country! hic). Both cities and their suburbs have a population of over 15 million people and growing! A great boon to Retailers of all shapes, sizes and pedigrees. During peak hours, the average time taken to commute from work to home and return is approx three hours in Mumbai. Both cities have the most terrible public transport systems which makes the usage of personal commute almost a necessity. So, higher sales of cars, car tyres and car freshners - with Godrej Ambipure leading the market with over 65% share. Delhi Metro is a saving grace and the new extension to Noida has been welcomed graciously by commuters. The influx of people from neighboring cities and states is so high that there is almost no control of who lives where.

The sheer number of people is such a great opportunity for us in business. While this is not specific to only these two cities, there is something special about consumers here. Most forms of modern retail were experimented here and have only proved successful that they have been replicated all across the country. And one such format is the Discount stores. Typically in Apparel and accessories. While the format is quite famous all across the world - even Hugo Boss sells on discount at Metzingen - it is quite recent in India - probably less than a decade. While it is a bit difficult to say which Brand/Retailer first established this concept, the biggies have been on it for quite some time - Madura Garments, Arvind Mills and other popular Indian and International Brands and smaller retailers. In the fashion apparel and accessories business (including where the brand is franchised), the franchisee usually pays the full cost price and buys the products from the Brand, on which he enjoys a margin of 20-55%. After the season is over (Spring-Summer from March to Aug and Autumn-Winter from Sep. to Feb.), the products must be marked down and sold as they cannot be carried over to the next season - simply because they are usually not the fabric that could be used. That's how the End of Season Sale or EOSS came in place. The average discounting for most brands during the EOSS is as high as 35% and what remains after the sale with the retailers is less than 10% of the original stock.



These usually remained with the Retailer for sometime until they were sold out. And that's where someone found an opportunity - to create seperate stores that could sell these merchandise at discounted prices throughout the year. If they were closer to the downtown stores, then the full-price business would get affected, hence they are usually located in the suburbs or outside the city. The stores are quite basic - no air-conditioning, no great fixtures and furniture, simple lighting and minimum staff. The cost of operation is very low since the margins are also low - between 10-15%. Consumers take an effort to go all out to shop as their savings in lieu of the effort taken is well deserved. One such Retailer in India is The Loot. Founded in 2004, this retailer opened its 100th store in Bangalore in May 2009 and currently has over 120 stores across the country with plans to cross the 200 mark in a year. This retailer roped in Bollywood's infamous bad boy Gulshan Grover as its Brand Ambassador with the store resembling doors and images of a jail. And the store aptly named The Loot with a rug sack pic along the main logo.




Last week, one of my cousins wanted to buy a shirt quite urgently and it was the only store located on the way while we were driving on the outskirts of Mumbai, at a place called Thane. Not that he was looking for a discounted product though, but we ended up here. The store has special schemes - Buy one and get one for free or Buy at 40% discount, etc. The store, which appeared like a franchised one had popular apparel brands such as Louis Phillippe, Arrow and other lesser known brands, and even stocks luggage, hand bags, belts, deodarants and perfumes. While my cousin had gone with an intention of buying just a shirt, he ended up buying a matching pair of denims as well... all in span of less than 30 minutes. And we were not alone; on a Sunday afternoon, there were atleast 5-6 families shopping together. We ended running a huge bill but when we walked out, it did seem like it was indeed a loot.

There are several lessons here - In India, families shop together. So, there must be something of interest to everyone - atleast to keep them engaged while the others in the group are shopping. Next, locate the store as close as possible to the consumer. If not for anything, they would end up just because the store is closeby or on the way. Adequate parking and management - a great boon to shoppers. Last but not the least, rotate merchandise as often as possible, what we call as Stock Turn. Even if it means selling at a lower margin, atleast the cost is recovered and there is fresh cash flow for new merchandise. Afterall, sometimes such a loot fuels consumption and brings back people seeking more.

Sunday, November 15, 2009

Central realigns the city...

India's largest retailer, The Future Group opened its 2nd Bangalore Central Mall recently at JP Nagar. Until a few years a quiet residential locality, JP Nagar is famous for its various attractions such as the Hanuman Temple and Woodys restaurant. The 60 feet road is abuzz with a host of retailers over the past few years with Viveks (Electronics Retail) being one of the earliest occupants followed by Big Bazaar and many other stand alone restaurants and eateries. While residents in and around JP Nagar and Jaya Nagar frequented these places, the offering was not strong enough to keep the crowds engaged for long. This is where Central has done a great deal.

CENTRAL opened its first mall in May 2004 - THE reason why I moved from Madras to Bangalore. It was the first of its kind in the country then - a seamless mall that had the usually famous brands - regional, domestic and international, all sharing floor and (virtual) wall space - this was infact the highlight of the Mall. There were no seams or walls between the brands and billing was unified across the floor. So, unlike in regular malls, there was no need to visit various brand stores and end up multiple billings. It was more than a Department store whereas not the convential mall in terms of total floor area. Right from Day One, it was a superhit. The second Mall opened in Hyderabad in Oct. 04 and the third at Pune in early 2005. As of today, there are eleven malls across eight cities.




The new Central Mall, spread over 200,000 sqft has a frontage of almost 200 feet - along the main road and is a corner property. While the entry to the mall is from the main road, the exit which curves a bit finally leads into the adjacent road. There is adequate parking space for atleast 150+ cars and a equal number of two-wheelers in the two leves of basement. The ivory colored vitrified marble makes the floor appear bigger and larger than it is and so does the main atrium that goes upto the fourth floor. The toilets are spacious and tucked away in good corners leading shoppers across the various aisles. There are many anchors and mini-anchors - PVR being the leisure anchor, McDonalds for Food, Cafe Coffee Day for beverages and the spacious foodcourt and restaurants (that are yet to open) for multi-cusine F&B. These are sure to bring in regular footfalls to the mall. The ground floor has Ladies and childrens's sections along with the usual perfumes and jewelry categories. The toys section is quite sizeable and is sure to attract chidren and those at heart. The first floor houses ethnic wear for men, women and home - yes, there is a very attractive homewear collection which already seems to be a super hit. The Men's formal wear is also nicely tucked on one side and the spread of brands is wide and fresh.

The second floor is focussed on the Youth - the teens and tweens as I famously refer; those in their teens and twenties - a very important segment for most brands today. Reliance TimeOut that offers books and music is a surprise! Cafe Coffee Day is located next to the Customer Service area - great thinking by the Mall planners to keep those waiting for various services such as alterations, membership, etc. E-Zone on the other side showcases latest offering of electronics and home-needs. The third floor houses Home Town, the division of the Future Group that specializes on furniture and home needs. There is also a Food Bazaar that completes the family shopping offerring a wide variety of Grocery and household products. The fourth and fifth floors would have PVR Cinemas while the sixth floor would have food courts and restaurants. This is the only confusing bit - and challenging to bypass shoppers into the F&B  areas as also to redirect those who have watched movies into the food-court.


The building opposite to the Mall is BIG Bazaar. I was wondering how would it be to connect both the buildings - probably with a skywalk that cuts across the road. While this surely sounds exciting, it is as much impossible due to corporation rules and regulations. The Mall in general looks like Takashimaya or Isetan in Singapore with its wide alleys, choices and selections. A refreshing look on designs and images is visible all acorss the Mall with images that nicely depict the mood and reasons to shop. With these and more on offer, this Central Mall is sure to realign the centre point of the city. Over a period of time, it is not just the residents of neighboring areas such as JP Nagar (various phases), parts of Jaya Nagar, Koramangala and even Bannerghatta Road who would visit this mall, but even those from far-off places. The Second Bangalore Central,  Mall as the name suggests, would surely become central for shopping in this part of the city.

Thursday, November 12, 2009

Now, buy your favorite alien!

While this was the most spoken topic among the advertising and marketing fraternity for over 6 weeks during and after the IPL 2009, the concept still lingers on in our mind. I am referring to the Vodafone Zoozoo – an alien like creature that made the most of the recent Indian Premier League (IPL) 2009. IPL was the brainchild of serial entrepreneur and cricket fan Lalit Modi, who hit upon his goldmine idea based on the various leagues and clubs that play different games, mainly football and soccer in the west. Team Franchises are thrown open for bids and usually, the rich and famous buy them for increasing their popularity and wealth, while also increasing their Brand/firm presence. Team members are then chosen/ selected/ bought after committing several thousands of bucks by their respective franchisees. The first IPL held in 2008 was a runaway hit in India, while the second edition in 2009 was mired with controversies – due to the elections for choosing the new Parliament, and security reasons, the franchisees decided to move the show to South Africa as the former Government refused to promise fool-proof security for the events.

Since the IPL was played outside of India, the excitement levels among fans and viewers was much higher – the viewership also surged quite a bit compared to the previous year, thanks to higher penetration, bigger marketing budgets and adding new viewers. Various Indian brands paid large sums of money while fighting for screen-space and mind-space. Among them, Vodafone stood tall and popular. Vodafone entered India in 2005 after acquiring a major stake in the former “Hutchisson Essar” that was owned by the Ruias of the Essar Group. Since then, the former trade name “Hutch” was slowly replaced with “Vodafone” all across the country. The advertising campaigns showed a humble Pug – with their most famous tagline “Wherever you go, our network follows”. This campaign also had its share of controversies – from animal lovers to organizations that support the cause of cruelty to them, (have you ever heard of prevention of cruelty to humans, children of sex-workers, orphaned/ handicapped children, etc. !!??!!) the rich, the famous, the unheard of and the wannabes, all trying their best to gain scores on their popularity charts.

For the IPL, the creative teams at Vodafone and their agency Ogilvy wanted to send a different message with a basic question in mind – how to increase ARPUs or Average Revenue Per User. This is the fundamental measure of the telecom companies and with an existing price of Re. 1 per minute for calls made across the country, each player was trying newer ways to increase their revenues. VAS or value-added services is an important source for these companies and that is what Vodafone and Ogilvy decided to focus on. And thus was born the concept of Zoozoos – an alien like creature that has a big fat potato body and egg-shaped head with similar features as a human – that could walk, talk, sing and cry. Through this, they were trying to convey the same emotions as a human would. These low-cost production ads (that cost approx INR 3 Crores) had no celebrity endorsements – a variety of telecom operators have always used and during the same time, Airtel was using Madhavan and Vidya Balan while Idea was using Abhishek Bachhan. When the new Zoozoo ads hit the screen, it was refreshing – the young and the old took notice of what was being conveyed (mainly in the urban areas while their counterparts in the rural/semi-urban areas found it difficult to comprehend). There used to be times during the second week of the IPL when viewers were so glued to their television sets that they were actually waiting for the new Zoozoo ad!

While the campaign did extremely well, sources say that it did well in terms of collections too. A friend of mine who works for Vodafone conveyed that in the 8 weeks following the commencement of the new campaign, VAS incomes increased by over 150% in the top 4 circles that the operator is present. Quite an achievement.


While the faithful pug remains so, the Zoozoo was given special preference – that they would be used in the form of Merchandise and would be sold. Shoppers Stop, India’s largest Department Store chain has got the exclusive rights to sell the Zoozoo merchandise at its outlets. While the deal was announced a month ago, the merchandise have already started arriving at the stores and could also be purchased online. At prices starting INR 299, this is one sure-shot hit among shoppers – of all age groups. And I am sure this is going to attract newer footfalls into the stores! Usually, when a new campaign commences at Retail stores, footfalls increase by 30% on an average. Am not sure about this one, but am sure it would only do good in the near future, for Shoppers Stop and fellow retailers inside like Café Coffee Day!

So, rush to your nearest store to grab the merchandise – whether to wear to college or to work on a Saturday, or to the tennis academy or simply to stay put at home!

Friday, November 6, 2009

GMR, GVK and air travelers in India

It’s already over a week since I moved out of the Bengaluru International Airport and an “Airport Retail” perspective, but I am still somewhat connected to the Travel Retail business as Café Coffee Day operates across the key airports in India. Indian airports are joining the BIG league with Indian corporate houses actively engaging into airport development as private partners to the Indian Government’s initiative of privatizing the airports. Since the last nine years, five out of over 75 airports in India have been privatized – Cochin, Bangalore, Hyderabad, Delhi and Mumbai. These airports together handle over 70 million passengers (out of 100+ million air passengers) every year. The Indian aviation industry has been growing at a CAGR of over 15% over the past few years and this is expected to continue until 2020.



Out of the five airports, Delhi and Hyd. Airports are co-owned by the GMR Group and Mumbai and Bangalore are co-owned by the GVK Group. The GVK Group announced on 05 Nov. 2009 that it has picked up a 12% stake in BIAL, the company that operates the Bangalore Airport from one of its promoters, Unique Zurich Airport. Both the groups are large Industrial houses with varied interests across Infrastructure, Power, etc. Both the groups have their promoters and their families actively involved in the management of the in the business and the family name is projected as the face of these projects. Together, they are expected to invest over 40,000 Crores (USD 10 billion) over the next 15 years into Airport expansion and development.



The modernization (work-in-progress) at Delhi and Mumbai airports shows the efforts undertaken by both the groups amidst stiff resistance from various Unions of the Airports Authority of India (AAI), the erstwhile operator of these airports, public outcry for loss of land & livelihood and political & bureaucratic interference in decision making. However, the outcome is welcoming to see – new structures all around, reconstruction and new construction of airside facilities including the Runway and most importantly, the Terminal Building. From curbside parking management to commercial facilities inside the Terminal, from lounges to toilets, things seem to be very well progressed in all ways. The choice of commercial offering is quite interesting – an eclectic mix of Domestic, Indian and International Brands which seem to be well accepted by passengers.



The four airports would handle over 60% of the total air traffic in India and the two groups are the ones leading this initiative. While Hyderabad and Bangalore are Greenfield airports that commenced commercial operations in March and May 2008 respectively, Bangalore is expected to initiate an interim expansion in 2010 with the surge in air-traffic. While the single runway would remain, the terminal building is expected to be substantially increased to accommodate the growth for the next 3-4 years by when the new terminal and the second runway would be in place. Hyderabad, on the other hand will saturate its Terminal space in the next 5-7 years and thereon, will also have a second Terminal and Runway. Mumbai will have its new and swanky Terminal for Domestic operations by early 2010 while Delhi will have the much talked-about and hyped Terminal 3 by the middle of 2010, well in time for the upcoming Commonwealth Games.



So, what’s in store for air travelers? A lot! To begin with, Indianness. Indian consumers (even air passengers in a way) are quite different from their western counterparts and this is clearly visible in their consumption patterns. Where in the world would you find air passengers enjoying hot Idlis and Vadas, Rotis and Rice or shopping for Diamonds and Watches at 7am? Where would you find air passengers enjoying a chilled beer with dosas and paneer tikkas or shopping Denims and T-Shirts at 7pm? Point to note is that most of such food is cooked and served hot – this needs a larger kitchen area than in the west where the majority of the food that is served is cold and from the chillers! If this needs to be done at the terminal level, adequate care needs to be taken while designing and planning the same. This is just the tip of the ice-berg; there are many more – higher capacities of electric power (since most of Indian food is otherwise cooked with LPG), seating space with tables (since Indian food is usually served on plates and trays), etc. And most importantly, the local identity at the airports – something that is sometimes loud, but certainly present at various international airports such as Dubai and Singapore. And a lot more to look for!

An Indian powerhouse is formed, claimed The Moodie Report, the world’s most read travel retail website while announcing the news of GVK’s strategic alliance with Zurich Airport. The Indian and International media have been covering this extensively over the past 24 hours (I get atleast 2-3 alerts on Google every half an hour!). More than the coverage and the usual media-hype, it is the substance of the news that’s more important for passengers. Like any other fellow passenger and as a representative of the Concessionaire at all the leading airports, I am quite excited about the upcoming opportunities. And I stand as a proud Indian today, looking at where the Indian companies are taking Indian Aviation infrastructure to. Jai Ho!

Wednesday, November 4, 2009

Grab and Fly

Air Travel in India is picking up slowly, but steadily once again, and this is visible in the numbers reported by International and Indian-origin Airlines and Airports over the last two quarters. For a 12 month period ending Sep. 09, over 90 million people took to Indian skies - that's a mindboggling 250,000 people every day. This includes departing and arriving, domestic and international passengers (pax.). 75% of pax are domestic while the rest are international - and that's approx. 190,000 pax. In this, over 40% fly Low Cost Airlines; that's over 75,000 pax everyday.

Low Cost Airlines have been confused with Low/No frills airlines in India. Globally, No-Frill Airlines such as easyJet and Ryanair do not provide many services on ground and on air to pax. Their turnaround time (duration on ground at the airport between a landing and take-off) are minimal, between 40-50 minutes per location and the aircraft spends more time on air (hidden from the public eyes) rather than being seen on the tarmac, more as an advertising and brand-building activity, like the Legacy carriers. Legacy carriers or full service carriers operate on a hub-and-spoke model - they bring pax. from several cities and pass them on different flights to other cities; and are those which provide a host or services such as check-in & security check assistance by ground staff, lounges for pax. of various seating classes such as business, economy, etc. and F&B on ground (in case of flight delays) as well as on air.

Low cost carriers actually focus on "lower cost of operation" which means leaner staff on ground and on air. These airlines encourage pax. to check-in before they visit the Airport or to use the self service kiosks rather than the manned counters which are fewer in number and take more time. Ever since the launch of Air Deccan, the low-fare regime started in India. Although the airline followed most principles of a Low-Cost airline, it was also instrumental in bringing the "price-war" between the airlines. Suddenly, the big boys were offerring throw-away prices that the common man grabbed with ease and hapiness. One merger, one take-over followed and a few closures are in the offing. But even these airlines may pull off with the increasing domestic air traffic. So, Low-cost airlines and Low-fare airlines are not to be confused really.



Aircraft food is generally abhored by frequent travellers (by popular definition, these are pax. who undertake over 12 trips a year) and prefer to eat at the Airport Terminals or outside. These are also pax. who are considered to be well-traveled and a bit more evolved than their counterparts in understanding and appreciating the Airport F&B offerring such as variety and quality, not to mention the superior Customer Service (in comparison to what was available earlier). In many parts of the world, it's quite common to see Starbucks, McDonalds, Illy and many international brands at airports which provide the continued offerring to its patrons. However in India, this trend is quite new, probably a few years now. The first few organized F&B retailing outlets were commenced by India's largest chain, Cafe Coffee Day - with outlets across over 35 airports, this is the largest Travel Retailer in India at the moment. Mumbai CSIA, India's busiest airport where I was passing through today has over 11 touch points across various locations.  Organized retail footprint at Airports was pioneered by Bengaluru International Airport when it was under planning and construction stages between 2005-2008 where Cafe Coffee Day operates three outlets.




With over 75,000 pax. who fly Low cost airlines which do not provide (complimentary) F&B on board , that is already a huge market potential. Assume 30% of these pax. would consume at Airports and if each spends INR 100 per visit, the total turnover is approx. over INR 25 lakhs everyday! And among the rest, if 50% of them, ie., 25,000 pax  spend INR 40, that is over 10 lakhs. And such multiplication (which is not complex) is anyone's guess while using some common sense and a calculator. However, the BIG picture is the impending F&B opportunity at airports. Today, more and more passengers, irrespective of whether they fly Legacy carriers or Low-cost, are preferring to consume at the Airports. Bars and Restaurants are added attractions and it is quite common to see pax. arriving early to the Airport to have a quick bite of their favorite food or to have a drink - one for the runway! as I always say.



With more and more newer air passengers getting added everyday, this is one opportunity that cannot be missed. And Cafe Coffee Day would only continue to lead the way!

Friday, October 30, 2009

I leave, but my soul remains...

I have always compared the making of our “Bengaluru International Airport” to the epic Ramayana – of how thousands of hands contributed towards the construction of each and every square inch of this place. I was particularly among the few lucky ones in the country, to play a pivotal role in this mammoth infrastructure project; one that has faced innumerous criticism and obstacles over the years, but today, the Runway, the Terminal and the other buildings stand edifice to show what has gone into its making – satisfying passenger needs to its best and growing higher – in ranking among its peers as well as its revenues, a sign that clearly proves how much our passengers like our Airport. I still remember the sunny morning in March 2006 when I came to the erstwhile corporate office of BIAL at Hebbal to meet the then Chief Commercial Officer, Mr. Stephan Widrig. A visionary and a great leader, he was also among the few “perfect” gentlemen and kind-hearted human beings I have ever known. As always he had been, he let me speak for over 20 minutes – about myself, my past, my present and what I wanted to accomplish in future. He was a keen listener, not just the words the other person utters but those that one doesn’t too. After a 30 minute discussion, he seemed to have been convinced that I was the right one for the job. I had to wait for over an hour – reading the few aviation magazines on the reception area, while also thinking about the excitement that I would be having, should I actually get recruited. I always had a flair for aviation from my childhood – first it was about becoming a crew member, then a pilot and later on, as a passenger. But to become a catalyst or airport manager was something that I hadn’t thought in my wildest dreams! In the next three hours, everything was over – an offer letter was handed, medical check-up completed at a nearby hospital and I was ready to be welcomed into the Company! I joined on 3rd May 2006. And the rest, as they say is History.



I am glad I took this decision to join BIAL – something that many around me were sceptical about. Some even said that this would be the biggest disaster of my life. Today, they and the whole world know what it has been. Indeed, this has been a highlight in my career and one of the best times that I have had (and I hope there is much more to come in the years ahead). The portfolio that I have managed is among the most coveted in the world – no exaggeration. To be a part of creating and managing the first of its kind Travel Retail footprint across any Indian airport, that too a Greenfield, can only be a wish – one that I have accomplished and walking out today with pride.

Among the first things I did after I joined was to commission a Consumer Research – to understand what passengers wanted at our Airport. So, Synovate was asked to study over 600 respondents at the former HAL Airport – an effort that took more time to commence than to conclude. Once the report was in place, we started to work on the demands. We also started discussions with Retail & F&B Operators in India and their first question always was – “Who would Shop at the Airport?!?” for which we didn’t have ready answers. Although the Travel Retail Industry was already a USD 30 Billion business globally, India’s share was (as is still) less than 1%. So, we started to dig deeper and had a counter question as answer – “Who would not shop at Airports & why?” and interestingly, the answer was quite simple: Passengers wouldn’t shop

• If they believed that the products sold were of inferior quality

• If the pricing adopted was crazy, ridiculous and unreasonable

• If the overall ambience wasn’t conducive for consumption

And it was important to make the offering as competitive and compulsive as possible. It was around the same time that International Travel Retail Operators were looking at India on a more serious note – a market that was dominated by ITDC, the Govt. of India undertaking, for the past three decades and smaller private players since the late 90’s. Through a competitive bidding process, the Joint-venture of The Nuance Group – Shoppers Stop was selected as the main Retail Partner and HMSHost and Cafe Coffee Day as the main F&B Partners. Note the word Partner – it was not just on paper but in spirit. Since the business potential was both large and risky, we had decided to follow the Revenue share model – one that is used at the best airports across the world. And no one complains – if there is an upside in the business, then both the entities share the profits and vice-versa.



Construction, which was in brisk pace already had started to gather steam by Feb. 2007. On my very first visit to the site, on 8th May 2006, I was shown a concrete upcoming structure – where a basement that’s six meters below ground was being laid and I was introduced to what would later be known as the “Terminal Building”. Even today, I watch in awe the gigantic super structure – enormous day-light coming inside thereby giving a sense of place unlike many airports where so much of electricity is consumed as well as being felt cluttered. The ATC Tower, 64 meters in height was growing everyday and it was so exciting to measure the height with fingers from far, like how young adults measure in front of the mirror. And the runway spread over 24,000 square meters (60 meters wide and 4,000 meters long) was a delight to see being laid - we have done innumerable trips on this runway, by foot as well as burning rubber...



And then, the other partners were chosen. Each choice has a great history behind it. And there are too many that this column cannot take. By the end of the year 2007, all partners were in full swing with a Jan. 2008 timeline to finish the concrete/external construction and to begin store fit-outs. Every day was so different – new challenges, huddle meetings and new solutions. In the same month, a new logo was unveiled, one that displays the spirit of the city. Each team had grown in size and every member was getting prepared for the D-Day ahead – the Public Trials on 11th March 2008. The Airport had to prove that it was ready for operations and at 11.05 hrs, the first boarding call was announced by the former CEO, Mr. Albert Brunner. The Swiss Boss who spent over seven years in Bangalore by then knew the country and the countrymen better than most Indians. A workaholic by nature, his day would start at 08.00 hrs with his favourite coffee from Barista and would end by 20.00 hrs. And amidst his professional, bureaucratic and political meetings, he had the time and energy to socialise. He knew many things about the city that many of us didn’t know – from culture to cars, from fashion to food and wine.



On 30th March 2008, the Airport Team had a massive gathering along with its partners – to celebrate the completion of the project – one of its kinds in India where such a project was actually completed on time! A day I was waiting for close to two years to fulfil a promise that I had made to my former boss – that I would stand next to him and take a photo on Airport Opening Date. However, the Airport commenced commercial operations on the midnight of 24th May 2008 - behind schedule by six weeks due to various reasons that were beyond our control. However, I was among the equals – over 500 of us – some who cheered the first flight that landed and later took off on the tarmac and many others, welcoming and guiding passengers within the Terminal. I would still never forget that night, the first night – situations and emotions, good bad and ugly that flew through the air. The next morning was somewhat different – the Sun rose earlier than usual and so did passengers who took their morning flights out of Bangalore. Many had arrived over two hours in advance even for Domestic flights due to panic – that was hyped in the media about the distance of the Airport – a mere 35km from city centre. Volvo Buses that are operated till date by BMTC are among the most used, efficient, proactive, disciplined and courteous public transport systems in the country. Today, we find it challenging to have domestic passengers atleast 30 minutes before their departure – after all, their “Dwell time” at the airport is crucial to increase revenues.

Life has been very different before and after the Airport commenced operations. The short days that were long because there wasn’t much to do became longer days with little time to attend to many things – including lunch and dinner sometimes. About our Retail business, I have always boasted that Bangalore has been blessed with the best consumers and this has showed very well in our Operations. Every retail concept out-performed its expectations and even today, we see so many surprises - one that sets us thinking and keeps us on our feet.

After much deliberation and preparation, the Airport celebrated the first ever Shopping Festival along with its First anniversary. It was a big surprise to us, on 24th May 2009 that one full long year that was dotted with tragic terrorist incidents, global recession, India’s largest corporate fraud et al. And to rub salt on the wound, passenger traffic was dripping and so was consumer sentiment. Many who were braving the risk chose to sit on the fence and those who were already there were down-trading – both that wasn’t good for the Retail Industry in general and to the Travel Retail Industry in specific. But as always, the good and the bad stay for not too long and the past two quarters, especially the last one has been satisfying. Dassera and Diwali posted some encouraging figures and Christmas season already looks cheerful. Let’s hope.

Along these years, I have had the opportunity to meet so many great personalities in our Industry and I have also travelled quite extensively – ten countries to be precise. My first one was an official training trip to Zurich Airport which is also among the shareholders of BIAL. My week-long trip was mixed with enthusiasm, excitement and eagerness. I would sleep for not more than 6 hours a day and the rest of the time was spent learning and exploring. ZRH Airport is among the best in the world as rated by Airports Council International, an independent nodal agency that monitors passenger satisfaction across Airports worldwide. This tour was followed by a brief one at Frankfurt, the second busiest airport in Europe after London Heathrow. And my tour ended with Dubai – the world’s best airport as far as Commercial offering is concerned - they clock a turnover of over USD One Billion pa. In 2007, I visited Singapore and Kuala Lumpur. I consider Singapore Changi as my University – have made several trips now and every time I go, I stand and observe every square meter of the Commercial Areas – not just for ideas but for inspiration and clarity. Among my very few lifetime wishes is to work for this Airport, so I can learn firsthand. And in 2008, I visited Shanghai, Hong Kong, Bangkok in March, Singapore in Sep. and Hong Kong and Singapore once again in Dec. Hong Kong Airport is like a library – one can draw reference for any Travel Retail issue and they would have an answer to it. In June 2008, I visited Germany for a month as a Rotary Ambassador representing India to spread peace and friendship between the two countries. And during this trip, managed to visit London Heathrow (LHR) and Stuttgart Airport. LHR is among the most complex airport operation in the world, with a flight landing or taking off every 5 seconds between its two runways. With over 50% of its passengers transiting between the East and the West, the complexities involved in managing the commercial offering to cater to people from various nationalities, preferences, cultures and backgrounds is tremendous and World Duty Free that runs the Retail Business does a commendable job at it. I also had the privilege of talking about Indian Travel Retail at several Travel Retail Conclaves – at TFWA Singapore in May 2007, India Retail Forum in Sep. 2007 and IQPC at Singapore in 2008 and IQPC at Kuala Lumpur in 2009.

With such rich knowledge and understanding of the business, I stand proud with my head held high, of what I have been blessed and accomplished over the past years. But remembering my favourite Ramayana once again, my contribution to this Airport is as big, or rather as small as what a little squirrel did – to build the mythological bridge between India and Lanka. Like the squirrel, I would also be forgotten one day; although for me what I have done and achieved looks so big, it is indeed such a small contribution to this Airport. This is not something that I write for the sake of this column but something that I always believed in and have felt that way which many around me would know. This Airport and this company have given me so much, but I have returned very little. However, as I leave office for good today, I am sure, it’s only me which leaves but my soul remains here, always. Thank you, BIAL and its employees and associates – but for your support and encouragement, my new journey wouldn’t have been possible. I don’t consider this the end, but a beginning. After all, the woods are lovely, dark and deep, I have wishes to accomplish, promises to keep, but I have miles to go before I sleep.
And I have Miles to Go, before I sleep.
Jai Hind!

Wednesday, October 28, 2009

Ampa Skywalk – Newest in Chennai

I couldn’t resist visiting the newest Mall in Chennai – Ampa Skywalk last week. The first of its kind in North Chennai, this Mall has been in the making for over five years now. In my previous stint at Benetton, we managed to get two outlets for the Brand – one in the Ground floor and the other in the Second (exclusively for kids). While it took more than three years to finish the construction, it took as much time probably to get all the necessary approvals. And the final product is worth the wait as many would believe. Located along the ubiquitous Cooum River, this five storey structure has a colour combination on the exterior that’s almost impossible to miss. Lots of colourful alucobond and glass with very little concrete gives it a different look than its few counterparts in the city. Located on a corner plot, the Mall is expected to cater largely to the surrounding residential areas –parts of Anna Nagar, Nungambakkam, Aynavaram and Kilpauk. Maybe for the first few months, this would be a Destination because of its novelty, but once the upcoming “Express Avenue” is ready, all the focus in town is about to turn towards it. (Will write more about EA later).



Entry into the mall is from Nelson Manickam Road while the exit leads into Poonamallee High Road. Parking is managed by Central Parking Services, (the same one who operates at Bengaluru International Airport) its first big project in Chennai and also a leader in providing parking solutions in south India, aiming to grow all across the country in the coming years. The height of the car parking areas is quite comfortable (even for SUVs or for novice drivers of small cars) and the ramp that leads to different levels is quite spacious – the turning radius is very minimal and thereby provides comfort while driving. Every floor of parking has an entrance into the Mall – something that could have be combined with two floors (like in Forum Bangalore) thereby saving ton loads of concrete and construction material. Open wires and drainage pipes are visible all over but this could be very nicely covered with advertising/mall communication panels. Only 40% of space is occupied yet and the rest in under fit-out stage

First impression as one gets into the Mall – impressive, by Chennai standards. I quite liked the spacious Atrium from where one could see the famous “Skywalk” – a bridge that connects two sides of the top floor which would house PVR Cinemas as an anchor. This would be the first location for PVR Cinemas (preceded by INOX in 2006 at Chennai Citi Centre). There are over 100 Cinema screens in Chennai city limits and the ticket prices are almost 50% of those that are charged at these multiplexes. So, I would be curious to see their pricing and marketing strategy as time goes.

The Mall has more than one anchor – PVR for Entertainment, Westside for apparel, Landmark for Leisure, Star Bazaar as a Hyper for home-needs, Mc Donalds, KFC, Pizza Hut, TGI Friday, a 200 seater food court, a couple of speciality restaurants and a very large entertainment centre for children and the young at heart. Although the F&B Outlets may not be technically classified as “anchors”, they do more or less the same job as the anchors – to act as a destination and to pull consumers into the Mall. Cafe Coffee Day, La Boulangerie (a chennai based gourmet and speciality bakery chain), Booster Juice, Cookieman and Kalmane coffee bring in a fresh lease of life in every floor as they are massively spread across. I spoke to my friend from JLL who was part of the floor-design and he gave a strange logic used by the developers – that every floor, along the car parking exit would have an F&B joint – a cafe, bakery etc. I hope this works.





On product retail, the line-up is impressive: Benetton, Levi’s, Will Lifestyle, Lee, Zodiac, Metro & Mochi, Peter England, Allen Solly etc. The surprise ones are Bossini and Health and glow – it’s quite some time that we remembered these brands, but nice to see them here though. Zimsons, a leading player in premium and luxury watches has several stores for different categories on the Ground Floor. Given that there are very few premium watch stores in the city, this is sure to draw in the right crowds. The positioning of the escalators that go up and come down looks nice – but they do not seem to circulate footfalls. This is a very important aspect in Malls – afterall, driving footfalls to the Mall is quite easier than driving them along the corridors, in front of the stores. Light colored marble flooring make the floor look cleaner and larger.

The most interesting part is that the Food court called F3 that stands for “Food, fun and frolic” offers a pre-paid card. On payment of INR 10, a smart-card is given that can be loaded with currency in denominations of INR 10 and this single card could be used across all the outlets. Sounds interesting, as it makes life easier for diners – they don’t have to wait in long queues at cash tills while the cashier is struggling for returning change. It is also a great way to increase consumption – shoppers would load for a minimum and may not consume for all the amounts, so they would come back regularly to this place. The only glitch seems to be the cash-flow for the operators – I doubt if the settlements would be done even once in a week. That means, they have to wait for the bi-monthly/monthly cycle to get their turnover that is collected by the Mall Developer. But this is a good way to keep a tab on the Sales – since most of the Malls are now following the Revenue share model and thereby, this becomes easier to track every transaction that occurs at the various outlets.


Overall, this is a welcome inclusion in the city and am sure this would continue to serve very well as a friendly neighbourhood mall for a long time to come, I guess.

Saturday, October 24, 2009

Madras Memoirs...

This column comes straight from the heart of Madras – T. Nagar, to be precise, where I have been camping over the past week ever since our daughter was born last Thursday. The past weekend was not just hectic but also exciting and fulfilling for our business. Retailers of all sizes, shapes and geographic spread have reported an upswing in Sales during the just concluded Diwali festival. Mambalam aka T. Nagar in Madras houses the highest penetration of Retail outlets per sq. Km in South India. The estimated size of the Organized Retail business – Apparel, Jewellery and Household items, is expected to be over INR 10 Crores every day! This, from the top 20 large format Retailers such as GRT Jewellery, Prince Jewellery, Joy Alukkas, Singapore Mustafa, Pothys, Kumaran Silks and most importantly Saravana Stores –famously known as India’s very own Wal-Mart. This Retailer who has more than two locations spread over 300,000 sqft., spends a couple of Crores every year on Advertising – on TVCs, Radio, Hoardings at prominent locations near Railway Stations, Airport, etc. – with leading South Indian film stars as Brand Endorsers (and not just ambassadors). It may be recalled that Mr. Kishore Biyani (Founder and CEO of The Future Group) found inspiration for his most successful Hyper-business after spending a couple of hours himself looking at this store.



For the just-born, I was searching a nice cradle over the past days; I visited four to five outlets that carry children’s stuff but wasn’t satisfied with their collection. Home Centre, part of the Landmark Group doesn’t even keep cradles or kids furniture - that was disbelief. After a number of phone calls to friends and cousins, I landed up at “Saravana Stores” on North Usman Road (the newest location for the Retailer). Fully air-conditioned with two large elevators that could carry atleast 12 people at a time, it was amazing to see the way this Retailer conducts business. Parking was easy, as my visit was at 09.30 hrs, and a day after the Diwali festival. As we entered the store, there were half a dozen people near the automatic glass entrance to greet and guide us – something that’s rare to see at many large organized retail outlets. We enquired about our requirements and were directed to the third floor. Interestingly, the elevator stops every second floor – wow, what a strategy I thought. Great way to bring footfalls into the next floor as well as some savings of electricity! But most importantly, it proves efficiency – sometimes people use the elevator to go one level up or down and end up holding the equipment for long durations.



As we entered the shop floor – clear and white marble that show vividly even the smallest dust (or the one that shouldn’t be) - a sprawling 10,000 sft I guessed, I was simply awed by their collection. Over 20,000 or more products on a single floor! Every section neatly ear-marked with clear signage in black font/white background and atleast 60 staff members in just one floor – that’s a whopping “1 staff for every 150 sft” (usually it is 1 every 300 sft in India) – rather one for every customer who visits the section. The philosophy is simple – no provocative selling, but 100% service support. Ask for any assistance and bingo – its right there. And the cradles, as expected were at the end of the floor. After browsing through a dozen of them, we decided on one – a simple yet elegant design. In what I had researched over the past days, cradles could cost between INR 1,500 – INR 9,500. It could also get more expensive as the materials involved change/improve. Our case was simple. Buy something that looks classy, durable and most importantly worth its price since the usage is only for 12-18 months. Not to my surprise, the one that we chose was 30% cheaper than similar ones that I saw at many leading stores. I couldn’t take my eyes off the “Kids clothing” collection - hundreds of pieces stuffed alongside each other, yet the variety, and the design at such low prices was unbelievable.

So, how does this Retailer manage to procure the products at such cheap prices? The age-old philosophy of “volumes”. And the staff comes at a measly cost – they are mostly picked up from villages or smaller towns, brought to the city, put up in shared accommodations such as dormitories or hostels and also given food. Plus a monthly salary which is sometimes given on hand or credited into the accounts of their parents/dependents in their home town! Gradually, the staff picks the nuances of the trade and move on to other Retailers – for a better pay and future. Although attrition is not very high, the quality of the staff is not comparable to modern Retailers –but they serve perfectly to their key clientele (among which you and I are usually not).

During my stay in Madras, I also visited some of the famous F&B Outlets – Ratna Cafe & Saravana Bhavan most importantly among them. While the history of Ratna Cafe dates back almost three decades, Saravana Bhavan is over 10 years old with a good penetration in the city as well as abroad – Dubai, Singapore and the US. Ratna Cafe’s food is world famous – its recipe is every homemaker’s envy, customer’s delight and competition’s grudge. With such a lineage, they have a handful of outlets all across. I wonder, whether it is the financial backing (or the lack of it) or the family’s unwillingness to expand. Saravana Bhavan, which started as a small neighbourhood F&B outlet expanded massively – the basis of expansion was not merely availability of funds or willingness of the family that runs it; rather the acceptance of the concept by its patrons and customers. They changed the way people were dining in the late 90’s – self service fast food coupled with comfortable table-service dining – something that Madrasis were not used to in the pre-Pizza Hut/McDonald’s era and hence lapped up quite happily. And they enjoy some of the best locations in town – from neighbourhood residential areas to arterial roads, near Cinemas and popular shopping destinations. Ample parking for both two- and four-wheelers is an important plus point.



With so much Retail action and a couple of upcoming Malls, it’s tough not to miss this place. Look forward to coming back in my new avtar in 10 days from now!

Friday, October 9, 2009

When skill set takes over everything else!

If there is one activity that many urban men dread every month among others, it’s the thought of visiting his “personal groomer”. From a nonchalant corner shop that could seat not more than three people at a time to the more recent air-conditioned (sometimes unisex) salons, this business has come a long way. The Barbers are today better known as “Hair-stylists” and the profession is gaining acceptance as a popular vocation too and many youngsters are getting their hands “on” in this business. The recycled newspapers have been replaced with Filmfare, Femina, Vogue and even India Today! From waiting outside the shops to fixing prior appointments, from standing under scorching sun to comfy sofas, a lot has changed over the years, right in front of us!



While the beauty-care market in India is worth over Rs 5,000 Crores, growing at 25% pa, according to an L’Oreal study conducted in 2008, the services business accounts for 87% of this market. The estimated size of the men’s grooming market annually is over 1,500 Crores and has been growing at a CAGR of 12% over the past few years. But organised players command less than 5% of the pie. Every city or region in the country has a bunch of players, although many of them have aggressive plans to grow nationally in the years to come. YLG or You Look Good is the most recent entrant in this market, while Limelite promoted by Cavinkare is among the oldest. Other players like Bodycraft and Bounce operate with a limited reach within a particular geographical area.

The three most important things that men look for when they visit a Salon are Convenience to visit the Outlet including parking, Skillsets of the Staff and the Ambience of the place. While the order of priority may change from each person, the most important aspect to note here is the Skillset of the Staff. All things being great but a poor job done wouldn’t bring back the customer again. To ensure that the service delivery is consistent, many chains also have an in-house training academy. Before the staff starts attending customers (Go Live!), they are given an induction for 10-12 weeks. This largely includes training on using the right equipments, the SOPs to be followed (yes, afterall it is a complex activity), and observing some of the senior crew members performing the job.



It has been studied that over 70% of the customers prefer to be handled by the same stylist in their subsequent visits. This is because they believe that the staff already knows their preferences and thereby, the job could only get better over a period of time. According to a dip-stick survey conducted in a leading chain last year, atleast 9% of visitors walked away if their favourite staff was unavailable or busy (and were willing to wait for the same person if they had time).

The biggest drawback today is that there is not a single large chain in India that could boast of offering consistent service across a single city. And the reason is quite understandable – staff attrition. The stylists at the entry level are paid between Rs. 4,000 – Rs. 7,000 per month and earn and share tips worth Rs. 2,000 per person per month. Sooner than later, they tend to lose interest and start looking outside the window – either to hop on to another salon/chain or simply to pursue some other vocation. Unlike in the West, this is not a profession that many feel proud to be in.

Customers are charged between Rs. 50 and Rs. 500 per session that usually includes “Hair-cutting/trimming” followed by a wash. Certain Salons also offer package deals that include facials, massages, etc., and the staff are expected to “convince” their customers to take up one of them. Interestingly, if a staff speaks about a certain service to the customer for more than 4 minutes, the chances of him agreeing to experiment (if he is a first-timer) is over 90% according to survey in a popular salon. And once the customer is happy about this particular service, he would obviously frequent the place. Most chains however, do not sell branded personal grooming merchandise in a big way. Even if they do, the focus is minimal and its’ sales doesn’t contribute more than 10% to the total.



Two years ago, while we were still selecting operators for our Bengaluru International Airport, I had discussions with leading salon operators in Bangalore and in India. But no one was convinced that passengers would ask for such a service. Unsurprisingly, today the same people are willing to undertake this activity! While I feel happy that leading operators are looking up at the Travel Retail potential, it is sad that we don’t have a suitable space today at our Airport nor do I see such parlours coming up at other Airports in India in the short term. In this case, it is clearly convenience that a passenger looks for – trimming beard or a quick head massage or simply, a haircut and a wash and may even be willing to pay a handsome amount for the service! But necessarily, skillset would precede every other aspect – especially at the neighbourhood Outlets. This is one reason why many people keep shifting their salons regularly. After all, it’s an activity done once a month, but one has to sport the same look for the next four weeks!