Wednesday, April 22, 2009

Luxury Retail at Airports

The so called economic slowdown has not dented the prospects of Luxury Brands and labels, atleast in India. According to recent reports, Luxury Brands across categories are actually opening more stores and are recording higher sales than before. One of the reasons stated was that these consumers would have normally bought these products at Singapore or Dubai or Hong Kong while they were travelling (on vacation or business) and now since they are not travelling too much, they are buying these products in their neighborhood... err., that’s within India!

Sounds logical, but personally am unsure how true it is without a sound research or backing. Another reason that is usually stated is that these consumers are price inelastic (or rather recession inelastic, if you may allow me to say!). And that’s why more people are interested to procure that coveted C-Class or 7 Series at 5% Interest or low EMIs. Sometimes, I get confused with what recession does to people.

Having said that, it’s always interesting to watch how people embrace luxury. The new age malls are creating a niche (if not already) for a select breed of people to meet in a defined environment. Whilst sipping that decade old wine, they also talk about how a European Airline treated them so badly, by not upgrading them to First Class from their Economy Class tickets, in spite of having enough air miles to their credit (and anyway the planes fly empty these days).

These are the same consumers who are the core audience for Luxury Brands at Airports. And these coveted Brands take up prime space at Airports mainly to be in touch with their audience - to launch a new line, to talk about new promotions and to keep pampering their regular shoppers with exciting offerings. Many wonder if these Brands actually do any business at all, and if yes, would that be enough to sustain the (perceived) high rentals at Airports. Contrarily, these Brands actually take space to showcase themselves for their markets. And then, of course over a period of time, they build reputation and connect with the frequent travelers. And thereby it becomes a strong reason for them to expand inland. This is one way of course.

However, many Brands prefer to do it the other way – to first open large stores inland and expand within the city/country and then to come to the Airports. It’s quite difficult to say which model works best, but keeping in mind high operating costs in the city and in the country, it may look more feasible to take shop-in-shops or run Specialty stores with the main Airport Retailers. One way or the other – it’s just another reason to be in touch with their consumers. In today’s market scenario, one would agree “out of sight is out of mind”, all the more reasons to be in touch.

Tuesday, April 21, 2009

An Odyssey from Adyar to Africa!

I was watching the second day’s cricket match of the second edition of the Indian Premier League on Sunday, 19 April 2009. What struck my eyes was the big branding of one of India’s leading Retailers, Odyssey. One could not miss this name on the back of the team’s jersey of each player of Deccan Chargers, one of the eight teams that's part of this new concept in playing the game in just 20 overs! Enough has been said and written about the format, so I save my readers of any more of that...

Coming back to Odyssey – Dictionary.com defines this word as “a long series of wanderings or adventures, esp. when filled with notable experiences, hardships, etc.”

A very apt name christened by its Founder and Promoter. For all the struggles they have seen over the past decade to be where they are today. I have been seeing this brand since their inception in the year 1995 – at a nondescript location at Adyar in South Chennai, the capital city of Tamil Nadu, India. It was among those first stores to be “Organized” for the categories they were offering – mainly Books and stationery, Music and other leisure products. They were quite popular among students and youth in the city, especially in that area – given the affluence of people who resided in and around along with a number of schools.


Among the first initiatives of expansion of the business by the promoters was to step into a prominent Luxury Hotel in the city in 1999. This made them be seen, by the literati and the glitterati, and Brand recognition started to increase. In a couple of months, expansion was seen across various cities in South India. Even before they were acquired by Deccan Chronicle Holdings in 2005, they launched a co-branded Credit Card with ICICI Bank, one of the largest banks in India. This was a great initiative at that time. There are not too many Retailers who have ventured into this path and Odyssey is among the few who have got it right. However, a lot more could be done by Retailers through such partnerships – to be regularly in touch with their customers, to begin with. After signing up over two dozen stores in the same year, the brand started seeing more stores being rolled out – this time all over the country.


The year 2008 saw maximum store openings including another first to its credit – the first Leisure Retailer in India to enter Travel Retail when it opened its outlets at the Bengaluru International Airport on 23 May 2008. This was followed by other Airports such as Hyderabad and Delhi Airports and I am told that they are aggressively pursuing this subset of the larger Industry quite well. Also on the cards – a long list of Metro Rail stations at Delhi. As on date, although largely present in South India, they have 40 stores across 13 Indian cities. With one of the largest network of Leisure and Book Retail Stores in India, the Brand’s main USP, as I believe, is its simplicity. Most stores have a universal appeal with its furniture and decor only varying to suit the needs of the particular markets. Although Books are still the mainstay even today, they have ventured across various categories including Toys and Electronics, which needless to say are quite popular among its core audience. They also hold Book Reading sessions with prominent authors and writers at their Outlets – a unique but a sure way of getting more walk-ins into their outlets.


Coming back to where I started – advertising through IPL. Many of you would know that the promoters bought the Franchise of the Deccan Chargers Team in the year 2008 at a whopping USD 107 million! The sheer coincidence or rather the advantage of having such a sound backing from its parent and a pan-India presence would have obviously prompted the Retailer to take pole position as against the choice of its sister concern, Deccan Chronicle, a daily newspaper that’s present only in three cities in the country. This is also a first in our Industry – I am yet to see Retailers advertise through such media for obvious reasons of exorbitant advertising costs, although sports goods / FMCG manufacturers and marketers are exceptions. What a sensible way of utilizing space of its promoters’ assets and mainline communication to its potential and present target segments! Wow. And an opportunity to retail the Team Jerseys and other accessories at their Outlets - a clever, yet simple way of getting more shoppers walking into their Stores! This brand, from Adyar to Africa, has come a long way and probably there would be a day when they own a team as well. Hopefully. And I would be cheering for their team, as much as their success. For sure.

Friday, April 17, 2009

Driving Retail sales using ATMs!!

Its public knowledge that effective 01 April 2009, the Reserve Bank of India has mandated that cash withdrawals from an ATM, regardless of which bank one has his/her account with, are free of any additional charges. This means, if an individual has a Debit Card from Bank A, and wishes to withdraw her money using the ATM of Bank B, then she wouldn’t be charged Rs. 15 or Rs. 20 (1USD = INR 50) which she was being charged earlier. That’s great news. Especially for those who have their accounts with smaller Banks – those Banks who have smaller ATM networks. All the more in Tier II towns. And ofcourse, my favourites – the villages and rural areas.

So, what?

Well. I see this as a huge opportunity for Retailers. It’s already quite common to see ATMs in non-banking locations such as Petrol Bunks, Airports, Railway Stations, Malls and Supermarkets. These ATMs which are today much more sleek and compact than their older cousins (including in-built CCTV cameras that are as small as shirt buttons), could easily be fit into smaller areas. Till now, many retail formats haven’t sensed the usability and importance of these ATMs. To begin with, its additional rent to the lessor or landlord.

If buying bread-milk-eggs could bring customers regularly into supermarkets, then why not ATMs! Look at a scenario – In India, on an average, we withdraw enough cash to last for a week or so. According to latest estimates, about 40-45% of its Sales transactions in Organized Retail are made using Debit and Credit Cards. Which means, there is a huge opportunity to attract those who use cash – from buying convenience products to luxury goods. A strong reason why ATMs must be encouraged across various Retail formats – most importantly at Hypermarkets and Supermarkets.

In today’s economic slowdown, the biggest hit format happens to be Supermarkets. With most categories seeing less than 60% “fill-rates” due to various reasons, many SKUs being unavailable (partially) through the year and hardly any major difference among the various “brands” of grocery retailers, those who have an ATM will certainly see more walk-ins. Needless to say, there would be something or the other that they may want to pick-up and there you see – higher conversions! And yes, users visit ATMs not just to withdraw cash – today, banks offer many other services, such Cheque-Drop Boxes, Tele-banking, internet banking, details about new and existing products and services such as personal loans, home loans, insurance, etc. Many reasons why users keep visiting ATMs.

Other areas where I see advantages for Retailers – since most ATMs prefer to have a Security Guard posted 24/7/365, the Retailer and the Bank could share the cost. The ATM Booths could have fliers of Offers and Promotions at the Retail Store, thereby informing ATM users about what’s the latest in the store. Retailers could use the banks’ existing database and send them mailers (by post/email). In return, the Retailer could pick on a random basis, an ATM user over the past month and gift a voucher! Consumers who use a particular banks’ ATM/Debit cards could get special offers – Savings (Read: discounts) on products that they shop. Wow. And many more.

When most Retail formats have seen a 20-30% dip in their footfalls today, this could be a great way to bring more people even near or outside the Retail Stores. And yes, as I always believe in, its consumption that drives growth. Always.  

Saturday, April 11, 2009

Fore-court Retailing

Many of us would have seen Fuel stations abroad, especially in the West, where they extend other facilities - such as ATMs, Convenience Stores, Garages, and even Food Courts/QSRs, etc. While I was filling Fuel this morning at a Petrol "pump" near my house, I was wondering, what else I could do around the same time - I had to pick up some vegetables, ice-cream, bread (for Sunday breakfast) and some Magazines. The nearest outlet, where I could get all the above (either in one store or in different ones), was atleast another 10 minutes’ drive, but how I wish I could get some more under the same roof! Although it’s quite common to see some Oil Marketing Companies in India already in the fray for some time now, there is no great headway as such. While Vishal Retail has tied up with Hindustan Petroleum to start forecourt retailing at the HPCL outlets, Indian Oil has inked a deal with Future Group. Bharat Petroleum has tied up with Cinemata to set up cinema halls at its 300 fuel outlets on highways across the country by 2010.



To begin with, as I see, the main issue is ownership. Whilst most Outlets are franchised, the franchisee pays the lease rentals (if not owned by them, which is rare). The Franchisee makes about a Rupee or less for every litre of fuel that’s sold. No wonder, the franchisees spend a lot of time these days at the Outlets, to ensure quick and efficient service (with a smile) and thereby getting back these customers. Apparently, the Loyalty factor is among the lowest in this business, I am told. Some of us are quite particular about where we fill the fuel – but that’s just some! Many of them do not really plan their usage and hence drive into the ones that are closer, when they finish the tanks.

So, if there were (Organized) Retail formats here, then there is again an ownership issue – most of the Convenience (format) Retailers do not prefer the Franchise model and this could be a stumbling block. In Bangalore, there were some F&B operators who tried this – they are not popular coz’ they aren’t successful, possibly due the slow or nil growth. Larger Organizations wouldn’t be averse to this model, but I am particularly not sure what’s stopping them. In today’s times, where every square feet of space is expected to fetch returns, it’s not a bad idea to sub-lease a part of the premises for various other activities.

Just a matter of time, I keep saying (to myself), the eternal optimist that I am. Hopefully, my optimism will not be a dream. Let’s see.

Friday, April 10, 2009

Shopping @ Cinema..??..!!

As a short holiday period unfolds (Good Friday & Weekend; possibly many people taking a day or two off from work, before and after), there are many “things to do” on our lists. Short drive outside the city is a great option for those who have their personal mobility options. And for some, it’s about relaxing at home with family and friends - catching up on TV, latest movie DVDs, Worldspace Radio and of course, loads of Beer! And a few who prefer to venture out would definitely visit the nearest Cinema (notwithstanding the Bollywood standoff which saw the two Khans rub shoulders recently and showed their support and solidarity) given the fact the whole of South India has other options than just Hindi movies.

And how does that benefit Retailers? Well, yes, it does. Most of us remember going to “theaters” when we were children, not just for the movie, but also for the Samosas, Pop Corn and Colas – something that were as important as the movie going experience itself. No one complained the quality of food or the smoke and smell of cigarettes in the lobby – all of us co-existed and also caught with up friends and their families from the locality, looking at posters and reviewing the movie. Although there was enough and more of food, there wasn’t any product retailing. However, this changed since early 2000, when Malls with Multiplexes started to redefine the whole experience.

Recent history is replete with examples of successful movies (and the ones that were not) having a huge impact on Mall traffic, especially the ones that hosted Multiplexes. Expectations went sour for some and were extremely positive in a few cases. The Tamil blockbuster “Sivaji” (2007) which saw people waiting outside the Multiplexes for days before they could catch up the movie had their time well spent at the shops, restaurants and food courts! And such movies that have a family audience only add up the footfalls. Ghajini (2008) which was a super-hit had an opposite reaction to a previous mega release Mangal Pandey (2005) that brought crowds to the Multiplexes only to see the Khan himself, although there weren’t too many takers to appreciate the movie.

With Summer 09 collections already in place, and drying up not just due to the scorching weather, but possibly due to lack of footfalls too, it would be worth the effort to woo shoppers to see movies – along which they could also know what’s the latest in the Department Stores and Exclusive Brand Outlets. And some smart Visual Merchandising (VM) would certainly help. After all, VM is expected in entice a passerby into a browser, a browser into a buyer a buyer into a regular buyer and a regular buyer into a Loyal buyer of the store or brand.

Retailers could look at tie-ups with the Multiplexes – before and after the show, to make moviegoers pass through their stores. Another option, of course, that needs to be integrated well in advance is the lay out itself with better merchandise assortments. It’s not uncommon to see the exit area of the Multiplexes through Food courts – people do feel hungry/thirsty after sitting for over three hours. But how about having a flow where movie-goers pass through Retail outfits – may not be full stores, but samples and mock-ups; mannequins sporting the latest collections - and a gift voucher redeemable on purchase at the respective stores! Even a 10% conversion would add a lot more value than not doing anything. After all, when people passing through Airports and other Transit points (world over) shop at these places where the primary objective is to transit from Point A to B and not really “shop”, one would wonder why people wouldn’t shop at multiplexes, where the primary objective (or so be it) is only to watch movies! Wishful thinking.. naah… experimentation. Leads to success. And Learn.

Saturday, April 4, 2009

IPL - a reason to increase consumption

That the IPL was aptly named NRIPL by India’s Times of India newspaper is already public knowledge. Most of us not just liked the idea (although many felt the sarcasm was not called for!) but also felt the depth of those words – how the IPL which could have added over 1,000 Crores during the current economic slowdown to various Indian businesses (such as Airlines, Hotels, Restaurants & Bars, Forex money changers, Taxis, Tour Operators, etc.) have lost it out to some other country! And I read today that the tickets for the first two days were sold out in a few hours since online bookings commenced. Not surprising for another Cricket Crazy Country.

What I always liked about IPL 2 was its timing & dates – during the evenings and summer vacations; kids and adults can watch the Game at their homes/clubs/restaurants/bars et al. Am sure, this would certainly bring a BIG impetus to the heavily troubled F&B Industry across the country (footfalls have gone down by over 40% atleast in Bangalore, I am told) and people have become extremely choosy about what they are consuming. So, Restaurateurs must be planning their special menus & combos. Good luck to them.

I also hope the supermarkets are planning their bit too – Merchandisers and Buyers must be stocking Processed Food, Ready to Eats, Colas and needless to say, loads of beer and spirits. For an excitement starved Retail Industry over the past four months where families have reduced even their regular monthly purchases, am sure the next two months would bring more footfalls and higher sales, atleast on these specific categories. With the Cola companies planning a slew of new product launches and new campaigns already in place, am sure the thrust for higher throughput is not just incidental but a fact that they have to work very hard upon.

And not to forget the increased home deliveries – not just the ready to make Pop Corn sachets, wafers and Colas from the nearby Kira... errr.. the “Organized” Retail Stores, but also Pizzas and other food items from the local food joints. That the college exams would be over by then and some youth would have fun doing their bit of part-time jobs is sure shot – just that they must be encouraged to do so. (I have done that in my teens and I can vouch how exciting it can get).

This is the best time to increase manpower especially for door deliveries and work 2-3 weeks in advance, (that’s actually now) to tell the neighbourhood that they are ready for home deliveries. While I was in Hong Kong during Christmas 08, almost every meal that we had at my friend’s home where we stayed was ordered – on the Internet. There was this Guju restraurant closeby; make an order and pay online and you get your food at your doorstep in 30 minutes or lesser! Well, I know we are not yet so very “Organized” or ready for e-commerce, but am sure this is a good time to make a beginning... a reason to increase consumption. Needless to say, I do believe that consumption will result in higher growth and not necessarily otherwise. Wishful thinking! Let’s see what my neighbourhood has to offer.