Friday, January 3, 2020

Inflight Retailing - Retail 2020 (Article #7)

Air Asia, the low cost airline which pioneered the concept in South East Asia two decades back has been in the news for the few days for other reasons. The company has pioneered, much to the surprise of both the Aviation and the Retail Industry, an F&B concept by the name “Santan” which apparently has a wide range of menu curated from ASEAN countries. From Vietnamese chicken rice to Thai Noodles to the most favoured local Malay food, it features many an item which is a Local delicacy. And then comes the surprise. Hold. Santan has opened its first outlet at a premium shopping Mall in Kuala Lumpur and Tony Fernandes, the maverick CEO and Founder of Air Asia aspires to open 100 such outlets in the region. While executives of the Two related industries are sharing extreme feedback – from calling Santan a bizarre experiment to one that’s refreshing and pioneering, the jury is yet to be out.


Cut to 2005. Capt. Gopinath, an Indian Pilot who had retired from the indian Air Force aspired to set up a low-cost airline minus the frills and launched a test flight from Bangalore to Bellary followed by a national presence before ultimately selling off the business to Kingfisher Airlines. During the early days of Air Deccan, the airline ran several innovative promotions to catch the fancy of public and stood true to it’s Brand Byline – Now every Indian can fly, by offering inaugural promo tickets at ₹1 per ticket plus local and statutory aviation taxes. Was a great way of Marketing but here came the surprise – in the early days, there was no seat allocation for passengers who would run toget their preferred seats, from windows to aisles and to avoid the rear facing ones adjacent to the Crew.and to make add-on revenues, Air Deccan “sold” water much to the chagrin of the flyers and general public. Indian Aviation has come a long way forward since then. 

Retailing products on the flight, rather during the Flight, popularly known globally as “Inflight Retailing” in India is in it’s infancy in India currently. While one gets to savour a wide range of RTE (Ready to Eat) Food items from Biriyanis to Bhel Puri, Dal Chawal to Poha & Upma, these are not really innovations from the airlines themselves. Café Coffee Day created an innovative ready to mix coffee powder which only required Hot Water and introduced it in the skies in 2010. Although the coffee was not a hit, it has given birth to an innovative way of tea-making in similar lines. 


Airlines out up a catalogue of products, from key chains to power banks, Bluetooth earphones to toys. But I hardly see flyers buying them for the range is so boring and nothing that’s not available on ground. Not sure of the Commercial Management Team at airlines across India do not sense this opportunity which is over USD 2 Billion worldwide or are they simply focussing on the traditional aeronautical revenue coupled with faster and improved performance on ground, for that’s where a Plane should spend the least of its time. 

Once upon a time, Retail Brands would issue Gift Vouchers to Airline passengers while Jet Privilege allowed to earn and burn bonus points at select Retail Outlets.  Not anymore. Loyalty is dead, after all and Membership is in. I am waiting for the day when Netflix and Amazon Prime would provide a one-month trial for select passengers. Mall Chains and premium Department Store chains like Shoppers Stop would, for a small fee offer a coveted Membership that entails members to avail special offers including home pick-up, personal stylist and so on. Revv and Miles in a tie-up with Airlines would offer vehicles for self-drive at Airports so users can be more efficient all day as well as leisure tourists can avail sedans and SUVs for their tourist destination. In my opinion, inflight product and services retail is in the anvil and is bound to explode in a very big way in times to come. 


Would Air Asia launch Santan in India or would Indigo launch a café? I think that’s a too far-fetched idea at the moment. Retail, and modern retail is a different ballgame altogether. Long term Retail F&B companies are still tweaking their business models in India after being in service for 2 decades. I would rather hope we see more innovations in the inflight catalogue. Like Rajinikanth-branded aircrafts which was launched by Air Asia ahead of 2017 release tamil film Kabali. 

Thursday, January 2, 2020

Highway Retailing – Retail 2020 (Article #6)

I have just completed a 10-day vacation across North India. Being an avid traveler, my travel plans are usually frozen at least 2 months in advance, which includes booking of rooms, air / rail transportation as well as ground transportation including the last mile to the Hotel or Resort where we would stay. However. one thing which has always been unplanned, or rather difficult to plan is the place to eat / take a break during such trips, especially while travelling by road. On our last leg today, we drove from Jaipur to Delhi, a distance of 270 Kms which took us around 4.5 hours non-stop. Due to intense Fog in this part of India, we wanted to reach as close as possible to Gurgaon before we took a break. Thanks to constant protests across country on some pretext (currently the NRC) or the other, we decided we wouldn’t stop midway and filled our “tanks” at Jaipur during breakfast. Sadly, the weather played spoil sport and my flight was delayed by over 2.5 hours, thanks to the Fog.


To give a perspective, there are an estimated 40,000+ Fuel Stations across India. Of these, at least 90% of them are branded by PSUs including Indian Oil Corporation which has close to 40% of the outlets, followed by Bharath Petroleum, around 30% and Hindustan Petroleum, around 25%. Lastly, there are the privately-owned OMCs - Oil Marketing Companies such as Reliance, Shell and Essar which are less than 5% in number and growing faster than the PSU OMCs. During my stint at Café Coffee Day in 2009, I signed up two exclusive contracts with Shell and Essar which were riding high on the deregulation of fuel prices which meant that the OMCs could fix the price for Petrol and Diesel. Although they have maintained their prices on par with the PSUs, there are benefits they cater to the consumers beyond filling high quality fuel. For Ex., all Shell Outlets have clean rest rooms separately for Men and Women. Some of them even provide services such as Vehicle Wash and minor repairs. The erstwhile Reliance Fuel Outlets had separate Food Courts from the Fuel Station including independent ingress & egress which was extensively put to use by the company through company managed as well as Franchised / outsourced F&B operations in the name and style of A1 Plazas. 

However, the majority of Fuel stations managed by the Dealers of the 3 PSUs do not even have basic amenities such as clean rest rooms which has been a regular qualm of most highway warriors like me. There are exceptions such as the Yamuna Express highway which connects Delhi to Agra with an Eight-lane highway which has three Toll Plazas and each of them have a neighbouring resting area including large food courts housing International and regional F&B outlets. 


Café Coffee Day remains the Number One F&B brand in India which has the most number of highway Outlets as compared to any other business house in organised F&B Retail. But this trend at CCD started many years back, beginning with the coveted Bangalore – Mysore State Highway followed by many such Highways across India. Many other regional brands such as Haldirams in North India, Sukh Sagar in the West and A2B (Adyar Ananda Bhavan) and Adigas in the South have cracked the regional markets but none at a large pan-India scale. Perhaps, Indian businesses can take a leaf out of International operators in the US & Europe who have built Billion Dollar businesses around this model. 

Personal driving as well as Cab hailing for long distances have become affordable now, thanks to lower cost of owning 4-wheelers as well as many tourist locations across India. Highway Retailing is in it’s infancy in India now and much more needs to be done in times to come.