The E-commerce conundrum in Food Delivery

I was present at the India Retail Forum in 2012 at Mumbai’s Renaissance Hotel. The annual event was a carnival of sorts for Retailers across the country. Images Retail, the magazine publisher’s flagship event attracted thousands of retail enthusiasts every year and the year 2012 was a landmark one. This was when there was a cooling down in the Indian Retail story which scaled peak heights at the time. An estimated 350+ Malls were operational all over India and another 300 were in the making. India was touted to have 1,000 operational Malls by the year 2020 (which didn’t happen, obviously). Each mall would have atleast 250+ vanilla stores, 5-6 Anchor tenants and High Street rents had doubled in less than a decade. 

During an interactive session, Mr. Kishore Biyani, Founder and CEO of the Future Group was asked what went wrong with the group – this was the period the Group saw one of its toughest times in their history ever since they started operations in 1987 with their first ever company Manz Wear Pvt. Ltd. which sold suiting and shirting in Calcutta by the name and style of “Pantaloons” which was a combo-word of Pants and Patloons. Kishore Ji quipped that “they wanted to be everything to everyone” and hence a few things collapsed while a few stood tall and successful. The group’s e-commerce outing FutureBazaar.com was a colossal failure and couldn’t compete with a start-up named “Flipkart” (in 2012-13). So ironic looking back now. Their attempts to go “phygital” just didn’t work. Grocery e-commerce was unheard off and hyperlocal as a strategy didn’t even exist or was scripted. 

From running neighbourhood grocery shops measuring 1,000 sft. to running the Central chain of Malls across India, a hypermarket which redefined grocery and household products shopping in India, food courts and home improvement stores, joint-ventures with F&B chains and even a chain of kiosks by the name “ChaMosa” , which as the name suggests sold Chai, Samosas and may things more, the group was in to every format of retail which was in the book and which wasn’t. But the smart and suave entrepreneur that he is, Kishore ji exited his first love – “Pantaloons” store chain for Rs. 1,600 Crores to Aditya Birla Retail and pared an equal amount of debt driving the company back to success, profits and growth, eventually. 

Same is the case right now with many restaurants who wish to manage door delivery of food to customers. Off late, there has been a growing disquiet between the F&B houses – chains as well as neighbourhood standalone ones with the Food Tech companies such as Zomato, Swiggy among others. And the main bone of contention is that the tech platforms are overcharging the businesses – ranging from 20-45% towards discovery, discounts and delivery of food items to customers. What the restaurants believe is that these companies are mere delivery platforms. What the Food Tech companies are – are much beyond that. 

In India, eating out is “entertainment”. People dress up, wear make-up, connect with family and friends to step out for a meal – whether it is to celebrate a birthday or anniversary, salary weekend or just a casual outing. The premium that bars, pubs and restaurants have been commanding for “dining in” in India is not just for the great food, but also for providing an enjoyable and safe setting for individuals and cohorts of people to spend their time. So, more the premium a location is, the more expensive is the food (a cup of Coffee or Dal-Roti at a local restaurant vs. a  premium restaurant in a Mall, or a Star hotel & so on!). 

Assuming that patrons would keep paying more for the “setting” coupled with decent food, many restaurants across India have been charging a premium which has only been on the rise over the years. Even in a fiercely competitive category like pizzas – where Dominos specialises in take-aways vs. PH offering world-class dining options, prices of pizzas have remained more or less the same though Dominos saves immensely serving pizzas even to in-house guests in corrugated boxes with plastic chairs and tables. The likes of McD or BK have not been able to churn out profits like elsewhere in the world due to this continued focus on the restaurant format, the ambience and expected service standards. For Ex., India is probably the only country where we consumers expect someone to clear the paper packaging on which Burgers and Colas are served. So, the “cost of housekeeping” increases the business cost.

Now that consumers have been used to door delivery of F&B, mostly during the last 12 months and even before the pandemic began, the footfalls at restaurants for dining has dwindled. Sadly, most restaurant chains have not kept up with times and have followed their traditional ways of operating the business with the same kind of dine-in behaviour which today, unfortunately is becoming an expensive affair. With a total lockdown announced across some of the major towns in the country, restaurants are unable to operate the dining facility though the Government has allowed multiple delivery options. 

Now, what the Food-Tech companies have done, obviously is to charge consumers for deliveries and also charge a hefty commission from restaurants to catch-up on their hereditary losses – though am not sure if this model is sustainable. Even when the “Unlock” began around Aug. ‘20, many restaurants failed to convert their business model with a deeper focus on takeaways and deliveries, instead waited with bated breath for customers to keep pouring in. Until the second wave hit us and which has hit us very, very hard that there is no looking back now and consumers becoming weary to venture out, even after the so-called second wave slows down sometime in Jun. ‘21.

The ongoing tussle between the Restaurants and Food-Tech companies (I refuse to call them delivery partners because they are not just that) has reached a tipping point now that many restaurants are pulling off some of these platforms and are instead using pure-play delivery partners such as Dunzo, Shadowfax, Delhivery among others and / or are merely using their staff and waiters to deliver the food items. To opine the least, this is a disaster in the making.  The waiters and staff are not the “delivery person” material as their skill sets are quite different. But now, due to an imminent loss of livelihood, I believe they would double up their roles until they find their fitment elsewhere. 

To believe that each one is cut-out for the other’s business model is a myth. We saw how many so-called “Cloud kitchens” were created by the Food-Tech platforms which have not grown beyond a point. I am no one to judge but I guess, it’s best for the service providers to simply focus on their core skills so we consumers can keep at it without breaking this chain of discovery, ordering and reordering. Whether the players are listening to, is anyone’s guess.

The Café boom – Retail 2020 (Article #4)

When I was climbing up Vaishno Devi hills 5 years back late in the night, I saw to my pleasant surprise an outlet of Café Coffee Day midway known as “Ardh”. The café was quite popular among devotees and visitors and many regulars were savoring their favorite cuppa at this 24hr café. One can find over 1,700 such cafes across 450+ cities in India and the brand can be credited with creating as well as leading the “café culture” in India and introducing it to three generations since 1997 when the first one opened at Brigade Road, Bangalore.

A friend of mine asked me a few years back, “what’s it like to drink a cappuccino at Starbucks in India?” – I said, enjoying a great cup of coffee indeed. He replied, “No, one spends Rs. 350 to live their American dream while spending the 90-120 mins at the Café”. In hindsight, this is quite true. I had written in my article only yesterday that most Indians buy luxury products for the “Badge Value” it offers and not really for what the product stands for and the craftsmanship. Same is with eating out as well and no wonder, the café boom has been growing year on year in India. A Café (or a local F&B joint earlier) is the third most preferred place after Home and Workplace to have a social catch-up for most of us worldwide. 

The traditional tea shops in India, since the days of the Independence struggle, would play community radio and the entire neighbourhood would gather to listen to the latest updates. Later on, it was Ceylon FM and Geet Mala which attracted the locals only before independent Tea shops and local Restaurants started mushrooming across cities. The India Coffee House, stunningly still operational through a network of cooperative societies, is a glaring example of the gossip-gupshup culture of the 50s and 60s. And then came the trendier cafés which served Italian styled cappuccinos with local snacks and gourmet cuisines to attract the well-travelled as well as the aspirational customers of popular western culture. The rest as they say is History, rather, “History in the making”. For, we have a mere 4,000+ modern style cafés across 500 cities in India – for an estimated discerning customer segment of at least 30 million consumers in the age bracket of 18-45 years. 

Café Coffee Day is the largest café chain in India with over 1800+ cafes. In store count, second comes Starbucks which entered India in 2012 in a JV with Tata Group and operates around 180 outlets – approximately 10% of the market leader. Home grown café chains such as Barista and Java Green as well as Internationally acclaimed chains such as Costa, Gloria Jeans, Coffee Bean and Tea Leaf and many others entered India with much fanfare a decade or so back and have already exited with huge losses since they couldn’t get the business model right. While coveted brands like Illy Coffee are available only at select star hotels, many international café chains haven’t even entered India for obvious reasons. 

Meanwhile, India has witnessed a boom in the Tea Retailing models with a number of funded start-ups ruling the roost. Market Leader Chai Point has raised US $37.5 million and has 104 operational stores across India while Chaayos has raised US $18 million and operates 65 outlets. While these investments have largely gone into brand building, the Tea-Retailing business hasn’t been profitable even at an operating level as per market sources, thanks to the low perceived value of a cup of tea, its liberal availability across the length and breadth of the Country due to abundance of supply of raw tea leaves which are grown across the country unlike the Coffee Crop which needs a special soil and shade alongside to grow with high maintenance. Incidentally, most of the premium varieties of coffee and tea are exported for a hefty price and what we get mostly is of inferior quality. The ApeeJay Group created an innovative concept by the name “Cha-Bar” as part of the eponymous Oxford Bookstore, beginning from Park Street Kolkata to Mumbai, Delhi, Bangalore, Chennai and across India, although neither the book retail nor the tea-retail business took off as much as many other coffee chains took the country by storm at one time. 

A few years back Hindustan Unilever experimented with Bru Café at Mumbai as a brand experience center and the Tata Group has experimented with the Brooke Bond Café at Mumbai and Tata-Cha at Bangalore, both of which haven’t expanded for reasons best known to Tata Sons. Bru Café eventually never scaled since the instant coffee was not what the consumer was willing to pay a premium for. Bru and Nescafe Sunrise are the Top 2 operators in the Rs. 2,000 Crores pa Instant Coffee Market in India with over 40% market share together with numerous others such as ITC's Sunbean, Levista, Continental Coffee, Leo Coffee, Narasus Coffee and many others are stacked up one behind the other in one of the smallest Coffee Markets (by value) in the world, disproportionate to the population size. Nescafe has been able to open Kiosks at various establishments such as Airports, Railway Stations and Corporate Tech Parks while Bru has penetrated deep in to the small and medium size offices and corporates with over 25,000 installations cumulatively across all its formats.

With 50% of India’s population under the age of 35 years, a substantial exposure among the Gen Y, Gen Z and the Millennials to global culture and higher disposable incomes than the immediate previous generations, the Café boom is yet to even begin in my opinion. But it would be fraught with challenges. Getting the right real estate is the prime challenge. Then comes standardizing the F&B assortments so the crew at café can prepare with limited OTJ training. Third, deep pockets to keep consumers coming back for repeat visits. But the good news is that the potential Consumer is not just ready but is willing to pay a premium for discerning concepts. 

As I write this article, Gloria Jeans is making a comeback, CCD is about to get a new Investor cum Owner and a few interesting brands are scaling. Exciting space ahead. So I can write more interesting stuff about my favourite beverage, more often.

Howdy Slowdown?

Flipkart commenced operations in India about a decade ago. For the FY 2017-18, the Annual T/o of the company was Rs. 24,000 Crores (about US $4 Billion) while Amazon India has a turnover of Rs. 12,000 Crores for the same period. Swiggy earned around Rs. 442 Crores for the previous FY and Zomato added Rs. 1,340 Crores. Industry Leader in the Furniture segment Urban Ladder reported a top line of Rs. 200 Crores for the previous year. Offline Retail Giant Future Group has an annual turnover of Rs. 30,000 Crores across various formats from Grocery to Electronics. Reliance Retail on the other hand has a combined turnover of Rs. 100,000 Crores of which 70% comes from Fuel Retailing and Jio, the data cum telecom company which is part of the retail entity. Ola, the cab hailing company clocked a turnover of Rs. 2,200 Crores while Uber India has an approx. annual turnover of little less than 1,000 Crores last fiscal. Phew.

So, why am I enlisting these turnover figures here?

Because, we are complaining of an Economic Slowdown. FMCG companies, Retailers, Automobile Manufacturers and many other consumer facing companies (and their backend suppliers) have all been complaining of a slowing growth in their businesses. As is the case most often, the Government is being blamed for the mess that we are supposedly in, right now. 

Reliance Retail & the Future Group together account for over Rs. 60,000 Crores which is almost 2% of the total estimated Retail Industry in India (about US $ 500 billion). Add Amazon & Flipkart and the overall business from new channels has increased tremendously over the years. The total pie of the Organised Retail Industry as well as the total consumption market have increased over the past decade and a half from less than 5% to nearly 12% currently. While ITC, Britannia, HUL and others have seen a slide in their sales, remember how Patanjali is raking close to Rs. 10,000 Cr in turnover and is aggressively followed by the likes of Dabur & Himalaya!

E-commerce has played a pivotal role in increasing the overall consumption market in India – selling products online and delivering at the doorstep at the most comfortable time for consumers, service offering (such as booking plumbing & carpentry services) and of course transportation including local mobility as well as ticket bookings across modes of transport. 

While Swiggy and Zomato deliver lakhs of food parcels daily, the restaurants have seen an average 15-20% of their business coming from these channels with a marginal increase in their total business as well. Hundreds of restaurants which were invisible are now able to showcase their products on the Food Delivery Apps and have eventually taken away some of the market share of popular restaurants, thereby curtailing footfalls to restaurants as well as through online orders.

With millions of rides fulfilled everyday by Ride hailing apps in India, have you ever seen an Auto Rickshaw driver starving off business? In fact, thousands of new Autos have been sold. New companies like MG Motors & Kia have set up plants and newer models are outselling older versions. Just that the outdated models like i10 and Indica don’t have any takers. Fortuners, XUV500 & Audis and Beamers aren’t selling short anymore! 

The overall consumption market hasn’t shrunk, rather newer channels and opportunities have opened up. The turnover numbers in the first paragraph are to showcase how much new business has been added over the past decade. The slowdown is more in our minds and a measured approach towards over-spending, which is anyway an inherent way of living.  

And btw, the headline has nothing to do with the so called “Economic Slowdown” but the Indian PM is addressing an event in the US this weekend and the name of the event is “Howdy Modi”, so I thought I would use it to entice my readers.

My Retail Journey with the Coffee King

I have sang praises for the coffee consistency across India. I have shared so many anecdotes about my most favourite Indian Retail brand. I have done case studies on what went well and what didn’t for my previous company. And I have also occasionally complained about a few things I haven’t liked, much to the chagrin of my former and present colleagues. But I never thought I would have to write such an obituary for my former boss, retail czar, coffee king of India and the most unassuming Late Shri. VG Sidhartha.  

My first premium coffee was at Barista, KNK Road in Chennai in the late 90s. But I preferred CCD over Barista for two reasons – there were more youngsters at CCD; it was easy on the purse (I hadn’t graduated to a wallet those days!). When we finished our MBA and received Certificates at the Convocation event, we celebrated the day at CCD Ispahani Center, Chennai. A few years later, I took a Shatabdi to attend an interview at Bangalore for the role of an Area Manager at Café Coffee Day but I was rejected for the role since at the time, the hiring manager preferred someone who could also taste the food to ensure they were in fit form to serve customers, which I declined being a pure Vegetarian in my food habits. In 2006, I happened to meet Mr. Sidhartha for the first time. CCD was chosen as the preferred café for the upcoming Bangalore International Airport in a tightly fought Tender process. As Manager – Commercial Contracts, I was solely responsible for designing, conceptualising, leasing and managing the retail areas at India’s first private Airport and was delighted to meet the Chairman of Coffee Day Enterprises who came to sign the contracts. He was taller than me and a taller personality with his trademark smile. 

Over the course of years, I happened to be on the other side when I joined CCD as General Manager – Business Development (Key Accounts) in Nov. 2009. My team and I were responsible for identifying and later setting up over 140 cafes pan-India at Airports, Retail formats, Cinema Theatres, Colleges, Hospitals, Metro Rail Stations, Railway Stations and even IPL Stadia. In this period, I would get to meet him at least twice a month or more when my team and I would present the potential locations on a giant screen at the 10^th floor Conference Room of Coffee Day Square at Vittal Mallya Road. He was a very affable man, loved by everyone. When I visited his hometown Chikmagalur where the group runs a finishing institute where the children of coffee farmers of the region study basic skills of hospitality and coffee making, I have seen first-hand the gratitude, love and praise these kids and their families have showered on him. Many of them stepped out of their district for the first time only to work at a CCD across India. He took care of his people very well. Many of these staff members went on to join other popular Retail chains over time. 

Chairman, as we would address him was a stickler to time. Most meetings would start and finish on time. I would be asked by my Director to come to the Tenth floor at a stipulated time to make my Presentation but I would arrive 10 minutes before for a very selfish reason. His floor would have HBR Magazines which were very pricey those days to buy and read. So, I would make the most of my time to come up and wait and in that pretext pick up reading a few interesting articles. Would never forget those days of my life where I travelled across India, three days a week, over 40 weeks a year for two years non-stop. Today, I am known in the Retail Industry with two backgrounds – Bangalore Airport and CCD despite having worked at 5 iconic Retail Companies over the past two decades.

I owe whatever little name, fame and success I have achieved to CCD which gave me a global pedestal to learn and make a good name for myself. About 3 years back, I wrote to him seeking a small round of funding for my start-up. As expected, he replied quite soon however in the negative stating that his fund invested in maturing ventures and not really in start-ups. During one of our meetings, he quipped “This is your second coffee in 1.5 hours” and I replied “Sir, I drink 6-7 cups of coffee a day” to which he replied, “Boss, don’t consume so much coffee, it’s not good for health”. Who would expect a coffee czar to say this? But he did. Because he really cared for people. Pray for his soul to attain Mukthi and reach the foot of the Lord who created this world. Om Shanthi.

Pic taken at CCD Dharamshala (2010)  - boys were from Chikmagalur

Why Coke wants Coffee...

A budding second generation Entrepreneur started an Internet café in Bangalore’s iconic Brigade Road in the mid-90s with the unprecedented boom in consumers using the World Wide Web to communicate with each other besides knowing a bit more about the world on the other side. Those days, an hour of browsing the Internet would cost ₹100 and a cup of coffee, perhaps ₹10 or so. It’s no surprise the costs have reversed today. 

 

Cut to 2019, the same Entrepreneur is expecting a valuation of $1 billion for his coveted asset, Café Coffee Day which he has patiently and painstakingly built over the past 20 years. The café has over 1,700 cafes across India now including a few outlets abroad. I was privileged to work in this team a decade back for 2 years where my team and I went ahead to set up over 140 cafes across Airports, Metros, inside large Retail formats such as Wal-Mart, Shoppers Stop, Odyssey, at Hospitals, University campuses, Cinemas and even at Cricket Stadiums at Chennai and Kolkata during IPL Matches. The bidder for CCD this time is none other than Coca Cola Company, world leader in carbonated beverages who has also been in India for 2.5 decades.

Why does Coke want coffee? Because they see an untapped opportunity to reach out to the millenials in India who are among the largest of their ilk worldwide. Pepsi, on the other hand has a majority of its business coming from snacks and food while Coca Cola Company with its wide portfolio dominates the carbonated beverages market which has seen a shy growth in India, thanks to alternative beverages, let alone a few healthier options. CCD cafes interact with over an estimated 3,50,000 patrons a day with an estimated 100,000 bills daily (assuming an average 3 persons per bill). That’s over 1.2 billion times of engagement annually, something that Coca Cola Co. can do perhaps only online with constant advertising. 

A recent report published by Euromonitor states that the Indian Coffee Market was pegged at ₹2,500 crores as of 2018 and could double in the next 5 years. With cafes becoming the third and most preferred alternative place to hang around after home and work place, Indians are embracing coffee cafes and tea bars like never before. In the immediate past half decade, chains like Chaayos and Chai Point have gained much attention from Consumers as well as deep pocketed Investors. World’s biggest café chain Starbucks entered India a decade back in a JV with Tatas and has grown to over 150 cafes till now while others like CBTL and Café Pascucci left the market even as the homegrown Barista and British chain Costa have found a small niche for themselves. Interestingly, Coca Cola Co. bought Costa Coffee last year for $5 Bn while Nestle bough the distribution rights of Starbucks across Europe for over $7 billion in 2018.

Interesting times ahead for discerning Indian consumers. Would we see us drinking Coke and Fanta along with a Cappuccino at the neighborhood café or the Mall down the road? I don’t know yet. Interestingly, Sidhartha of CCD has refrained all along from selling carbonated beverages ever since the beginning. But the brand’s future could be different. We are now seeing Spicejet logo on the erstwhile Jet Airways’ crafts. Time will tell how this story spins out. And although it’s not in my plan today, I am already fixing my Auditor’s meeting at a CCD. For the love of the brand and their coffee.

Coffee Matters (Noun & Verb)

My former Boss at BIAL, Mr. Stephan Widrig, the then Chief Commercial Officer blocked his calendar and sent me a meeting request with the Title - “Coffee with Shriram”. I was stunned and confused at the same time. I was awaiting to have my annual performance review around that time with him and instead he sends me this. Most Indian employees (excuse my bias, please) are used to sitting nervously in front of their bosses during such sessions, with sweat falling profusely and continuously for the entire duration, what with the Boss is going to gag the employee with their non-performance of metrics and expectations. But this session turned out to be different. 

Stephan had done his homework (as always) and had just a single page with pencil notes on it. He invited me warmly to his cabin and we had a 45 minute discussion on what I have contributed to that particular FY as well as the 2 years I had spent with the company which was involved in setting up the first private Greenfield Airport in India. I was more critical about my performance than him, frankly. But he calmed me down often and suggested never to be so difficult on myself. The review went well and I came out with flying colours (as cliched as it sounds) and a hefty increment + bonus, but most importantly I walked out with so much satisfaction of working for such a person!

A recent study by John Bargh of Yale University suggests that a Coffee Meeting with the Boss can do wonders and this article is the reason for my outpour of my fondest professional memories.The study suggests that the “coffee meeting” can also work wonders when one is pitching new projects to Clients, raising an Investment or even discussing with Suppliers and Business Partners.

“What we found was that there was a significant difference between the two groups, such that participants who held the hot coffee cup saw person A as being more generous, more sociable.”

It’s common to see Starbucks and CCD outlets across India (and perhaps elsewhere in the world) filled with people engaged in discussions - as we reckon from the Food Retail Industry, cafes are the most preferred third choice of location for most of us after Home and Workplace. I am told Pubs are a great place to pitch Angel Investors by Startups in the West - and we have seen and heard enough stories how many Unicorns who raised their first round of funding over beer. Back in India, alcohol is still taboo - at least in most business occasions (well, Delhi and Mumbai could still be exceptions). Even some of the largest Indian corporations and business houses do not hold official Dinners with alcohol, thanks to an inherent cultural mindset. So cafes are the “go-to” places.

I recall when I was a student 2.5 decades back, the cafe culture was still setting in. Chennai had “Hot Breads” even before Cafe Coffee Day came up and there were similar such smaller joints where young couples would turn up for a “coffee date”. Even a conservative city like Kolkata had it’s brush with “Coffee Pai”, a speciality cafe with wonderful desserts and coffee to go with run by my friend Naveen back in the millennium year. Over the years, the cafe and coffee culture has outgrown with every important road across the top 30 cities in India doting a regional, national or International coffee shops. Such is the power of Coffee.

On the same note, a number of Tea joints have also sprung up in India over the past decade, with some having raised millions of US Dollars in Investment. My favourite in Chennai is “Chai Kings” which serves a wide variety of speciality Tea and have upgraded their outlets with a swanky indoor, with the recent one opened at Ramanujam Tech Park in Chennai. However, the value proposition for Coffee over Tea (Price being a differentiator) is way too high and hence Coffee chains can afford to charge much higher than Traditional Indian Tea. 

As the Indian spring begins this January, do plan a coffee meeting soon with someone important in your career and life - from an Ex-Colleague to your current Boss, long lost friends or your spouse. And remember to go for a Warm Coffee than a cold one. You will feel the difference, trust me. And write to me, if it did make a difference. Cheers.

Coming soon - 60,000 Retail Centres in India…

The Central Government announced on Sunday that it is planning to issue application forms for 60,000 Fuel stations across the Country to be operated through Dealers using the trade name of the Three Oil Marketing Companies (OMCs) Indian Oil, Bharat Petroleum and Hindustan Petroleum. There are already 62,000 (and counting) fuel stations across India which retail Petrol, Diesel and allied products while a bunch of them also retail CNG for commercial vehicles. About 10% of these stations are operated by private players such as Shell, Essar, etc. It is a remarkable feat that the world’s highest fuel retail station is in India at the Ladakh region of Jammu & Kashmir in the Himalayas which is a favourite among auto-enthusiasts. 

As in the past, prospective applicants need to apply online and pay an Ernest deposit to the OMCs which would be followed by a lucky draw. And those who win would be awarded the contracts and assistance provided by the respective agencies in setting up the outlets while those who didn’t qualify would be refunded their deposits. While this generous move by the BJP Government is seen as a positive measure since no such new contracts have been issued in the past four years, critics have dubbed this as a meaningless move with spiralling fuel costs and dwindling vehicle sales over the past two quarters this financial year and a mere public-pleasing stunt ahead of the upcoming National Elections in May 2019. So, the verdict is split. 

It costs a whopping Rs. 1.5 – Rs. 2 Crore to set up a Fuel Station spread over 5,000 sq. ft in the name and style of the OMCs while the cost is more than double for private players like Shell who have stricter norms towards the setting up of the outlets. The biggest challenge for setting up a Fuel Station has been land acquisition, especially on National & State Highways which have seen a 10-fold increase in vehicle traffic over the past decade, thanks to better roads, lower cost of acquiring personal vehicles and a generally heightened mood for vacations and road trips. 

Being an avid traveller and a terrific lover of road trips myself, starting with my beloved Hyundai Santro in 2005 till the new age Mahindra XUV500 (I upgraded to an Automatic from the previous Manual this March), I have personally seen how the entire ecosystem has evolved over the past 15 years or so. In fact, I plan my trips now, whether short or long depending on the wayside amenities that I could use, from rest rooms to coffee shops, meals to speciality snacks and of course the need for service centres, local vehicle mechanics and Authorised Service Centres, etc. The need for such pitstops vary when I travel solo or with family and of course based on the number of hours we travel at a stretch. 

My pet peeve on highway travel has been the lack of good quality toilets (well, good is a relative term, so!) and clean and hygienic food outlets which have somewhat been fulfilled at least across Tamil Nadu Highways which I frequent the most by road. While only a handful International and National Retailers such as Café Coffee Day, KFC, Mc Donalds and A2B have scratched the surface of the opportunity of Highway Travel Retail, there seems to be an enormous opportunity that lays ahead of us. I see these upcoming 60,000 new Fuel stations (many say only 1/3^rd of all locations proposed actually turn up in reality) as nothing other than Retail Centres, where apart from filling Fuel, one can have various other retail offering from food outlets like cafes to speciality restaurants, shops selling snacks, fruits and condiments for the journey ahead and of course, wayside motels for a quick overnight stay for tired drivers and their families. 

Reliance Retail with their Fuel stations did come up with some of these models way back in 2006-07 but the whole effort slowly dwindled due to decentralisation of Fuel prices and today, they remain large parcels of land ready for an explosive growth. These fuel stations (and Retail Centres) could be beneficial not only for travellers but also for the nearby towns and villages, generating sustainable employment and entrepreneurial opportunities. 

I am writing this sitting in the back seat of a Bolero travelling on work and just stopped at a highway shack where I had a glass of Coffee. I see a new Retail Centre coming up closely (when I close my eyes).

E for Empowerment - Employee Empowerment

Have you felt that the restaurant where you spent a few hundreds or even thousands provided a great meal but the service was basic, if not atrocious?

Have you experienced cashiers without any life at cash tills in supermarkets who hardly look at the customers faces?

Have you encountered sales staff at apparel boutiques who are not interested to show you varieties of merchandise?

Have you seen sales staff at a mobile retail store who are more engrossed in their own smartphones playing games or watching Youtube than serving you?

There are many such examples that we could discuss in detail and the prime reason for this is that the Retailer has provided limited or nil empowerment to the staff. I had a similar example this morning. I was at Café Coffee Day Ispahani Centre (Chennai) with a guest and we ordered two cold beverages which arrived fashionably late after 10 minutes. One sip and the Frappe was lesser by a quarter. In 3-4 minutes my drink was over! And it was meant to be a cold drink. After a while, I went to order a Cappuccino and again had issues with the staff who were novices and were under training while the senior guy was not around. When he appeared suddenly I told him about the cold-less Frappe and he just gave me a blank look – nothing more. No apology, no offer to replace the drink, nothing. I wouldn’t blame him. This is how most of our large Retail chains work who are facing severe challenges in employee management.

While we could debate what the staff in the above example could have done, I think the issue should be addressed at the Corporate level than at the store level. Worldwide, many retail stores, especially in services businesses such as food and entertainment have given a lot of empowerment to their staff across hierarchies. For example, walk in to a Starbucks and order a drink – if you didn’t like it and inform the guys behind the counter, they would just replace it without battling an eyelid. Yes, there could be some cunning customers who do it purposely to give a try for some new beverages, but “Customer Delight” which we discussed in the previous article is foremost for such Retail Brands than the few sour apples.

Indeed, many small and medium retailers have empowered their staff immensely and I must give credit to such Entrepreneurs as well. It is not without a reason that some brands have grown their businesses immensely while established ones falter. Even large retailers are empowering their staff. Case in example: The Store Managers at The Future Group outlets are designated as “Kartas” not without a reason. Karta is the official name of the person who heads a business managed by a Hindu United Family (HUF) and the Future Group has just taken a leaf out of it. The Karta of a Future Group is fully empowered to take decisions pertaining to his/her store, ofcourse what’s within their areas of power & consideration.

There is inertia among Business owners to empower their staff due to trust deficit and employee dependability. However, with the right coaching & mentoring, this can be very well be overcome and businesses can indeed succeed.

Brewing Cheer with Beer!

I recently happened to meet Rahul Singh, Founder and CEO of “The Beer Café”, an upcoming chain in Delhi NCR, based out of Gurgaon. Rahul comes across as an affable person, having spent over 20 years in the Indian Retail Industry. Before turning entrepreneur, Rahul was working for Reebok as Executive Director and was responsible for sourcing apparel for domestic as well as export markets. An electrifying guy, Rahul seems to have a natural flair for entrepreneurship. It was a chance meeting to discuss a business proposition but turned out to be a very engaging 90 minutes one on one. Prior to The Beer Café, Rahul  was responsible for creating the first ever indoor Golf centre along with F&B and Entertainment at Gurgaon, at the upscale Ambience Mall.

I couldn’t resist but to ask Rahul how many months did he take to come up with the idea of a Beer only place. He was quick to retort saying that it took him just two months! I loved the way he simplified his method of narrowing down the concept. According to Rahul, there are three broad categories in the F&B Business – Fine Dine, Quick Service and Fast Food. He chose the Fast Food model. Within that, there were two options – to focus on food or beverage and he chose the latter. And within Beverages (read Coffee Café chains like Café Coffee Day, Barista, Costa Coffee, Gloria Jeans and Starbucks which have more than 2,000 cafes in India), he chose cold beverages and that’s how the idea of Beer Café was born. Simple idea that relies on classy execution.

Rahul wants his chain to be the CCD of beer and conversations. Alcohol frees up the mind and the soul and today, one has fewer choices to consume a pint of beer, either at a restaurant or at a Pub (home parties are a limited choice though). So, he wanted to set-up Beer Cafes in convenient locations where people could drop by with their friends or colleagues at work for a quick chat or a relaxed conversation.

The Beer Café now has over 11 locations within Delhi/NCR and would have about 30 operational outlets within the next three months! With VC funding coming in, Rahul hopes to grow the café network substantially over the next couple of months. His only gripe: Real estate costs of First World with consumer spends of Third World. Every Retailer would agree to this quote. Operating Costs, especially store rentals are extremely high and staff attrition is another big challenge. Rahul is now looking for an able COO to run the business, so he could take a bigger role in managing Strategy and Expansion.

The café is very appealing, with bright lights and a friendly attitude of staff. On a weekday evening when I passed by at the Beer Café at the Ambience Mall at Gurgaon, there were many who were having a good time seemingly. And many more would be in times to come.