10 April, 2011

Obituary - Raghu Pillai, the Retail Wizard

If there is any regret I would nurse all my professional life, it would be not meeting Mr. Raghu Pillai, whose sudden demise this morning (April 10, 2011) has left me baffled with life’s uncertainties. Last month, I was at the Corporate Office of Home Town, which is also the Head office of Future Value Retail, where he had moved in a few months ago as CEO after being at the helm and putting up Reliance Retail to shape. I saw him walk past the cabin in which I was in a meeting; when I walked out, couldn’t spot him and left in a hurry for the next meeting. Little did I imagine that I would never see him again! It is ironical that I write this column on board a flight from Chennai to Kolkata where I started my career a decade ago at Musicworld Entertainment, part of RPG Retail for which we was the founding CEO since 1995. He suffered a massive heart attack and passed away at his Chennai home this morning and is survived by his wife, son and daughter.

Raghu Pillai was one of my first inspirations into Retail. I was among those 40 other Management trainees who were deeply inspired and influenced by his baritone-voice inaugural speech even as we were settling in our chairs that morning during the first day of the induction session at the RPG Retail’s former headquarters at Spencer’s Plaza at Chennai. He came across as a very simple and down-to-earth person but was a towering personality. His trademark Cotton half-sleeve shirts and Chinos trousers with a notebook and some papers on one hand and a box of Classic cigarettes on the other was an inspiration that many of us imitated, although out of sheer fan-following and respect than anything else. I had the privilege to interact closely with him during his regular visits to the RPG Headquarters in Kolkata – he would silently walk into the Musicworld store at Park Street and would be browsing the shelves, observing Customers and ideating new ways that we should be taking-up. Later on, when I moved to Foodworld Supermarkets Ltd., which was the Food & Grocery chain of RPG Retail, I continued to have interactions with him as I was heading the flagship store of Foodworld located at RA Puram, a South Madras residential locality where he was instrumental in opening the first Foodworld store, which was inaugurated by the late Carnatic Music Legend, Smt. MS Subbulakshmi. He used to frequent the store, usually on his way back home as we were also preparing for the store’s renovations in 2003.

Raghu was a big fan of music, as he spent many years with Gramophone Company of India (popularly known as HMV, a company that RPG Group bought over many years ago). He was a Retail Wizard – after all, he was the first working professional who had commenced the organized Retail set-up in this country. At RPG Retail, he was responsible for the introduction of various formats such as Foodworld, Musicworld, Health & Glow and Giant Hypermarkets and later on moved to Reliance Retail where he was the Group CEO for Strategy, Operations and Business Development. In Oct. 2010, he joined The Future Group as CEO of Future Value Retail and also as an Executive Member of the Board. His keen sense of understanding of markets and consumers came from his hands-on extensive experience – he used to spend a lot of time at the Retail stores. He was one person whom the entire Retail Industry looked up to – the first Retail Professional in this country to pave way for thousands of us who followed this unchartered territory.
I write this column with deep regret; it’s a pity I cannot attend his funeral on Monday morning at Chennai, but Sir, you will remain in our hearts forever as a great role-model and as an inspirational leader. May your Soul rest in peace…

04 April, 2011

David vs. Goliath – Retailers and Kiranas. Long Live David.

I was actually not so surprised to see the store closed for a few days, although really felt bad about it. The first time I entered the store ever since I moved to my new locality, I really didn’t get the right vibes – somehow, these psychological factors work a lot in Retail. The store was in a good location, with grand visibility due to a small curve around, was located in the upper ground floor, which means one has to take a few steps to reach the store and even had unlimited car parking facility along the road side. So, there were actually no concerns about the location per se. But once inside the store, I somehow felt that this store wasn’t doing too well. The category mix was just fine, although in my first visit (which was during the first week of the month), I didn’t get as many as 6 items in the monthly shopping basket. The staff attitude was good – atleast not so bad given the indifference that we see at many other similar retail stores. The stench (of Non-Veg Food) for a hard core veggie like me was unbearable – the fresh meat section was located deep inside and the smell was all around. This usually happens because the store staff does not run the air conditioning throughout the day – a little compromise to save electricity bills which could have such an impact that it detracts otherwise loyal customers into the store. Last but not the least, this was only one of the three Food & Grocery stores in the vicinity of 5 square kilometers – no way could “competition” have been a reason!

I am referring to “Spencer’s” Retail store – my alma mater, my first University after my B-School education. In my early years at the erstwhile Foodworld which was a Joint venture between the RPG Group and Dairy Farm International, Hong Kong, I realized my love affair with the Retail business – a conscious decision taken to stay on in Retail during one of those self-introspection moments which is why where I am. Indeed, I am greatly thankful to the Management support that I received during my initial days – I was fresh into the system and was the only MBA Store Manager – an unwarranted attention within the company, but those who had employed me had a thought and plan behind. It was the most prestigious store I was handling, at RA Puram in South Madras which was also the first store of the group way back in 1997. Foodworld was already a household name by 2002 when I joined, and hence didn’t require marketing the brand. Those were the days when I would stand at the doorstep, welcoming customers as well as hearing their feedback when they were exiting. I had a superb team to manage (rather, one that I was part of) and the store used to attract high-profile customers like film stars and celebrities of their own right! In late 2005, DFI and Spencers split their JV and the RPG Group created its own Retail stores under the iconic “Spencer’s” branding. The rest as they say is history. 

Today, Foodworld and Spencer’s co-exist, especially in the southern markets such as Chennai, Bangalore, Hyderabad etc. Loyalties have split and each of them have their own loyal lot of customers. Spencer’s was inching a step ahead due to its original brand-recall while Foodworld was remembered for building the organized Retail space. Over the years, Spencer’s faced stiff competition from national players such as Big Bazaar, more. , Star Bazaar, etc. which opened large format stores and hence had to create its own avatar, Spencer’s hyper. While the move did work to its advantage, its success would be keeping it going.  

So what really was plaguing the store I referred earlier? Not many actually. One of the biggest competitors for organized players in this space is not its peers, but the local Kirana. He has also grown over the years, form 200 sft mom and pop outlets which used to sell off the counter to large air conditioned self-serviced stores with mechanized billing, spanning 2,000 sft and a range that can never compete with others. One of such players is doing brisk business in my locality – a group of Malayalee entrepreneurs who returned from the Middle East who may have tried various sources of employment and finally settled on the age-old Retail formula. The store is cluttered with merchandise – a phenomenon that our Indian customers like a lot. Organized Retailers have tried cleaning up the store as much as possible, which eventually attracted only the elite (who incidentally don’t cook at home always). Indian shoppers like the butt & brush effect, something we are used to in wet markets once upon a time.
Here are a few reasons why the Greenland scored brownies against Spencer’s;

·         Merchandise Offering – One of the key success factors for the Food & Grocery business is availability of goods – a make or break reason. If during the second or third visit the customer doesn’t find products that she wants, she would not enter the store again. This was one of the main drawbacks in my opinion. While the Spencer’s brand name pulled shoppers inside, they left the store empty-handed.
·         Store Ambience – Fresh Meat in my opinion was a wrong move – an inclusion which could have been avoided. Little do we realize the maintenance involved in managing the ambient temperature within the store. Also, price-wise, there wouldn't be any great advantage over the local markets, so I wonder why the had to try this. 
·         Home Delivery & Extended shopping hours – while Spencer’s had “staff” employed, Foodland had “family and friends” employed to serve customers. There would be a guy who takes phone calls through the day and goods delivered (for as low as a bill of Rs. 100) within a few minutes – From NAN to Noodles, one could just order over a phone. Also, the shop would open as early as 7am and would close after all customers have left- close to 10.30pm.
·         Staples – It is a given fact that the biggest draw for organized F&G Retailers is Staples, a category that managers spend a lot of time on. These are expected to be crowd pullers and hence a lot of analysis is undertaken to ensure the right product is available at the right time at the right price. Unfortunately, even the strong-hold of Spencer’s could save it from closure
·         Fresh Fruits & Vegetables – this, I guess was one of the strongest proposition. While Spencer’s had better products within the confines of an air-conditioned store, Greenland displayed them outside in the open. Availability was never an issue and pricing was reasonable.
The above scenario is pretty interesting, given that the debate on FDI in retail is raging by the day. My hunch is that FDI will indeed be allowed around Q3 this year. Three states (Tamil Nadu, West Bengal & Kerala would have positive results on the Congress Party & its allies) are up for Assembly elections next month, the results of which will play a major role in the Centre deciding on FDI in Retail. The anti-FDI guys have always batted citing the livelihood of small entrepreneurs and Kiranas but the situation described above is certainly not a lone incident. There are hundreds of organized small-format Retail Stores that are facing the music across the country. Hence the question is who actually is David? Certainly not the kiranas! With over 12 million small unorganized retail stores across the country, they are indeed the Goliath. The best is yet to come and I am enjoying each passing day in this exciting Organized Retail Industry!

Thank you, HR

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