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.

Self-Checkout or Assisted

Earlier, I wrote in my article for The Economic Times about how Self-Checkout or even an assisted one would make a cut in the Indian scenario even as Indians are embracing E-Commerce like no other and the Indian E-Commerce business is expected to cross over USD 50 Billion by 2025 by various estimates. Meanwhile, the Retail Industry in India is pegged at USD 500 Billion with just about 10% being Organised or even semi-Organised (meaning those shopkeepers who use some form of PoS for Billing & Accounting). Almost half of the semi-organised Retailers do not have an end to-end PoS solution and this is the latest trending opportunity in the realm of Retail Entrepreneurship with a number of existing players upping their ante while a whole lot of new technology is being tested and introduced by new Start-Ups. Interesting days ahead indeed.

Meanwhile, I visited the Apple Store on Orchard Road at Singapore during my recent vacation to the Country. It’s been 11 years since I travelled abroad and was yearning to see the Temple of Technology to seek the blessings of the Almighty Apple (sic). I have owned every Apple product ever made by the Company in it’s recent history, starting from the iconic iPod in 2007, iPhone (several of them!), iPad (two of them), MacBook, Apple Tv, Apple Watch and Airpods. I felt like a little kid inside Disneyland when I entered the Apple Store, that I was walking all along the counters and seeing the whole retail theatre with glee.  I wanted to interact with the staff and hence gave a request for a query on iCloud Management. I was given an appointment and was asked to wait for about 40 mins which I agreed with utter happiness so I can spend time there seeing how Apple consumers interact with the Apple Store. On the first floor was the Genius Groove – apparently the Genius Bar has now become a fledgling hub where atleast 100+ customers & staff can be seen seated together and interact on various service issues. I picked up my iPad and started browsing with the free internet provided by the Apple Store – a whopping 110 mbps even as so many of them were sharing the same internet. Finally, my turn came and I was assisted ably by Justin who clarified some basic as well as a few complicated queries on iCloud. He was extremely polite and knowledgeable and sent me back happy. 

I returned a day later to buy the new iPod which was launched on Thursday 30^thMay 2019. I saw about it on their website and ended up at the store to pick it up. The staff themselves were surprised that it was ready for Sales! I placed an order on the mobile PoS which the staff had where I was allowed to browse the options, colours, etc. I placed the order and waited for 10 minutes by when another Apple Staff brought the product and handed over to his colleague. She placed my order on the same handheld PoS and my transaction was completed in less than 2 minutes. I was pretty excited doing this transaction and saw first hand how Omni-Channel Retail actually works. While I have seen similar technology being made available at a few Indian Retail Stores (Croma, For Example), the seamlessness and the convenience was fantastic from a user experience. 

There are atleast 20,000 companies, small medium or bigger who make PoS solutions including market leaders like GoFrugal, Wondersoft, Pathfinder, etc. to name a few. The solutions are priced from a one-time payment for as low as Rs. 10,000, SaaS models with recurring payments, enterprise solutions and so on. At my own Start-Up “Smiling Baby” – a chain of baby care stores, we signed up GoFrugal Technology’s eponomous “RayMedi” software which is now christened “RPoS” and have invested heavily 2 years backwith a module to manage Inventory across our multiple franchise stores including product management, adding inventory, live stock status and much more. With two running stores and two more in the pipeline, we have put the software to great use although we are yet to unlock so many hidden features including the omni-channel option where in we can rotate stocks across stores based on user requirements. Also, there is an option to connect the software with a mobile App, so Consumers can actually check which product is available at which store and accordingly, they can place orders online for a home delivery or a store pick-up. And this, for a small Start-Up like ours which is certainly not heavy on piled up cash investments. 

Omni-Channel offers a great opportunity for SME Retailers as much as the established ones. Time to make the most of it now.

Retailers and Jet Airways – Cross Learnings

I had just started flying frequently from Bangalore to Delhi for monthly meetings and the preferred choice those days was Jet Airways (9W). Their on-board service was perhaps the best in class (the only comparison was the erstwhile Indian Airlines) and a few years later, maybe Kingfisher. Even with the popularity of the red-dress stewards with mini-skirts that attracted millions of flyers (forget not those plastic Kingfisher branded earphones), the Corporate Traveller still preferred 9W. There were many reasons for this choice, despite their pricing being 7-9% higher than Kingfisher and almost 1.5 times of Indigo and Spicejet in the later years. 

The Jet Airways – Citibank co-branded Credit Card was a must have on our wallets in the later part of the Millennium. The card provided several intrinsic benefits – including Lounge access at Airports as well as shopping and dining benefits across the country. The 5 Tier membership on Jet Privilege, among India’s largest Loyalty Program was similar to the Snakes & Ladder game, that travellers had to cautiously fly a designated number of flights in a quarter to retain their Membership Tiers. And how can I forget the uncountable “upgrades” I have enjoyed on 9W from Economy to Business to even First Class! 

Move over Kingfisher, which many Corporate Travellers thought were more hype and publicity than 9W which had a very genuine care for travellers. Be it the highly curated gourmet food menu even on Economy Class, Coat hangers for Business Travellers and an overall, relaxed travel experience for toddlers to Senior Citizens, these were a few things that attracted passengers until a few years ago. Around a decade back, 9W acquired Sahara Airlines only to burn out too soon, even as the low-cost airlines were matching or lowering air fares what Sahara offered. And after the merger completed, 9W continued to be a premier airline, some even calling it elitist. It was common to see celebrities, cricketers, reputed Business Leaders and many more socially popular people on board 9W. Even without the selfie melees those days, it was nice interacting with such personalities often on board or at the 9W Lounges. 

As I write this piece, I just finished reading that SBI which is managing the debt ridden airline’s takeover has further tightened the norms for a possible suitor even as travel agent-turned India’s most respected Aviator and business tycoon Mr. Naresh Goyal resigned from the Board recently. I am able to already see similar comparisons between 9W (and to some extent Kingfisher as well) and Modern Retailers, for they both cater to similar consumer segments. I have hardly seen traditional Kirana stores go out of business, save for financial mismanagement or not keeping in tune with changing times. In some cases, the next-gen of these Kiranas despise to take over the business calling them traditional, boring and uninteresting. 

But we have seen the meteoric rise and abysmal fall of so many Retailers, Shopping Centres and Malls. If we see what’s in common with those who downed shutters or ones that don’t have the grease to keep them up – it’s all about financial prudence, business stability and focussing on the core. For example, 9W lowered its fare over time to compete with the likes of cost-efficient airlines like Go Air. Being an International Airline and also having a Government norm to fly to far off destinations including Tier 2 towns, the airline was making losses for every nautical mile it flew in some cases. Sounds similar to many of our Retailers selling at cost or lower, a few or more SKUs which they call “Loss Leaders” and what is expected to drive footfalls who will eventually end up buying high-margin products. How I wish this dream was fulfilled. 

Most recently, 9W removed complimentary meals on board for the first time in it’s illustrious history which made even the most hopeless 9W Fan and Corporate Traveller to start whining, writing a fitting Obit for the airline on social media. Instead of upping its value proposition, the airline took to removing services, akin to how Retailers cut down support staff or reduce/switch off air-conditioning in the Retail Stores and Malls to reduce operating costs. In-flight Retail, which is a proven big-billion business worldwide remains largely untapped as well.  All is not over for 9W, yet. I am quite confident that the airline will find a new suitor who will continue and also improve the brand’s legacy with passenger growth touching double digits the last few years. Also, the Government wouldn’t let another airline fail, for it impacts the image of the country at large. However, Retailers may not be that lucky. A private Retail Company is not of national importance, yet – the way Americans eulogised Walmart & Starbucks. We see store openings and closures commonly these days. Ask me about E-Commerce players losing money for every transaction – from selling mobile phones to a portion of Roti or Dosa – well, they all hope that consumers will get used to convenience. Well. 

Travel Retail at Regional Airports

I am seated at Madurai Airport and my Spicejet to Chennai is delayed by 55 mins. It’s a swanking new terminal built a few years ago when the local heavyweight MK Alagiri, (eldest son of Late M. Karunanidhi, the former Chief Minister of Tamil Nadu) was an MP in the UPA Cabinet. Being his hometown, he pushed for this infrastructure development a decade back when the DMK was a key ally of the UPA led Congress Government between 2004 - 14. That was when Bangalore & Hyderabad came up with new greenfield airports while Mumbai and Delhi had a massive makeover – all four now being run by private partners. While the UPA Government selectively upgraded regional airports, the present Modi Government led by BJP along with NDA allies has given a further push to unlock aviation opportunities at over 40 unused airports under the ambitions UDAN – Udega Desh ka Aam Nagrik (Common man will fly). 

The Prime Minister inaugurated the Gangtok Airport recently, unveiling a host of opportunities for tourism to the Eastern hill state of Sikkim (although excessive tourism is a bane for ecology, but I will save this for another article) along with numerous airports across India taking the tally of operational airports in India to 100. A further 50 airports are yet to take off even as many airlines have wound up operations at some of these airports due to various reasons – poor patronage by passengers cited to be the most favoured response even as I reckon that it is due to careless Business management by these operators who took up routes which they knew were unviable and continued to bleed operationally without building parallel commercial opportunities other than not marketing the cost of time to the locals to fly, rather than take up a rail or bus journey. Truejet has ceased operations to Salem while Air Deccan (yes, they were resurrected by Captain Gopinath) ceased operations in the East. And many such examples.  

I had to rush to Madurai on an urgent personal work and took a day trip by Air. After my work was over, I reached the Airport four hours in advance since I had a 2-hour Video Conference with a Client. I was dreading the thought of being seated in those most uncomfortable standard airport-seating. But to my own surprise, there was an oasis – a Lounge before Security hold area. It was prohibitively expensive for Rs. 900 per pax with unlimited time one can spend plus some food and snacks on the house. They wouldn’t accept Mastercard or Visa’s Complementary Lounge options either. But my call was more important, so I chose to pay and use. Didn’t realise how I spent the three-hour period at this well maintained Lounge with polite and courteous staff. Thankfully, I was the sole occupant all along so had the entire 20 seater Lounge for myself.

Took my boarding pass from the Kiosk and walked around and upstairs to be greeted by unexcited staff who were clueless why their “shops” existed what with not a single passenger glancing inside. I noticed local delicacies – Halwa and Milk Khova from neighbouring Tirunelveli and Srivilliputhur respectively. Once inside the waiting area, there were the usual food Kiosks savouring watery coffee, dip tea and oily snacks with sugary bakery stuff. Absolute gold mine of an opportunity to cater to the 3,000 plus passengers who fly off daily from the domestic terminals. Being sensitive Tier 2 cities like Madurai, it would make sense to engage passengers with affordable F&B and Retail options. Perhaps a Levis or Nike may not work, but Indian brands with a regional appeal could do well. 

Tourism development in India is usually seen as an activity to be undertaken by a particular Department of the Government. Worldwide, I have seen a cohesive collaboration between the Public and Governmental agencies to promote tourism – from Singapore to Switzerland, Bangkok to Berlin. It’s only in India that we compartmentalise the potential opportunities. There wasn’t a single poster or a visual that speaks about Enchanting Tamil Nadu which is the spiritual and cultural capital of India. At the Departure hold, passengers and visitors are already travelling back, so instead of promoting the city, why not promote the State? We would sell more Coffee, Tea & much more at neighbouring airports too!

My i Vs. Mi Experiences

I purchased my Mobile SIM card for the first time in the year 2002 in Chennai from Aircel and that number is still active. My my first handset was an Ericsson followed by Samsung R220, the first mobile phone launched in India with a multi-colour display. This was followed by a few Nokia models over a decade and a Sony Ericsson P1i before I finally moved to Blackberry. A few models and 4 years later, I moved on to the Apple Ecosystem with iPhone 4S in 2011. I upgraded to 5S, 6 and 7 over the years as well as including other i-Devices such as 3 generations of iPod, 2 variants of iPads, a MacBook, Apple Tv and finally an iWatch. With a paid plan for Apple Music and a huge storage on iCloud, I don’t have to worry about my stuff on the hard disk anymore, for its all safe and secure, “Up in the Air”. Hopefully. With a seamless integration within the iOS, it is almost impossible for me to move out of the Apple Ecosystem anymore and I guess I will remain clued in here. however, when the announcements for new models of iPhone XS & XS Max were announced last month, I had less interest than last year for the iPhone 8 & X. Somehow I felt that Apple has stopped making mobile phones for common users and is perhaps focusing on a niche segment who can use most of their offering.

Notwithstanding my self-prejudice for a coveted Brand and its products that I love so much, I decided to visit a Retail Store to physically touch and see the new launches. On a sunny Chennai afternoon last weekend, visited an upmarket Mall in the City, which for some strange reason has four retail stores next to & opposite to each other who sell multi-brands of Mobile phones and accessories apart from an Apple Premium Reseller (APR) and a Mi Experience Store. Even before I could visit the APR I happened to see the new iPhones at one of Tamil Nadu’s leading multi-brand Retail Store. The Staff were as uninterested as I were and they hardly explained why the new damn thing costs a lakh and fifty thousand bucks, with which one can but at least three new laptops or 15 mediocre mobile phones or perhaps even 5 top-end new mobile phone models. I didn’t bother to even ask queries and quickly moved on to the next chore with the family. Was having a sad grin on my face that the same “me” had waited at the same Mall five years back in a queue for four hours on a sunny November afternoon along with my better half to buy my Apple iPhone 5S on the launch day. How things change, huh!

My wife has been asking me to buy her a wearable device to measure footsteps, which we have been exploring for the past few days. Surprisingly, Croma and Reliance didn’t have a wide range while the Mi Experience Store at Express Avenue Mall didn’t have the widely popular Mi Watch 2. The staff at the Mi Store was unapologetic that it wasn’t available at their flagship store in South Chennai and instead advised us to visit a few days later when it would arrive at the Store. Really? Do Brand staff think Customers will Queue up anymore for their once coveted products? We ended up buying at another store whose Sales staff surprised us and matched the same price as the Mi Experience store where the device’s price is Rs. 200 lower than outside. At the Mi Experience store, I saw a wide range of products including LED TVs but another flagship Mi A5 model of Mobile Phone wasn’t available, once again. 

Recently, I was reading how Best Buy has embraced omni-channel in the US by ensuring a wide variety of models across Brands were made available at the Store and the Retailer also offered multiple models of delivery such as in-store, same day delivery, Day +1 delivery, at home delivery, etc. This was the only way they could counter the intense competition from Amazon in the US. Back in India, things remain unchanged. Croma has a namesake omni-channel model but the staff are disinterested in taking the effort. The bigger surprise was Mi Experience Store, where the staff could have immediately engaged with us, potential buyers of a Watch to browse the range on a device kept right at the store where one could browse and buy with a deliver in a day or two, Lost opportunity. 

This is just my personal experience and am damn sure there are millions of such experiences across the world where Customers are walking away without purchasing, thanks to disinterested staff and their respective Managements. A report in the Economic Times suggests that of the 1 lakh units kept ready for the opening weekend in India, not more than 50% were sold, thanks to low interest of Customers for various reasons, from new innovations to pricing. This is a first for Apple, what with already sagging Sales and the same trend could continue if they keep making iPhones which people stop buying for snob-value. And a younger brand like Mi which boasts of giving a run for money with its devices could do better with Merchandise Planning some Staff training. hope that’s not asking for too much from a Brand which has apparently carved a niche for itself.  

Would Pricing alone entice Customers?

This is my 21^st year in Retail and I am still not amused that the Indian consumer’s love for discounted prices has never waned. Back in the late 90s when I first encountered a modern Retail outlet at Mandaveli at South Madras where my mother sent me to check out the new Store since the Sugar that was sold there was cheaper and of better quality than at the Ration Shop we would buy regularly, I was quite amazed at the whole set-up. It was a nice shop on RK Mutt Road with a bold red signage and white font which read “Subiksha” meaning prosperity in Sanskrit language. That the Indian Consumer has been price-conscious is known, but what’s interesting that almost all products in the country is today is sold at MRP – of course there are exceptions.  In categories like Electronics, the concept of Maximum Retail Price is just for Statutory Prices – to satisfy the Tax authorities. It’s been more than a decade since Electronic items were sold on MRP, barring new releases of Mobile Phones – Apple retains MRP for quite a long time since launching new product ranges while most other Brands cannot and do not retain MRP for more than 2 weeks since launch. 

In Fast Moving Consumer Goods (FMCG), MRP has always existed and will remain so, thanks to the MRP Act which governs pricing of consumer products. However, most Retailers of all sizes – S, M, L or XL or XXL (pun intended) offer or atleast promise to offer products below MRP. Subiksha’s initial success was due to a Brand promise that “Every product was priced below MRP” including Medicines which was an instant hit. The Retailer carefully priced products a rupee or more below – but at least One rupee lower than MRP which was a rarity those days. Even Kiranas wouldn’t reduce so much from the price of products, however would offer credit to consumers which was the first example of ensuring “Customer stickiness” a buzzword today. Over the years, most other Retailers have played on the Price and used it to their advantage. India’s first organized Grocery Retailer Foodworld had exciting price-offs on special days and this would draw crowds to the stores. Foodworld also launched Private Label products – “different cover, same product” which was cheaper by 10-20% across Spices, Ketchups and so on. A few years later, Food Bazaar came up with the premise of EDLP, a term coined originally by Sears in the 1960s USA which was popularised by Wal-Mart later on. 

Every Day Lower Price by Food Bazaar meant that there was no need for the consumer to worry about price change gimmicks; prices were low every day on a whole lot of items which kept / and keeps driving footfalls to the stores till date. On 26 Jan. 2006, Big Bazaar celebrated “Maha Bachhat Day” or “Big Savings Day” which was sort of similar to Black Friday and Thanksgiving weekend shopping in the West. The result was overwhelming and the Retailer has steadily increased it to 3-4 days now culminating with a weekend. In 2012, Flipkart ran “Big Billion Day” which was a runaway hit while also upset thousands of customers because they couldn’t get their hands on many products which were sold out in seconds and the delivery of products took more time than usual. Proof, that Indian consumers are extremely price-sensitive and will embrace price offers all the time. While this article is mainly focussed on Grocery, the competitive / discounted pricing works for every other product that’s sold in retail – from Agarbathis to Audi Cars, Furniture to Apartments (sans GST, as they advertise!).

I happened to visit D-Mart at Salem in Tamil Nadu, India this week. I have visited one of their outlets in Mumbai 8 years before while exploring setting up CCD within their premises. I was awed by their offering. Almost every product was on discount – below MRP to be precise. No crazy promos, no confusing promotions, buy this and get that and so on. Simple, straightforward discounts as we Consumers like it. In no time, I was carrying a basket and when I went to the Billing counter, I was informed by the girl I was to pay Rs. 901. Unbelievable that I picked so many things. But frankly, there was more to do than pricing which stuck me – the store was spic and span. For a grocery cum Hypermarket in a Tier 2 town with a population of less than 20 lakh population, that was surprising. The girl, when I asked said the store was seven months old and is filled up to the brim on the weekends with Customers shopping till late in to the night after the city is shut. Says something about us.

Is Consumer Loyalty Dead?

Commencing this weekend (23 June), almost all Fashion Brands in India will go on EOSS – End of Season Sale, a biennial activity that has been witnessing a higher share of annual sales. When I used to work for Benetton as Area Manager in 2004, things were different. There used to be EOSS Twice a year followed by the “seasons” as they are called, viz., “Spring Summer (SS)” and “Autumn Winter (AW)”. EOSS would usually start after Valentine’s Day in the hope that shoppers would still shop at full price for the big day to impress their dear ones. And the next EOSS would occur after Schools and Colleges have reopened, just ahead of the Festival season that usually begins from August onwards. Slowly, things started changing, rather realigning to Global trends. Many international brands had to match their Global Fashion Calendar and the year-end Christmas Sales, so the EOSS was pushed to December & January and accordingly the next EOSS moved earlier to end-June. And that’s the current trend now.

From Apparel Department Stores to Mono Brands, almost all Brands try to exhaust their Stocks during the EOSS. Interestingly, 15 years back, EOSS was restricted to a little less than 3-4 weeks. However, now it has moved to 6-8 weeks. There are many reasons that could be attributed to this;

• There is limited seasonality these days, in a sense Customers shop all through the year compared to “Occasion-based Shopping” such as for festivals, wedding season, special occasions etc. So, while the lean periods through the year have more or less flattened, the demand spread has also evened out
• Ever since the 2008 Economic Crash worldwide, Customers have become wary of spending high on products which would eventually be available at a lower price in a few weeks (sic). While India saw a boom in Mall culture between 2009-2014, the sheer number of Brands and their availability all through the year have been a cake for the Customers with easier accessibility 365 days
• While I am not a big fan of “E-Commerce killed Offline” theory, it is a fact that there has been a reasonable impact for fashion brands, especially. This is mainly because the unsold Inventory were pushed to their digital vertical by Brands to liquidate the stocks and over time, the likes of Jabong and Myntra have become more of “Factory Outlets” where discounted Merchandise are available, always. It is no wonder that the share of products which are on Full Price on such Ecommerce Marketplaces is relatively low compared to those on Discounts. Actually, this is applicable for all categories
• Department Stores offer a larger “Discount Pie” compared to the Mono Brands, given that most of them operate on a “Buy and Sell” model with no stock returns to the Brands. Therefore, in an effort to reduce the impact of their exposure to unsold Inventory, Department Stores offer aggressive discounts & promotions to ensure they clear old stocks as much as possible. 

So, with all the above factors taken in to account, I wonder at times, is there “Brand Loyalty” left anymore especially for the Fashion Brands?

When was the last time, You – the Reader of this Article, bought the same Brand of Apparel or Footwear or Watch or Sunglasses? Are you wearing now the same Brand that you wore yesterday? If two Brands are offering similar discounts during EOSS (or even at full price), would you buy a particular Brand? If so, then why?

So, the responses could be very subjective and suits each one of our needs. 

Honestly, I do not see Consumers clinging on to any particular Brand and I attribute it to two reasons – variety offered by over Top 500 Indian and International Brands (and Labels) across products categories from Perfumes to Casual wear, formal shoes, running shoes and beyond. 

Are you rewarding your Loyal Customers just with just Loyalty Points, Sale Previews and price-offs? Is this going to be sustainable at all in the long term? 

How would you retain them for longer – LTV as they say, Life Time Value (sic)?

Smiling Baby 2.0

The biggest challenge for most of us in our lives, especially for Startup Entrepreneurs is to learn from our past. We have all heard that it is perfectly fine for us to make mistakes. In fact, in my formative years as a Retail Professional when I worked at Pantaloon Retail (now The Future Group), there used to be posters in our office that it was “Ok” to make mistakes as long as you don’t repeat them and of course, one learns from them. Indeed I have made a number of mistakes in my Retail Career spanning 20 years but my specialty has been that I have gotten up back every single time after faltering with some amazing learning. And that’s what this article is all about.

It’s been in my mind to set-up my own Retail venture as an option for Entrepreneurship for some time now. From Education to Food to Tech to Product Retail, we (my wife & I) dabbled for a long time on which segment to choose. My only criteria, having signed up 140 cafes for Café Coffee Day and 160 Dealership Outlets for Royal Enfield (both of them all India) – I was General Manager – Business Development at both companies - was that the business I was about to build should be Scalable, Saleable and Profitable.

Among many other options that we finalized was the one retailing baby products – which is perhaps the only category other than food that has a potential sale 365 days a year and is almost price inelastic so to say. And that’s how my first startup venture Smiling Baby was conceptualized way back in 2013. While the business model was completely fool proof and continues to remain so even after 4 years, there have a few shortcomings as well. I took each of those lessons with grace and have become a much better Entrepreneur over the past 36 months.

Now as we enter in to our second phase, Smiling Baby 2.0 as I call, there a few learning that I have already implemented. I spoke about these initiatives at the recently held ReTechCon2017 at Mumbai, organized by Retailers Association of India, the industry body that represents Retailers of all sizes.

Among other things, the first thing that we have implemented is a truly “omni-channel” retail model. We already have one store in Chennai and are setting up two more in Coimbatore shortly. All the existing and future stores are connected together on the backend with the Retail store and a website (+ Apps) in the front-end. When a customer visits a store and looks for a product which may not be physically at the store but is still available on the website/app, she will still be able to order the item and it gets picked up and delivered to her from some other store where they may have it in stock. And all this within less than 24 hours from the time of ordering! E-Commerce, as a habit for shopping is getting better by the day in India and that’s been my biggest learning in my journey.

That Amazon has purchased Whole Foods strengthens my model of Omni-channel because that’s precisely what Retail in the 21^st century is going to be.  Customers need a product right there when they need it. While the e-commerce warehouses will continue to remain, it is all about effectively utilizing the retail store fronts which we have all built. The power of leverage is immense and we at Smiling Baby would stand testimony for the same. Watch this space.

EMIs to the rescue of Retailers

I have been receiving emailers from Bajaj Finance, one of the largest consumer finance companies in the country for a long time now, ever since I bought a couple of stuff using their services 5 years back. I still haven't unsubscribed to their mails, hoping that I get to gain a lot of insights into Consumer Behavior day in and day out. The one that I received today was a bit surprising... Even as I just finished my daily quota of early morning news releases, Bajaj Finance sends me an email that the newly launched iPhone6 can be bought using their services through EMIs, while Apple had announced earlier in the day that they have advised Retailers to discontinue the EMI Schemes specifically for the newly launched models due to overwhelming response and low stock quantity. Wonder where the communication channels failed between Apple, the Retailer and the Financing Company, clearly that there was an overlap of information to consumers which is misleading. Leading Retail chains such as Univercell, The Mobile store, EZone and a whole lot of smaller local resellers have been offering EMIs on the newly launched iPhone6 and 6 Plus.

Apple has been struggling in India, not because of a slowing market. Its quite the opposite. More and more people are embracing the Apple Ecosystem and this trend is clearly visible every time there is a new launch. For a country of over 1.2 billion with 300 million youth population, assuming a 0.1% population that would aspire to buy a new iPhone, Apple Inc has dispatched just 55,000 units of the newly launched model. This is quite amusing. Apple Sales have been scaling higher and higher in India over the last 2-3 years, yet the US Headquarters hasn't been giving the subsidiary and the market its due. In fact, it was the news recently that Apple India had to almost fight with HQ to advance the sales of the newly launched models ahead of Diwali to cash in on Festive sales. That the Sales would have been the same otherwise too, is another matter.

So why has Apple advised Retailers not to offer EMIs on the newly launched models? According to trade partners, the reason is three fold. To begin with, the company wants to create an atmosphere of desirability - EMI is the easiest way for youngsters to posess the product and Apple wants to keep it away from this lot of consumers. By not offering the EMI, only those who can really afford would end up buying the new models and it would command a premium in the market for a much longer time. Second, Apple and the Retailer would have to bear the interest costs partially since the EMI would be offered interest free to the consumer and it wants to minimise this cost at the moment. Third, Apple wants to clear the past inventory in the market; Models such as the iPhone 4 and 4S which were released over 3-4 years ago are still available to buy in the market and since there is no bigger market opportunity than India, Apple perhaps wants to clear the last lot of models asap.

So, if you are looking for a great deal on an older model of iPhone, now is the time. Rush to your nearest Retailer and negotiate a good deal, which I am sure they would be happy to offer. After all, an Apple product has a wonderful ecosystem and the older models too have a great experience to offer.

The iPhone Saga continues...

When I posted on my Facebook page at 11.35pm on the night of 16 Oct. 2014 that I was the first in the city of Chennai to receive a 64 GB Gold variant of the iPhone 6, someone sarcastically quipped "So?!?" Well. It was no big deal. Really. Anyone could have been the first one if they had put in the effort. And for me, it was pure fun. And a Retailer's delight too - to see how a Retailer delights his customers through completing a much anticipated and well hyped "transaction". In many parts of the country, the event was quite publicized and draw discerning customers to the Retail Stores - one retailer in Chennai had gone a step ahead to rope in leading actress Hansika Motwani to do the honours. India's largest mobile store chain, The Mobile Store took a full page Ad in national newspapers urging people to preorder and get the device in the midnight. Flipkart, India's largest ECommerce company along with rivals Snapdeal and Amazon was taking preorders promising one-day delivery. Crazy Apple Fans lined up the outsides of the Retail Stores, from UB City in Bangalore to Select City Walk in New Delhi's posh Saket area. I, however chose to skip the queues and chose to book with a low-key Retailer close to my workplace. I really took a chance with this Retail Shop, it is called Hello World located at Adyar, in South Chennai. They charged me Rs. 5,000 as booking charges 5 days before the original launch and assured to deliver the phone by midnight.

 On the day of release, I called then twice during the day to check if everything was as per plan, and they continued to assure that they were geared up for the event and I could come over after 11.30 in the night to collect the "piece". Yeah, ultimately its a piece, but a precious one though! I finished work, went home, had shower and dinner and drove back to the shop and reached around 11.15pm. There were 2-3 other customers who had turned up at that time. I was actually taking a chance, just in case they offered to sell the piece well before the time the invitation suggested. And in true Indian style, they did. They "sold" the first piece to me well in advance of the promised time but cautioned me not to activate the phone until 00.00 hours, lest I lose warranty.

I came back to my car, clicked a Selfie and shared on social media and whatsapp groups - small thrills, you see. And was greeted and responded by many people whom I knew and didn't. I really felt happy that the Retailer stood its purpose and kept us its word by delivering what was promised.

I came home and waited patiently, only to activate my new iPhone6 at 00.05 hrs. Its a delight to restart or swicth on an iDevice. And I love that experience absolutely. The finesse with which a product has been created and packaged - Hats off to Steve Jobs for this. I have been using Apple products for a decade now, with my first one being an iPod Nano 4GB. In the year 2004, it was a miracle to store over 10,000 songs on a single portable device that can be heard through headphones, on a car through an AUX Jack as well as played on a music system. And Apple has gradually grown its line-up. at the moment, I guess they have over 30 SKUs, some in sales in a few countries while some have been discontinued from production as well.

There have been a number of reviews about iPhone6 itself, so I am not going to get into the technicalities. Your favourite news websites are a better source than mine. So, I would urge you to read what you think suits you best. I am only going to share how it feels as a user, as a keen observer of consumerism, as a retailer and as a Retail Consultant who advises various businesses.

The iPhone6 is a tad bigger than the previously launched iPhone5S. The beauty of the earlier iPhones and iPods was that they could be managed using one hand, depending on what suits you. Not anymore with the new model. While a few can hold the device comfortably in one hand, most people, including a few women may find it difficult to use it on one hand. However, the flipside is the screen size looks much bigger. You get to see and read a lot more, especially on sites like twitter and facebook as well was webpages. While the default font size remains the same (it can be increased through manual settings though), one gets a feeling of using a non-Apple device. Maybe like an HTC or Sony. Samsung has launched various sizes appealing to various strata of people, just like how another Korean Automobile company Hyundai does. So, it depends on which other smartphone you compare it with. But interestingly the new model is lighter than the previous one, so the size is compensated with the pressure exerted by the palm.

Speed is immensely better in the iPhone6, but you would realise this only while using certain apps. And the likes of Facebook and Twitter have updated their own apps in line with the iOS8 Operating system, so the apps now open up and perform much better than in previous devices. Battery drains slower than before, although I haven't put the device to too much of use such as having a Facetime Call or watching a movie. Features like Near Field Communication (NFC) and ApplePay wouldn't be usable in India, for we dont have the relevant infrastructure here. Other than some basic cosmetic changes, there is nothing new in the device, although hardcore Apple Fans will tell you about the technicalities which I dont think will change the way we live! However, to each his own. 

At the moment, its been just about 36 hours since I have been using the phone and it seems to be working well and doing its job to its best. And my love for Apple keeps increasing by the day. As the saga continues...

Online Dining

I have enjoyed my pizzas better at the restaurant that at home, all along. It is more to do with the fun of dining – you plan a trip to the pizzeria, a walk or a short drive usually, or even at a Mall after finishing retail therapy. I fondly remember the bottomless Coke and unlimited Pizzas at Pizza Corner in Chennai in the late 90s during my most cherished college days with my gang of friends. Have ever since been a fan of pizzas and the love has only been growing. Frankly, I like pizzas from different places, be it Dominos or Pizza Hut, California Pizza Kitchen or standalone indie restaurants. One of my most favourite of course has been from “Italia”, the fine dine restaurant at The Park, Bangalore. For me, Pizza is an all time snack. I am usually game for a pizza at any time of the day (or evening) although I avoid a heavy dinner of pizzas. In fact, the love of pizza is more because of the yummy accompaniments, the cheese garlic bread and an array of toppings, especially the gherkins and olives. Am not a big fan of coloured flavoured colas and would rather prefer a strong coffee if not a lemon ice tea to drown the heavy food.

What I like best is food to be served hot and fresh from the kitchen. Haven’t been a big fan of home delivery or takeaways since I feel that the freshness is somehow lost, especially the international fare such as pastas, pizzas etc. although Indian food is still doable – we have an option to reheat the curries and biryanis at home once again which can’t be done with pizzas and pastas. Have avoided ordering pizzas at home for a long time now since I have had not-so-great experiences in the past, but that was probably because I used to live in Bangalore where the ambient temperature outside is not conducive to serve hot food by road.

This Football season, I decided to order pizzas at home. No, I don’t follow the game but why not enjoy the delicious offers provided by F&B Retailers! So, first it was Dominos followed by Pizza Hut. On the first occasion, the pizza arrived pretty late, almost 45 minutes since I ordered. I was very disappointed with all the promises made by the company on various media, but gave a benefit of doubt to the delivery boy – he must have had a lot of orders to fulfil and mine was probably the last one. So, I didn’t make an issue about it and just left it there. Yes, I would give them a try once again in future and I hope they live up to expectations.

On the next occasion, the pizzas were served hot and were in a consumable condition even after 20-30 minutes of being delivered at home. What was surprising was it was a Sunday and was the day of the “Final” match between the two teams. And yet, the pizzas were sent on time, well ahead of the promised time. They have a future customer for sure!

In both occasions, I used the mobile applications of both these companies. The UI for Dominos is a bit confusing while the one for Pizza Hut seemed much better. In fact, I had to switch over to the website while ordering for Dominos since that seemed to be a better option. The UI is perhaps not designed by retail experts and with consumer feedback, it lacks the sensibilities that customers look for, especially people of the older age and for women, both of these segments may not be very mobile savvy. Also, one of my friends quipped on his Facebook post recently how the delivery boys call a number of times to take directions. The Pizza companies can take a cue from Uber, the taxi service guys who have a GPS enabled map on their cell phones that help the drivers reach their destination without even calling once.

Mobile App Zomato also integrates Home Delivery along with providing reviews about restaurants and they are growing rapidly not just in India, but also internationally. Overall, I guess online dining, or rather online ordering is a great way to reach out to customers. It is also non-intrusive in a way. There is no need to call a number and go through the menu being repeated often – the menu is just there on the mobile app or on the website and helps users to choose what they want quickly and easily. Once customers are used to it, they would rather prefer this option instead of calling on the phone, whenever they desire to order food home. So, go ahead and try ordering on your phone next time. And yes, do take a minute to share your feedback. Happy Dining…