Showing posts with label Duty Free. Show all posts
Showing posts with label Duty Free. Show all posts

28 October, 2011

Selling, Upselling and Unselling

Despite my request thrice, the staff of India’s first class airline forgot to sell me sandwiches and muffin, my first and most important meal of the day – Breakfast, while I was flying from Bangalore to Delhi (on work) last week. My first request was placed around 25 minutes after take-off, and I waved at her two times thereafter, but to my dismay and surprise, she seemed to have forgotten till the flight landed… And it was a 2.5 hour flight! Was it pure negligence or arrogance or forgetfulness – I don’t know, but for sure, a lost opportunity. What I may, if allowed can call “unselling”. In our (Retail) business, a lost consumption opportunity can never be recovered. After all, a breakfast meal (to the same person) cannot be served for lunch or dinner! On a quick calculation, I was stunned to note the business opportunity of selling on board – if, for example, an airline flies 100 flights a day, with an average of 100 pax per flight, and a 25% conversion @ Rs. 120 per person, it amounts to Rs. 3 lakhs per day or Rs. 100 crore per annum in topline! Well – that’s the potential opportunity and it all depends on how best the airline staff are able to sell. However, what the airline then needs are not air hosts and hostesses but air- salesmen and saleswomen! but why not? The airlines haven’t yet spotted this as an important opportunity (I Guess so, lest she would have sold my muffin!) and I am sure this is one market that F&B players cannot and shouldn’t miss. With minimum dwell time at airports (time spent between security checks and boarding), and with a healthy >25% conversion of pax at F&B outlets across Indian airport terminals, I wonder why this opportunity cannot be real. It is, indeed.

(Suggested Reading: Travel Retail and Luxury Retail at Airports)

Over the last weekend, India’s most consumed newspaper Times of India carried 20-30 page supplements across all major cities, most of which were advertisements by Retailers and Brands wooing shoppers to choose their respective locations and products while shopping this Diwali. Prominent advertisers included large retailers such as The Future Group (Pantaloons, Big Bazaar, Food Bazaar, Central Malls, EZone, Home Town), Shoppers Stop, Lifestyle, Croma, Reliance Retail, etc. What was interesting was most Retailers were promoting “bill value” based promotions – a clear tactic to entice shoppers to spend a little extra – what we popularly call as “Upselling”. This could be on and off the ground – while advertisements promote the idea, it is the sales’ staff who finally “close the sale’ and hence are the messengers by the Retailers to convince shoppers to spend more. Unsurprisingly, sales grew between 25% – 45% across various Retail stores. Electronics and Furniture took centre stage this time (specifically for promotions) while apparel and accessories including Jewellery, Watches, etc. were assumed to be sure-shot purchases for the festive season.

(Suggested Reading: Consumer Driven)

Upselling is an art, taught and trained to Retail staff right from the time they join in their roles and all through their career. It’s a bit like negotiation, pushing customers to buy more. While this is expected of every staff towards every customer who walks into the store, it is emphasized especially during festive times to increase the bill values – the amount spent by a customer on his / her shopping bill.

 

Gift Vouchers

While “gifts” of a certain perceived value are given away if the customer achieves a certain amount of bill, other tactics have also been used over time – gift vouchers being the most common one. The advantage with gift vouchers is that the shopper has to return back to the store once again and encash it or utilize the voucher for part-payment and that too, within a certain time frame. The average amount spent over and above the value of Gift Vouchers ranges between 20-35% and goes up to 70% in some cases. They are also transferable, and can hence be passed on to loved ones. This festive season, Reliance Trends is providing coupons worth Rs. 3,000 for a shopping value of the same amount.

(Suggested Reading: Gift Vouchers)

By-Products

This is a smart tactic used, especially in the Electronics business. While a battery charger and headphones are in-built with the original packaging (in most cases), the retailer or the brand could throw in an additional accessory, say a screen guard or a Bluetooth ™ headset along with a mobile phone! Instead of providing a cheap one, Samsung upsells with a Samsung Bluetooth™ headset for just Rs. 500 (MRP Rs. 899) at select retail stores including at Ezone and 50% off on other accessories for its Galaxy Tablet. Great way to engage shoppers to spend more!

Buy One Get One

An age-old tactic to upsell, this is the most common (yet boring) phenomenon one can find. Giordano offers another wrist watch when you buy one! Works well for couples who want a new one for themselves but the designs may be limited. However, it also works as a worthy gift. Last year, I bought an Esprit ladies watch as a gift and I got myself a fabric-strap sporty watch from Puma which I use while cycling. Needless to say, one can always find utilities how to use the free product.

Scratch and win!

Some Retailers offer a promotion scheme where every shopper who attains a certain bill value gets to scratch a card (or crush a fortune cookie) and wins a gift as mentioned in it. The gifts may range from gift vouchers to small home utensils to accessories or even a motor bike or a car or a house! The excitement in this case is pretty high, with each shopper hoping to win something big. Atleast, there is no disappointment that one didn’t get the big fish! SPAR, world’s largest F&B Retailer is offering a similar proposition to enable more shoppers to buy more!

(Suggested Reading: National Shopping Day!)

Shop and win!

Central Malls, India’s largest Mall chain is offering a Toyota Etios (car) and a Harley Davidson (Motorbike) to be won when you shop and participate in a lucky draw! By far, the most exciting, tried-and-tested promotion globally to attract shoppers. An average middle class shopper, irrespective of whether he / she owns a car or a bike (no matter how many) wouldn’t decline an offer to own one more, especially if it is free of cost. The only catch – the winner has to pay road taxes and insurance, which may cost a few thousands. However, this sort of promotion, a raffle to say is among the ones that excite shoppers the most. Airports worldwide, including Singapore, Dubai, Heathrow, Frankfurt etc., offer luxury and high-end cars to be won for a few bucks that is spent at their airport shops. No matter, what – people buy! And buy more, and in this case, upselling just works.

(Also Read: Central Realigns the City!)

Diwali is gone, but the offers are still on! Festivals would come and go buy upselling continues. Retailers must spend a lot of time encouraging their staff to upsell, rather to talk to potential customers, to begin with. These days, many shop assistants feel they are paid to stand (there are well-dressed mannequins already) and usually talk with each other but move to a corner when a shopper walks by. Store Managers would do well for themselves if they lead by example. I have done so, many years back encouraging shoppers to buy bread when they come to buy their morning milk, to try a new range of ketchup when they are looking for noodles at Foodworld.

It’s possible. Just needs a bit of push. By each of us! Happy Selling… errr… Upselling…

14 October, 2011

Airports, A/c and Retail Opportunities

 

I came across an article recently on Times of India according to which Airports Authority of India (AAI) plans to turn-off air-conditioning in certain parts of the airports to reduce its expenses. “Our model for low-cost airports is based on a good low-cost carrier where people will get good, cost-efficient services. AC is the single biggest cost factor in airports. We are examining models to cut down the need for air-conditioning in the tier III airports that will come up,” said a senior official of AAI. Hubli in Karnataka will prove to be the first test case for this new phenomenon. The AAI is building an airport in Hubli for which the terminal cost has been pegged at Rs 60 crore (USD 13 Million). “We are going to further reduce this cost by shunning the fancy and shining tiles used for flooring and are looking at more areas for economy without compromising the efficiency and comfort level for flyers,” said sources. There is an increasing clamour among airlines, many of whom are struggling to survive and unable to pay hefty fees that the fancy new airports levy. Their logic: have economic airports with low charges so that flying remains affordable as high charges for ‘Taj Mahal’ kind of airports would have to be recovered in the form of higher fares from passengers.

(Suggested Reading: Airline guidelines – a boon to Retailers)

Another recent article in The Economic Times illustrates the financial performance of GMR Airports, the company that has built and manages two of the top 6 airports in India at Delhi and Hyderabad. Incidentally, Hyderabad Airport is the Number 1 among its peers according to the latest ACI Survey which grades airports across the world on passenger amenities and services. And yes, GMR neither switches off nor plans to switch of A/c. Their opportunity – non-Aeronautical Revenues which includes Retail and F&B options at the airport premises. World over, non-Aeronautical revenues account 30-50% of an airport’s revenues. Of this, Retail/F&B contributes significantly, over 70% in some cases closely followed by “Car Parking Revenues”.

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In India, the focus on Non-Aero income has hardly been given importance by AAI, the erstwhile operator of the top airports in India (located at Mumbai, Delhi, Bangalore and Hyderabad which are now privatised). In the year 2006, Airport privatisation was formally passed on a Private-Public Partnership model (PPP) and Delhi, Mumbai airports were handed over by AAI to two private parties, viz., GMR and GVK to modernize the respective airports. While Mumbai is half-done (not sure which half), Delhi has a swanky new terminal, more popularly known as T3, built at a cost of over USD 2.5 billion. Over 100,000 sft of space is dedicated to Retail, F&B and other commercial areas and also boasts the largest car parking facility in town! (while compared to any other Mall or Shopping Centre). Hyderabad and Bangalore had their own greenfield (built from scratch) airports led by GMR and Zurich airports’ consortium in the year 2008.

(Also read: Privatisation of airports)

Instead of switching off A/c or using inferior quality of flooring and other amenities, AAI should rather focus more on the commercial opportunities. AAI follows the “Competitive Tender” model where the bidder with the highest bid amount qualifies to operate the said commercial locations. Needless to say, most of the branded players shun from such tenders due to inconsistency of participation. For example, a branded pizza chain cannot sell beyond their range, so does a branded formal wear Retailer! Most of the spaces that are tendered out are between 8-20 sqm (about 90 – 220 sft) for a snack bar or even a specialised category apparel / accessories store or a book store! It’s not only a business challenge to run a retail establishment within such a small area – but it doesn’t provide a good retail experience as well. This is a fundamental philosophy-flaw of AAI that needs to change. Change NOW.

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If done properly, AAI can expect to garner reasonably good revenues from Non-Aero revenues. Chennai and Kolkata Airports which are being modernised by the AAI themselves will be a litmus test for Retailers. These airports are as large or larger than Bangalore & Hyderabad and the customer (Read: Passenger) is the same who is spending time and money at Delhi, Mumbai and other International airports. So, the intent to spend / opportunity to serve is already huge. With the burgeoning spends in Organized Retail even in tier II and tier III cities growing by over 35% year on year, it is no surprise that passengers in smaller airports / cities would spend on good quality products and services. HMSHost, a leading player in the F&B space at airports worldwide is now the largest player across Indian airports with significant presence at Bangalore, Hyderabad, Mumbai and more recently at AAI managed airports at Chandigarh and Lucknow. Cafe Coffee Day, India’s largest cafe chain operates over 25 locations across various airports in India.

(Also Read: A lot happened over coffee!)

So now, its up to AAI how they would want to capture the wallet-spends of its passengers! As a regular user of airports, I wouldn’t mind lesser space at the terminals (as a passenger, my dwell time is no more than 45 minutes and I am not going to play football anyway), rather prefer a comfortable environment – reasonably well maintained terminals and hygienic toilets included.

Hope – the most important word in our lives. I hope things will change. Even with AAI. Let’s see.

Ashta Mudras

20 September, 2011

Alcohol and Consumers

According to a recent report by World Health Organization, alcohol use results in the death of 2.5 million people annually. Nearly 4% of all deaths are related to alcohol. Most alcohol-related deaths are caused by injuries, cancer, cardiovascular diseases and liver cirrhosis. Globally, 6.2% of all male deaths are related to alcohol, compared to 1.1% of female deaths. Worldwide, 3.2 lakh young people aged 15-29 years die annually from alcohol-related causes, resulting in 9% of all deaths in that age group. Alcohol raises the risk of as many as 60 different diseases, according to a recent study in the medical journal `Lancet'. Nearly 62.5 million people in India drink alcohol with per capita consumption being around four litres per adult per year. For every six men, one woman drinks alcohol in India. Over 40% of road crashes occur in India during the night, with one-third of them being due to drunk driving. It observes that India saw a robust increase in recorded adult per capita consumption of alcohol. When it came to only drinkers, the average per capita consumption of pure alcohol of a 15-year-old and above in India between 2003-05 was 22.25 litres (23.93 litres among men and 10.35 litres among women). Nearly 62.5 million people in India drink alcohol with per capita consumption being around four litres per adult per year. For every six men, one woman drinks alcohol in India. Over 40% of road crashes occur in India during the night, with one-third of them being due to drunk driving.

Actor Imran Khan had recently announced to file a Public Interest Litigation (PIL) at the Bombay High Court challenging the State Government’s proposal to ban “alcohol consumption” under the age of 25 years according to a recent news article in Times of India. The co-petitioner is his brother-in-law Vedant Malik, 22, who wants to "espouse the cause on behalf of youth below the age of 25 years", says the PIL. The respondents are the Maharashtra government, the secretary of the department of social justice and state excise commissioner. The PIL states that the government "seeks to impinge on the right of equality and personal liberty" of the youth, who are otherwise vested with the right to vote, marry, serve in the military, drive vehicles and enter into legal contracts. The PIL informs that legal drinking ages worldwide are usually 18 to 21. Incidentally, Maharashtra's and Delhi's drinking age limit of 25 is among the highest in the world, except for Maharashtra's Wardha district, where it is 30. The PIL states that the petitioners were surprised to find that the 25 drinking age limit was actually in force since September 26, 2005, but was not being implemented. "The petitioners were therefore under the bonafide belief that the age limit to apply for a liquor permit was 21 years and not 25 years,'' the PIL says. The petitioners then read news articles saying that the Maharashtra cabinet on June 1, 2011 introduced a de-addiction policy that said the legal drinking age for hard liquor was 25 and mild beer 21. They decided to challenge the higher drinking age and asked the department of social justice and empowerment and excise commissioner for the policy. They learnt that the policy was "only at a nascent stage of discussion and yet to be implemented.

I would say this is indeed a noble move had it been done by any other person than the said actor who played the role of an urban youth in his recent movie “Delhi Belly”, which was produced by his uncle and ace actor Aamir Khan. In the film, the actor and crew have professed and performed some of the most vulgar acts (some really meant only within closed doors) which even couples in their 30s (without their children) couldn’t fathom watching at the cinema! The fraternity and junta laughed off the whole episode, claimed and hailed the actor-uncle duo to have taken Indian cinema to global echelons! Neither the saffron brigade nor any mullah condemned or took them to the roads or to the court; no women’s panel took notice of such derogatory remarks in the film. A song featuring “chaste Delhi / national abuse” was reformulated in the soundtrack which went on to become a Chartbuster. Indeed, there was some criticism, but Aamir Khan himself appeared on Tv to justify this and said it was just a song, just a movie! And Hyundai Motor Corp. whose brand ambassador happens to be Shah Rukh Khan (apparently the two Khans are considered arch rivals and do not see eye-to-eye ) announced that it would sue the movie-makers due to a dialogue spelled in the film, where a modified “Hyundai Santro” is abused with the choicest derogatory words which goes “this looks like the outcome if a donkey had f****d a rickshaw!” The film grossed over INR 20 Crores during the opening weekend and was declared a super-hit at the Box-Office, an important attribute to commercial success!

Look who’s talking about social causes! And in a recent interview in Times of India, the actor says he is supporting the freedom of choice! Well, we live in a democratic set-up and each one of us is free to propose our likings and wishes. But a youth icon such as Imran Khan standing up for a frivolous cause such as this is rather disappointing.

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As consumers, we all have the right to choose what we want to buy and consume. In fact retailers like Spencer’s, Hypercity, SPAR, More, Total, star Bazaar and many more have separate sections within their stores that are dedicated to alcohol. At Airports, Duty Free Liquor and Tobacco is one of the fastest selling items. I remember way back in 2001, Spencer's stores in Chennai city would sell alcoholic beverages within a distant corner of the store, or rather abutting the main supermarket. Liquor was not part of monthly shopping baskets earlier, which has changed dramatically over the years. The typical 365 litre refrigerators have given way to larger capacity ones, thanks to the increasing consumption patterns of consumers. Today, there is a specific place allotted for wine, beer, soda and other beverages within the cooling equipment. Consumers have evolved and know what to drink and when to drink. most boutique Restaurants that have opened recently have liquor permits and serve alcohol (no one really checks the age). Even Pizza Hut started serving wine at some of its outlets which was later withdrawn due to poor response. While every one talks about “legal drinking age”, it is not implemented in its spirit.

The issue arises when unwanted propaganda such as this is promulgated. When the Government issued such a notice (in Maharashtra), not a single liquor company or a Retailer came forward with such a PIL. For obvious reasons. No one wants to be known supporting alcoholism. But the way the actor has done this doesn’t merit anyone other than him with some additional publicity which I am sure he could do without. Even if he had filed it as a “consumer”, his agency could have remained silent about it. (I am not even bringing his religion into the picture as this blog is not meant for discussing such purposes).

Consumers today are well aware of their rights with permissible laws (and outside). They are learned, educated and know what is really good for them and their families. Whether the PIL is granted or rejected or not, alcoholism is a peril that will continue to daunt the society unless managed well (by each one of us) with personal and social responsibility.

Cheers to Consumers.

27 March, 2011

Redefining Airport Retail – Terminal Three, Delhi Airport



It was the first time ever (and hopefully the last time) that I ever missed a flight. Was stunned by the fact that something like that could actually happen! It wasn’t because I was wandering across the sprawling retail areas of the airport but because of a silly gaffe. Anyway, the pupose of my visit was fulfilled with a three hour walkthrough across the various areas of the airport. Although it’s been already written and told a few times so far, here’s a firsthand account of what’s for an avid shopper at T3. Firstly, if you were to really explore this place, block 60-90 minutes ahead of the scheduled boarding time (not the departure time). The design of the airport terminal is such that one enters the main hub after security check and then there are different spokes (or arms) which lead the passengers to the Boarding Gates. The Hub is where most of the Retail and F&B action is. So, be prepared to walk a long way before you finally get seated into the aircraft. Undoubtedly one of the most modern airports in the world, T3 as it is famously known is constructed and managed by the GMR Group which also manages the Hyderabad Airport in India and Ataturk Airport in Turkey.

As with most international airports, the Check-In and Arrival areas are common for both Domestic and International passengers. While there are limited Retail and F&B opportunities in these areas (mostly for convenience), I guess it is more by design since the passengers are expected to spend time and money in the main commercial areas after security check.  The walkway for passengers is through the retail stores – an interesting idea first explored at the Bangalore International Airport, which is predominantly how airport retail layouts are planned and executed world over. The idea is to make the passengers walk through the stores – the store aisles are identical to the walkways and hence give immense opportunity to convert passersby into potential customers. In the Domestic Departures, one is welcomed with a fascinating WH Smith, the UK based books and stationery retailer through a joint venture in India. Adjacent to it is another British Giant – Marks & Spencer that showcases daily wear fashion for men and women including accessories. The undergarments’ section at the entrance was a surprise – am sure store planners would have visualized some other way than reality. Then there are other major retail brands such as Fab-India and Swarovski showcasing Indian and International contemporary fashion, Croma Zip, the electronics mini-format from Tata Retail, Perfumes and Cosmetics from home-grown Parcos, Toys and early learning products from ELC, Sweets and Confectionery from Chokola and local delicacies from Haldirams. The F&B range is rather remarkable – given that passengers prefer to spend more time at bars and restaurants. T3 is the second home for Coffee Day Square that serves the most premium single-origin coffee sourced from all over the world apart from the regular fare that’s available across its other 1,070 cafes; Kingfisher Good Times Bar as the name suggests welcomes tired passengers to offer one for the runway; the massive foodcourt in the first floor offers over a dozen Indian and International offering– over 300 exciting items to choose from. On the way to the gates, there is also Dilli StrEAT – a superb idea that showcases local food delicacies. And then there are the Lounges which overflow (read pax waiting outside for some of them seated to move out) during the peak hours.

Given that our domestic passengers are not habituated to shop at airports, it was surprising to see such a spread-out retail offering. For example, the distance from the Business Lounges / Shopping & Dining areas to the Boarding Gates could be between 200 metres to 1,000 metres which means one may have to walk between 10-20 minutes to reach the aircraft.

The International Departures (after Emigration and Security check) is quite similar, except that the entrance is welcomed by one of the most fabulous Duty Free selections across categories such as Liquor and tobacco, Scotch whisky, Premium Wines, Perfumes and Cosmetics etc. Ethos, India’s largest retailer of watches and timewear operates a premium watch boutique. They have indeed walked a long way in Airport Retail after debuting in Bangalore Airport in 2008 and thereafter at Mumbai Airport. Then there are other premium and luxury brands such as Versace, Hugo Boss, Samsonite Black, Swarovski, Mango, Kimaya, etc. An interesting idea is the Indian souvenir and gifts shop - it also includes a SPA / Therapy centre and is welcomed with exciting artifacts and a photo of the Mahatma with a Charka – quite didn’t understand the significance except for a small note on “Service”. Coffee Bean and Tea Leaf has a cafĂ© in the ground level but for a more detailed fare, one has to walk up to the first floor which has a massive food court and a special area for children to play – I guess the planners would have thought children would be playing while the adults are having a bite at the foodcourt which is again located between 200 – 1,000 meters from the Boarding Gates.

The kilometer long piers (at Domestic & International Departures) that connect the main building to the Boarding Gates do have some F&B opportunities, but the menu is selective and doesn’t attract passengers quite a bit, unless there is a compulsive need to stop-by. Pepsi is the exclusive partner for this airport and hence one can find a vending machine selling various packed beverages every 20 meters. Vodafone is the prominent telecom partner and even offers free browsing!  There are a number of ATMs, just look for them and you have the convenience of picking up cash on the go. 

Overall, it’s a joy to be at this Airport Terminal for which we have waited for many years - this airport was completed in 37 months with a capacity to manage 34 million passengers a year in comparison to Singapore Changi T3 (76 months, 22 million pax capacity), London Heathrow T5 (60 months, 25 million pax capacity) and Beijing T3 (60 months, 45 million pax capacity) – easy in and easy out - 168 check-in counters; 49 emigration counters, 46 immigration counters; in-line baggage handling system with a capacity to handle 12,800 bags per hours; 97 automatic travelators and 78 Boarding Bridges; an overall area of 5.4 million sqft including 215,000 sft of Retail space! Just that it takes too much time than anticipated, so double your proposed time if you want to pass through the Retail, F&B areas. As for shopping, if you still do, then Happy Shopping.

Brand Tags and why they matter

When I wore a new T-shirt during a weekend holiday earlier this month, my teenage daughter pondered why I chose this one with a loud-brand n...