What Retailers can learn from Kingfisher Airlines

The past few weeks would have been one of the most tumultuous for India’s five star Airline, Kingfisher! The Airline and its promoter Dr. Vijay Mallya were in the news (and continue to be) for all the wrong reasons. The India Media which I personally respect a lot were making some scathing remarks and reports all of a sudden about the airline’s business health although it knew about it for many years now being a public limited company. With a debt exceeding Rs. 7,000 Crores (USD 1.80 Billion), Cash-and-carry of Fuel at airports and a few flights grounded for reconfiguration of seats, the Airline was abused by one and all including those who otherwise held it in high esteem. It was common to see many passengers at airport lounges discussing their wisdom and advising how the Airline should be run and how the promoter and the Management can do better. These were some of those who earlier yearned to be seen in the Kingfisher Lounges at airports! In fact, some subscribed for the Kingfisher-Amex credit card so they would get free and immediate access to these Lounges (obviously not for Kingfisher parties which were for the most elite). And some would go any length to get a Kingfisher calendar (in the same lines of a Pirelli calendar). Serious. No Kidding. Anybody who is somebody had a word of advice for the airline. They should do this; they shouldn’t have done that and so on. Naturally (sic).

I am not an Aviation Expert or one who shares Management Consulting for free. I have my own thoughts about the airline, and those are my views. Running a USD 2 Billion empire and being the second largest liquor company in the world (UB is expected to reach the number one position sometime in 2012), I believe Mr. Mallya and Co. knows their business best despite the unconventional ways of how entrepreneurs run their business (rare to see them plunge in Horse & Car Racing or hosting the most enviable parties at Monaco & Monte Carlo). The airline is going through some turbulence and I am sure they would come out of it sooner than later. Whether someone picks up a stake in the airline or if the Banks bail them out is one thing, but the exemplary five-star service which Kingfisher introduced is something that is worth living for. As eminent scholar Swaminathan Anklesaria Aiyar said in his recent article, “Kingfisher is worth saving!”

There are some interesting learning that our Retail Industry could take from the state of affairs of Kingfisher, which I have listed as below;

Scale-Up but at what cost

The airline was founded six years ago and has hence scaled up reasonably well, in fact started flying international since 2009 after acquiring Air Deccan (which was seen as the main reason for buying out). However, some of the routes it was operating were just not profitable. A Few were as per govt. Regulations such as flying to the North East of India, but there were some routes that could have been avoided. I guess this applies to Retailers as well. In a quest to expand their presence some Retailers like those in the F&B business such as cafes, speciality restaurants, etc. enter new cities and towns although they would just not be profitable ever! For Ex., the number of staff who are required to manage an outlet, a region & a territory would just not make sense unless the number of stores are reasonably big.

Being Everything for Everybody

At the India Retail Forum in 2010, Mr. Kishore Biyani of The Future Group made a statement which many of us in the industry vouched for – “A Retailer cannot be everything for everybody!”. Such powerful words. And makes so much sense. This applies a lot especially for Luxury Retailers. One thing that Kingfisher did was to position itself for the fashionable few with all its flamboyance and exclusivity. Later, when it bought out Air Deccan, it created a platform in the low-cost segment with “Kingfisher Red” which was recently scrapped off. In the meanwhile, Kingfisher was offering differential service patterns across its flights – some were served hot food on the house while some had to pay exorbitant prices for cold sandwiches!

Price Matters – Discounts don’t work all the time

In tune with many other airlines offering everyday low fares, Kingfisher was also pricing its fares accordingly. This, I believe was one of the earliest and biggest mistakes the airline did although it had an option not to do so. Many Retailers, to gain easy and quick market share especially Hypermarkets and Supermarkets work aggressively on their pricing and create hundreds of loss-leaders. That way, they attract footfalls in the initial stages although they would never be able to lift prices in future. This is a dangerous strategy that Retailers should keep monitoring constantly. Although it is fine to change the market positioning once in a while, one has to be careful in the long-term.

Competition – Creating a Niche for oneself

Over time, Competition will increase, irrespective of which business one is operating in. For Kingfisher, it was initially the low cost Indian counterparts and over time, International airlines were also competing for market share. This applies to Retailers such as those in the Fashion segment. It is but natural that international brands would enter India eventually, given the potential the 10 million plus affluent households we have which is their main target segment. This should be part of the Strategy and not a knee-jerk reaction.

Managing the Media

Most importantly, Media should be well-managed – always. To say the least, lesser the better. Kingfisher has been the darling of the Media, with all the red short skirts, the sexy parties and those PYTs who are partying. Every move of the airline has been well covered and captured right from the first page, the Page 3 as well as in the last pages of the newspapers (the sports pages, usually). TV Channels have never missed covering its important times, and there is even a channel dedicated to the Good Times! Most Retailers fail to engage the Media well – either they are over exposed or under-exposed. Well, its worth discussing the business priorities and problems from time to time to- and with the media, rather than bringing it all at once. The recent discussions and view points on allowing FDI in Retail is a great example. Many Retailers, who were initially reluctant on the subject have now done a volte-face because they are cash-strapped by agreeing to bring in foreign retailers in to the fray! This stance will affect them sooner than later, with the media as well as their consumers.

Life’s lessons come from various quarters all the while and this time it is in the form of Kingfisher airlines. It is up to us to make good use of wisdom, irrespective where it comes from.

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”.

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.

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.

Malls are also parking lots!

I recently came across an article which claims that Bangalore is the most painful place when it comes to commuting and parking of vehicles! My suggestion – is to build more Malls.

IBM Global Commuter Pain survey

A new IBM survey of the daily commute in a cross-section of some of the most economically important international cities reveals a startling dichotomy: while the commute has become a lot more bearable over the past year, drivers’ complaints are going through the roof. The annual global Commuter Pain Survey, which IBM released recently, reveals that in a number of cities more people are taking public transportation rather than driving, when compared with last year’s survey. In many cities, there were big jumps in the percentage of respondents who said that roadway traffic has improved either “somewhat” or “substantially” in the past three years.

To better understand consumer attitudes around traffic congestion as the issue continues to grow around the world, IBM conducted the 2011 Commuter Pain survey. The IBM Commuter Pain Index, illustrated in this speedometer graphic, ranks the emotional and economic toll of commuting in 20 international cities. From right to left, cities are plotted from least painful starting with Montreal and gradually increase to the most painful city, Mexico City. But that’s only part of the story. In many cities, the survey recorded significant increases, when compared with last year, in the number of respondents who said that roadway traffic has increased their levels of personal stress and anger and negatively affected their performance at work or school.  “Commuting doesn’t occur in a vacuum,” said Naveen Lamba, IBM’s global intelligent transportation expert. “A person’s emotional response to the daily commute is colored by many factors – pertaining both to traffic congestion as well as to other, unrelated, issues. This year’s Global Commuter Pain survey indicates that drivers in cities around the world are much more unsettled and anxious compared with 2010.” 

According a report recently in Times of India, around 1,300 vehicles are fined everyday for illegal parking. And this is just the official number. I would assume for every ticket that is issued, atleast 5 are not! So, we can guess the number of illegal / wrong parking. Whose fault is it – to provide adequate parking spaces in a city like Bangalore, to ensure ample public transport is provided? And as users, as commuters, aren’t we as public responsible too? Well, there are no straight answers. In a growing urban metropolitan city like Bangalore, this is bound to happen. With the price of automobiles going down each year (and despite the rising petrol costs), more people are opting for personal transportation options, both for official as well as personal usage. And I wonder what relief a 3km Metro rail will bring in the short-term and even if a fifth of the city is connected, am not sure how useful it is going to be!

However, there is a simple solution through public-private partnership that can significantly reduce the pain-points – build more public car parking spaces which would also double up as Retail Destinations! Call them Malls, Shopping Centres, whatever. And we already have a great example in Garuda Mall. The land belongs to the city Corporation, the structure built by a private party which was expected to house over 2000 cars and two-wheelers. And also have some shops which would provide the revenues to maintain and manage the parking lot. And we know the result – a swanky mall with 100s of shops and restaurants including some big names such as Shoppers Stop, Westside, Louis Philippe, Benetton, etc. a full-blown food court and a six screen INOX Multiplex! Avid shoppers wait patiently outside just to just enter the mall over the weekends! Movie-goers reach the Mall 20-30 minutes before the cinema commences to ensure they watch the film from the beginning. A similar example is Mantri Mall at Malleswaram in South Bangalore

Bangalore, overall has only 10 notable Malls for a city that has a population of over 8 million people (as per the recent census). By any means, this is just not enough. World cities like New York, London, Paris, Tokyo, and even Shanghai and Beijing have a reasonably more number of Malls. And many other Retail destinations such as Hypermarkets, Neighbourhood Malls, etc. These locations, typically act as public parking spots for a particular locality during the day (since serious shoppers typically prefer late evenings or weekends). In a way, higher retail proliferation also means additional space on offer, which makes the market more competitive, such that builders and developers or Mall Management companies do not charge the Retailers exorbitantly, which in turn affects the number of stores a Retailer or a Brand operates in that market. This can be seen vividly in markets like China close by and in the US, needless to say. For example, every locality would have a Wal-Mart with hundreds of car parking lots – and it is not just for shoppers, but also for those who have work in the vicinity.  The expectation is that those who didn’t have any work in the mall may also just pop-in. And it happens many times. 

 

Infrastructure is one of the biggest challenges India is facing, and Retail Infrastructure is no better. Coupled to that, we as a society are averse to walking – which is very common to see in Japan, Singapore, Hong Kong, China, Europe and other countries. They say, that cafes and QSRs do not have parking lots (worldwide) because customers prefer to walk a bit. But not in India. Even a humble “darshini” restaurant which serves local fare would see a dozen two-wheelers parked outside its shop, mostly in a “No-Parking” area. Most of us, in the name of saving time prefer not to walk even a bit. And people also blame it on pollution, lack of pavements or walking tracks and so on.

Bangalore will see two new retail developments open its doors within the next six months. Each of them have a million square feet of Retail, F&B and Entertainment. And a couple of smaller developments are in various stages too. Together, at the moment around 5,000 cars and two-wheelers can be parked in our Malls but this expected to simply double with the new developments coming in. I assure, the next time I have to visit a place I will atleast attempt to look for a nearby mall. What about you?

Spicejet and Indigo will help Retailers grow!

 

Photo courtesy: campaonindia.in

It was heartening to read that two of India’s low-cost airlines, Spicejet and IndiGo have ordered new aircraft. My former colleague and boss at BIAL Stephan Widrig, currently the Chief Commercial Officer at Zurich Airport used to say that world over, Aviation grows twice at the rate of national GDP. And rightfully so. Except for 2008-09 when India’s aviation landscape saw a slowdown, which was mostly a perceived threat to future incomes than any direct effect on current earnings, I guess we have been flying happily. The flight I just took, a Jet Lite from Delhi to Bangalore (low-cost identity of India’s premier airline Jet Aiways) was almost full,. When my ticket was booked a week ago, the return fare was around Rs. 11,000 (USD 230). Not bad, I would say. And almost all airlines are running full during the peak hours and the load factor on an average seems to be over 80% (no of seats filled per craft).

Spicejet was recently acquired by media baron Kalanithi Maran, who runs the Sun television network across the country. Though media and aviation have nothing much to do (atleast directly to spur each other’s growth), he would be the only person who would know the reason and logic behind entering a rather unknown industry. Having said that, he has been an excellent entrepreneur in his own right and has created a niche for himself in the media industry, in which his company controls over 70% of channels and viewership in Tamil Nadu, especially in South India. While he is known to be a media-shy person, he is also known for his aggressiveness in his business approach. So, when Spicejet announced expansion plans by acquiring new aircraft and applying for international routes, industry observes are not surprised. But his team and he are doing something rather differently. Instead of buying an Airbus or a Boeing, they have chosen to buy Bombardier aircraft. Except those in the industry, many wouldn’t know that aircraft which have lesser than 80 seats are exempt from various aviation and airport taxes in India. Most importantly, they don’t have to pay landing and parking charges at these airports. Since they have smaller aircraft sizes, they can easily land in smaller landing strips of 2,000 – 3,500 metres (Delhi has 4,200 metre long runway which is capable of handling the Airbus 380, the largest passenger plane currently). Many years back, Captain Gopinath, the pioneer of low-cost flying used the same to his advantage when he launched Air Deccan, India’s first low-cost airline by operating mostly ATRs to fly regional short-haul (less than 2 hour) routes. Similarly, Paramount Airways (which is now defunct and has severe debts) used Embraer aircraft and reaped benefits until such time they were alive. Sadly, both companies couldn’t sustain for too long due to investments and cash flows. Maran, hopefully shouldn’t have that issue.

Now, how does that help Retailers? Indeed, it does. Indigo and Spicejet have announced plans for International expansion. While Spicejet has chosen Hyderabad Airport as its hub, Indigo will use Delhi  for expanding its base. Thanks to low-cost operations, both these airlines are expected to penetrate into Tier II towns. Smaller airports such as Raipur, Ranchi and Patna have demonstrated double-digit passenger growth over the past two years. Thanks to employment opportunities, youth from these cities are living and working in bigger cities like Mumbai, Delhi and Bangalore and fly down to their home-towns when required rather than spending days together in trains like in the good old times. Now – more the number of passengers, more the opportunity for commercial establishments. And that’s where Retailers are expected to benefit. For example, after successfully operating at Bangalore and Hyderabad airports for the past three years, HMSHost,  the $8 Billion F&B Retailer has recently won 10 year contracts at Chandigarh and Lucknow! While their bid was aggressive and raised eyebrows among the Industry, the company seems to be unfazed, After all, they operate at most number of airport locations in the world as a company, and should know better than anyone else. With their knowledge and expertise, not only would they set the standard in these airports, but would also fulfil the passenger requirements to the best possible. TFS, a newly launched company 2 years ago now operates F&B concessions at Mumbai and Delhi airports (the two airports account for over 45% of aviation in India). Chennai and Kolkata airports which are undergoing modernisation by the state-owned Airports Authority of India are also expected to go the master concessionaire way!

Regional Airports like Trichy, Coimbatore, Mangalore, Nagpur, Pune, Ahmedabad, Bhubaneshwar and many more are expected to propel aviation growth over the nest few years. Not only would they feed domestic traffic, they would also encourage the ever-aspiring  middle class to undertake their first foreign jaunts. Indigo is offering a return fare of Rs. 9,999 to Dubai or Singapore from Delhi. Add on another Rs. 5,000 or so from anywhere in India for a connecting Indigo flight and a foreign trip for a couple at less than Rs. 30,000 (excluding cost of stay which works out to be very cheap if one avails package deals). These low-cost carriers are indeed growing the market and this would only help Retail and F&B players who are currently operating, as well as intend to operate at airports. The F&B spend per pax is currently less than a dollar across Indian Airports – compare that with a pax spend (on F&B) across major airports in the world such as Dubai, Singapore, Heathrow, Zurich which ranges from $5 – $15. More so, the low-cost airlines do not provide F&B on-board, so that is another opportunity that the F&B Retailers can capture.

Indeed, there is a long way to go for Travel Retailers in India and yes, it is expected to be a bumpy ride, thanks partially to lack of basic infrastructure requirements and trained manpower, but atleast there is a start that’s in the anvil. It’s up to the Retailers to identify and chase the opportunities and the to make the most out of them.

Retail staffing has a long way to go!

photo courtesy moodiereport.com

It was rather annoying that I didn’t get a refill lead for my Mont Blanc Pencil at the flagship store of the brand at the iconic UB City in Bangalore. The Sales staff, who was amicable and friendly ensured that the Mont Blanc service levels (as is globally) are maintained. What she didn’t do (and possibly, inadvertently) was accuracy of her technical skills. When I visited the store again the next day, another staff who was equally amicable and friendly explained that there were already spare leads within the writing instrument and that there was a mechanical issue due to which it wasn’t working properly. After a few permutation and combinations, he somehow managed to make it work! Well, I was impressed that my pencil was working normally but certainly not about the service levels at a store of one of the most respected brands in the world. In both the cases, there were no efforts made by the staff to show something new within the store – the interactions revolved around just fixing the problem rather being engaging or exhaustive. 

A few days ago, we went for dinner in a large group to a reputed restaurant in town, named Aangan. I believe they have a few branches across the city and was proven to be a good place all along. even as we were walking towards the store, what I saw from outside made me a bit confused – such a respected restaurant was running fans instead of air-conditioning! Yes, I agree the weather outside is rather pleasant but the overall ambience inside wasn’t so, with all the odour of food. We placed the order and were sipping our soup and the staff was already there with the main course – rotis, dal, etc. When I questioned what was the hurry, the staff replied (but politely), that “the food was already prepared”. Then a senior guy came across and took the food back (though not to the kitchen but to another table!).

 photo courtesy wsj.com

Now let me compare these with an example of extraordinary product / service orientation by Retail Sales staff.

WSJ.com recently carried an interesting article on how Apple has ensured highest levels of customer service at its flagship stores. More people now visit Apple's 326 stores in a single quarter than the 60 million who visited Walt Disney Co.'s four biggest theme parks last year, according to data from Apple and the Themed Entertainment Association. Apple's annual retail sales per square foot have soared to $4,406—excluding online sales, according to investment bank Needham & Co. Add in online sales, which include iTunes, and the number jumps to $5,914. That's far higher than the sales per square foot and online sales of jeweler Tiffany & Co. ($3,070), luxury retailer Coach Inc. ($1,776), and electronics retailer Best Buy Co. ($880), according to estimates. According to several employees and training manuals, sales associates are taught an unusual sales philosophy: not to sell, but rather to help customers solve problems.

Retail staffing is one of the most complex challenges that Indian Retailers have been facing over the years. My first employer, RPG Retail had set-up RIRM – RPG Institute of Retail Management, an inhouse training & development agency in which I was a Certified Trainer. The HR Team would scout for talent from government schools and recruit them as trainees – they would be provided class room training initially and later, on-the-job training at one of its Foodworld, Musicworld and Health & Glow stores. In addition to this, they would be given a Certificate after a 6 month period of experience and a job offer to join as a full time employee. The success rate used to be over 80%, thanks to the reasonably lucrative and respectful employment that the trainees used to get. Over a period of time, they were “ready to poach” variety for newer Retailers who entered the market. Most Retailers in India today have a Training & Development Department but it’s quite a challenge to retain front-end employees especially, thanks to the lure for a small hike in salary! Most of them do not have long-term goals and hence keep jumping jobs, partially for the sake of salary and partially for other conveniences – such as proximity to their residence, designation, and not to mention shorter working hours or lower work-load.

Thankfully, Indian customers at the moment are not as demanding as their western counterparts, but it is just a matter of time that they too shall be demanding superior product knowledge and high levels of customer service – from boutique stores to hypermarkets. Needless to say, retail employees would also understand this themselves, with personal experiences. More than the employers’ interest, I foresee employees (in the front-end) taking a lot more interest in training themselves – for their own long-term success and existence!

Hypermarkets–The latest poster boy of Modern Retail

The first thought that came to my mind was – “Will this store be THE game changer for this Mall?” Not that it had weak anchors otherwise, but somehow this store, I believe would attract most number of footfalls. Time will prove, and I hope my assessment would be correct in this case too. I am referring to HyperCITY from the K Raheja Group which opened a few weeks back at Royal Meenakshi Mall - Hulimavu, a lesser known suburb in South-East Bangalore which houses one of the largest new-age residential settlements of those who are employed in IT, ITES and the BPO Industries, mainly due to the cost effective availability of housing requirements as well as reasonable accessibility in terms of time and distance to their respective workplaces. A maiden attempt by a group of enterprising entrepreneurs, I would say this is another brilliant model for Neighbourhood malls – self sustained with most aspects of modern retail within its precincts. Other anchors include Cineapolis, the Mexico based multiplex chain with its first cinema in South India, CROMA – the electronics store from Tata Retail (TRENT) and many others.

The store is located on the upper ground floor facing the main entrance and the lower ground floor of the mall with direct access to the basement parking areas – a smart move by the Retailer to encourage shoppers to enter the store directly after they park their vehicles.  However, after finishing their shopping from the Upper ground floor, one would have to pass through the lower floor to access their cars – a bit of walking around the store though, which could be inconvenient during peak shopping hours. The store is well laid out – the lower ground floor offers Grocery and other Home needs while the upper ground floor with all other categories including Electronics, Toys, Apparel, Furniture, even Bicycles and many more. My guess is that the lower ground would remain more crowded – for two reasons; one that it has brilliant view from outside and would naturally attract mall visitors, and two that it houses the core categories which shoppers would come looking to save for – grocery, fruits and vegetables and household items. What I liked the most was the “fresh section” – Maybe it was the first day and hence everything looked very nicely displayed but still, the way the categories were planned was commendable. Also, they are located deep within the store, another smart idea to pull customers inside and thereby making them walk through the store. Meat & Poultry located close by could prove to be a disadvantage if the exhausts and HVAC are not maintained well – an issue that many retailers are trying to grope with.

The store interiors are typical of a Hyper – no false roofing, basic tiles on the floor, tube-lights running through the length and breadth of the store and focus lights on merchandise that’s on offer. While it does reduce the Capex to a large extent, it also showcases the store as being simple and straightforward – a stark contrast to the luxury stores at high-end malls that sometimes stink of grandeur and austerity! After all, hypermarkets should also look what they profess – savings, savings and savings. And HyperCITY is indeed very good at it. On the store launch, Mark Ashman, CEO, HyperCity Retail (India) Ltd, told the media, “HyperCity is committed to fulfilling the aspirations of the local people by providing them a world-class shopping experience. Our customers will enjoy the convenience of international shopping from over 44,000 products at great value under one roof.” And all this over a mere 60,000 sft.!

With their continued focus on convenience, experience, quality and savings, there is something that this Retailer has been doing right. Apart from stacking the right merchandise, I guess its the speed at which they have been growing. Often accused (not in a real sense though) of being slow in terms of store expansion and growth, HyperCITY has got its act right. With only 10 stores across the country, the group has managed to understand the business well – they have opened at interesting catchments across cities to ensure that they are not just in the race to grab market share but also to make money at the store level. With an investment of upto INR 2 Crores per store, the Retailer has been cautious about its overall Operational profitability which seems to be getting better by the day. Specific to this Mall, none other than the Hyper is going to be the the main anchor that would attract thousands of shoppers every month! Those who come to shop would indeed pass through the other Retail stores, Food Courts & Restaurants and m\Movies would complete the entertainment bit as well. This store is not an exception, but Hypers would become the Poster boy of Modern Retail and the Darling of Mall Developers soon.

It was a Sunday afternoon and a lazy one at it. And that’s just when someone at home asks for a pack of NAN 3 – a health substitute from Nestle SA that’s given to children. Given that it is a product not available so easily and usually procured from Pharmacies or Drug Stores, no one at home is willing to hit the road and that’s when the friendly Kirana comes to remembrance. One phone call and it would be delivered in a few minutes, suggested one of the members at the household. The next minute, someone was making the call and the friendly voice at the other end was actually prodding for further purchases if the family needed something else. A few other items were included and it was promised the stuff would be delivered shortly. And indeed, it was. In the next 15 minutes, there was a young boy at the door with a bag full of items for well over Rs. 500/-. This can happen, most probably only in India. We as a nation are not yet fully used to shopping in a cycle – although we see major crowds at the large hyper and super markets, consumers miss out buying many things – either they are out of stock or they are out of their shopping list. This is very unlike in the West where there has been an evolution of shopping habits, usually during the beginning of the month, or even on weekends, well in advance for the week ahead. But here, most times we prefer the “just-in-time” way.

 

While the debate and discussion regarding opening up FDI in Retail has prevailed for long, there is little doubt that Organized Retailers could offer such services. “Free Home Delivery” is usually advertised at many Supermarkets like Foodworld, Spencers, Nilgiris and even a few Hypermarkets like Total, Food Bazaar but they all come with riders – that the distance should be within a 3-5 km radius, the total bill value should be above a certain level and that the delivery could take between 2- 6 hours depending on the day of the week and place of delivery. Naturally, since the cost of operating is far higher for Organized Retailers than the neighbourhood kiranas. The big boys need to maintain books of accounts, a mini truck or a van to deliver and a driver to drive (not to forget the maintenance of these vehicles) and many other internal processes. All these are negated with the local kirana. Depending on the level or urgency, the kirana is willing to deliver at the earliest and usually within the locality and most of them operate in one.

Cash & Carry Retailers (are they actually retailers?!?) such as Metro AG have been operating in India since 2001 and most recently Wal-Mart in a JV with the Bharti Group has been operating such stores in Punjab under the trade name “Best Price”. These stores usually sell their wares to the smaller kiranas, hotels, restaurants, etc. who in turn retail to end users and consumers. Since the large Organized Retailers order their goods directly from the brands and suppliers, they are able to pass on higher margins to the kiranas who in fact benefit from this exercise. This has been a strong point supporting FDI in Retail all along since many in the industry believe that it would do well in the long run for the Retailers, the Kiranas and the Consumers.

 

It is quite natural to see more deliveries over the weekends, festivals days and specials events such as Cricket Series and Public holidays as there are more people to consume at home. Not just the kirana stuff, even door-delivery of food and other beverages seems to be on the rise. Last Sunday along with the morning newspapers, there were pamphlets from atleast three restaurants in the area – all small time local operators. An A4 page size pamphlet cluttered with a whopping menu of more than 100 items printed in two colours on the back and front size. But who cares! As long as the food is tasty and delivered on time, nobody bothers. What’s important is not just quick service but the quality of products. Kiranas and small-time eateries take greater care while packing, transporting and delivering as these simple steps are their real “Brand Ambassadors”. If all three were good the first time, chances are they would be called again.

So, no matter how many large Retail formats open up in this country, one reason why Kiranas will remain in business is “convenience” – a fact that most of us live by.

Long Live Kiranas! Long Live Home Deliveries!

Thank you: Karnataka Government; You are the best spoilsport.

The fuss continues – to be or not to be open after 11pm. The excise laws in the state of Karnataka make F&B outlets comply with a silly ruling that was brought into effect a few years ago. Reason? Roadside robbery, Killings, Drunken Driving and other Law and Order issues! This is not just cynical but also stupid, one would wonder. But not our friendly Babus who sit at the Soudha. They believe that the best way to curb the above mentioned menaces would be to shut F&B outlets by 11pm. And it was the same Government that held a Global Investors Meet early June which attracted the likes of Lakshmi Mittal, Vijay Mallya and many other investors from across the country and the world who have committed (although only an LoI) to invest over INR 40,000 Crores in the state. Bangalore is truly set to become a global city but the archaic laws would still prohibit dining after late hours! We are aiming for more BPOs, IT – ITES industries and knowledge workers who would work 24/7/365 and manage businesses but there wouldn’t be a place for them to unwind after work!

Many would have read the recent controversy courted by the Commissioner of Police, the Minister of Excise and the media – initially a proposal which was later converted by the Minister as just a thought – that Five star hotels would be allowed to serve alcohol upto 1am. And those like me who can’t afford such places? – that’s not the government’s problem. Alcohol anyway is not good for oneself and the country! Cynicism apart, the larger issue here is not just keeping restaurants and bars open. It is about projecting the image of the city, its people, its society. I have had the privilege to visit many global cities such as Singapore, Hong Kong, Kuala Lumpur and Shanghai in Asia, Zurich, Frankfurt in Europe and many others. None of the cities shut shop at 11pm. Yes, most of the regular F&B points and Malls close around that time because their main clientèle, the families wind up by then. But for those who want to continue, there are enough and more places where they could visit.

What I find silliest, if not funny is to connect Law and Order to closing F&B outlets by 11pm. The main claim to fame by the city police is drunken driving. While I am always up and against drunken driving myself and have never done such an act for many years now, this cannot and should not be a reason for restaurants and bars to be closed. What we need is more vigilance, which is not something that the Police Dept is ready to provide. At last count, the manpower shortage in the dept. was as high as 30%. And whatever check that the police perform is restricted to weekends, between 10-11.30pm because that’s when most people get out of F&B places. I have always advocated that when a person is caught Drunk and driving, it’s not some basic fine but a steep one that would really work. I always wonder if people in the West or other countries are actually disciplined all by themselves, whether it is obeying traffic rules or other civic rules. Most often I have noticed that it is the fear of Fine, a form of punishment that deters people from committing such acts. In India, one can get away by paying a mere Rs. 100 for over-speeding, parking in an unassigned area or even jumping traffic signals! Shamefully, the basic fine for drunken driving is all of Rs. 1,000 / - . If the sergeant feels so, then he could summon the errant driver to appear in front of a metropolitan court and accept his mistake, pay a fine and then he / she is out. I am told that in some cities in Japan, the bar-man keeps an eye on those who consume more than the stipulated level of alcohol and while the bill is cleared, they are advised to either take a taxi or use one of the chauffeurs who are appointed by the night-club for a small cost. This way, many people get employment part-time and patrons are taken home safely. This is not just customer service but by law. Such an idea was mooted and tried by a few restaurants in the city, but for reasons one could guess, it just didn’t work. We preferred to drive back ourselves.

Wonder what this curb means to F&B business across the city. If the outlets are kept open for 2-3 hours more, the sales could increase by 10-25% depending on the category. The increase in taxes alone one would pay off the additional costs (if any) to maintain law and order in the city. Recently, Delhi Government announced that small joints could sell Beer and Wine, keeping in mind the upcoming Commonwealth Games in Oct. 2010. We are not even asking to increase the number of Liquor points of sale, but just to extend the time until which places that serve F&B are kept open. Will the upcoming global city get truly global? Time will tell. Cheers.