Retail Employees Day

12 December is celebrated annually as Retail Employees Day, an occasion to thank the frontend staff who have taken up Retail as their preferred occupation. Started in the year 2011 with a few outlets, RED 2019 was celebrated with much fervour across the country with celebrities coming forward to wish and thank the front-end staff for their continued service.

It was a chance meeting that Mr. BS Nagesh, Former MD & CEO of Shoppers Stop, India’s much respected Department Store Chain, had with a few staff on the shop floor when he was setting up TRRAIN – Trust for Retailers and Retail Associates of India, that the staff said they were not being recognised for the work they do at Retail Stores. Thus was born RED, as a day to show gratitude to the staff who work multiple shifts daily, travel long distances mostly on public transport and in many cases, a primary or an ancillary bread winner for the family along with the parent. 

I am personally quite happy that RED has grown and like how over the past decade.

To give you a perspective, every 7^th person in the world works in a Retail Environment, directly or indirectly. This includes people who work on the shop floor, at warehouses, those who are involved in supply chain and delivery and so on. In India, over 40 million people are directly employed in the Retail Trade which contributes to 3.3% of India’s GDP. 

Today, India boasts of over 800 Malls of which at least a Third of them clock a turnover of over 300 Crores annually. Two decades back, shopping was restricted to the nearby Kirana Shop for buying day today Grocery & Household shopping and the city centre or the “Market” area where consumers would flock during festive occasions to buy clothes, accessories, footwear, home furnishing, etc. even as the annual shopping trend (like today) was non-existent. 

The taboo of working in a Retail Environment can be best explained by me, perhaps since I have faced flak personally during my early days in Retail. 

I started my working life at the age of 19 scooping Ice-Cream at Baskin Robbin’s first outlet in Chennai as a part-time employee from 11am – 3pm while pursuing my second year B. Com (evening college) as well as attending NIIT classes at 7am, to acquire coding skills of C, C++ Visual Basic and so on. I was chided by “elders” (but not my parents) in the family for working as a “server” at an ice-cream joint and was forced to quit the part time assignment in less than a year which was feeding my pocket money. 

However, I was so impressed with this Industry that I ditched my coveted Computer Education only to pursue an MBA in Marketing after UG, join RPG Retail through Campus Placement as a Management Trainee and a few years later, added the tagline “Retailer by Profession and Choice” to my bio which remains till date. 

Even during my stint at Foodworld Supermarkets, my own extended family members as well as a few neighbours would mock at my choice of employment, much to the chagrin and embarrassment of my Parents. They thought I didn’t get a more “handsome job”, was working at a “shop” which wasn’t the best of jobs one could get after a respectable MBA and wasn’t “marriage worthy” although the Industry was paying good salaries, took abundant care of the employees with benefits, provided decent pay, incentives & compensation and most importantly, Customers immensely respected the Retail staff. 

Its so nice to see celebrities coming forward to thank Retail employees for their stupendous efforts and good work. Some of it is sharp marketing, one may say. So be it. At least, that way the likes of King Khan associate himself with the Retail Industry and the staff, raising the bar at how “we” are perceived in the society. 

This is just the beginning, as I famously quote that “The Great Indian Retail Story is yet to be fully told and is still to meaningfully unfold”. Watch this space. 

And thank you, Retail Industry. But for the choice of continuing to work at Baskin Robbins in 1997 despite the discrimination from the society, I wouldn't be where I am in life and most importantly, wouldn't have written this piece. 

Much obliged and always proud to call myself a "Retailer by Choice". Here's wishing all the employees working in ur Industry a great future ahead. 

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)?

Retail horoscope 2017

There have been predictions written about sun signs and moon signs. So, I set-out writing one for the Retail Industry in which I complete 20 years this year . These are not purely fictional but I see things going this way. Take a look and let me know what you think.

Kirana Stores

The largest Retail segment, the sem-organized and unorganized Kirana Stores are set for a huge overhaul. With the onset of demonetization, Kirana stores do not have a choice but to go digital. All this while, most of them have been collecting cash for sales which mostly go unaccounted causing a great loss to the exchequer. This will change in 2017. From Bank EDC machines to Mobile Wallets, they will start accepting every form of money other than cash. A robust y-o-y growth is also seen in this business model.

Supermarkets

Neighborhood Supermarkets from large retail chains have already been making a comeback. Nilgiris is leading from the front through Franchising, while Aditya Birla More seems to merge with Future Group, and so would Heritage Retail this year. None of the supermarket chains have an online presence due to reasons best known to them. I don’t see any change here. Heritage is experimenting something but I am not sure if they would be scale up like the Hyperlocal players. Margins will be strained and even store profitability will be a challenge. I see more consolidation in 2017 among the medium sized players.

Hypermarkets

The most abused retail format of the last half a decade, the Hypermarkets have come a full circle. As I write this article, the store sizes have come down from 25,000-45,000 sft to as low as 8,000 sft. While poor availability of retail space is one of the reasons, the sheer ability to sell higher volumes like in Western markets is the core reasons. Indian customers prefer fresh products, be it rice or atta or oil or vegetables and fruits. Also, the households are smaller in size, so are the kitchens and refridgerators. Quite obviously the trolley size will be smaller. With most Mall spaces exhausted and almost no new Mall of any significance across major metros, Hypers may look for standalone sites in suburban areas.

Apparel Retail / Specialty

With a chunk of this format having moved online, from Diapers to Accessories to shirts to dresses, this offline retail format would see more store exits in 2017. The franchisee-dominated model will find few takers and loss making / average performing stores will be closed or consolidated. Malls are already operating at an average 15-25% vacancy of Vanilla Store locations and this year will be worse with burgeoning rent and maintenance cost (the CAM Scam!). Consumers will move towards E-Commerce for specialty retail and will be fine to shop even with limited or nil discounts due to the convenience it offers. Bad year for Retailers in this space which will see many small and regional Brands winding up.

Consumer Durables Retail

With E-Commerce already swooping a majority of consumer durable retail sales, such Retailers will be left in the lurch. Brands, who have initially supported offline retailers in the mid-2000s have started balancing their act with e-commerce. 2017 will see a swing in their loyalties towards e-commerce players. With tighter margins, higher rentals, surging operating costs, many such Retailers dealing in Consumer Durables will consolidate their store count while many would shut stores which are not making enough profits. Overall very challenging year for retailers in this space.

Jewelry Retail

The most affected sector after Demonitization is this retail format. Various media reports suggest how some leading players made a killing on 8^th and 9^th Nov. 2016 after the Prime Minister made the historical announcement. With 90% or more of their business in cash, and it’s quite well known how much of them get accounted, Bullion retailers will face heat the most. A significant number of stores would be thrown out of business. Large chains which have PE Investments made based on PPTs and Excel File projections will face a blank wall, with valuations diving deep and would find the going very tough. Extremely tough year for Retailers in this space. The market will dictate terms in May around Akshaya Trithiya when consumers go bonkers buying bullion.

Food & Beverage

With the Industry having matured in the last decade, it is time for consolidation for F&B Retailers. With scale in place, players like CCD, Dominos and McD will now consolidate their presence and focus on store EBIDTA. New initiatives such as Home Delivery and signing up with delivery companies will bring more business while a tired economy will put pressure on attract store footfalls. Outlet sizes will reduce by 30-50% across formats. There is a sudden upswing in specialty bars and pubs and this trend will continue. A growing and discerning set of gastro-enthusiasts will mean new entrants and new formats are on the anvil. Interesting space for Startups in this space.

 E-Commerce

It’s been 10 years since Flipkart the market leader was born. Sadly, this year would be the most challenging to the company that made e-commerce take off in this country where less than 10% of the Retail Industry is organized. With 1,000s of e-commerce companies of various sizes and shapes, names and offering in the market, the space would see a blood bath this year too. Most such companies which did not have a significant differentiator will have to bid adieu. Less than a Billion Dollar will go in to investments in existing companies while new startups will find the going tough. Amazon will consolidate itself in the market and will become a household name with higher market share and mind share. Hyperlocal Market places which connect offline retailers online will have a good run, since this model is reasonable new to customers. There will be some consolidation in this space too but new entrants will carve a niche. Reasonable investments are expected in this space.

Consumer

A weak economy, struggling to grow since the last 5 years will mean strained purses for consumers. They will be cautious this year on spending and will demand quality and service from Retailers than ever before. 

UDAN - a A Flight for Retailers

If the Modi Government has its way, it will make the real common man to fly. No kidding. With it's ambitious UDAN - Ude Desh ka Aam Nagrik (Let the common man fly) which is a rehash of the regional air connectivity proposed by the UPA Governments but with a lot more incentives to Airlines and of course flyers. The fare for a one hour flight is capped at Rs. 2,500 adjusted to inflation. Whether the one hour is block time or flying time is yet to be clarified. And many other things too. If technical details about UDAN interest you, read this column written by The Flying Engineer here.

India has over 450 airstrips/airports that were developed and built during the WW 1 & WW 2 by the British for strategic purposes. How many of you may know, unless you are from surrounding areas that we have airports in most obscure locations that one would have never thought of, such as Vellore and Salem (Tamil Nadu), Kadappa (Andhra), Gubarga (Karnataka), Raxaul & Muzaffarpur (Bihar) and so on. Most of these lay defunct with AAI not having funds to develop them or Airlines ready to ply there for various reasons. Such airports also include the ones at Pondicherry and Mysore, just to name two of them, which are very interesting tourist places but are not really well served. When local politicians announce their charter for upcoming elections, there is a mention of developing a local airport but the idea dies down after the man (or woman) occupies the high seat. Due to this, many thousands of people are forced to undertake alternate routes for travel by road and rail which are cumbersome and times taking as well. 

The Federation of Indian Airlines (FIA), which represents IndiGo, Jet Airways, SpiceJet and GoAir, has written to the Union Civil Aviation Ministry terming the proposed regional connectivity levy as “illegal” and “in contravention to the Constitution of India.” It said the government is not empowered to levy a tax on airlines to fund the regional connectivity scheme under the Aircraft Act of 1934, quotes The Hindu. And their grouse is understandable. The Civil Aviation Ministry's guidelines already includes flying to certain far-off destinations across the country including the North East which doesn't attract flight loads and hence dampens the revenue prospects for the airlines. 

Given the scenario, as a former Airport Official and a Retailer, here is my recipe for a resounding success to this ambitious plan. Commercial Revenues can significantly reduce the burden on the Ministry as well as the Airlines, if they were allowed to be rightfully exploited. Worldwide, even the top airports such as Singapore, Hong Kong, Dubai and Frankfurt boast more than a fourth of their revenues coming from non-aero revenues. This has been, mostly a well-planned strategy executed over the past 4 decades by these airports, given the opportunity to derive non-aero incomes, especially from the millions of passengers who fly everyday across the world.

It is common knowledge that the Terminal Building in a small airport such as Salem which would have probably two flights a day will mostly remain unused all day (and night) whilst occupying thousands of acres of land. One of the best ways to put to use the idle areas is by constructing relevant retail areas in these locations. Sounds weird? Let me explain.

Continuing the example of Salem, it is a prosperous city with the Salem Steel Plant employing thousands and also being a business hub due to its native industries in apparel manufacturing and of course agriculture. People here have the money and aspirations to fly, travel the country and the world. But in most cases, they have to visit Chennai to take a flight forward. While Coimbatore is closer, it doesn't operate flights to all parts of the world or even connect important hubs within India. It is also important to note that cities like Salem do not have a so called popular Mall with domestic and international Retailers, although there is quite a bit of shopping and dining that happens all over the city. Therefore, by commercialising the landslide (the city side) areas of this airport and allowing private partners to Build-Operate-Transfer the assets to the Government, it would probably be a double whammy. The biggest issue with airports today worldwide is the safety and security factors. But this would be well taken care because the commercial areas would be located in the landside and visitors (to the Mall) will have no access to the terminal building and beyond. Only passengers with valid boarding documents would be allowed inside the Terminal Building. 

At the same time, the Restaurants at the roof top of these buildings will provide a massive view of the runway and the city as well as the parked aircraft which is always a delight to watch. A part of the vacant land may also be used to build budget hotels, thus ensuring a 365 day use of the asset. 

While the idea sounds cool, the biggest issue here is execution. AAI runs most of the airports in India including Chennai and Kolkata and currently only four airports at Bangalore, Hyderabad, Mumbai and Delhi have been privatised. It is to be noted that these four airports contribute over 75% of the air-traffic in India and also act as hubs for international travel. Much has been written, discussed and debated about the perils of privatisation of Airports over the past decade. And the Government may take the best of what has been done in since 2006 regarding airport privatisation and perhaps move on. Alternately, the airport may continue to build and maintain the Terminal building, the Runway, the ATC Tower and other technical facilities while the other areas are handed over to private operators.

Overall, Retailers have a great opportunity to grab this opportunity. India's largest cafe chain Cafe Coffee Day put up its first cafe at HAL Airport at Bangalore in the late 90's and continues its focus in the airports and has a major presence all over the country. Many other retailers can take a cue out of this and explore other retail opportunities. Chennai Airport is out with its upcoming Retail Tender, details of which can be accessed here.

I hope to see Retailers take advantage of this sky-high (pun intended) opportunity and also be a part of this upcoming growth opportunity. 

Are Cafes sustainable?

The most discussed topic these days in Retail circles in India is the impending IPO of the company that runs the Cafe Coffee Day chain of stores. The holding company, Coffee Day Enterprises is planning to raise ₹1,150 Crores from the Indian Stock Market for which Draft Herring Prospectus has been submitted recently. The company is among the few of its peers such as The Future Group, Shoppers Stop, Trent(Tata's) and Dominos (Jubiliant Organosys) who have gone public with the companies. CDE plans to utilise the money raised for paring debts and for expansion almost on an equal basis. The company started out renting its premises for Internet enthusiasts to browse in 1996 while also encouraging them to buy a good cup of Cappuccino, coffee that is prepared and presented in the Italian style for 5 times the price of a normal cup of coffee. Very soon, the company decided to change its strategy for Internet to consumer and positioned itself as a place for conversations and more. The rest is history. 

A lot happens over Coffee, is not just the tag line for CCd but also something that is real. A lot of things get done at cafe similar to CCd such as Costa, Barista, Coffee Bean and Tea Leaf, and of course at Starbucks, the world's largest cafe chain which entered India in 2012 in a joint venture with Tata's. I was at a Starbucks for over 4 hours yesterday, which included a one hour meeting, a half an hour call and rest of the time on Mails and office work. During those four hours, not more than two tables were empty for more than 5 mins. The cafe was running at full occupancy. There were people working on their Macs and other laptops, a few who were reading stuff on their books and devices and one man sitting next to me who watched a full movie! 

With an Investment of over ₹1 crore in interiors and hefty rents for locations, this SBUX outlet does a Sale of about ₹40-50 Lakhs a month. Compare that with ₹3/5 Lakhs that a CCD would do, albeit with 1/4 th the investment and 50% lesser opex. So, are these cafes really viable in the long term?

Answer is Yes and No. 

Cafes are viable in the medium to long term provided they receive continuous and healthy patronage. Keeping aside the Capex and Opex for a moment, the cafes would be profitable not just financially but as a Brand asset in the medium to long term when their occupancy remains high. Consumers walk in to a cafe for the coffee (and food) for only 30%. The rest is for the experience in itself and a peaceful me-only space that one doesn't get at home or workplace. 

It is far easier to be viable as a single store than as a chain of stores, for Ny format in Retail. Most of the Indian Retailers are bleeding due to unresponsive assets in the form of their stores and high costs of operations including servicing debts. This will change over time with Retailers finding new avenues for their revenues. But what about cafes? CCD took a strategic position to be the nearest cafe in every neighbourhood and that has paid off. There are over 1,400 cafes across four formats in over 250 cities in India apart from a handful of them in Austria and Malaysia. Most of the cafes for CCD are operationally viable and are not seeking money from Corporate anymore. The newer ones face tough competition with the traditional outlets, especially with the changing landscape in the out of home consumption sector.

Cafes have always been viable provided you get the fundamentals correct. So, for every Java Green and Barista, there is a SBUX and CCD as examples. As the saying goes, the 120 bucks you paid for the coffee is actually not for the coffee but for the sofa and a/c. With the increasing trend of people working in casual environments, cafes will have a large impact on our lives. Next - probably a Bollywood fil, on how cafes have made or broken marriages! Watch this space. 

‘Santa’stic Holiday Shopping!

Santa Claus is a symbol of positivity and cheer, is well known. But he has been used as a constant Brand Ambassador by Retailers all over the world for quite many years now. Retail Stores use various displays of Santa at their precincts – some use static images and some use real men (or women) as real life Santas who give away candy bars and chocolates, goodies and gifts to children and elders who pass by the store. Santa is a global symbol of mass Retail Advertising, I would say. From Brown Goods to Apparel, all Retail formats use Santa in their copy some way or the other to connect with their audience and to bring the relevance of shopping during this season.

Afterall, Christmas is not just a religious festival, not atleast in India, one of the most secular countries in the world which embraces all forms of worship in its country. While it may be rare to have a Masjid, a Temple and a Church to share walls, its not uncommon for people across religions to celebrate each others festivals. Diwali and Id are two other festivals which are celebrated with much fervor all over the country. Christmas is no more restricted to Christians in India, but to the community at large. Many Hindu and Muslim homes decorate their premises with small and large Christmas Trees and Stars in their balconies and order Cakes to consume with their family and friends.

This Christmas Season, leading Retailers have used Santa in their campaigns. Pantaloon Retail, formerly owned by The Future Group and now by Aditya Birla Group has a “Buy 2 Get 1” Offer on its entire range of products. Shoppers Stop, India’s largest Department Store chain with over 61 outlets across the country has a 20% cash back offer in the form of Discount Vouchers. While the offer is only for a limited period, it would promote future walkins and shopping due the Discount Vouchers being provided with every shopping worth Rs. 5,000 or more.

 

Its also a great time to shop for Consumer Durables. Chennai’s leading Retailer Shahs and Viveks are offering massive discounts on LED Tvs, Washing Machines, Refridgerators, Cameras, et al.

 

Leading Brands like Apple and Samsung, surprisingly do not have any special schemes this Christmas – Diwali is probably a bigger festival for shopping personal gadgets. Now is the best time to fill your homes and wardrobes. So rush to your nearest Retail Store and shop more, save more! Have a Santastic Shopping Season. Merry Christmas.

Restaurants in Malls…

I was recently at Forum Vijaya Mall (Chennai), one of the newest in town. It was a Sunday and I was there for lunch, but the upper level of car parking was almost empty around noon, which took me by surprise. However, I was told two days later by someone who works for the Mall that there were over 45,000 footfalls on that day. The Restaurant that I was supposed to visit was located on the second floor of the Mall. As is usually the case, I checked the reviews of the restaurant on the Zomato app on my iPhone. Most of them had written good things about the place and its menu, not to forget their wonderful service. Here is a sample;

After such a good meal, the bill came to around 2500 bucks. "Not bad at all!", we thought, given the amount of food we had eaten. The service too was perfect. The waiters were very watchful, responsive and most importantly, proactive. – Amruth

A great place with tastefully done interiors and food! The options on the menu are limited, but every single item you are served taste good and also look really good on the plate! – Nandhini

If I have to be perfectly honest, there could not be a more unfortunate location to host such a lovely restaurant. A mall in Vadapalani is hardly any place for a classy place like this. Where venue fails, Salt takes North Indian Cuisine and gives it a fantastic twist, to ensure they stand out from the others. I expect much more of this restaurant in the near future. – Vaishnavi

Apart from many reviews, the one above set me thinking. Are Restaurants in Malls a viable option as compared to those on high streets? Are Mall shoppers the right TG for specialty restaurants in Malls? For the cost of operation in Malls, do restaurants make any money at all as a business option? When I spoke to the gentleman who runs the restaurant, he mentioned that the rent is about Rs. 65 per sft per month. Assuming they have an area of 2,000 sft, their rent per month would be about Rs. 1.30 lakhs. Add to that all other expenses which would be around Rs. 2 lakhs pm. On a conservative estimate of Rs. 15 lakhs of sales per month and an operating margin of 50%, the store would recover its expenses and have an EBIDTA of about Rs. 2 –3 lakhs per month. Given the way the outlet has been done, their investment would have been about Rs. 70 lakhs. So, the restaurant makes about Rs. 25 lakhs in profits (before interest and taxes a year)  and would take about 3 years to break even.

On the contrary, business would be double, if not more were it to be on a High Street. There are a number of good quality specialty restaurants that are garnering those numbers already. So, why do Restaurants still prefer Malls? Perhaps, Brand building and familiarity. I don’t see any logical reason why someone would invest so heavily in a Restaurant inside a Mall and wait for 3-4 years to break even, when it could be faster in a High Street. What works best are for established brands such as Rajdhani, Sigree, Mainland China, etc. which have built reputation over the years and have hence chosen to be within Malls to leverage their brand value. For first timers in the Restaurant business, Malls are probably not the place to be in. This is not restricted just to Chennai but to other cities as well. I was at Chandigarh a few weeks back and they have a brand new Mall called Elante. I was almost alone at Chilis on a weekday evening, which is located in the same floor as the cinemas on the fourth floor of the mall. Restaurants in India’s most successful Mall, Select City Walk face the same fate – Restaurants are empty through the week with weekends being their only busy times.

So, what ails Restaurants in Malls?

Mall shoppers are mostly for spending time, probably window shopping. Conversions for Retailers too is lower than on high streets. The sheer number of footfalls make up for lower conversions and therefore helps Retailers and Restaurants. Unless you are a destination such as a Shoppers Stop, Lifestyle, Café Coffee Day, Starbucks, Subway, KFC, Pizza Hut, etc. These are places which plan to visit and hence drop by. Eating out is way to expensive these days, given the cost of ingredients. And Restaurants are trying their best not to upset their clientele by absorbing losses as much as they can. But then, consumers are staying away from eating places on a regular basis, as was the case a couple of years ago. For example, a could of years ago, the neighbourhood area of Koramangala in Bangalore had almost 50 eating joints, a third of whom have closed over the last one year.

Mall hoppers prefer food courts instead, which are usually pathetically planned. Mall planners in India somehow do not build large enough food courts, with thousand of chairs and a breathable exhaust system, that are modular and scalable as and when consumers increase. Instead, they try to lease all counters at one shot thereby not having scope for further expansion in future. What would cost around Rs. 600 for a family of three in the food court would probably cost over 50% more in a fine dine restaurant within the Mall.

Restaurateurs would do well to experiment new concepts first on the High Streets. That is where people frequent. There are no SCAM, errrr CAM expenses (Common Area Maintenance) on High Street Locations and no restrictions to close the restaurant at a stipulated time. The biggest benefit of being on High Streets is that the signage builds familiarity among customers over time. No wonder, there are more successful restaurants in India and the world over on High Streets!

Alternate ECommerce–Auction Sites

There was a cover story about Alibaba.com, China’s largest ECommerce company in recent issue of The Economist. Quite a few facts. That it is turning out to be one of the largest ecommerce companies in the world, with sales of over $170 billion, which is Amazon and eBay put together. That it has a financing division, viz., AliFinance which provides micro credit to small firms and consumers; and that it has 6 million vendors registered on its site. What was started in 1999 by the firm’s founder, Mr. Jack Ma, an English Teacher as a B-2-B portal connecting small Chinese manufacturers to overseas buyers has now transformed into an internet behemoth. “EBay may be a shark in the ocean,” Mr Ma once said, “but I am a crocodile in the Yangzi river. If we fight in the ocean, we lose; but if we fight in the river, we win.”Taobao, a consumer-to-consumer portal not unlike eBay, features nearly a billion products and is one of the 20 most-visited websites globally. Tmall, a newish business-to-consumer portal that is a bit like Amazon, helps global brands such as Disney and Levi’s reach China’s middle classes.

Indiaplaza, which was also founded in 1999 back home in India is unfortunately facing its toughest time yet. With over 80% of its 150+ workforce having quit over the past six months, the company which pioneered ecommerce in India has no takers today. With a weak b-2-c model based on product listing by various partners, the company has just not been able to scale up over the last few years, thus allowing late entrants like flipkart, myntra, jabong and coupon sites like snapdeal and groupon to surge ahead. To be fair to Indiaplaza, most of the Ecommerce sites in India are on deathbed, awaiting Angels to come and save them. The top three players, Flipkart, Jabong & Myntra with sales of over USD 600 million collectively are only making losses and there no signs of any profitability in the immediate future. Offline Retailers have had a slow start without much success in this arena. Croma, part of the Tata Group’s Trent Ltd., Crossword, India’s largest book store chain along with Landmark and Shoppers Stop,  India’s largest Department Store chain are the only few large Retailers who have attempted an Ecommerce entry over the past years. With FDI in Retail not included for Ecommerce businesses, the Government’s backing has been minimal in this regard.

Even as I was thinking so, I came across an article which mentioned about an auction site named QuiBids (spelt as KweeBids). More out of curiosity, I set-up an account to know how this works. Registration was simple.GBP 0.40 is the value of each bid (for the UK Site) and can be bought online at the store in bundles that the user can choose, which in turn can be used while placing bids or while buying an item on the site after discounts and offers. The joining fee will be refunded in full or part thereof if bids are not placed for the said value. They have listed hundreds of items and all of them are on auction. The products are genuine and the processes are audited by Grant Thornton, one of the top audit companies in the world (I have personally seen the audit assurance report which is published on their website). One can bid an item only 5 minutes before the bid time comes to an end. Which means, users keep track of all those items on bid and are probably hooked on to the site all through, if they want to participate in the bidding process. Each time a bidder places a bid, the time slot for the auction increases by 20, 15 and 10 seconds in that order. If the number of bids the user holds is over, then he/she cannot participate in the bid anymore but the value in their account can be used against purchases. Also, the value of the product is discounted to the extent the bids are placed by users. Which means, if a product is priced at, say GBP 100, and the auction ends at GBP 32, with a discount of GBP 9, then the user can buy the product for GBP 91 (less the value that is already in the account). Shipping is charged depending on the size and weight of the product. All in all, it is a win-win for the company and the user. The company makes a thin margin on sale of such products while the loss on bid money is usually written off against a publicity fee paid by the brand to feature their products. And on top of it, users also buy the product which is at a discount for them but which fetches a margin for the company. In addition to this, users may also buy “bids” for set values, so as to keep on bidding. At the end of the day, a user will only gain from the tremendous discount that he gets out of the product even after buying bids.

The prose above may not be fully convincing, so do log on to www.quibids.com to explore.

According to their website,

“QuiBids was started in July 2009 as an attempt to improve the Internet auction model by making it more exciting, safer, and more reliable. We're based out of Oklahoma City, Oklahoma and our goal as a business is simple: To provide an exciting online auction model with better deals for the consumer than any other website in existence."

You can win all sorts of popular products at incredibly low prices. Look at our homepage to see what products are up for auction right now, and if one catches your eye, buy some bids for a low price! When you place a bid, we add a maximum of 10-20 seconds to the timer - to give someone else the chance to bid if they're interested. This is similar to the "Going Once...Twice...SOLD" approach of auctions.

If no one else bids and the timer reaches zero, you’ve won a sweet deal on QuiBids! If you don't win the auction, you never have to go away empty handed. Any time after you've placed your first bid in an auction, you can choose to buy the product for a discount using the Buy Now feature. This will help limit your losses so you don’t have to leave all your bids on the table. You’ll never have to pay more than the Value Price for any products on QuiBids.

I have never come across such an exciting business model which I can comfortably say is an alternate Ecommerce model. There is hardly any publicity that I see for this company or for this form of Ecommerce and yet there are hundreds of dedicated users who are constantly bidding to win their favorite products at rock bottom prices. I guess the typical profile of the customer would be in their 20s and this is almost like a contest for them! Internet penetration is quite important for the success of this model and I presume the success of this model in western countries, which is not so the case in India where most of the internet consumption still happens at workplace with curious onlookers peeping into each others’ desktops and laptops. With Wifi (at home) using the iPad and other tablets and 3G on mobiles such as the iPhones by Apple and Blackberry gaining popularity coupled with the deeper penetration of Android smartphones starting at $ 100 (Rs. 5,500), chances are more young ones in India will appreciate and participate in such promotions in times to come.

Indian Ecommerce players need to reinvent themselves to stay ahead in the game. Afterall, everyone remembers who is the biggest of ‘em all, and not really the one who started. Such is life.

Apple–Smart Product or Smarter Retailer?

 

After a lot of careful consideration over the past few months, including reading various literature online and discussion with friends and users of the iPhone, I finally decided to take the plunge. Yes. Now I own an iPhone 4S 32 GB. So, what? Actually. It is just another phone, in my opinion. It is indeed a true case study of how an ordinary product can be made an extraordinary success with simple, yet effective Marketing. One must learn from Apple in this regard. Much has been written about the technical specifications, uniqueness and superiority of the iOS of the iPhone, the Siri and various other features and hence I wouldn’t delve into it. Nor am I a technology expert to rip through comparisons with an Android phone (from Samsung or HTC ) or a BlackBerry or a Windows Phone. Oh yeah, by the way there is Nokia too. Apple iPhone 4S, for me lacks some basic stuff – such as a favourite tune as an alarm; select many / select all in the email box to delete and many such small features. Wonder how the Apple engineers skipped these and a bigger wonder that Apple Marketers kept them low-key, promoting various other features. It is a good smartphone but can be a lot better. Will leave it there.

10 days ago, I ordered my iPhone online – through www.indiaplaza.com where I work. Not just because of a particular loyalty – but also because of the Price. The phone is about Rs. 2,000 (USD 40) cheaper while buying online, compared to the ones sold at an Apple Store or other Electronic Retail chains such as Croma (from the house of Tatas), Ezone (part of the Future Group), Reliance Digital, etc. Two months ago, I bought an iPod Touch (also from www.indiaplaza.com) and the price online was a lot cheaper – I got a 10% discount while the company was celebrating the birthday of Apple founder Steve Jobs. In my view, the iPods, iPhones and iPads should also be sold through Department store chains such as Shoppers Stop and Lifestyle too. After all, it is indeed a lifestyle product as promoted by Apple and not just merely a gadget. The Apple stores are more a novelty than being electronic stores. They are a lot more engaging, inviting and most importantly (well stocked). And I am referring this from an Indian context.

I visited the Apple Store twice in a span of two months to buy accessories for my iPod and iPhone. Every time, the staff have delighted me. They speak little, but with a lot of sense. I have already bought Rs. 10,000 (USD 200) worth accessories from the Apple Store and I believe it is only because of the wonderful staff interaction that I have had each time. On the first instance, I wanted to buy a case and screen guard for my iPod and the staff showed me gladly all the varieties that they had – without indicating any obligation on me to buy. I walked up to two nearby stores that also sold mobile accessories to check out what they have – at one store, the staff was busy canoodling with his girlfriend (I guess) on the phone and had least interest or respect for the customer who came to spend money. At another store, they had stocks for every damn model but an iPod. The staff felt sorry but couldn’t offer anymore. I came back to the Apple store and ended up buying from there. I repeated my visit a month later – this time to buy a screen guard and a case for the iPhone. I visited various other electronic retail stores who didn’t stock them, and were more interested in selling larger items such as LCDs, Washing Machines and Refrigerators. Even Croma, which is known to stock a wide range of accessories wasn’t carrying anything specific for the iPhone.

Back at my favourite Apple store  at the Forum Mall (Bangalore)m Simran, the sales assistant was not just being polite and interactive but was also non-obtrusive. She allowed me to have a look at things, touch and feel them and never got perturbed by the questions that I enquired regarding the various options. She was happy to answer as many and even offered a few ideas such as a “Matt-finish” scratch guard that would not leave traces of oil from the face and which is easy to wipe off. She suggested a case that not just matched with the phone but was sleek and had a good form factor. Amongst other things, she also showed a few headphones and a couple of JBL speakers. And eventually, I ended up buying a noise-cancellation Apple ear phone worth a 100 dollars (Rs. 4,800) which was completely unplanned! All in a span of a few minutes. Now, that’s what I call “engaging customers” smartly. She knew my preferences for music, realised I had an iPod Touch and an iPhone and that I could, most importantly – appreciate and enjoy the stuff that they make and sell. Hats off to their level of knowledge and customer service. Next on my list: JBL Speakers for the iPod.

I have been using a Samsung Galaxy Tab for the past one year and a BlackBerry for over 3 years. Its been just over two weeks since I have been using the iPhone. Happy with it. But would go back to my BlackBerry any day. I am just that. But all said and done, Apple is not just a product maker but also a smart Retailer. With its unique offering of products, they seemed to have mastered the art of letting customers engage with their products. Single Brand Retailers have a lot to learn from them. Of how not to sell, but to make customers buy the products. And appreciate them all their life. Kudos Apple.