New Airline guidelines – a boon to Retailers

Even as the bus was moving slowly on the tarmac towards the aircraft, it all seemed a dream for me. I would actually be taking the flight to head back home after a long four days that included a road trip from Delhi to Chandigarh, Jalandhar and Amritsar and back to Delhi - a distance of over 900 kms covered in less than 60 hours. The car journey was indeed tiresome and the trip was hectic but the wish-list was complete - A visit to the Golden Temple, the Wagah Border, Wal-Mart stores in Punjab and a couple of other meetings. All those memories were coming back to my mind as the bus slowly halted. There were just five of us in the long bus operated by India’s most efficient airline, Jet Airways as most of them were already seated and their seat-belts fastened. Usually the late comers are welcomed with a stiff and dirty look by some passengers as though the flight was held up only because of them (which was not in our case). The crew, ever smiling and happy to help, guided us to our seats and the doors were being closed, the flight getting ready for take-off. As the plane reached the runway and started moving, I was amused that this could actually happen to me – reaching the airport 14 minutes before the scheduled departure time and still being flown. Yes, I reached at 18.31 hrs. at the Terminal 1D at Delhi Airport for a flight that was scheduled to depart at 18.45 hrs. Even the lady at the check-in was amused of my (in)sanity and reassured – that she wouldn’t be responsible if I couldn’t board the craft. I have held faith in miracles and one such happened that day.
Since I had already done a web-check the previous day, all I needed to do was carry a print out to show the Security staff and run to the boarding gates. The usually unfriendly and rude staff of CISF at Delhi Airport was, for a change nice and polite and let me past the security gates, while also advising that I need to really rush as the flight’s about to take off. Even as I approached the waiting area, my name along with a few others were being screamed on the Public Address systems and I had to run across the 2,000 sqm terminal building to reach the boarding gates. Just that I was feeling a bit guilty that I wasn’t taking anything back for my family or friends from the sprawling Retail areas. What was reassuring was that there was an all-purpose retail outlet at the Arrival areas at Bangalore International Airport, managed by India’s leading Leisure Retailer Odyssey that stocks everything from toys to chocolates, books to music. So I didn’t have to worry much since I could pick it up after reaching Bangalore.

While my getting into the flight was indeed some kind of magic, it was an eye-opener and warning, given the new guidelines laid down by many of the airlines in conjunction with the airports – Check-In counters for Domestic Flights would close 45 minutes prior to scheduled departure (previously 30 minutes) and 75 minutes prior for International flights and this would be applicable at the top six airports by passenger volumes in India including Mumbai, Delhi, Chennai, Bangalore, Kolkata and Hyderabad. This means one wouldn’t be able to check-in at the airport after the counters close, but could still board the flight if check-in has already been done though telephone or on the Web well in advance. Over a period of time, this trend would result in passengers arriving early to the airport, like how they do at other points of transit such as Railway stations and Bus stands. Earlier, the airports were smaller and cramped, but all this changed with the Government allowing private participation in constructing new infrastructure at airports. Bangalore International Airport was the first one to be signed on paper although Hyderabad International Airport was the first to commence its Greenfield Airport in 2008. GVK managed Mumbai International Airport had its new terminal building inaugurated a few months ago and GMR operated Delhi International Airport has recently commenced India’s pride, Terminal 3, or T3 as it is fondly called. Other airports at Chennai, Kolkata, Mangalore, Ahmadabad and many others managed by Airports Authority of India are being modernised at a total cost of over USD 4 Billion.

While arriving at the airport was not seen as a major attraction a few years ago, today passengers seem to love it. For Example, Cafe Coffee Day, the first national Retail Brand to enter airports many years ago had its share of patrons arriving at the erstwhile HAL Airport in Bangalore only to sip a cup of hot coffee before they left the city which they do even today at the new airport. Currently, CCD operates over 30 outlets across leading airports in India and is planning to enter many more in the years to come. The Bangalore International Airport was the first one in the country to have a properly planned and well-managed Retail footprint, led by India’s largest retailer in the lifestyle business, viz. Shoppers Stop which also incidentally operates at Hyderabad Airport. T3 at Delhi has over 20,000 sqm of Retail areas and hosts leading domestic, regional and international brands alike across domestic & International Departure and Arrival areas. It is quite common to see passengers packing sandwiches or burgers from CCD outlets along with a cold coffee or a frappe or Pizzas & Pepsi from Pizza Hut outlets at various airport terminals, thanks to the advent of low-cost airlines (which command a 35% market share in the Indian skies) that do not serve complimentary meals on board.

While arriving early to shop at Duty Free areas in the International Departures is common worldwide, the trend was basic and functional many years ago which was again altered at the Bangalore International Airport which hosts one of the best collections of Scotch, Tobacco, perfumes & cosmetics, Electronics etc. This is the airport where leading city-side retailers such as Odyssey Books and Leisure, Ethos Swiss Watch studio and fashion designer Deepika Govind started their airport retail journey. Today, Odyssey aand Ethos have mastered the trade and operate at many other airports while planning for more stores in times to come.

There are indeed many advantages for passengers to shop at airports. To begin with, it’s a lot of time saved for business passengers and busy executives, compared to that at the over-crowded malls in the city where entering and exiting could take more than 20 minutes during the weekends. Since these store understand the pulse of their customers, they stock the right kind of products so the decision making is quicker. Most importantly, these outlets offer a value-addition to their customers by bundling various promotions – afterall, the passenger doesn’t and cannot come every day to the airport! F&B operators focus on speed of delivery and high quality products and even offer tamper-proof packing so that there is no spill over even if it were to be consumed 20,000 ft above sea level. They also offer a wide assortment which caters to the millions of travellers who could never get bored of the offering.

So, if you are travelling through an airport next time, reach early. You might be in for a surprise looking at what’s available at the airport. Needless to say, the writer is not responsible if you exceed the limits on your credit card. Happy Shopping & Dining!

Beginning of the End...

I was in Germany for a month in June 2008. Not on a holiday, but on a mission. I was part of a five member team sponsored by The Rotary International that visited the Stuttgart region as Cultural Ambassador of India to spread friendship and strengthen business relationship between the two countries. We weren’t on vacation but as guests in the houses of German Rotarians. It was a fabulous four weeks and we learnt a lot about the country while also sharing the greatness of our own homeland. During the course of the stay, I had the opportunity to visit a couple of Retail points – a Hypermarket, a Supermarket, a Mall, a famous High Street and a Factory Outlet city. During my course of interactions with various people within the Retail business and outside, I learned one thing – consumers are the same world over! Irrespective of their origin or culture, what they seek when they buy something is the same – “value”. They could have grown up shopping and aspiring for various brands across borders and cultures, but the most important thing that they seek is the product should deliver value and the brand has to stand for its stated attributes. The city that I am referring to is Metzingen, famous for its factory outlets, attracting people from all over the world. Hugo Boss, which was founded in Metzingen and still has its headquarters there, started first with its factory outlet and was soon followed by other companies (e.g. Armani, Joop, Strenesse, Escada, Bally, Puma, Adidas, Reebok, etc.) who offer a range of their clothing and accessories at reduced prices. I was told that shoppers visit this city in large groups and spend a lot of time and money. All this, in the country of Volkswagen, Audi and Mercedes!

It’s quite common to see Retailers and Brands mark-down and sell their products after the season cycle is over. Typically, the fashion cycle is aligned to climatic conditions – Spring Summer from Feb – July and Autumn Winter from Aug – Jan. Once the season is over, the left over stock of the previous batches are sent to specialized shops popularly known as Factory Outlets. Such outlets are located outside the city due to low real-estate costs, provide basic amenities – may or may not provide a/c, nil or minimal personalised staff service, and limited parking for vehicles. The outlets do not stock the full range but shoppers do not complain as the goods are heavily marked down, ranging from 15-60%. While street-wear brands were pioneers in this line of business, premium and even luxury brands have joined this trend since the mid-1990s. It is quite common to see such outlets all over the world and India is no exception. Since mid-2000, a number of such small localities have come up in the city outskirts and attract large crowds, especially during the weekends. Large format stores such as Brand Factory (by The Future Group), Mega Mart (by Arvind Mills) and many such Retailers operate today and are slowly getting near CBD areas too.

While the Factory Outlets are a sure shot dump-yard, brands try their best to liquidate their stocks from within their stores, at lower mark-downs but “higher discounts” that appeal to shoppers. And this was born the concept of “End of Season Sale” or EOSS. Almost every brand across the spectrum offer EOSS twice a year, just after the season is over. The Sale begins as early as Jan and July and goes on for 4-6 weeks. While the discounts are lower during the opening weeks, it gets deeper as weeks pass by, but shoppers may not get their preferred sizes and colours, so stocks get liquidated quite much during the opening weeks.

One would have noticed during the last few days, various brands offering deep discounts at their outlets. While consumers keep track of who is offering what, they usually wait for the big boys – the Department Stores such as Shoppers Stop, Lifestyle, Westside and Central to commence their EOSS. Since the size of stock-holding is substantial, the discounts offered by them are also deeper. India’s largest Department store chain by size, Shoppers Stop (which operates more than 25 stores across the country including at Bangalore International Airport & Hyderabad International Airport) and Lifestyle offer a preview for two days to their privileged customers, their Loyalty card holders (First Citizen and Inner Circle). Westside offers an additional percentage of discounts if shoppers use a particular bank’s credit card. The newest and the most premium Department Store format, The Collective from Madura Garments that stocks brands such as Hugo Boss, Armani, Ralph Lauren, etc also goes on Sale!

The season has just begun and is expected to continue for the next 6-8 weeks. My friends in the apparel business say that the recent Spring-Summer season reflected healthy sales – same store sales growth of over 10-15% YoY and hence the discounts this season may not be very high (unlike last year same time where the average discount was 40% and went as high as 70%). Whichever way, the same product is going to be available at a price lower than before (remember, it’s only the price that is lower and not the Brand value0, so what are you waiting for? Rush to a store near you and I guarantee that you are in for a surprise. Happy Shopping...

Learning from Levis; Collaborate, Cooperate and Succeed.

It’s quite rare to see (in the Indian context) Brands working very closely with Retailers or Malls. Most often, each Brand would like to leverage its presence within the large format, be it a Department Store or a Hyper or even a Mall by taking up pole position (read – prime locations at the entrance). Retailers cash in on this trend by charging a premium for such locations which Brands pay, albeit not happily. Many Brands, international, domestic and regional believe that a prime location within the store would attract footfalls and the Brand magic would result into higher conversions. In most cases, it is not so. Corner locations alone do not guarantee higher business potential. What’s important is for the Brand to work closely with the Retailer in mutual interest and both must make best use of each other.

A recent example is that of Levis. I have read somewhere that on an average an American owns 1.65 pairs of Levis. That’s very similar to the count on Wal-Mart, that over the past 40 years, over 90% of all Americans have visited the world’s largest Retailer atleast once in their lifetime. In India, of course we cannot share such figures with authenticity though. Back to Levis. The Brand was among the earliest entrants in the casual-wear denim wear segment in India during the early 90s and continues to remain among the most aspired affordable fashion brands in India. After a small lull during mid-2000 decade, Levis has bounced back in strength. A very strong merchandising and marketing team is at work and the results are on the face. After many successful campaigns over the past months, the most recent one is an encouraging trend set by the brand again. This time, its outright collaboration.

Levis and Lifestyle, the Department Store chain owned and managed by The Landmark Group of Dubai, have come together in what seems to be among the most talked about promo in town. The tagline, aptly named “Just4YOUth” targets the young by age and young at heart to enjoy the mood and spirit of youth. This at a time, when most first-timers enter their college days, an important part of growing-up. To have a bit of variety and participation from other brands, LEE and ARROW have also been roped in. The promo seems simple; an assured gift with a minimum billing and a chance to win a Mega Prize, VW Beetle, the newest and coolest Youth icon in the making in India. And there are other prizes to be won too, including a YAMAHA motorbike and voila, a chance to be the next model for the Department Store chain! This is seemingly similar to the promotion that was held a year ago at Bengaluru International Airport to celebrate its first anniversary. Although many sceptics believe that such promos do not offer tangible benefits, I refuse to believe so. Indian shoppers are value-seekers and if they see anything additional to their purchases, they would just grab it. It’s been so for many years now and will remain so for times to come. The simple promo is a great crowd puller into the Lifestyle Stores, especially for Levis fans to check out the latest collections. On similar lines, Levis has also partnered with Shoppers Stop, India’s largest Department Store chain with another exciting promo – “Denim Rocks”, attracting music lovers by offering a Promotion revolving around the most favoured fabric of rock stars, pop stars and rappers. Here, the associate partner is another fashion brand FLYING MACHINE.

Today, Brands should seek more prominence among shoppers by not just having a premium location but by experimenting such promotions from time to time. The mantra is clear – Collaboration between the various parties, i.e., Brands and Retailers. Cooperation among Brands within the store. And the result – Mutual success for all. Wish more brands understand this simple logic, rather advertising silos on supplement first-pages!

Duty Free in India – a fiasco or a success story in the making?

“Nuance Group (India) to exit Hyderabad Airport Travel Retail as new Tender looms” read the headline on The Moodie Report – the most respected and authentic Travel Retail news site that never sleeps. Even though the Publisher Martin Moodie, Deputy Editor Dermott David and many other senior people were stranded over the past 10 days due the flight disruptions caused by E15 (that’s the short code for the Icelandic Volcano), the news website kept going. Such is the commitment of the people behind. Back to the headline, which also appeared in a leading Indian newspaper a few days ago, it was indeed a surprise for many of us in the Industry. Or should we say was it a surprise that the news came so late! Well. 

The Nuance Group that operates over 400 shops across 60 airports and 20 countries worldwide and which is among the largest Duty Free operators in the world entered India in the year 2006, with a JV with Shoppers Stop, India’s leading retailer. The JV was specifically formed for the Duty Free tenders that were coming up then, at Bangalore and Hyderabad for the two new Greenfield airports. It was quite a surprise to see this JV and so were many other partnerships – The Oberoi Group with Heinemann, for example. It was the first time that international players were setting their eyes in India. It was initially India Tourism Development Corporation (ITDC), a Govt. Of India undertaking which was the monopoly operator across Indian airports over the past 3-4 decades. And then came in the private monopoly of Flemingo since the turn of the 21^st century. This was challenged by the International players in 2006 when the top five Duty Free operators of the world including Nuance, DFS, Dufry, Heinemann and Alpha participated in the tender process of BIAL. The line-up and interest in the Indian Duty Free was so impressive that many in the industry were hoping for better days ahead, guessing that the international players with their global exposure and best practices would mark a change in the country. Wish dreams were horses!

The first International player to win a tender in India was the Nuance-Shoppers Stop JV at Bangalore International Airport. This was followed by a similar success at Hyderabad International Airport. Other players such as Dufry and Heinemann made a quiet exit from India heading back to their strong bases. Alpha, which had been operating in Kochi and Colombo for over 10 years went back to focus on its territories.

A lot was anticipated by the Industry from the Nuance-Shoppers JV since its victory from the tenders at Bangalore and Hyderabad. With their impeccable track record in India, Shoppers Stop was expected to put things into perspective and bring some method to madness in this crazy business. After all, travel retail was, and is still a very nascent industry in India and who would believe me as an Airport Retail Manager a few years ago when I would say passengers would buy not just books and magazines, but also diamonds, watches, t-shirts and perfumes, even in the domestic departures of the airports! Shoppers Stop is doing an excellent job and one can see this at the Bangalore and Hyderabad Airports. And Nuance, with their global experience and success was expected to negotiate the best rates from its suppliers and pass on the discounts to its customers at the International Departures and Arrivals. Needless to say, this is a true story today and the duty free stores in Bangalore and Hyderabad have been the favourite for most International passengers in recent times, surpassing erstwhile favorites such as Dubai, Singapore and Bangkok Duty Free.

So, what really went wrong at Hyderabad? Honestly, I wouldn’t like to speculate. But there are certain points that were evident with their business model, some of which are discussed here. Sure, these are observations of yours truly and a few people around while personal thoughts of some of the readers may differ. To begin with, the size of the market was over-estimated. Going by previous experiences, the incumbent Flemingo who was operating at the erstwhile Begumpet Airport at Hyderabad did not have such a large duty free area. This, in my opinion should have been the first learning. A large airport doesn’t necessarily mean a large Duty Free Store, many of you would agree. Next, the range included high-end premium products including Scotch and Cigars, which was probably not required. The reason for this being over 60% of international passengers are either proceeding towards or returning from the Middle East and are blue-collared workers, whose primary requirements include some inexpensive chocolates to distribute among friends and family, low-cost tobacco products, whisky and rum. And most importantly, over half of all passengers belong to the Muslim community who do not consume any form of alcohol. This, according to many in the industry was the most important point that should have been kept in mind. Indeed, for the reasons mentioned above, it was widely expected that Alpha Duty Free, now a part of the Autogrill Group, which has been operating in Cochin (with similar consumer profiles) could have been a better bet for this airport.

Most recently, middle of 2009, there was an unsavoury incident at Hyderabad Airport where some of the staff of the duty free were allegedly involved in a racket that included illegal smuggling of customs bonded goods. While the words may sound alarming or confusing, what was happening actually was that the staff were taking goods out of the store that were not purchased by passengers, but by illegally using their personal details. This, according to some in the close vicinity of the Operator as well as the Airport Management was the last nail on the coffin. Afterall, the GMR Group which operates and manages the airports in Delhi and Hyderabad was in no mood to continue a situation that would give it disrepute in any form. The new Terminal 3 at New Delhi is nearing completion and once finished would possibly be the best terminal in India and among the best in the world. So, the latest news is that a new tender is being called for and the new operator “may” have a Joint Venture with the GMR Group directly, just like how Aer Rianta has entered in Delhi.

Having said all of that, Nuance has done a commendable job in Bangalore over the last two years and this is also a reflection of their best practices being continued – they are also doing great in Zurich Airport, which happens to be one of the main shareholders in Bangalore Airport. Their achievements in Bangalore include bringing for the first time in India a Formula One Racing Car to many other exciting promotions that have never been tried in the country. While there is wide speculation that they would wind up their India operations  (naturally by the Indian Media coz they love doing it), many in the know are unwilling to believe so. Bangalore Duty Free, if done well in the years to come would be not just among the most profitable to the operator, but has the possibility to be one of the best in the world. Nuance has proven time and again that it is THE BEST Operator at Singapore and Hong Kong and understands the pulse of this market quite much. I am sure the business will flourish well in capable hands and continued mentoring and look forward to its wining accolades in times to come. So, where is the Indian Duty Free heading towards? Just wait until T3 opens - and the new integrated Terminal at Mumbai International Airport. Just a matter of time, when Indian operators will show the world how this business is run best. Cheers. 

Pay online and gain rewards!

Many of us have been transacting online since the last few years and the size of this market has only been increasing. Most International and a few Domestic Banks provide Net-Banking facility at no additional cost to their customers and this means the customers can use their Debit/Credit cards to perform various transactions –to transfer funds to other accounts within and outside the customer’s own bank; to purchase financial products such as Fixed & Recurring Deposits, Insurance, Stocks, etc.; and of course, to shop! When I mean shop, one could buy almost anything that one desires – from groceries to stationery, cars to real estate properties. Needless to say, one needs to use his/her own prudence while shopping online – whether using a Debit or a Credit card as it is a natural tendency to spend as much as possible, given the various exciting promotions and offers that compel us to “consume” more. Internet payment security has been a great concern over the past years but that’s improving day by day with Banks and their payment gateway partners (third-parties who process the transactions on behalf of the bank’s customers) upgrading their back-end continuously, to ensure that the transactions are not spammed by malicious intentions.

Online shopping has been in existence since late 90s – with many Airlines and Online Travel Agents (OTAs) notably starting the trend. For the sellers, it was mere savings in their operating costs – there is no need for precious real estate and manpower to conduct these transactions; for consumers, it was saving time and effort, and of course, a better deal at the touch of a button. In India, Air Deccan (which was later taken over by Kingfisher Airlines) was among the first to popularize this trend. Over the years, many Retailers such as Shoppers Stop, Crossword, The Future Group, PVR Cinemas, etc have been using this potential in their favour. Then there are generic websites such as eBay and Amazon who have been pioneering this concept since the past decade, where one can purchase almost everything under the sun. Having said that, the size of the Online Shopping/transacting market is not yet very big in India. There are various reasons that one could find that deter people from transacting online, security being a major one but most importantly, it is the “habit” or the lack of it. I know many of my friends who have been living in the US or Europe who shop online for as many products – from hand wash liquids to food items to shirts and ties. That’s because of previous experiences and yes, standardization of products (including Quality and Delivery). I remember when I was at my friends’ place in Hong Kong last year we called and ordered full-fledged meals for three days from a small time Indian Restaurant – order placed, payment done instantly online and food delivered in less than 30 minutes. So, if it can work well in HKG, so be it in BLR as well!

While retailers have been encouraging consumers to shop online more often, Banks and credit card issuers have been doing their bit too. One of the most popular ones in recent times is the initiative by Visa. Visa has its own website aptly named visabillpay.com and the Indian version called visabillpay.in. One can register and pay bills online instantly across various service providers such as Regional Electricity Boards, Mobile and Telephone service providers, Insurance companies, etc. using all Banks’ cards which are issued by Visa. Since the payment gateway is managed by Visa, security factors seem to be well in place. Apart from providing the bank login details, one needs to provide the authentication grid details as well – three out of the ten two-digit numbers that are behind every card issued (recently) must be keyed in to complete the process. Visa, on its part takes special initiatives from time to time. When I had registered two years ago, they had a simple yet effective and compulsive scheme – when a bill is paid through the website, the user gets a 5% cash back subject to a maximum of Rs. 50 per transaction. Recently, they have come up with more exciting offers and have been repeatedly announcing this through the Print Media (across various national publications). As a limited period offer, for every five bills that are paid through the website, the user receives a Gift Voucher from PVR Cinemas. And for every bill worth Rs. 800 or more that is paid through the website, the user receives a Gift voucher worth Rs. 150 from Pizza Hut.And there are some other exciting offers too... 

There have been many programs in the past to reward customer loyalty. But this is a bit different. Needless to say, this is among the brilliant campaigns that I have seen in the past few days when Retailers have tried every trick in the book to woo consumers. In this case, a very smart move by PVR and Pizza Hut! While it is bit more cumbersome in the case of the cinema, the pizza idea seems better. The consumption cycle is not just faster, but obviously the upside sales potential is higher. A family of four would order for atleast Rs. 300-400 during one purchase and the upside value is the hook. In case of PVR too, consumers would visit the cinema, redeem tickets against the voucher but buy food and beverage within the auditorium. That’s again a big opportunity.

In both the cases, chances that first-timers would get tempted are high. If someone has never tried paying online, then probably he would, with the comfort of paying bills online, from his desktop or PDA. In case the customer has never visited a PVR or has never ordered a pizza, then that’s again a great attempt to get them acclimatized to a new way of watching movie or dining.

Whichever way, the more you spend, the more you earn rewards. So, go pay! And get rewarded instantly.