Showing posts with label Target. Show all posts
Showing posts with label Target. Show all posts

Sunday, January 1, 2012

Retail in India–Way ahead for 2012

Customer Checkout 

Organized Retail in India has come a long way over the past decade and 2011 was expected to change the wind towards the positive side, due to allowing FDI in Retail. Thanks to political unrest and the opposition parties claiming hoarse, FDI in Multi-Brand Retail has been put on hold (hope not shelved) while FDI in Single Brand Retail has quietly been allowed, atleast on paper. While a few International Brands such as Benetton, Tommy, Diesel, Esprit, etc. have been operating in India for many years now through Joint Ventures with Indian partners, a beeline of Brands wanting to enter India is expected in 2012 – a hope that many in Retail have been holding on for sometime now! The coming months are expected to be exciting times for our Industry and here’s a view on how this landscape would evolve;

Malls

From a lakh square feet to a million square feet in 10 years, modern shopping centers aka Malls have walked a long journey all these years. Today, Malls are not places for consumers to just shop but a generous mix of shopatainment – which includes Shopping, Dining and Entertainment. While there are over 200 operational malls today in the country, another equal number is expected to come up in the next few years. A number of mall projects which commenced during the slowdown in 2008 are ready for occupancy now and many are expected to launch this year.

Supermarkets

The neighborhood supermarkets have evolved the most, among all formats of Retail over the years. Size was always a concern for players like Spencer’s and More – getting it right was a challenge, either the stores being too big with empty shelves or too small with regular stock-outs. Many players have exited the marketplace while a few like Food Bazaar and Nilgiris (through franchises) are increasing their presence assuming scale-up would help them gain overall net margins which range in high single digits. This would be the first format, in my opinion that would straighten up – only serious players would exist and they would do a great job while many others would exit – hopefully this year.

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Hypermarkets

With foreigner CEOs and advisors engaging the managements of Indian Retailers, it was widely believed that Hypermarkets must be large, really large like the ones in western countries.Thanks to some early learning, many players like Hypercity and Total have corrected their ways of working. Small is the new Big, with Hypers ranging from 20,000 – 45,000 in prime retail areas in multi-level locations compared to the earlier proposition of being over 60,000 sft – one single floor in suburban areas! Newer players especially multi-nationals like Tesco and Target are expected in this format in the coming year while existing players are planning massive scale-ups.

Department Stores

These large format stores, the blue-eyed ones due to their colorful appearance was and is expected to be the only ones to see some EBIDTA in their early years. That’s a boon and bane in a sense in this format. To ensure they attract high-spender footfalls regularly, they should turn their stocks quite often; that means having the right mix of merchandise is extremely important which is a direct impact of having high quality staff who can choose the right merchandise every consecutive season. This is a vicious cycle and players like Shoppers Stop, Lifestyle, Westside etc. have got it right while a few of them are still struggling to learn.

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Specialty Retailers

Stand-alone specialty stores of international and even domestic brands are seeing dwindling numbers. The total number of stores that were being added year-on-year have reduced considerably. If it was 20 new stores and most being unprofitable four years ago, the numbers have reversed, thankfully. Most brands don’t talk about crazy numbers anymore, only well-merchandised stores and outlet level profitably.

QSRs and Food Retailing

It seems cooking and eating at home is a more expensive proposition these days thanks to high food inflation and going by the sales of pizza chains and fine-dine restaurants. While Dunkin Donuts is almost ready with its first outlet, Starbucks is slated to open quite soon too. Café Coffee Day will ad over 200 new cafes this year while Dominos and Pizza Hut will have company in California Pizza Kitchen and a few others. This would indeed be the most exciting format to watch indeed!

Greenland

Kiranas

The unorganized retailer down the road doesn’t pay taxes or offer health benefits to employees; no one ever checks the quality or quantity of goods sold; BUT he is able to offer lower prices everyday to consumers with other additional benefits such as short-term credit and quick home delivery. Modernisation is the byword for the them and they are indeed giving a touch competition to the organized players.

E-Commerce

But the real competition, if not threat to all formats of retail in 2012 is going to be through E-Commerce. Sadly, many brands and retailers are not paying attention to the increasing internet user base – over 100 million as of 2011 compared to just three million in 2001. This has allowed fly-by-night operators to open websites that sell everything from toothpaste to watches, apparel to expensive jewelry! Most of them have no clue how e-commerce works and many are even buying merchandise and selling – something which goes against the fundamental philosophy of transacting online!

Sunday, July 3, 2011

Driving footfalls…


It has been the talk of the town for sometime now, the new BlackBerry Playbook, the tablet from Research In Motion.There are thousands of reviews online and I am not going to delve into it for now. I got my hands on it three weeks back (even before it was launched in India) when a friend of mine who had brought it from the US showed it to me. Pretty engaging stuff, with its plusses and drawbacks. But what interested me to analyse and write this column was an email which I received a weeks back from EZone, India’s largest electronics store from The Future Group. There were actually two, one for a pre-booking and another stating that the wait was over and the Playbook™ is Finally Here. Am sure the mailer would have gone to hundreds, or maybe thousands of email accounts and would have pulled quite a few to the store over the past few days. I myself visited a few stores of EZone and Croma (TRENT Enterprises, part of the TATA Group) over the past few days and the results were amazing! Of the six different stores that I went to in Bangalore, two didn’t have stocks – I was informed by the sales executive that the “Catchment” for that store was not expected to explore Tablets! Another store had just the Playbook and an iPad, there were no other Tablets from any other Brand. And at one of the largest showrooms of one of the Retailers, there were crowds across the store in every section and surprisingly, there was no staff to attend the curious seekers at the area that stocked “Tablets” although there were atleast 6 different brands which were available.  Shoppers explored themselves (none of them were functional since WiFi was not connected) and moved on – one could imagine how many “Tablets” they would have sold today!

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Elsewhere in the world, in the US, you can collect boatloads of kicks™ in the kicks Reward Program and unlock awesome exclusive deals at your favourite stores. Walk into Target, Best Buy, Macy's, American Eagle, Sports Authority, Crate&Barrel, West Elm, Wet Seal and the largest Simon malls. Open the Shopkick™ app on your iPhone or Android phone in the entrance area, and wait for a few seconds. That's it! Your Shopkick app will reward you instantly. It's fun. You can get rewards at all 1,300 Best Buy and Best Buy Mobile stores in the United States, and at all Crate&Barrel and West Elm stores! And in many major cities you will find more stores with walk-in rewards, like Target, Macy's, American Eagle, Sports Authority Wet Seal and Simon Malls. Shopkick is adding more stores in more cities every month. Cool rewards like iTunes gift cards, Restaurant vouchers, Best Buy/Target/Macy's/American Eagle/Sports Authority gift cards, Facebook Credits, movie tickets, or if you go all out, True Religion jeans, a Coach handbag, or a 3D 55" Sony Bravia HDTV. And if you want to change the world, donate your kicks to 30 different causes! And all this, just to woo shoppers to walk into a Retail Store!

Look at the contrast. In one country, there are not enough sales staff to manage shoppers and potential customers who walk into the store. And in another scenario where shoppers are “paid” to just visit the stores! According to the Shopkick program, as you walk into the stores, there are specific sections where you get higher kicks™ and one can keep accumulating them. There are also certain products, which by mere scanning fetches additional kicks. I did try to download the Android app in my phone, but I got a message that the app was not applicable in my country!

What makes me wonder, is how Retailers need to woo shoppers to walk-in to their stores and convert them into buyers. While the first part is not so difficult in India – with less than 10% of the Retail Industry being organized, and there is no dearth of footfalls walking into Retail formats, it is indeed important for Retailers to focus on;
  • Merchandise Availability – This would be a game changer between those who remain in the business and those who don’t…
  • Customer Service – the Retailer might have the products, but if they are not showcased well to potential buyers, then the conversion is not bound to happen; and not just this time, even the next time too!
Sales are happening despite these, but its just a matter of time for shoppers to move to alternative avenues for shopping. An ASSOCHAM Report suggests that the expected market size of online shopping in India is about USD 2 Billion pa. Forget shoppers walking off to neighbouring stores, they may be shopping on their mobile phones and tablets sitting at the favourite Coffee Day outlets! And then, I would be writing a column on that trend, from a cafe indeed!