Showing posts with label organized retail. Show all posts
Showing posts with label organized retail. Show all posts

14 July, 2017

The Power of (No) Branding

Off late I have been travelling extensively across the state of Tamil Nadu on work – been conducting several Training Programs, to meet & work with Clients, etc. One such visit recently took me to a small town 500kms to the South of Chennai by the name Tirunelveli (Nellai in Tamil). The town is notorious for clashes among people at the drop of a hat although a lot has improved over the years in the areas of Law & Order, Crime, etc. The people in the surrounding areas have a certain slang of Tamil, which in itself is a famous way of speaking the native language. The Nellaiappar Temple in the town is world famous and is said to be 1.5 times bigger than the Madurai Meenakshi Temple. Bang opposite the temple is a shop that is as famous as the temple itself.


The temple goes by the name “Iruttu Kadai” meaning “dark shop” in Tamil. The shop has been around since 7 decades or more and is run by a North Indian family from Rajasthan. The shop, which doesn’t have a name – as in a Brand Name – is known by it’s colloquial name all over the world and makes just one product – a traditional sweet meat called Halwa. The sweet, although made across India in different forms is very unique to this particular shop. No one gets the same taste as they make and the family that runs the business have a unique recipe for the product which has been tried to be remade by so many people but no one gets “this” particular taste. And they don’t have branches either!


The shop doesn’t have a brand name and is open from 5.30pm to 8.30pm or till they run out of stocks whichever is earlier. Apparently, the shop owners produce 1 tonne – yes, you read that right, ONE Tonne of Halwa every day! And the sweet meat gets sold within a span of hours. Even till this day, the shop doesn’t have proper lighting or visual merchandising and has just one small bulb, a 10 watts bulb reminiscent of the olden days when they would run the business in almost pitch darkness with oil lamps. And it is no surprise that people queue up outside the shop from early evening to get their prized pick.


In today’s world of loud and glossy branding, insane amount of money being showered on advertising, needless to say the innumerable new age food businesses which are hyper funded and get so much of PR, shops such as these have carved a niche for themselves. To survive in 21st century in Retail without even a registered brand name, operate just for a few hours in the day (or evening) and managing with just One SKU – I personally think that there is more to this Retailer than just the Halwa itself.


I managed to get some Halwa for myself the previous evening through a friend before I visited the place next day (since it is closed all day) but couldn’t meet the owners and the family that runs the place although I plan to meet them soon. It was a sense of pride and satisfaction that Retail is a very simple business to be in. Keep the fuss away, focus on your product and be consistent with what you do – customers will reach you no matter what – these are some of the learning that I take away from this specialty food retailer. As I always say, Organized Retail has so much to learn from traditional Retailers and this is just one such example.

01 April, 2017

A for Attrition

My father started and ended his career after 33 years at ITC Limited, the largest cigarette manufacturing company in India, which has now morphed itself in to a full-fledged Consumer Products Company. I always used to wonder how such traditional companies could retain their employees so long while new-age Retail Companies - established players as well as newer startups fail to do so. One of the biggest issues plaguing Organized Retail (Offline & Online) today is – not just lack of Investments or returning customers, rather staff attrition. Despite best efforts by the company, from monthly felicitations, cash rewards, mid-course promotions, and of course the house parties at startups that sometimes even have beer and snacks flowing, employees leave. At times, abruptly.

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Why Employees leave – Myths

Competition: Loyal employees, almost certainly never jump to competition. They leave their present organization on the premise that employee-friendliness is better at the Competitor’s place. And the job-hopping continues.

Higher Pay: Most employees never work just for money. They work for their passion towards Retail and serving customers whole-heartedly. Indeed, a good salary is important, but it is certainly not the only reason for them to leave.

Recognition & Rewards: While most Retail companies have a robust R&R mechanism, it generally fails to reward deserving candidates due to internal conflicts, nepotism and favoritism. Employees leave when they are not recognized for their hard work, especially at the front-end grass-root levels.


Distance to travel: Another big myth is employees feel the workplace is too far from their residence. Certainly not. Happy employees will travel any length to their workplace provided they are happy working for the Employer.

False promises: At times, Employers make tall promises about the job, work-life balance, promotion opportunities and incentives in addition to remuneration. When these are not kept up, employees feel cheated and walk away.

There is an old adage, which goes “Employees never leave an Organization, they leave their bosses”. This is so much true and relevant in current times when there are so many jobs that are getting mechanized from Retail Warehouses to Cashier checkout points. 

Offline Retail stores rely completely on human values and relationships between the front-end employees and their customers, so for these Retailers it is even more important to ensure the staff are kept happy.  At senior levels in the Organizations, the CXOs must ensure not just a happy working environment but must also measure these experiences from time to time and also keep improvising it. Top Retailers in the world have seen closure of their businesses and one of the key attributes to that is employee retention.

--> For most of us, A for Attrition is a bad word. But we must strive our best to ensure that this word loses significance in our business lives, slowly but steadily.

03 January, 2017

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 8th and 9th 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. 


15 February, 2016

When Ancient meets Modern...

Baba Ramdev's Patanjali products have taken the consumer goods world by a storm over the past 24 months. While the herbal and ayurvedic brand has been around for a long time, Baba Ramdev gained massive popularity while joining protest meets held by Anna Hazare over corruption issues. He later dilly-dallied with Aam Aadmi Party and later found support from none other than the BJP which went on to form the Government at the Centre in 2014. Ever since, Baba Ramdev has been among the most searched figures in the internet, not to mention his Yoga classes and ayurvedic products. He has been, by the way imparting yoga techniques for decades and his programmes on yoga are a super hit on hindu spiritual channels in India such as Aastha Tv.


Patanjali, is a name which also belongs to the founder of Yoga and hence the correlation with consumer goods brand. At the moment, Patanjali has over 400 items across Grocery, Personal Care including skin care, dental care, herbal products, washing powder, soaps and detergents, pure Cow's Ghee, Honey and many more. These products are manufactured at a state of the art factory in Himachal Pradesh, located in the North of India with access to the Himalayas. The Brand has had its share of controversies with Baba Ramdev himself being the centre of attraction (or distraction) in various events. A section of Imams of the Muslim Community asked followers of Islam not to use these products since some of them included Cow's urine, which is considered in Hinduism as a disinfectant. It is another matter completely that there are hundreds of muslims who work at the Patanjali's massive factory spread over hundreds of acres in Himachal. With the fall-out of Maggi Noodles (a Nestle product), Patanjali wowed people with their Atta Noodles, considered a healthier option and launched them in Jan. 2016 ever since it's been a super hit. 


Patanjali has been giving tough competition to national and international brands such as Colgate, Nestle, P&G and many others. On the Sales & Distribution front, they follow a similar model such as the good old days of FMCG. The products are sent from the factory to a Super stockist in each Metro who in turn passes it on to Distributors who then pass on to Retail Stores. The entire Supply Chain seems to be working quite flawlessly at the moment. The demand-supply ratio is currently pegged at 1:4 as per market estimates, i.e., there is one unit available for every four people who are looking forward to buy it. This is massive. In Indian history of consumer products, Bajaj Motors has the notoriety for having made people to book a scooter and wait for several years for delivery. Patanjali is in the same vein. People of all ages and segments of the society have been embracing them.


Patanjali recently tied up with the largest retailer in the country, The Future Group and the products have been available on the shelves of Food Bazaar which is the Hypermarket chain of the company as well as in other smaller retail formats such as Nilgiris, KB's Fair Price, to name a few. This approach of taking ancient medicine to modern retail has been an interesting move by the brand which now rubs shoulders with other well established brands such as Surf, Lakme, ITC, Nestle, etc. It is imminent that no brand, irrespective of their origin or utility cannot neglect Organized Retail which was less than 5% of the market a decade back and is now at over 10% of the USD 600 billion market and growing at 20% CAGR. Patanjali is sure to make a dent in the market share of the biggies and news articles have appeared in international magazines that MNCs are already fretting over this issue.


The brand's popularity is largely due to the power of Ayurveda, the way it has been positioned in the minds of the consumers and the Brand Ambassador which is Baba Ramdev himself, who is seen and aspired as one of the fittest Indians. It wouldn't be surprising of the brand attracts significant Private Equity and grows in scale in times to come. Watch this space.


07 September, 2014

Sync-ing customers with Technology

Smartphones have come a long way in India over the years. Until about ten years ago, the most popular phones for business purposes were BlackBerry followed by Nokia Feature Phones for personal uses. Others like Samsung, LG, Motorola, etc. had very limited models and therefore very less sales (penetration) as well. Things started changing with the launch of the Apple iPhone in 2007. The iPhone revolutionised the way people used mobile phones with its remarkable technology, style and utilities. As is quite famous about Apple Founder Steve Jobs, the company doesn't conduct much of surveys about user's needs - it rather provides features that users never thought they would need one - the most recent being the finger print scanner for unlocking the iPhone 5S which was the most recent launch in 2013. Samsung Electronics, which is one of the leading Electronics companies in the world has surged past others in less than half a decade to dominate the world's number one position in Smart Phones across the world as well as in India. According to a recent report on NDTV Profit, Sales of Smartphones rose by 84 per cent in the quarter ending June 2014. Local and Foreign companies alike are sacrificing profit margins to build market share in India, which counts 914 million mobile users, according to Government of India data.
Technology Consultancy IDC India projects annual smartphone sales growth of around 40 per cent for the next five years in this price-sensitive nation.


This is a delightful news for Retailers selling mobile phones and accessories. Univercell, Chennai based Retailer of technology products including smart phones, feature phones and related gadgets has grown consistently over the years and is rated No. 1 in terms of their network, Strategic Locations, Innovative Marketing, Friendly service and most importantly, a wide array of products across various brands. The Retailer, recently launched its newest format, rightfully called "Univercell Sync" at the tony Nungambakkam neighbourhood in Central Chennai. The store, spread over about 800 sft is strategically located to enthuse passersby to drop over. While the brand is quite popular in the city, the new "Sync" suffix is sure to attract a lot of people to get inquisitive and enquire the details about the new initiative.

The store layout is interestingly divided as various zones for purposes such as Photography, Music, Work, Accessories and Kids. Gadgets are displayed utility-wise rather than Brand-wise, which is a great way to encourage customers to choose the right gadget according to their uses. Global giants such as Apple, Samsung and LG share the display space with home grown Micromax and Karbon. However, the phones are still displayed price wise within the display areas so buyers can choose within the price range they require.


I was pretty impressed with the Music zone, especially. If CDs killed Music Cassettes fifteen years ago, the iPod killed the CD players a decade ago. Today, most of music is stored and played digitally and handphones have most of them, since people prefer to have a single gadget for making calls, taking photos and for listening to music. The display also includes music gadgets such as speakers, bluetooth devices to stream music, ear phones, head phones and cables to connect. With the touch of a button, its quite easy to connect one's phone to many of the devices and have a live display, which would aid buying the right product quite easily.

I was also quite intrigued with the kid's zone - a special area for interaction with the young ones - kids can hang around and explore various interesting things about the gadgets and the friendly staff are also helpful to teach them a thing or two.


Overall, the store is a notch above the hundreds of retail stores across the city that also "sell" mobile phones. The Univercell Sync stores dont just sell, they rather provide a very unique experience that the next-gen is looking for. Do drop over at the store in the coming days and enjoy a world class experience and share your thoughts.

The store is located at:
New No. 103, Old No. 52,
Nungambakkam High Road,
Chennai.
Landmark: diagonally opp Basics Store.

17 April, 2014

Digital Retail is still nascent

Croma, which is a part of the TATA Group has been my preferred store for shopping all things electronic over the past few years. They customer service is friendly, well-stocked and well maintained and operated stores. The staff also double up as digital experts, mostly guiding customers on why they need to buy a gadget, rather than what they need to. The apple Assistant at one of the Croma Stores I frequent is more like a good friend and advisor now – I reach out to him regarding queries about the phone, the software, the enhancements and a whole lot. Croma’s main competitors in the organized Retail space include EZone from the Future Group and Reliance Digital, a part of Reliance Retail. Then there are the local biggies, such as Viveks, Shahs, VGp, etc in Chennai and ofcourse the most infamous Ritchie Street off Mount Road which is the hub for electronic products in the city. Croma has fared much better than the others while it faces stiff competition from Reliance which is expanding rapidly off late.

Tata photo

I visited the Croma Store on Mount Road a month back, to enquire about a revolutionary device – a a USB Stick which provided 3G & Wi-Fi services on the go. The device just needs a plug point – AC or DC; which means you can use it as a wi+fi device using the cigarette lighter slot in your car and can provide its service upto 5 gadgets including laptops, tablets, phones, iPods, etc. The device has been around for sometime and the staff say that it is seeing brisk sales every other day that it gets sold out within a few days of stocks coming in to the store. So, the store that I went to didn’t have the stocks and they apologised for the same, and said that I could pay the advance for the device and that they would call once the device reaches the store. Somehow, I wasn’t comfortable with that idea, since I wanted the device then and there.

I set out looking for the Tata DOCOMO Store that exclusively sells these devices and offers other solutions and services of the same nature. Even they didn’t have the stock at the time I went. However, the staff was quick to note down my details and said he would call me the next day as soon as he received the stocks. And he did promptly call me the next day. Within just four hours, the device was working!

Croma

So, why did the guy at Croma not do what the guy at the DoCoMo store did? Since, the sales targets were different to each one of them, simple. For a mass retailer, which attracts hundreds of customers to their stores, the kind of focused service is always on the back seat. For the guy at the exclusive store, his key targets are selling the USB sticks and converting buyers into users and users into big spenders. It’s a known fact that “data usage” is indeed going to be a money spinner in times to come for Telecom companies, with SMS being replaced by the likes of whatsApp and ISD calls being replaced by the likes of Viber, Line, etc.

I would have expected Croma, which is also a Tata Company to work closely with another division of the group (DoCoMo is a Telecom company operated by Tata Teleservics). It is challenging, since they are different companies with different cultures. Also, the supply chain mechanism could be different. The big learning was as consumers, we need to visit the right kind of stores to get our things done. While it is simpler to buy online, it takes much more time to get the sim-card activated which required personal identification at a retail store, and hence only elongates the process.

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