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.

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. 

Why I suspended Oyethere Delivery!

This was an idea that I set out with while studying at NIIT in 1996, that one day I would be able to order pretty much anything on my computer and it would reach my doorstep within minutes or hours. That it took me 20 years to realize that dream is another story. Thus was born Oyethere.com, my hyperlocal ecommerce marketplace which delivered (yes, we are past tense right now) products to customers within 30-300 mins from the time of delivery. We started with Tender Coconut, being the only website in the world where you can order one, and moved on to Patanjali, Grocery, Household, Books, Baby products and more. We delivered special T-Shirts with pics of matinee idol Rajnikanth and his signature dialogues printed on them ahead of the release of Kabali. In Sep. 16, we delivered authentic eco-friendly Ganeshas (Clay Pillaiyar) for the Chathurthi festival. And then we shut down. Meanwhile, we got noticed on media, print, radio and Tv for our unique efforts. But potential investors remained myopic. A few of my friends came forward to support me with small sums of funding when I reached out to them around Aug. 2015. That investment came along for a year. We were not “burning” money; no full page Ads, no high-decibel paid digital campaigns and so on. We did not even hire the so-called elite and erudite Digital Marketing Agencies who sadly learn their business at our cost.

 Meanwhile, Swiggy, by far one of the most funded hyperlocal delivery companies in India reported a 65-fold increase in losses as per a report on Live Mint. Yes, you read that right. Here is a quick analysis of what they did;

Revenue for FY 2016: INR 23,59,00,000 (commission on transactions)

Revenue per day in FY 15-16: INR 6,55,278

Daily Transactions: Approx. 21,843 @ Rs. 30 per transaction as commission

Losses for FY @015-16: INR 131,18,00,000 (INR 131 Crores)

Which means, Swiggy spent Rs. 204 (Edited) to get a transaction!  This is Wow.

In the meanwhile, Oyethere was revenue compliant from day one. We made Rs. 5 per tender coconut from the roadside vendor. And 5-25% margin from our partners such as Patanjali, CDS Supermarket, Odyssey, Brown Tree & so on. We had between 1-4 delivery boys at the max and were delivering between 1-10 orders per day. We broke even our Opex from Day one. Absolutely NO CAPEX. I was spending frugally on Marketing offline & online, while also meticulously building PR & positive visibility all around. Sadly, we didn’t have backers. Those who promised the moon and beyond (on investments) backed out citing market conditions. We didn’t have access to popular and noteworthy Entrepreneurs & Angel Investors who funded startups out of Delhi, Mumbai & Bangalore.

On Nov. 1, 2016, I decided to suspend operations temporarily until we get a decent amount of funding. Talks are on currently with various people, but sadly most Investors neither understand Retail nor Investing. So there is a big gap between what I propose and what they understand. For sure, Oyethere will not make losses like others. No way I shall allow that to happen. But that, only when we get the next round of funding. Till then, I am on a break. 

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. 

Chennai Shopping Festival

For the first time, Retailers in Chennai have come together to create a one of its kind Retail Promotion. Titled "Chennai Shopping Festival" (CSF), this is organised by the Retailers and for the Retailers of Chennai. My own start-up Smiling Baby, a baby store that caters to the needs of new born kids upto six years is a member of Retailers Association of India (RAI), an Industry body that represents our needs and requirements to the Government and other bodies. Under the auspices of RAI, members of the organisation have come forward to create a marketing property which is CSF. The idea was rolled over on our WhatsApp group by a member, seconded by a few of us and actioned by all of us in just a week's time from start to finish. We have built a simple website that provides information about the various participating stores and their offers. Take a look here.

http://www.chennaishoppingfestival.com/offers/28

Over 30 leading Retailers from Chennai spread over 300 stores in the city including Viveks, Odyssey, Basics Life to name a few have come forward to join in this promotion. The big highlight of this promotion is Uber has come forward to ferry passengers to select Retail Store locations by using the code CSF150 (One Free ride worth Rs. 150 for new users!).

We at Smiling Baby also have a few interesting offers.

Smiling Baby is located at E-135, 6th Avenue, Besant Nagar, Chennai. Ph. 044-43507015 / 9176300015. Open All days from 10am - 9pm. Over 100 brands are available at competitive prices across categories such as Baby Care, nursing & Feeding, Maternity, Cosmetics, Baby Gear, Toys & Games, Apparel and Accessories. The store is the ONLY Destination Store for Medala, world's best mother care brand and houses the entire range of Medela products such as Breast Pumps, Maternity Hygiene, Feeding bottles and so on. One can also find world's other leading brands such as Chicco, Pigeon, Fisher Price, Himalaya, Johnson & Johnson and many others.

Once cam also shop online at www.smilibaby.in where the products will be delivered the same day or the next day with a Cash on Delivery option other than paying by Credit / Debit Cards at the place of delivery using mobile EDC machines.

Do spread the word; visit the website and click the "Get Offer" button so you receive an SMS to your mobile. Happy Festivities. Happy Shopping.

Mistakes make you stronger

In what is considered as a head-turning market opportunity, I went about with plans to deliver Eco-Friendly clay Ganeshas to customers at their doorsteps. While a few people have already tried it in the past with limited success, this was perhaps the first time a Hyperlocal Ecommerce Marketplace (my startup Oyethere.com) was trying something very unique such as this. We had four different options – an idol of Clay Ganesha being common in all the four and the additions being different in each one of them. Icing on the cake was that we would pick up the Ganeshas back from customers houses after the five day ritual was over, thereby providing customers a great sense of relief from rushing towards water bodies for immersing the idols, as is the normal practice around the festival that is celebrated all over the world by Hindus with much fervor. Being a strategy guy, I planned meticulously on how this whole exercise should be executed. Firstly, met our product partner well in advance to brief them about the enormity of the opportunity and what gains it would bring to both of us. Later, I planned the marketing campaigns, mostly digital.Finally, I worked on the logistics and last mile delivery which is the key thing in Hyperlocal Ecommerce.  As always, plans on paper looked glossy. I had very few chances of faltering, I thought to myself and didn’t leave enough room for things that could go out of hands. And that nailed me in.

12 hours before we began the distribution and delivery of Ganeshas, I gave a notice to my product partner. While I was sure they were at work, I didn’t follow-up every few hours on what has been the ground scenario. The partner’s staff, being new to this kind of an operation, hadn’t kept check and balances which meant that there were unforeseen delays from their suppliers. We started deliveries 3 hours behind our scheduled time of commencement, thereby putting a lot of stress on our capabilities. While we had adequate manpower to deliver Ganeshas, the last minute pressure hit everyone on their heads, with all of us getting in to a tizzy. I was attending almost every call that was coming to our helpline and patiently explained to customers that the Ganeshas would be delivered on time, only to find myself fooled by my own randomness. We delivered and delighted a majority but had to suspend our operations at one stage, which not only put off the customers but also attracted a lot of negative criticism through calls, messages and social media. At 11.55pm, I put out an apology on our official Facebook Page, requesting customers to forgive us for the lapse. I went underground for a few days, with no interaction with the outside world, just so I could introspect the mistakes and come out stronger. Which I did eventually, doing a favour to myself and my ecosystem.

As always, my wife and a few friends stood by me. Many of them took the effort to call me, message me to keep my spirits high. They quoted examples of how very large companies have committed grave mistakes but came back stronger after correcting themselves. And so here I am, back in action with new plans and new resolves to improve ourselves and offer better services in times to come. Our plans are intact and we believe we will only perform better in times to come. 

Don’t write me off, yet. And watch this space.

Is it Game Over for Malls?

Whose fault is it, I wondered, when I entered this iconic location last weekend. The Mall was nearly empty on a sunny Saturday afternoon. Car Parking area, which is the core identity of any Mall or Shopping centre such as a Retail Store or a Hypermarket was barely full, with a few cars parked intermittently.

The ground floor has a Mercedes Benz Car parked in the atrium, with curious onlookers not even sure if they would like to go closeby. Basics, which has won the hearts of Chennaites being a local brand with an International appeal has shut store. And so have so many stores. Lifestyle Department Store, the Anchor store of the Mall wears a dull look. The security guard at the entrance seems unhappy and bored with almost no visitors for a while. Even some of the food outlets and a café which were doing some basic business seem to be shut. I walked up the Escalator and was surprised to see empty stores all over!

The Foodcourt was the saddest. Half the counters were shut. The one or two who were functioning were neither providing tasty food nor were bothered about customer service. They were just serving a need, of thirst and hunger and nothing beyond. The dining areas was hardly populated, with many tables not even having chairs, forget patrons. Those who were having a meal were merely passersby and I couldn’t notice even a few of them with shopping bags.

McDonalds continues to attract crowds, perhaps the brand pull makes all the difference. The play area did have some crowds, but not sustainable to send them to other parts of the mall.

Inox Multiplex with half a dozen screens was barely empty, with 4 new releases this week. That food prices in the canteen area of Inox is a put off is another blog column by itself! Even then, people should come to watch a movie in the weekend? That was also not to be seen.

Despite being in the centre of the city (and hence its name), why is the mall so empty? What went wrong with the Mall which was once the pride of Chennai? A decade back, rental costs in the mall used to hover around Rs. 180-300 per sft. Now there are hardly any takers. Retailers have shunned the mall. Food Outlets, which would anyway attract crowds and make some decent revenues seem to dislike being in the Mall. Whose fault is it anyway? Is it that the customers walked away from the Mall to bigger and better options such as Express Avenue Mall which is about 5 kms away? Or have they gone farther to the likes of Phoenix Market city or Vijaya Forum Mall?

This Mall has huge potential given its location, a stone’s throw from the Marina Beach and easy access from the rest of South Madras. It has enough parking space for shoppers, enough shopping space, cinema, foodcourt, play areas, what not. With a little bit of effort, this Mall can be turned around. Will the authorities get a good consultant and work in the renovation? Time will tell.