F for FDI in Food Retail

Much has been spoken and written about the opportunities and perils of allowing Foreign Direct Investment in Retail, especially in the Food & Grocery business. At the moment, only locally procured farm goods and other products manufactured in India can be sold in organized retail stores with FDI. Unfortunately, the top Food Retailers in India including the Future Group, Reliance Retail, RPG-SG led Spencers Retail, etc. do not have foreign investors. Most of the retail chains are reeling under heavy losses and have not been able to scale their businesses beyond existing geographies.

Carrefour and Auchan have shut shop while Walmart has severed it’s tie-up with Bharti Retail and is on it’s own for a while now. Tesco has always had a back-end arrangement with Tata Retail and it continues to be just that. And there is no news of any other international Food Retail chain getting into India in the near future. Interestingly, Amazon and homegrown start-ups Grofers and Big Basket have applied FDI proposals to FIPB for operating in the food & grocery space, perhaps in e-commerce, which is gaining ground every passing day.

Big Basket started operations in 2011, is well funded at the moment and works on an Inventory model in gross violation to existing FDI rules. BB has a warehouse where its products are purchased, sorted and stored. Customers order online/mobile apps and BB delivers the said products from their Warehouse to customers at their doorsteps. BB also procures products from local retailers for quicker delivery and for items that they do not carry. Needless to say, BB hasn’t made a single penny in profits and continues to mount losses.

Grofers started similarly as Big Basket and built ghost stores (outlets with products but no name board and consumer shopping) but then modified its business model to a Hyperlocal model where it currently picks products from neighborhood stores and delivers to customers.

Others like Peppertap, Zopnow, etc. have tried their best raising Investments but have failed to make a dent and have shut shop or have morphed in to delivery companies. Amazon Now currently operates only in Bangalore and is app-based. Customers order on the Amazon Now Mobile app and Amazon picks the products from The Future Group run Food Bazaar & Shopper’s Stop’s Hyperlocal format “Hypercity” Stores and delivers products to customers in a scheduled manner. This is the entity perhaps to whom the FDI license is being sought for.

Incidentally, I have been operating “Oyethere” which has a website and mobile apps on Android and iOS which are not only Hyperlocal but also Convenience formats. Customers can order products from our website or apps and we pick products from the nearest Retail outlet with which we have tie-ups and deliver to customers in 30-300 mins which is our Unique Selling Proposition (USP). We have been around for a year and half now with minimal investments and are on the verge of getting well funded shortly.

Food Retail is a hot space both offline & online Retail and we are playing a wait & watch game with what the Modi-Government is up to. Let’s hope for the best.

E for Empowerment - Employee Empowerment

Have you felt that the restaurant where you spent a few hundreds or even thousands provided a great meal but the service was basic, if not atrocious?

Have you experienced cashiers without any life at cash tills in supermarkets who hardly look at the customers faces?

Have you encountered sales staff at apparel boutiques who are not interested to show you varieties of merchandise?

Have you seen sales staff at a mobile retail store who are more engrossed in their own smartphones playing games or watching Youtube than serving you?

There are many such examples that we could discuss in detail and the prime reason for this is that the Retailer has provided limited or nil empowerment to the staff. I had a similar example this morning. I was at Café Coffee Day Ispahani Centre (Chennai) with a guest and we ordered two cold beverages which arrived fashionably late after 10 minutes. One sip and the Frappe was lesser by a quarter. In 3-4 minutes my drink was over! And it was meant to be a cold drink. After a while, I went to order a Cappuccino and again had issues with the staff who were novices and were under training while the senior guy was not around. When he appeared suddenly I told him about the cold-less Frappe and he just gave me a blank look – nothing more. No apology, no offer to replace the drink, nothing. I wouldn’t blame him. This is how most of our large Retail chains work who are facing severe challenges in employee management.

While we could debate what the staff in the above example could have done, I think the issue should be addressed at the Corporate level than at the store level. Worldwide, many retail stores, especially in services businesses such as food and entertainment have given a lot of empowerment to their staff across hierarchies. For example, walk in to a Starbucks and order a drink – if you didn’t like it and inform the guys behind the counter, they would just replace it without battling an eyelid. Yes, there could be some cunning customers who do it purposely to give a try for some new beverages, but “Customer Delight” which we discussed in the previous article is foremost for such Retail Brands than the few sour apples.

Indeed, many small and medium retailers have empowered their staff immensely and I must give credit to such Entrepreneurs as well. It is not without a reason that some brands have grown their businesses immensely while established ones falter. Even large retailers are empowering their staff. Case in example: The Store Managers at The Future Group outlets are designated as “Kartas” not without a reason. Karta is the official name of the person who heads a business managed by a Hindu United Family (HUF) and the Future Group has just taken a leaf out of it. The Karta of a Future Group is fully empowered to take decisions pertaining to his/her store, ofcourse what’s within their areas of power & consideration.

There is inertia among Business owners to empower their staff due to trust deficit and employee dependability. However, with the right coaching & mentoring, this can be very well be overcome and businesses can indeed succeed.

D for Delight - Customer Delight

It is an almost daily endeavour for Retailers to “delight” their customers, which is perhaps the highest level of “Customer Service & Engagement”.  Brands like Apple, Gap, Disney, are a few global examples that have delighted their customers, which have become global case studies. Back home, Retailers like Shoppers Stop and Café Coffee Day have set very high benchmarks in Customer Delight which are continued to be emulated by small and medium retailers till date. One such recent example is restaurant chain “Rajdhani” which recently held a special preview for their preferred guests of the “Aamlicious” menu.

We were invited to be part of this special Dinner session on Monday 3^rd April 2017 at the flagship outlet of Rajdhani that was held at Phoenix Market City, a premium Mall in the suburbs of Chennai. Even as we entered, the entire team who were eagerly awaiting our arrival welcomed us with a special mango-based welcome drink. The Head of customer engagement was personally present at the event who struck an instant conversation with all the guests. She was open to discuss the current business scenario and informed us that post Demonitisation, there hasn’t been much impact for them since a majority of their customers paid through debit or credit cards.

After a while of socializing, the team started serving the new Aamlicious menu, which is a summer menu with Mango, the King of fruits and the summer special as a central theme. There were starters, salads, entrees, main course items and of course the desserts. The Captain of the table explained each item in great detail and suggested pairing of food with the new Aamlicious menu. Despite our repeated requests, the team went on serving more and more of the tasty items that we were feeling over-fed in just 30-45 mins since starting dinner. I had to take a 5 minute break before the dinner was all over. At the end, we were introduced to the Maharaaj, the Chief cook who comes up with such delicacies year after year through extensive research and analysis of customer preferences.

To experience this menu, reach out to any of the Rajdhani outlets in your city.

So here are some lessons from this initiative of the Food Retailer about Customer Delight which is worthy of emulation by the Industry.

Remember your Customers: Every time you have a special activity, a new product launch or a new menu, do remember your loyal patrons. A single happy customer (like me) will talk about their happy experience to a hundred people.

Product Consistency: If you are in a product business, especially the food business, it is vital to ensure the consistency of the quality of the food items. It is one thing to invite guests but if the quality slips, everything is down the drain.

In-Store Experience: Retail is a business where no matter how many millions are spent on Marketing, Advertising, Branding & Promotion, it is the final experience that the customer encounters at the store that matters the most.

--> Customer Delight is not a destination but a journey which Retailers need to keep working on constantly, every day, every time the customer visits us.

C for Conversion (Footfalls to Customers)

One of the biggest challenges for Retailers is customer conversion. In large formats such as Malls, Department Stores & Hypermarkets, the opportunity is huge but in reality the conversion rates are quite poor. It’s a completely different story at supermarkets and fashion retail stores. The conversion in E-Commerce is a completely different effort altogether. In this article, we explore various opportunities for Retailers to engage with customers for better conversions.

Drive footfalls

One of the most important things for a Retailer is to drive footfalls in to their store, no matter if they are located on a high street or a shopping complex such as a Mall. This could be done through creating interesting visual displays on the shop front, attractive shopping offers, images of brand ambassadors, new launches of products (and services), “Happy hour” shopping boards, to name a few. The key here is to drive footfalls in to the store and leave the Conversion to the shop staff, which is of course, easier said than done. Retailers should look at various ways through driving more and more potential customers to the store as well as get back past customers to shop repeatedly with them. In E-Commerce, potential customers leave a digital footprint and most of them do not know that, however e-tailers follow the trail and repeatedly reach the said potential customers through various ways such as Re-Marketing through Google & Facebook. You may wonder how does the same product that you saw a few days back on a popular website still shows up on your Facebook screen – this is it. Indeed, its eerie that our digital footprint is captured, but hey, when you get a product for free, you are the product, remember!

Tie-Ups with other Retailers

Many times, Retailers collaborate with each other and co-promote their products and services. For Ex., when I launched my Hyperlocal venture Oyethere.com, we gave away free vouchers for beauty treatments from Naturals Salon, India’s largest Salon chain along with each purchase. At times, the Gift Voucher value was the same as the shopping value of customers and they were really glad that they actually got back their money back. During Diwali 2016, a clutch of Retailers in Chennai got together and created Chennai Shopping Festival where more than 300 retail stores participated and promoted the event driving footfalls to each other’s stores. It is quite common to see larger international properties such as Dubai Shopping Festival, Singapore/HKG Shopping Festival and so on where Retailers come together and distribute store traffic to each other. Ecommerce giants like Snapdeal create Shopping Days which bring together thousands of retailers together and offer best deals to customers.

In-store Experience

Once the potential customers enter the retail store, that is where the magic of converting passers by to customers lies. Through store props, product displays and discounts or promotions, Retailers encourage customers to buy the products or services then and there. It is important to remember that the conversion period is very limited since customers might be in a hurry or may lose interest if the offering is not attractive. Therefore it is important to ensure Customer Conversion efforts are looked into carefully and continually by Retailers.