Is Consumer Loyalty Dead?

Commencing this weekend (23 June), almost all Fashion Brands in India will go on EOSS – End of Season Sale, a biennial activity that has been witnessing a higher share of annual sales. When I used to work for Benetton as Area Manager in 2004, things were different. There used to be EOSS Twice a year followed by the “seasons” as they are called, viz., “Spring Summer (SS)” and “Autumn Winter (AW)”. EOSS would usually start after Valentine’s Day in the hope that shoppers would still shop at full price for the big day to impress their dear ones. And the next EOSS would occur after Schools and Colleges have reopened, just ahead of the Festival season that usually begins from August onwards. Slowly, things started changing, rather realigning to Global trends. Many international brands had to match their Global Fashion Calendar and the year-end Christmas Sales, so the EOSS was pushed to December & January and accordingly the next EOSS moved earlier to end-June. And that’s the current trend now.

From Apparel Department Stores to Mono Brands, almost all Brands try to exhaust their Stocks during the EOSS. Interestingly, 15 years back, EOSS was restricted to a little less than 3-4 weeks. However, now it has moved to 6-8 weeks. There are many reasons that could be attributed to this;

• There is limited seasonality these days, in a sense Customers shop all through the year compared to “Occasion-based Shopping” such as for festivals, wedding season, special occasions etc. So, while the lean periods through the year have more or less flattened, the demand spread has also evened out
• Ever since the 2008 Economic Crash worldwide, Customers have become wary of spending high on products which would eventually be available at a lower price in a few weeks (sic). While India saw a boom in Mall culture between 2009-2014, the sheer number of Brands and their availability all through the year have been a cake for the Customers with easier accessibility 365 days
• While I am not a big fan of “E-Commerce killed Offline” theory, it is a fact that there has been a reasonable impact for fashion brands, especially. This is mainly because the unsold Inventory were pushed to their digital vertical by Brands to liquidate the stocks and over time, the likes of Jabong and Myntra have become more of “Factory Outlets” where discounted Merchandise are available, always. It is no wonder that the share of products which are on Full Price on such Ecommerce Marketplaces is relatively low compared to those on Discounts. Actually, this is applicable for all categories
• Department Stores offer a larger “Discount Pie” compared to the Mono Brands, given that most of them operate on a “Buy and Sell” model with no stock returns to the Brands. Therefore, in an effort to reduce the impact of their exposure to unsold Inventory, Department Stores offer aggressive discounts & promotions to ensure they clear old stocks as much as possible. 

So, with all the above factors taken in to account, I wonder at times, is there “Brand Loyalty” left anymore especially for the Fashion Brands?

When was the last time, You – the Reader of this Article, bought the same Brand of Apparel or Footwear or Watch or Sunglasses? Are you wearing now the same Brand that you wore yesterday? If two Brands are offering similar discounts during EOSS (or even at full price), would you buy a particular Brand? If so, then why?

So, the responses could be very subjective and suits each one of our needs. 

Honestly, I do not see Consumers clinging on to any particular Brand and I attribute it to two reasons – variety offered by over Top 500 Indian and International Brands (and Labels) across products categories from Perfumes to Casual wear, formal shoes, running shoes and beyond. 

Are you rewarding your Loyal Customers just with just Loyalty Points, Sale Previews and price-offs? Is this going to be sustainable at all in the long term? 

How would you retain them for longer – LTV as they say, Life Time Value (sic)?

What’s in a name?

Is naming hotels after castes illegal, or will it amount to casteism? No, said the Madurai branch of the Madras high court, terming it ‘commercial speech and holding that there was nothing wrong in a Trichy hotel calling itself ‘Sri Krishna Iyyar Traditional Bramanal Café’.

About four and half years ago, several Periyar Dravida Kazhagam members tried to deface the hotel’s name board and were arrested and jailed for 22 days before being released on bail. Quashing the criminal cases against 112 people, Justice G R Swaminathan pointed out the ‘sheer hypocrisy’ of the petitioners as they had not showed defiance against similar entities elsewhere. “In Madurai, where this bench is situated, there are hotels named after castes and communities. ‘Konar Mess’ and ‘Mudaliyar Idly Kadai’ are well-known instances. Speaking for myself, I used to regularly go to ‘Reddiyar Mess’ at Pondicherry for lunch during my college days,” said Justice Swaminathan.

It is the constitutional right of the proprietor of a hotel to name it after a caste or community, he said, adding: “Unless untouchability is practised or only persons from that caste are allowed entry, nothing is illegal in it.”

Much has been discussed about the religious and caste identities of Retailers in India. I am told this segregation exists, even in developed countries between people of various religious identities. We still see people of certain religious identities in India not shopping at outlets run by those of other communities. In one instance, I learned that a Retailer had to shut the store in a town because the customers there felt uneasy while the jewellery they purchased were being delivered in their hands by those of a certain community, which they felt was offensive. This was in the year 2016.

The reason I am writing this article is because there is an unusual discomfort among the citizens of India, with mindless accusations drawn upon each other thanks to the hidden agenda of politicians. In many cases, the whole thing is vicious. Retailers take advantage of Politicians from their caste and they help the Politicians in turn to win subsequent elections. There are instances where people of various ideologies fight among each other and hence boycott certain Retailers. 

It is common to see those of non-Hindu community make flower garlands outside Temples for Hindu Gods and I have personally seen this till date in areas like Mylapore & Triplicane. Neither do Customers have a qualm about the same nor does God ever came in some devotee’s dream and told them to boycott those from other religions selling flowers that decorate HIM.

In my own journey of 21 years in Organised Retail, I have personally never segregated a customer based on their race or religion. In fact, I always say that it is from the money the Customer pays us for the products or services that we feed our own families. So, where is the question of religion coming here? This realisation is very important. Especially in the current situation. I guess Retailers (and people at large) must rise above the growing polarisation thrust upon us by fringe elements and a few politicians for our own good. For we cannot expect that this trend will take us anywhere forward. No way.

Travel is an Incredible Opportunity

I have been travelling regularly on work for over a decade now. As a kid, my travel (mostly by bus & train) for outstation trips was limited to 2-3 times a year. My first business travel was in 2002 when I was called for an Interview by Shoppers Stop in Mumbai for the role of a Supervisor for their Chennai Store. I negotiated hard with the HR guy to get me a flight ticket although it was out of bounds by their policy. I flew Air India – a noon flight onward and a 2am flight for return since that was the lowest fare. Then I started flying across South India to expand the business of Benetton in 2005 with monthly visits to Delhi to our HO. The first visa on my passport was in 2006 and well, it was for Switzerland where I went to learn Travel Retail which I was implementing at Bangalore International Airport (BIAL). I flew to Singapore First Class onward and Business Class return for the first time, to speak at a conference on Indian Aviation in 2008 with my tickets being sponsored by the Organisers.  Travelled to 10 countries across Asia and Europe during my stint at BIAL. My domestic travel peaked during my stints at Café Coffee Day in 2009 where I set-up 140 cafes pan-India and thereafter at Royal Enfield Motorcycles in 2012 where I set-up 160 Dealerships across India.

Those days, I literally used to live out of a suitcase, travelling 3-4 days a week, more than 40 weeks a year. It was a lot of fun although tiring. But a sense of accomplishment looking at my professional achievements down the years. I have met many people at Airports – from childhood classmates to celebrities to politicians to academicians to Industrialists and a long list of personalities. I even travelled with a person of the third gender from Hyderabad to Bangalore once and trust me, it was some experience I would say.

Since 2014 my travel reduced to almost 10-15 days a year when I chose to become an Entrepreneur and started my offline Retail venture Smiling Baby in Chennai. I restarted my travel since 2017 when I began focusing on my Consulting Assignments. Interestingly, I have travelled over 45 weeks during the past 52 weeks, mostly by train since I prefer taking an overnight journey for distances less than 500 kms.

I have always travelled in a/c coaches this past year and mostly in the 2^nd A/c Coaches since the bills are paid by my clients. I have always wondered why & how some people manage to fly Business or First Class and have done a lot of searches on this topic online. Empirical data suggests that those who fly in higher classes are more productive upon arrival in their destination cities. They get to sit comfortably, sleep on a flat bed, read a lot, get less distracted while working due to fewer passengers and hence are refreshed by the time they arrive in the next station. Indian Prime Minister Mr. Modi is a classic example – we have seen him fresh as an Apple just the day upon arrival even after trans-Atlantic flights!

I travelled on 1^st a/c last night from Chennai to Madurai and this was so comfortable. Even in 2^nd A/c, sometimes I get side upper or lower berths and I have seen my productivity nose-dive the next day. But the 1^st a/c coaches are so comfortable. The berth is wider, fewer people, lesser banter and more comfortable a/c with a bigger pillow and nicer rugs. Trust me, the day after such comfortable travel is not just a more productive day but also a happier day, which boosts morale and work efficiencies. I travelled in 3^rd A/c a week back and had a upper berth onward and lower berth up on return and it was not even just uncomfortable but very frustrating. The next two days were a nightmare.

This is not to demean the millions of people who travel in non-a/c coaches or other means of public transport. Travelling comfortably works best for me to increase my productivity and I believe, to each his own. Her own. Whichever mode, travel is a great opportunity to learn new things, meet new people and understand life better during the journeys. 

Does Loyalty still exist?

I was speaking on a Panel Discussion last week at a conference hosted by Asia Retail Congress at Mumbai with some fantastic speakers from the Indian Retail Ecosystem, where the topic for us was to discuss Customer Loyalty. While preparing the points to ponder, I was wondering whether Loyalty still exists in today’s context. Well, yes – it sounds crazy if I say there is no Loyalty in the consumer business today. Don’t believe me? Take a look.

The toothpaste and toothbrush – look how consumers get swayed by newer options and attractive advertisements? There was a joke that a dentist/compounder who would appear in such an ad for toothpaste was once seen wearing a stethoscope! The body wash/soap – the options we see at supermarkets. The clothes we wear – this one’s interesting. Let me ask you, is the dress you are wearing right now – was it the same brand that you purchased most recently? If yes, you are part of a small minority of consumers who are still brand loyal. The so-called disruption by new-age startups who thundered the e-commerce world a decade back and continue to bleed in billions – do consumers have any loyalty still left over? Again, consumers prefer to buy from trusted websites (is Trust=Loyalty? Later, on that) where they could probably have the option of returning faulty goods sold by unscrupulous vendors on whom the Amazons & the Flipkarts don’t have much command. A Big Billion Day or an interesting Sale period – and consumers swing their loyalty there.

Let’s look at a few touchy, personal products. Let me start with Gillette which I have personally been using for the past 2 decades. I started with a Presto plastic shaving razor worth Rs. 10 twenty years back. I am now using the “Mach 3 Advanced” which is some Rs. 350+ per razor! And while the Advertisement claims a 30-day use, it still warrants “Conditions Apply” such as the skin tone, number of times repeating the shave and hard water. For me, this is one classic case of Customer Loyalty where consumers have continued to stick on with the Brand and its extensions such as Shaving Gel, After Shave, Body Wash & so on. Let’s look at Sanitary Napkins. Women I know (and I don’t discuss this with many!) use a particular brand/model – purely because of operational comfort. Interestingly, Brands which come in with alternatives offer sample packs or ones with fewer pads, so consumers can perhaps try and decide. Still, the loyalty is extreme. Women continue to stick to their favourites.

Look at Café Coffee Day. With 1,500 cafes across India over 2 decades, the brand continues to drive at least one lakh consumers every day and sells over 50,000 cappuccinos daily! Cut to competition – the nearest café chain Starbucks has just over 100 cafes pan-India although the argument is that their daily turnover per café is 3x of CCD. Indeed, their food prices are 3x of that of what we get at CCD and their beverages, at least 2x. So, that explains.

Royal Enfield was an underdog seven years back, selling 1 lakh vehicles per annum. Now, they sell almost 1 lakh units per month. Today, RE sells more motorcycles worldwide than all other premium brands put together – some feat this.

So, does Loyalty exist? I have a hung verdict here t least for now. The house is definitely split over this issue. For certain products and categories, consumers show extreme loyalty while for some, there hardly exists any loyalty. Travel, Food, even Luxury – take your pick. Look through the lens and you’ll see how fragmented the so-called Customer Loyalty is. And Loyalty Cards – well, I shall write a follow-up column on this shortly.