Music Retail - Retail 2020 (Article #2)

I started my career in Retail in 1997, scooping ice-cream at Basin Robbins' second outlet in India and first in Chennai (then, Madras). As the current decade comes to an end and an exciting one unfold, I am writing a series of 20 Articles over 20 days (10 in Dec' 19 and 10 in Jan'20) on the various Retail developments I have personally witnessed since 2001 onwards. Today I have written about the "Music Retail Industry".

I joined RPG Retail as a Management Trainee through campus selection at ITM Business School where I pursued my 2-year MBA. After a 21-day orientation, we were sent to our respective “regions” as per the traditional culture of the then corporate behemoths. And mine was Kolkata, West Bengal. I reached out to my then GM – HR and asked her “why me?”. I had never crossed beyond Tamil Nadu for my vacations or holidays all my life and here, I am being sent to an unknown territory, unknown language, unknown people, unknown everything and that too on my first job. She said, this is one decision you’d never regret in your life. And I haven’t, true to her words.

Musicworld at Park Street, Kolkata was at the time the largest music store in Asia and among the largest in the world only behind the Virgin Music and HMV Stores at London. Spread over 8,000 sq. ft., the Muwicworld store was a cynosure of eyes for the locals as well as those visiting the city – returning Indians, NRIs and Music lovers from all over India and the world. The store had over 30,000 SKUs across 4 major languages – Bengali, Hindi, Western English and Devotional Music. This was the time around the turn of the Millennium when Audio Music CDs in regional Indian languages were getting launched at Rs. 299 per unit. And then, T-Series, the illustrious Music company which took audio cassettes to the masses launched the Audio CD of Dil Chahta Hai at just Rs. 99. Even at the time, the music store would clock a monthly turnover of around Rs. 50 lakhs and that December when I was managing the operations, the store peaked at close to Rs. 90 lakhs in Turnover – audio cassettes in Bengali and Hindi were contributing over 60% in volumes and less than 50% in value terms, while the CDs coupled with Gaming CDs and VCDs contributed the rest. At this rate, I thought this business would never cease to exist. I was wrong.

RPG launched HamaraCD in two forms – one where a consumer could login to the website and choose the playlist; second, a self-service kiosk placed at select MW Stores where one could do the same. The only hitch – it was priced at Rs. 399 for a track list of 12-15 songs (around 300 MB space on the disk, if I recall correctly). This was a revolutionary concept at the time and again, I thought this was probably the way forward. 

My selection into RPG Musicworld was based on multiple reasons – of course, the Management Panel had their own reasons to choose me during the formal rounds of Group Discussion and Personal Interviews. Other than that, I was a trained musician in Indian Carnatic Music starting to learn the “Mridangam”, a percussion instrument at the age of 9. I started performing on stage at the age of 11 and thereafter pursued until I hit a very bad patch in high school studies when my parents decided to discontinue the art for want of having me to focus and score good marks. I restarted learning the art after 2.5 decades from none other my Late Guru's son last year. 

There is another reason for my passion towards Music & Music retail – while at school in Class 9 & 10, I was experimenting my first tryst with Entrepreneurship (unknowingly of course, only to save some from money to eat Samosas after school) by recording playlists for friends for a fee. Here’s how that model worked. I would buy music cassettes of latest Tamil films from the wholesale market in Chennai at Ritchie Street for around Rs. 23 /- (MRP was Rs. 28/-) by cycling 6 km from home in the pretext of attending some group studies with friends or extra tuition classes. There was also a shop nearby where the shopkeeper would rent me cassettes for Rs. 10 for 3 days during which I would record songs from films which I didn’t possess in my library. Then, I would buy empty cassettes for Rs. 12 which could accommodate around 6/7 songs. From the plethora of film songs I had, I would curate a list that my classmates and friends preferred along with a title card, handwritten and sketched with my self-branding and sell it for Rs. 30-35, depending on the demand at the time. From immediate classmates to seniors to juniors, I had a long and happy list of customers who came back to me from time to time. The “venture” was short lived since I decided to focus on whatever spare-time I had on school studies. 

Managing a Rs. 7 Crores pa topline and a healthy profitability in my first job two decades back, my stint at Musicworld Kolkata is the one I cherish among the most in my professional career. I made a lot of stranger-turned friends, some of whom I am still in touch with and we start our chats where we left the last time, of sorts. But more than that, I would wonder how this business could be sustainable in the long term since piracy of music was getting popular around that time, albeit consumers had an inferior experience listening to music. In my first report to the company, I suggested that we also sell CD Players thereby inducing music lovers to upgrade from Cassettes to CDs and once they fell in love with the original and high quality of music through CDs, they wouldn’t prefer pirated ones. Due to various reasons, the company didn’t pursue the idea. 

Musicworld was among the first few brands in India to offer a Loyalty Card known as “Masti Card” wherein the holder of the card would get preferred treatment in terms of discounts and offers across various other retail formats. The concept was a big hit during it’s limited lifetime and there were even local, small-time shopkeepers wanting to be associated with MW Masti Card for the pride it offered to them. I travelled by Trams, Metro Trains, Buses and Taxis to multiple Retail Establishments from Garia to Esplanade, VIP Road to Taj Bengal to induct them into the coveted Club. Such good experiences right in my first job. Later on during my stint at RPG Foodworld, there used to be MW Kiosks with the Chartbuster Titles only and I would take special care of this vertical due to my loyalty and allegiance to Music.

I was also among the first to write an Obit Column for Musicworld when it finally downed its shutters at Kolkata as well as ceased to exist as a concept. Honestly, I saw it coming since the company, for various internal reasons, wasn’t pursuing the digital way forward even as MP3 was the preferred mode of listening to Music until online Music streaming has become the norm currently. That SaReGaMa, the company which was formed after RPG bought over the titles from HMV had a huge repertoire of music across genres (those days in digital form) wasn’t put to best use, perhaps by the company. Very sad indeed.

On Dec. 7, when the Music album of Superstar Rajinikanth starred “Darbar” released in three languages - Tamil, Telugu and Hindi, Gaana App – the online streaming company owned by The Times of India Group (ironically, the biggest competition for Musicworld was PlanetM which was owned by same The Times Group back in the 2000s) had bought exclusive rights for streaming Darbar Music which meant that other Apps like Jio-Saavn, Airtel's Wynk Music, Amazon Prime Music app and Google Music cannot officially stream them. While it’s not clear how much Gaana incurred on this, the market estimate is that the company has paid over Rs. 6 Crores for this exclusive right until the film releases on 9 January 2020. During this period, Gaana expects to quadruple the number of its userbase in South where it has been weak, with a retention rate as high as 20% Month on Month which is again 2x the market average. the song "Chumma Kizhi" from Darbar album had 28 million realtime views on Youtube in 24 hours of launch. And today, I see that the Tamil album alone has 10 Million+ Playouts on the Mobile Music App... Says a lot of how Music Retail is still prevalent, just that the consumption patterns have changed, or evolved if I may say so. 

Times have changed so much that during the Darbar Music launch, there wasn’t any CD which was actually released in the open market. While Music Retail (offline) is almost dead, online Music Retail through streaming websites and Apps is here to stay. Else, why would the young Aakash Ambani pay a premium of USD 100 million to acquire a Music over-the-top (OTT) app Saavn to add to Jio’s portfolio to build a USD 1 Bn entity? 

Picture abhi baki hai, mere dost. 

Salons & Grooming - Retail 2020 (Article #1)

I started my career in Retail in 1997 scooping ice-cream at Baskin Robbins’ second outlet in India and first in Chennai (then, Madras). As the current decade comes to an end and an exciting one unfolds, I am writing a series of 20 articles over 20 days (10 in Dec ’19 and 10 in Jan ’20) on the various Retail developments I have personally witnessed since 2001 onwards. Today, I have written about the Salon Industry which is pegged at 100,000  crores annually and a CAGR of 15-18%. 

Every road in the heavily populated Mega Cities, Leading Metros and the Top 50 cities across India have a Salon or a Beauty Parlour. Even then, you would find that a national chain or a regionally popular brand name is scarce, say 1 out of 10 such salons. Around 3 decades back, premium Salons & Parlours in India for the uber rich, the industrialists, ace sports persons and Celebrities of Art and Cinema were restricted to the 5-Star Hotels. They would fancy paying a premium at these reputed places for their personal grooming and makeover in closed confines with assured privacy. Almost around the turn of the new Millennium, Entrepreneurs started opening premium-looking Salons with not so premium Prices with a few key differentiator such as maintaining the hygiene of the precincts as well as qualified staff. 

The “barber” or “beautician” had a new title sans a visiting card though – they came to be known as Stylists. Chains such as Naturals, Limelite, YLG, Enrich, Toni & Guy and many smaller regional brands started popping all over the country attracting a host of consumers for basic services such as the humble monthly hair cut for men and waxing and eyebrows for women to the more detailed services like a Keratin Hair Treatment or a complete makeover ahead of a wedding or betrothal or even a Baby shower. Sushmita Sen and Aishwarya Rai followed by many other Indian girls getting crowned at International Beauty Pageants only added popularity to the business of making people look better. After all, Beauty is skin deep, as the saying goes. 

I have been a risk taker all my life, even as the adage goes “With high risks come high rewards”. I took it a bit too personally by opting for colouring my hair red in 2005, thanks to my Stylists insistent perseverance when I was working for United Colours of Benetton as Area Manager for South India hoping to add glamour and colour to my lifestyle. To my surprise, neither of it happened and I vowed never to colour my hair ever again in my lifetime, even as my “Stylist “ urges me every month if I would like to shade my greying hair on the head. 

Among the various retail formats, the Salon Industry got itself in to an act all by itself since it touches the lives of millions. No matter what an individual’s employment or profession is, since everyone wants to look well groomed and that’s basic. Add to that various self-pampering activities for oneself and this market is going to explode in market opportunity.

Also, it throws open the possibilities of Entrepreneurship- for an investment of less than ₹15 lakhs, a Salon can be opened and it doesn’t cost much more to open a branded one. All that Customers look for are easy ingress and egress, Parking for 4 Wheelers, consistent service by the Stylists and a hygienic environment which is well maintained. Easier said than done, I reckon since the biggest challenge that this Industry faces today is poaching of staff by competitors since consumers prefer a Stylist over a Salon (name). 

Ironically, I got an opportunity to join a premium brand of Salon as a Manager in 2003. My family disapproved it for obvious reasons that it was infra-dig to work at such an Industry. Not anymore. I was a Consultant to a premium and popular Salon chai. Two years back and accomplished my lifetime wish. If I were to bet my life on a retail format for the next decade, it would be this.

Retail Employees Day

12 December is celebrated annually as Retail Employees Day, an occasion to thank the frontend staff who have taken up Retail as their preferred occupation. Started in the year 2011 with a few outlets, RED 2019 was celebrated with much fervour across the country with celebrities coming forward to wish and thank the front-end staff for their continued service.

It was a chance meeting that Mr. BS Nagesh, Former MD & CEO of Shoppers Stop, India’s much respected Department Store Chain, had with a few staff on the shop floor when he was setting up TRRAIN – Trust for Retailers and Retail Associates of India, that the staff said they were not being recognised for the work they do at Retail Stores. Thus was born RED, as a day to show gratitude to the staff who work multiple shifts daily, travel long distances mostly on public transport and in many cases, a primary or an ancillary bread winner for the family along with the parent. 

I am personally quite happy that RED has grown and like how over the past decade.

To give you a perspective, every 7^th person in the world works in a Retail Environment, directly or indirectly. This includes people who work on the shop floor, at warehouses, those who are involved in supply chain and delivery and so on. In India, over 40 million people are directly employed in the Retail Trade which contributes to 3.3% of India’s GDP. 

Today, India boasts of over 800 Malls of which at least a Third of them clock a turnover of over 300 Crores annually. Two decades back, shopping was restricted to the nearby Kirana Shop for buying day today Grocery & Household shopping and the city centre or the “Market” area where consumers would flock during festive occasions to buy clothes, accessories, footwear, home furnishing, etc. even as the annual shopping trend (like today) was non-existent. 

The taboo of working in a Retail Environment can be best explained by me, perhaps since I have faced flak personally during my early days in Retail. 

I started my working life at the age of 19 scooping Ice-Cream at Baskin Robbin’s first outlet in Chennai as a part-time employee from 11am – 3pm while pursuing my second year B. Com (evening college) as well as attending NIIT classes at 7am, to acquire coding skills of C, C++ Visual Basic and so on. I was chided by “elders” (but not my parents) in the family for working as a “server” at an ice-cream joint and was forced to quit the part time assignment in less than a year which was feeding my pocket money. 

However, I was so impressed with this Industry that I ditched my coveted Computer Education only to pursue an MBA in Marketing after UG, join RPG Retail through Campus Placement as a Management Trainee and a few years later, added the tagline “Retailer by Profession and Choice” to my bio which remains till date. 

Even during my stint at Foodworld Supermarkets, my own extended family members as well as a few neighbours would mock at my choice of employment, much to the chagrin and embarrassment of my Parents. They thought I didn’t get a more “handsome job”, was working at a “shop” which wasn’t the best of jobs one could get after a respectable MBA and wasn’t “marriage worthy” although the Industry was paying good salaries, took abundant care of the employees with benefits, provided decent pay, incentives & compensation and most importantly, Customers immensely respected the Retail staff. 

Its so nice to see celebrities coming forward to thank Retail employees for their stupendous efforts and good work. Some of it is sharp marketing, one may say. So be it. At least, that way the likes of King Khan associate himself with the Retail Industry and the staff, raising the bar at how “we” are perceived in the society. 

This is just the beginning, as I famously quote that “The Great Indian Retail Story is yet to be fully told and is still to meaningfully unfold”. Watch this space. 

And thank you, Retail Industry. But for the choice of continuing to work at Baskin Robbins in 1997 despite the discrimination from the society, I wouldn't be where I am in life and most importantly, wouldn't have written this piece. 

Much obliged and always proud to call myself a "Retailer by Choice". Here's wishing all the employees working in ur Industry a great future ahead. 

The Indian Retail Apocalypse

The E-commerce companies mopped up over USD 3 billion during the Navarathri Sales late September / early October, we read in newspapers. That’s a small blip compared to the total business that usually happens all India during that period. To give a perspective, only Kolkata garnered a Sales turnover of Rs. 4,500 Crores and the State had an estimated Rs. 15,000 Crores in Sales during the Pujo Week, the Dasera Festival which is celebrated with much fervour Eastern India, especially West Bengal. For the rest of India, the Deepavali fortnight is the highest grosser akin to "Black Friday" Sales of the West (minus the discounts, usually). Most brands in the Electronics, Consumer Durables and Household Appliances businesses record 40% of their Annual Turnover during Q3 – October to December during when three important festivals occur and are celebrated all India – Deepavali, Eid and Christmas – New Year block. 

Having contributed to Amazon and Flipkart during the Big Billion Days ahead of Dasera, decided to open up my wallet at Offline Stores for my Deepavali shopping.  

Visited the iconic Express Avenue Mall in Chennai last week after a long time. Why after a long time? Because I moved to a new house late last year and don’t live closer to the Mall anymore. And there are enough stores across categories nearby current home. Looking at the sparse crowds all over, I had doubts if the mass media was actually correct about a possible slowdown. 

At least 6 CEOs / Heads of Businesses who run International / National Brands in India I spoke with over the past few days – and have known them personally, confirmed there’s no slowdown in Sales overall. Some said they have a single digit growth (over last year) and some said double-digit. Unfortunately, most of them told me not to quote them for this article. 

H&M on the other had revealed stunning sales for the past year although it’s not clear whether the Chennai store had a Y-O-Y increase in Sales or otherwise. At Rs. 1,236 Crores, it was 39% more than last year while it’s Profit grew a neat 29%. Zara, grew 17% to Rs. 1,438 Crores compared to last year. H&M & Zara operate 42 & 22 stores respectively in India. Meahile, Japanese Uniqlo opened a store at tony DLF Mall in South Delhi earlier this month and garnered a Sale of Rs. 2.20 Crores in the first two days. India's largest Department Store chain Shoppers Stop has been going through quite a metamorphosis under Rajeev Suri who took over a turbulent company two years back. Here's what he had to say to the Economic Times on where they are headed. Lifestyle, Dubai based Landmark Group's flagship chain has it various stores reporting mixed numbers, thanks to various geo-social changes in the consumption patterns. 

After seven fulfilling years in a healthy JV with the Tata Group, Starbucks aims to break-even this FY with an estimated store count of 185+ cafes all India. Dominos Pizza, India's largest F&B chain reported a 12% growth over last year while most other F&B companies, organized or semi-organised have seen a significant increase in Sales despite the hype over Food hailing Apps such as Swiggy and Zomato from whose channel, restaurants garner about 15-20% Sales. Even local eateries and restaurants have not seen a significant dip in outlet sales, which is usually compensated with online orders. A few local players have shut shop indeed but that's due to internal inefficiencies. 

The Multiplex industry, on the other hand is on a roll with PVR Cinemas, the market leader recording 25% more admits, 37% increase in Total Income and 149% increase in EBIDTA and 35% increase in Net Profits while there is a slew of films in Hindi, Tamil, Telugu and more Indian languages slated for release soon and which are expecting a big round of BO in the coming months. Minister Ravi Shankar Prasad claimed he was quoted out of context when he described the economy in healthy mode comparing the BO outcomes of a few films. And the American theory of Entertainment Industry doing well during a slowdown - well, probably yes for them but not in Indian when most Indians are scrambling for 3 meals and a healthy, wealthy living even when the Economy was apparently doing very well. 

There is NO Slowdown as is being projected everywhere in Mainstream Media. Yes, some industries have seen correction in the way they are run – from neighborhood Pharmacies to Auto-Dealers. Local Pharmacists cannot purchase medicines anymore without a valid GST Invoice which has affected their business overall since most small shops have never been used to paying VAT. Auto-Dealers were being dumped with stocks by Automobile Companies in the name of Primary Sales which has seen a collection. Commercial Vehicle Sales have come down, thanks to better quality of vehicles manufactured over the past decade, a faster TAT of trips thanks to GST and limited / nil local bureaucracy and of course the diesel price impact being absorbed by everyone in the value chain. 

No Indian has stopped spending or planning to stop spending. If people were buying a lot of grocery and vegetables, they have reduced shopping but this has been well compensated with Swiggy and Zomato Sales! And similarly in every other industry.

There is absolutely no scope of a RETAIL APOCALYPSE in India yet. Not for the next 30 years at least. Stop worrying and start spending like before. 

Happy Deepavali.

The Accidental Entrepreneur

The first 15 years of my career was filled with exciting tenures at some of India’s top Retail companies. My flagship stints include designing and setting up the entire retail areas at India’s first private Airport at Bangalore in 2006. Subsequently I joined Café Coffee Day in 2009 and went on to set-up 140 cafés all India, all of them being operated directly by the company, save for a few Airports which were operated by JV partners. In 2012, I moved back from Bangalore after working there for 8 years to my hometown Chennai to join the world’s oldest automobile company in continuous production and India’s pride, Royal Enfield Motorcycles where I was responsible for transitioning to the new Retail Identity as well as setting up 160 dealerships across India. In all these three companies, I had the privilege to work with some of the best minds in the world and in India including with two top Entrepreneurs and I always dreamt of a confirmed berth in the C-suite by the time I hit my 40s (which is around now). But destiny had other plans. Good or Bad, I am yet to decipher. 

Due to certain personal situations, I had to give up my professional career and that’s how I ended up becoming an Entrepreneur. An Accidental Entrepreneur. With no prior knowledge in running an own business, with no access to external capital or hereditary wealth and of course not a surname that would get me the first Sales order, I went about setting up my first venture which was an offline retail store selling baby products. We had a grand vision but were short on funds although we (my wife and I) invested our lifetime savings into the venture. Various reasons were to our disadvantage including the 2015 Natural calamity due to which I ran out of fuel sooner than I thought. Everytime I decided to give up on Entrepreneurship, there was a strong reason emerged why I should continue what I had started. And this was only reemphasized during the recently concluded TiECon 2019, the annual flagship event hosted by TiE Chennai.

I became a member of TiE Chennai in 2014 and was invited to join as a Charter Member earlier this year. I have seen in close quarters how the Entrepreneurial ecosystem in Chennai has thrived despite the overall conservative ideology of Investors here. I have seen a few Start-Ups who have gone to become larger in scale and operations while a few haven’t been lucky. 

The conclave this year had some outstanding speakers such as Mr. Vineet Nayar (HCL) and Mr. Harish Bhat (Tata Sons) who had come over from far away and shared their experiences and the opportunity that India offers. Many other Entrepreneurs who were on stage as well as off-stage only displayed courage and positivity about Entrepreneurship even during the current turbulent times and have infused a new sense of optimism in me about various possibilities that lay ahead. 

Vineet Nayar shared an anecdote of how and why Entrepreneurs should choose to be a butterfly but not an ant and keep fluttering their wings, come what may and never give up on dreams. Mr. VR Muthu, the Founder of VVS Sons which owns “Idhayam” Gingely Oil spoke on his own experiences of failures and successes and how he convinced Retailers to stock and sell their products with innovative marketing methods which has a 10% contribution to revenues from Exports, thanks to the global Tamil diaspora. Mr. Sathish Kumar from Erode whose Company owns “Milky Mist” range of dairy products created a Mobile App using which the so-called “North Indian” food item "Paneer" has been used by the regional population in Tamil Nadu with innovative menu offering. Sathish doesn’t have an Ivy league degree, runs a 500 Crore company, recently appointed by a former top-honcho from Amul and has clearly displayed that Higher Education is not a guarantee for success and that one can employ the right talent to grow the business.

NextGen Entrepreneurs Tharun Mahadevan, Manu Ranjith and Sanjay Dasari spoke on how they never used their surnames to get the first Purchase Order and how their international education and exposure helped them to look at a larger perspective than their peers who have been educated within the country. Mr. Murugavel who built India's first formal match-making company and made an IPO with it and Mr. Suresh Sambandam whose company Kissflow has led the SaaS revolution in India along with Zoho and Freshworks from Chennai revealed how the IT Industry could contribute over a Trillion US Dollars to the Indian Economy in the coming years.

I am an eternal optimist with a Never-say-Die attitude and TiECon 2019 has only been an eye-opener for me that many other Entrepreneurs who were/ are more disadvantaged than me have overcome severe hardships and business failures including financial losses worse than I have and that I have no reason to give-up yet, having sailed 5 years already in to this. 

As I always say, I have Miles to Go... 

Howdy Slowdown?

Flipkart commenced operations in India about a decade ago. For the FY 2017-18, the Annual T/o of the company was Rs. 24,000 Crores (about US $4 Billion) while Amazon India has a turnover of Rs. 12,000 Crores for the same period. Swiggy earned around Rs. 442 Crores for the previous FY and Zomato added Rs. 1,340 Crores. Industry Leader in the Furniture segment Urban Ladder reported a top line of Rs. 200 Crores for the previous year. Offline Retail Giant Future Group has an annual turnover of Rs. 30,000 Crores across various formats from Grocery to Electronics. Reliance Retail on the other hand has a combined turnover of Rs. 100,000 Crores of which 70% comes from Fuel Retailing and Jio, the data cum telecom company which is part of the retail entity. Ola, the cab hailing company clocked a turnover of Rs. 2,200 Crores while Uber India has an approx. annual turnover of little less than 1,000 Crores last fiscal. Phew.

So, why am I enlisting these turnover figures here?

Because, we are complaining of an Economic Slowdown. FMCG companies, Retailers, Automobile Manufacturers and many other consumer facing companies (and their backend suppliers) have all been complaining of a slowing growth in their businesses. As is the case most often, the Government is being blamed for the mess that we are supposedly in, right now. 

Reliance Retail & the Future Group together account for over Rs. 60,000 Crores which is almost 2% of the total estimated Retail Industry in India (about US $ 500 billion). Add Amazon & Flipkart and the overall business from new channels has increased tremendously over the years. The total pie of the Organised Retail Industry as well as the total consumption market have increased over the past decade and a half from less than 5% to nearly 12% currently. While ITC, Britannia, HUL and others have seen a slide in their sales, remember how Patanjali is raking close to Rs. 10,000 Cr in turnover and is aggressively followed by the likes of Dabur & Himalaya!

E-commerce has played a pivotal role in increasing the overall consumption market in India – selling products online and delivering at the doorstep at the most comfortable time for consumers, service offering (such as booking plumbing & carpentry services) and of course transportation including local mobility as well as ticket bookings across modes of transport. 

While Swiggy and Zomato deliver lakhs of food parcels daily, the restaurants have seen an average 15-20% of their business coming from these channels with a marginal increase in their total business as well. Hundreds of restaurants which were invisible are now able to showcase their products on the Food Delivery Apps and have eventually taken away some of the market share of popular restaurants, thereby curtailing footfalls to restaurants as well as through online orders.

With millions of rides fulfilled everyday by Ride hailing apps in India, have you ever seen an Auto Rickshaw driver starving off business? In fact, thousands of new Autos have been sold. New companies like MG Motors & Kia have set up plants and newer models are outselling older versions. Just that the outdated models like i10 and Indica don’t have any takers. Fortuners, XUV500 & Audis and Beamers aren’t selling short anymore! 

The overall consumption market hasn’t shrunk, rather newer channels and opportunities have opened up. The turnover numbers in the first paragraph are to showcase how much new business has been added over the past decade. The slowdown is more in our minds and a measured approach towards over-spending, which is anyway an inherent way of living.  

And btw, the headline has nothing to do with the so called “Economic Slowdown” but the Indian PM is addressing an event in the US this weekend and the name of the event is “Howdy Modi”, so I thought I would use it to entice my readers.

Food Fiesta! But Free Food?

My favourite haunt in Chennai for a great Filter Coffee & South Indian snacks continues to be the iconic “Woodlands Restaurant” on RK Salai, Chennai which doesn’t have a towering personality quite literally (pun intended) like it’s neighbour Hotel Savera (which is among the first 5-Star Hotels in the city). But patrons and lovers of the third generation restaurant brand which runs a single branch in the city for over 5 decades is a sight to reckon. On a Weekend, one has to wait at least 30 mins if you are in a group of 4 or more, especially after 7pm. Around 9.15pm, the Manager would courteously inform you to look out elsewhere for dinner since the restaurant would take its last order by 10pm and that there would be no space for seating anymore. Call it brand arrogance or customer affinity; I term it the latter. For the love of Customers, that they would either come in early and dine their heart full or stay and dine, whichever suits them from time to time. Trust me, dining here isn't cheap; a table for four adults could cost upwards of Rs. 1,500 for dinner. Also, this is perhaps the only standalone restaurants in Chennai (or even in India) where you would hardly find boys in T-Shirts of various colours, Orange or Red or Black waiting to pick up food. For, this one restaurant never “logged in” to the Food Apps or their Loyalty Programs (namesake I say!). 

Two weekends back, we went for a family dinner at a leading Chinese restaurant in town. We logged on to an App which offered FLAT 50% off the Bill if we purchased an entry fee of Rs. 25 for each of us. Apparently, they termed is as Table Reservation Fee, which we anyway accepted. To our bad luck, there were only 3 coupons left to buy but we were 4. So I called the restaurant and requested if they could accommodate us. My friendly bangali babu accepted to allow the 4 of against 3 coupons and to my surprise, we saved a whopping 50% off the bill on a cheque of Rs. 2,200. The next week, I went out again with my classmates where I carefully booked a popular restaurant in the heart of South Chennai, known for its exotic fare and of course obnoxious prices. Again, I saved over Rs. 1,000 during this outing. At both instances, the restaurant was not even 25% full - the former was a dinner & the latter was Luncheon. Just when I was planning the next visit last weekend with an extended family and close friends (a larger crowd, perhaps), the NRAI announced a “Logout” Campaign to reduce their losses. Thankfully. For there was no end to this practise of subsidising patrons for what they would ideally charge others. Membership or otherwise, a 50% off on Bill was simply too much to give away as discounts.

Now compare the two glaring examples. As I always say, it’s a game of David Vs. Goliath, with the smaller, less-organised players being the Goliath collectively. How does it make sense to offer a food item on a discount when it is cooked with loads of investment - time and money included and of course with a lot of passion and love! It makes no sense to offer F&B at lower prices than what they are meant to be, except for lean times such as Happy Hours when people would prefer not to consume or to sell-out certain items at a discount to ensure there was no wastage at the end of the business day. From the beginning, I have watched closely how restaurants were getting caught in the whirlwind that the Food Aggregators were hatching on them, sadly. A friend who runs a large restaurant chain in Coimbatore was clear that he would neither discount their signature food nor allow the Apps to do so. And he, along with the local Federation members has been successful till date, save for a 10% discount once in a while. 

Most Restaurants complain that their bottomline has not seen a significant leap although the turnover has gone up significantly, helping them to reach more customers including many new users although there’s no guarantee that they would order at full price or even visit the restaurants. My hunch has been right – when there are no discounts, people order less frequently and lesser portion sizes. And the opposite in the contrary. This is not specific to India but a human quality called “greed”. Isn't it not common that we see people buying a lot more clothes during End of Season Sale even though they may not be sure whether they would ever wear it, even once. 

I have never believed personally in the theory of discounting in Retail, be it Grocery or Fashion, Food or Furniture. Some products like Electronics outdate faster or Room Inventory at Hotels perish, so perhaps yes. But then, most businesses believe Discounts attract Customers more than their products. I think it’s otherwise. If a user doesn’t see value in your pricing, then don’t decrease it, rather increase the value offering. 

After all,

Price is what you Pay;

Value is what you derive.