03 July, 2009
Best Friend, Worst Enemy!
That Bata and Big Bazaar are among the Top 100 goes to show the importance consumers are placing on Organized Retailers. Bata, among India’s oldest Retailers has been popular over the years for their core strength – Footwear. There was a time in the 80s and early 90s when school shoes were from Bata, mostly from Bata and only from Bata (many of you who went to school during those years can relate well). Sales surged by 30-40% during the months of June & July when schools would begin and once again in Dec. and Jan. when the monsoons are over. Bata slowly increased their range to include many other products that would complement, such as socks, shoe polish cream, school bags, etc. And then came one of their branded shoes “Power”. The positioning was such that the white canvas and leather shoes were to be worn everyday where as the new brand was meant for sports and other leisure activities. As sales grew, so was popularity and over a period of time, other branded shoes were launched within the store. And the Brand was so big that at some point in time, it was a big effort to even stand inside the stores. Customer Service sufferred as buyers received lesser attention than they expected. This was the beginning of the end. And in just 10 years, urban consumers had shifted loyalties – to lesser known Indian brands and more popular international ones. At some stage, Bata was almost invisible in India until 2004-05 when they made a comeback. A great case study in Indian Retail to decipher for years to come.
BIG Bazaar, a relatively new Retail chain that’s celebrating its 8th anniverisary now is already among the top 100 list. Not surprising, given the way the company has grown. I used to work for this chain (owned by The Future Group) five years ago and it was a famous saying then, which I am sure is the same today too – every working day in the Group is equivalent to two working days elsewhere. That’s the pace at which the Company operates. Needless to say, they are the largest Retail Group in the country today and International Retailers are somewhat adapting their India strategy taking lessons from the way this group operates.
So, do consumers buy these trusted brands or do they prefer buying them at certain Retail stores? We don’t have a survey done on this, but surely that wouldn’t be the case atleast at the moment. Household shopping is divided largely into Monthly Baskets and Weekly top-ups. One may drive a bit far for the former, but for the latter purchases, it’s always the nearest Retail store. Time, is of essence here and proximity and availability are the two most important factors. And most Retail chains lose out on the second point for various reasons. It could be due to financial reasons or simply, bad merchandise planning. Whichever way, if the stock is not on the shelf more than thrice as consumers visit, its likely that they wouldn’t return the fourth time.
The way to win Trust is to offer what consumers want – something that very few Retailers practice, as in most other cases, its “take it or leave it”. And Customer Service – the way the front-end manages the store and its users will make all that difference. There are umpteen global examples where shoppers visit faraway located outlets mainly because they enjoy the place. That’s Trust. One must remember that Consumers could be either your Best Friends or Worst Enemies. Yes, enemies, because they propel the retailer’s downfall. By not visiting. And that odd boards at the end of the store which reas “Thank You, visit again” becomes redundant.
02 July, 2009
Being Thrifty and still tempting to Consume - a paradox!
For sometime, may I urge your to think for a few seconds (an electronic calculator would help) the cash flows that the OMCs – the Oil Marketing Companies would have made within six hours last evening. The numbers are mind boggling. Suppose if One million vehicles filled on an average 30 liters of fuel – and were paying approx. Rs. 2 more (since the lower variant was unavailable) and were filling their tanks (Salary Day, so more cash on hand coupled with the fear of the impending price increase), we are talking of 30 million litres filled and INR 60 million raked in additionally, in just a few hours. This, is just an example, if not exaggerated. At one, the Government lost a lot of public sympathy with this rude price hike (of 10%) on petrol. Another, was that it was on Salary Day, a day that most Indian families await for 29 days (no matter how many digits their salaries are) in the month. While the general belief was disbelief – that the hike was real, people were finding it difficult to cope with this hike. Just three days ago, India’s largest bank SBI decreased Home Loan lending rate of Interest by a substantial percentage – indicating that owning homes got a bit easier for middle class people. Everyone who is anyone who understands Economics has a opinion these days on what to expect from the Budget to be presented shortly.
Given this scenario, the increase in the price of Petrol & Diesel was a paradox, if not a shock. On one side, Retailers are trying to woo consumers to consume more – not as much as their American counterparts overconsumed sometime ago, but certainly to consume more than what they are already doing. And on the other hand, the Government does its bit by increasing the most basic ingredient that decides the prices of most other products sold in this country. It is really noteworthy to decode the background – fuel hike would first affect the price of vegetables, something we consume everyday. And then, fruits and other food products including Grocery. While Unorganized Retailers and hawkers would be the most affected, Organized Retailers would face similar challenges sooner than later. Cost of Operations would go up which would shrink the outflow planned by Retailers, including special offers and promotions.
The Festival seasons starts from mid July onwards and the general tendency to shop would increase around this time. But with a 10% hike in self- and public transportation costs, the monthly household income (that didn't grow much this year due to the economic slowdown and the recession effect) would shrink to that extent and this will surely decrease consumption. The GDP of every country is largely based on the outcome of a few key industries such as Agriculture, Manufacturing, Services including Aviation and Telecom, and importantly, Retail. It would be sad to see how people would wish to consume less due to this sudden and steep Fuel price hike, which could play spoil sport over the festive period. The Automobile Industry has been on a roll for the past five months and the growth story is back, albeit in single digits. This would also be affected a bit now.
It’s confusing to see the government’s stance on this issue – of increasing consumption. Experts believe that the GDP would grow only when people consume more, which would be directly impacted by Retail. However, it remains a BIG question of how we would achieve this. One one side, it’s being thrifty about spending and on the other, trying to woo consumers – it’s a paradox, awaiting to be unravelled.
29 June, 2009
AirPlay
The ground floor houses a Westside Store, from where you walk up to the first floor which opens into the Landmark Outlet, welcoming you with well segregated Books from across various categories. And this floor leads you to the second floor that begins with some pefumes and gifts and deep inside is the Music section. We were trying to reach the fourth floor which has the INOX multiplex – our main reason to visit this place was to watch the latest Hindi superhit, New York, based on the traumatic effect on people in the US from various religions and backgrounds after the fateful 9/11. We still had some 20 minutes and decided to walk through the store. While Westside was looking normal with its usual collections, Landmark was a bit better. Too many merchandise and too little ventilation and airconditioning makes these outlets stuffy. Wish the project guys doubled up as salesmen too or atleast visited these places as customers, that they don’t repeat such bad planning!
As I was walking past the western/pop section (and remebering my good’ol days at Musicworld), I was remined of the Pop sensation who breathed his last a few days ago. I called for assistance and said, “Where can I find the Best of MJ India collection”. The good samaritan took me to the section, searched for the album and handed it over on my hand. Wow. I was quite surprised with that – quite rare to see, honestly, that a sales guy actually gives you what you actually wanted and that too in a jiffy. I thanked him and was looking at the other collections. However, this was what I wanted and moved towards the billing area. While some other music was playing all along, I suddenly heard “Black or White” on the speakers. The same salesguy who assisted me, was preparing his day, planning his work, saw me again. And I said, “AirPlay MJ Hits today and see your sales soar five times” and I could see a wide grin on his face, for he knew I wouldn’t be wrong. It’s not just a commercial proposition that Retailers must cash in on, certainly not. That would be cheap and may not take them long. But, it’s great service to remind customers and highlight the collection of the world’s most popular pop singer and honor him atleast with that respect, after all that he went through before he finally died. Even as I write this piece, News channels are showcasing various reports, most of them their own thoughts with some facts thrown in here or there.
After billing, we walked up to the third floor, some food outlets bunched up in a low ceiling food court, which made us to test our fast-walking skills. And then, finally headed to the fourth floor. It was a delight to see the entrance of the cinema hall! But I must admit that the overall layout of this location was not all that bad – afterall it brought more customers through the shops and the food court, increasing footfalls and probably inducing conversions. And just then remembered why we were there. I asked myself if I would have bought the music CD of the movie that we were going to watch and the answer was yes. Just that I didn’t remember to. Probably because I wasn’t reminded. What a wonderful opportunity it was to sell music CDs at the Cinema Hall or even just before one entered. Such a simple thought which am sure would have stuck the area sales executive who went to check out stocks at the Landmark Outlet, but probably missed out. If not a great grand display, atleast an Airplay would have helped. Yes, I bet.
This was the first project that I undertook as a Management Trainee straight out of B-School 8 years ago. And the results were startling. Whenever a particular artist/album was played on Airplay (that’s the common music that you hear at the retail stores), chances of that particular album’s sales going up was over five times. And there were days when we have played the same CD for over 6 hours – continuously. One such example was K3G or Kabhi Kushi Kabhie Gham, a hindi movie released in 2001 that featured the Shahenshah and the Baadshah together (that’s Amitabh Bachhan and Shah Rukh Khan). After all, nothing better than AirPlay. It not only holds customers within the store, but also creates great conversions. Just that one must remember, to play. To AirPlay. If only.
18 June, 2009
Consumer “Driven”
We choose to sit closer to the Bar with nice and comfortable wooden chairs while the well spread out seating area was meant for larger groups, we thought. Then we turned to the Bar man and asked for Beer; my friend said Carlsberg and I said Blue. He quite didn’t catch it for a couple of times until I said Kingfisher Blue. With a wide grin on his face, he replied that they don’t keep Kingfisher. I was shocked! At Mr. Mallya’s home ground, there is a restaurant that doesn’t stock and sell Kingfisher… India’s most sold Beer by quantity. So we ordered Carlsberg and started enjoying the beer, the company and the evening. But something was running at the back of my mind. Will I return to this place again, although they don’t serve my favorite Beer?
As I write this almost a day after, I still don’t have an answer – if people like me, if consumers like me would return to a place that doesn’t stock what they want but would rather pursue them to have something similar. I am not so much an expert about Beer-making that I could explain now in length about the origin, the process and the taste of various brands of Beer but what intrigues me is this – are consumers looking for just an emotional gratification while they buy or consume brands or are there some rational reasons attached to it as well. If Kingfisher was the most famous Beer and our state Karnataka being among the biggest markets in the country (and Bangalore leading the pack within the state), then how was it that the restaurant was almost full when we were leaving the place at 9pm? Was the environment, the ambience and the food so great that people were willing to desert their favorite Beer Brand for some other alternatives?
The logic that consumers visit such places not to get drunk (a pint is INR 180.00 ie., USD 4 and the food is mind-blowingly high on price notwithstanding the quality) but just to spend some good time sounds crazy, if not surprising. On a weekday, if that’s the crowd, then one could imagine how the place looks on a weekend. So, are such consumers (not just to this place) visiting their favorite places only to spend “time”? Then what value does a Brand carry? Somebody said Brand Loyalty? Naaah.
Let’s not confuse loyalty over popularity and availability. Loyalty would be built only when the Brand was available. Obviously. And it is possible to build Loyalty especially in a controlled market, where entry to external brands is not just difficult but impossible at times due to government guidelines. And if the consumer doesn’t get their favorite Brand more than twice or thrice, would they switch over to some other alternative? Whats interesting here is that consumers would continue to buy alternatives only till such time they don’t get their favorite ones. Or they may get used to newer Brands because of what they offer. So, availability leads to popularity which may result in Loyalty. I doubt if it would work in any other direction.
In this case, while comparing attributes, KF Blue and Carlsberg score more or less the same. But would someone switchover to Carlsberg in future leaving their favorite brand behind? May be not. However, the first time the Brand gets to interact with a consumer is when the decision is made. To use it again or not.
It was quite similar two decades ago when there were only three cars in India, forget variants – Ambassador, Fiat Padmini and Maruti 800. Today, they still exist. With a decent single digit market share, but they just “exist”. Possible in a country like India where the ever growing consumerism ensures that everytime a segment upgrades, there is another segment that fill their previous profile. And today, while Hyundai rules the roost, Maruti is still quite close and other brands such as Honda, Toyota, Fiat and GM are household names.
Cut to a Retail store: would consumers still come to a store that doesn’t retail their favorite Brands across categories? While private store labels give a run for the money to the domestic and international biggies, the consumers know exactly what they want. No wonder, private labels do not contribute over 20% to the store’s turnover. Consumers would come to the retail store only looking for their favorite brands. And may walk empty hand if they don’t find their choices. Convincing them with alternatives is not just through the ambience and environment – the product attributes must live up to their expectations. So, the equation runs as availablity -> popularity + Attributes = Loyalty. After all, Brands are expected to Drive Consumers into the stores, not drive out! Cheers.
14 June, 2009
Delhi T3; What it means to Indian Travel Retail
On 03 Feb. 2009, when Delhi International Airport Limited (DIAL) unveiled its ambitious commercial plans for its much-awaited upcoming integrated Third Terminal in 2010 (popularly known as “T3”), almost everyone who is anyone in the Travel Retail Industry was present. The company named the retail space as “Skyline Avenue – Destination You”, a first in Indian Travel Retail history. Not many airports worldwide actually believe in creating a separate identity to its commercial offering, but the team at DIAL went ahead with such an arduous task. While the overall proposal covering 20,000 sqm of Travel Retail space was welcomed by the Industry, it came with some surprises: that the participating operators must be willing to form a 49% joint-venture with DIAL to operate the business was just one. While such a decision was probably logical, given the fact that a huge investment is already being made by the Airport Operator, very few (Retail/F&B operators) apparently were enthusiastic in sharing the Board Room with an Airport Operator. Although there are very few such examples worldwide, both models have their own pros and cons. With stringent FDI guidelines (in Indian Retail) and the operator already having to manage the issues with forming such a JV, it was an exciting story in the making. And it ended up with more surprises. To begin with, The Nuance Group (with two Airports in its kitty at the moment at Blr & Hyd) not participating in the Tender process, HMSHost (with three Airports at Blr, Hyd and Bom) aggressively pursuing more ground and a few new Domestic and International names, from India and abroad, the finish was rather a nail-biting one.
The Retail Tender was won by Aer Rianta International (ARI) in a JV this time with IDFS, a popular Indian company in the Duty Free business (their earlier JV with Flemingo was short-lived) and the F&B Tender was won (in four different packages) by SSP International (two packages), Devyani Group, and Travel Food Services (one package each).
That The Nuance Group did not bid and HMSHost did not win in Delhi makes it worth a case to analyse. So, what does it mean to the nascent Indian Travel Retail Industry? Firstly, the estimated INR 200 Crore (~USD 45 million) Indian Duty Free business gets quite well fragmented; with Flemingo and ITDC holding more contracts than any other operator, it leaves with just two contracts for Nuance and one for ARI. Currently, the Top six Airports (DEL, MUM, BLR, HYD, MAS, and CCU) would probably have over 50% market share by value and the rest is distributed within the other Airports.
If there is anyone who’s probably going to have the best of times, it’s the one who feeds us everyday – The Customer. With more choices and competitive pricing across key International Airports, it would be worth seeing which Airport this “passenger” chooses to travel from. Doesn’t look like a reality in the short-run by a few of my sceptical colleagues in the Industry, but sooner than later, I am confident that this will happen. The next best one to get benefitted (from such an industry fragmentation) is the Supplier. Over the past few decades, not more than half a dozen suppliers (including leading Brands) were providing goods to the erstwhile Duty Free Operators. This has changed quite a lot over the past five years which has already seen three new International operators. While their pedigree certainly helps in getting better margins, the power of consolidation (some call it monopoly, hic!) fizzles out. Each airport is located in a peculiar zone such that what sells the most in one may not even find a significant place in others. So, there is a lot of work to do by the Suppliers and Retailers to ensure that the right product at the right price at the right time is going to be available. Looks easier said than done, as understanding the ever-changing needs of the constantly evolving Customers through research and other methodologies is not just an expensive affair, but also a time-staking exercise.
And the other member of the Trinity, the Airport(s) would actually find the going just fine, may or may not be too turbulent but certainly not a great time, given the reduction in number of passengers that provides them their direct income and dwindling overall passenger (commercial) spends. With the six major Airports actively competing among themselves and with others in the region, to lure the passengers to pass through their airports with better connections and then make them spend as much at their respective locations with better layouts and enhanced facilities, this is one unique competition that’s worth following. And the Indian Ministry of Civil Aviation’s plans to modernise over two dozen Airports in the next few years is another opportunity (or rather a new competition that's brewing).
Everyone knows that Competition alone does not mean competitive prices (for customers). In that case, every operator in India would look at maximising their returns as the number of touch-points (Read: Airports) is just a handful and short term and more Operators waiting in the fray to enter the country, not to forget that passengers may not be spending more in the coming years although the total number of passengers is expected to increase significantly. So, it may not be just possible to offer best prices all the while. While it is difficult to say what a fragmented market means to the stakeholders, it certainly does not provide a comfort factor for those who prefer to operate in a silo. A quick comparison at neighbouring airports is interesting. At Dubai, the single Operator is Govt. owned and hence no question of direct competition expect for, from the Middle Eastern region; Ditto in Bahrain and Kuala Lumpur. At Bangkok, notwithstanding all the controversies over the past two years, it is still a single operator. At Hong Kong and Singapore, the two Big Operators (one in L&T and one for P&C) have gained considerable ground over the years. Heathrow and Frankfurt have strong operators for quite long. The above mentioned airports cover more than 70% of inbound and outbound traffic from India. But one must note that the prices at these airports have always been competitive (for some reason, I hate to use the word “Cheaper”).
In F&B, while world leader HMSHost has brought certain standards at key Indian Airports, they have also showed that it is certainly possible to ensure passengers are spending quite well, as long as they see “Value” in what is offered. With innovative concepts (not necessarily established QSR names) and Five Star services at affordable prices, the “spend” per passenger across their various outlets have been healthy and growing consistently. While newer operators (in Travel Retail) are still honing their skills, it would be sometime till they can catch up with the more established ones (like HMS). But the race is a long drawn one, with millions of passengers to be fed every year! Hopefully, more the merrier, atleast in this case!
So, will more Competition bring better Prices for Indian Customers? Too early to say; but, will the existing Operators try to increase or consolidate their presence? Certainly! For their own benefit. The Indian Travel Retail Business is not just too big a promise but a sure-shot opportunity over the next decade. With the present 110 million passengers expected to double within the next ten years, this is one market that cannot be missed – for those within and for those outside, watching with keen interest.
07 June, 2009
Madras – it’s Hip, it’s Hot, it’s Happenning…
“Uppitta Tamizh mannai naan marakka matten… (and I added)
Uppitta Bengalai naan marakka matten… Uppitta Benglurai naan marakka matten…”
Look forward to another off-beat vacation – most probably, Kolkata. Havent been there in eight years! Another exciting consumer market.
24 May, 2009
We are One!
17 May, 2009
BIA Shopping Festival
Then, Airports promote and encourage a particular airline – the flag carrier as they call which is the largest in the country or could be the largest in that particular airport. Similarly, the airline reciprocates by promoting the particular airport, thereby bringing more connectivity to passengers (and visitors) to the Airport that directly impacts the Airport revenues.
Airports also promote hospitality and related businesses – to share information about hotels, resorts and other must visits in the city. This is important because visitors always tend to judge the country by their hospitality, especially the hotel operators. It is little wonder that we being among the most hospitable countries in the world have such a wide and vast network of hotels and resorts all over the country, which many visitors remember even after they return to their respective countries.
Lastly, the Airports and certain Brands come together - Brands that are closely associated with consumers in the country. From Banks to their service providers, luxury and mainline automobile manufactures/marketers, liquor/perfume/other FMCG companies, they are all there – as part of the Airport’s activities; to support their initiatives as well as to get the best possible benefits from such promotions.
We went ahead on similar lines, tying up with Karnataka Tourism to promote tourism in our state and with Jet Airways, one of India’s most respected and largest private Airlines. It was quite obvious that the Hospitality providers in India are not in their best of state at the moment, with visitor numbers (to India) coming down drastically and business travellers down-trading their requirements. We spoke to many other “Brands” but they all cited similar reasons owing to the global slowdown.
Visitors & Passengers could also pick up a brochure, courtesy the Tourism Dept. - one side indicating the location and special offers across various Outlets and the rear side would have the maps of Bangalore and Karnataka. To promote Culture and Folk Arts, there would be performances over the weekends, showcasing the various cultural facets and the rich heritage of our State. There is also a replica of the Golden Chariot- and the world famous Hampi stone Chariot on display. There are also small outlets that display and sell various handicraft products, so we effectively bundle and promote everything that we have from our state.
So, do drop by at our Airport with your family and friends when you find time over the next four weeks, to witness another exciting shopping and cultural season ahead.
Press Coverage:
Aviation India
Bangalore Mirror
Deccan Chronicle
Financial Channel
The Hindu
The Hindu Businessline
The Times of India
02 May, 2009
Van Heusen - From Power Dressing to Powerful communication
Many would know that the Brand also associated with the main character of a recent Hindi blockbuster, Ghajini, and thereby bringing back the culture of waist-coats to Board Rooms. The weather conditions, however, in most Indian cities was a deterrent for this to become usable and popular. A few years back, another flagship brand of the company, Louis Phillippe associated itself with the powerful character played by the lead role in the Hindi movie DON. And many other Brands used and are continuing to use the Hindi filmdom, popularly known as Bollywood as well as other local language films to launch and showcase their collections.
Coming back to the MC Collection from VH, there is a great effort being taken by the Retailer this time. Similar to how international brands prefer taking appointments from their key clientele and make the brand feel superior, VH has taken a similar route this time around – to entice focussed walk-ins into the retail store. One needs to just call up a phone number and book an appointment for an exclusive “dekko” of the collections avaialble at the store. As is anyone’s guess, the conversion is almost certain, given the Brand’s equity in the market and the conviction of shoppers to posess this Brand. And most importantly, the pricing is not too high – ranges from INR 9,000 - 15,000 (USD 180 – 300). Freebies such as a matching Tie and a breast-pocket handkerchief, as always are packaged smartly along with the main offerring. This is being tested for two months in a row – May and June 2009 and in all probability, the Brand may retain such an exclusivity in future at certain stores in large cities.
Now, my point to make here is the attention given to the customer in today’s scenario. Losing regular shoppers to competition is usual, but losing shoppers due to an economic slowdown doesn’t happen frequently, not even in a few years’ cycle. This is the time Retailers must take care of the customers more than normal – pamper them as much as possible with innovative, yet simple ways to get them into the stores. As you would agree, atleast in most parts of India, many are holding back their spending – a typical phenomenon of sitting on the fence. Show them the value, and communicate with them in such a way, that they get down from the fence and walk into the stores, and that’s really half work done. And then, the Merchandising has to lead from there. Very few have realised this in today’s market condition. And they are sure to reap benefits. Like in Management, there are three types of Retailers – those who achieve success, those who watch, and then those who wonder! Clearly, our example here has always been the first – and it continues to strive excellence.
22 April, 2009
Luxury Retail at Airports
The so called economic slowdown has not dented the prospects of Luxury Brands and labels, atleast in India. According to recent reports, Luxury Brands across categories are actually opening more stores and are recording higher sales than before. One of the reasons stated was that these consumers would have normally bought these products at Singapore or Dubai or Hong Kong while they were travelling (on vacation or business) and now since they are not travelling too much, they are buying these products in their neighborhood... err., that’s within India!
Sounds logical, but personally am unsure how true it is without a sound research or backing. Another reason that is usually stated is that these consumers are price inelastic (or rather recession inelastic, if you may allow me to say!). And that’s why more people are interested to procure that coveted C-Class or 7 Series at 5% Interest or low EMIs. Sometimes, I get confused with what recession does to people.
Having said that, it’s always interesting to watch how people embrace luxury. The new age malls are creating a niche (if not already) for a select breed of people to meet in a defined environment. Whilst sipping that decade old wine, they also talk about how a European Airline treated them so badly, by not upgrading them to First Class from their Economy Class tickets, in spite of having enough air miles to their credit (and anyway the planes fly empty these days).
These are the same consumers who are the core audience for Luxury Brands at Airports. And these coveted Brands take up prime space at Airports mainly to be in touch with their audience - to launch a new line, to talk about new promotions and to keep pampering their regular shoppers with exciting offerings. Many wonder if these Brands actually do any business at all, and if yes, would that be enough to sustain the (perceived) high rentals at Airports. Contrarily, these Brands actually take space to showcase themselves for their markets. And then, of course over a period of time, they build reputation and connect with the frequent travelers. And thereby it becomes a strong reason for them to expand inland. This is one way of course.
However, many Brands prefer to do it the other way – to first open large stores inland and expand within the city/country and then to come to the Airports. It’s quite difficult to say which model works best, but keeping in mind high operating costs in the city and in the country, it may look more feasible to take shop-in-shops or run Specialty stores with the main Airport Retailers. One way or the other – it’s just another reason to be in touch with their consumers. In today’s market scenario, one would agree “out of sight is out of mind”, all the more reasons to be in touch.
21 April, 2009
An Odyssey from Adyar to Africa!
Coming back to Odyssey – Dictionary.com defines this word as “a long series of wanderings or adventures, esp. when filled with notable experiences, hardships, etc.”
A very apt name christened by its Founder and Promoter. For all the struggles they have seen over the past decade to be where they are today. I have been seeing this brand since their inception in the year 1995 – at a nondescript location at Adyar in South Chennai, the capital city of Tamil Nadu, India. It was among those first stores to be “Organized” for the categories they were offering – mainly Books and stationery, Music and other leisure products. They were quite popular among students and youth in the city, especially in that area – given the affluence of people who resided in and around along with a number of schools.
Among the first initiatives of expansion of the business by the promoters was to step into a prominent Luxury Hotel in the city in 1999. This made them be seen, by the literati and the glitterati, and Brand recognition started to increase. In a couple of months, expansion was seen across various cities in South India. Even before they were acquired by Deccan Chronicle Holdings in 2005, they launched a co-branded Credit Card with ICICI Bank, one of the largest banks in India. This was a great initiative at that time. There are not too many Retailers who have ventured into this path and Odyssey is among the few who have got it right. However, a lot more could be done by Retailers through such partnerships – to be regularly in touch with their customers, to begin with. After signing up over two dozen stores in the same year, the brand started seeing more stores being rolled out – this time all over the country.
The year 2008 saw maximum store openings including another first to its credit – the first Leisure Retailer in India to enter Travel Retail when it opened its outlets at the Bengaluru International Airport on 23 May 2008. This was followed by other Airports such as Hyderabad and Delhi Airports and I am told that they are aggressively pursuing this subset of the larger Industry quite well. Also on the cards – a long list of Metro Rail stations at Delhi. As on date, although largely present in South India, they have 40 stores across 13 Indian cities. With one of the largest network of Leisure and Book Retail Stores in India, the Brand’s main USP, as I believe, is its simplicity. Most stores have a universal appeal with its furniture and decor only varying to suit the needs of the particular markets. Although Books are still the mainstay even today, they have ventured across various categories including Toys and Electronics, which needless to say are quite popular among its core audience. They also hold Book Reading sessions with prominent authors and writers at their Outlets – a unique but a sure way of getting more walk-ins into their outlets.
Coming back to where I started – advertising through IPL. Many of you would know that the promoters bought the Franchise of the Deccan Chargers Team in the year 2008 at a whopping USD 107 million! The sheer coincidence or rather the advantage of having such a sound backing from its parent and a pan-India presence would have obviously prompted the Retailer to take pole position as against the choice of its sister concern, Deccan Chronicle, a daily newspaper that’s present only in three cities in the country. This is also a first in our Industry – I am yet to see Retailers advertise through such media for obvious reasons of exorbitant advertising costs, although sports goods / FMCG manufacturers and marketers are exceptions. What a sensible way of utilizing space of its promoters’ assets and mainline communication to its potential and present target segments! Wow. And an opportunity to retail the Team Jerseys and other accessories at their Outlets - a clever, yet simple way of getting more shoppers walking into their Stores! This brand, from Adyar to Africa, has come a long way and probably there would be a day when they own a team as well. Hopefully. And I would be cheering for their team, as much as their success. For sure.
17 April, 2009
Driving Retail sales using ATMs!!
So, what?
Well. I see this as a huge opportunity for Retailers. It’s already quite common to see ATMs in non-banking locations such as Petrol Bunks, Airports, Railway Stations, Malls and Supermarkets. These ATMs which are today much more sleek and compact than their older cousins (including in-built CCTV cameras that are as small as shirt buttons), could easily be fit into smaller areas. Till now, many retail formats haven’t sensed the usability and importance of these ATMs. To begin with, its additional rent to the lessor or landlord.
If buying bread-milk-eggs could bring customers regularly into supermarkets, then why not ATMs! Look at a scenario – In India, on an average, we withdraw enough cash to last for a week or so. According to latest estimates, about 40-45% of its Sales transactions in Organized Retail are made using Debit and Credit Cards. Which means, there is a huge opportunity to attract those who use cash – from buying convenience products to luxury goods. A strong reason why ATMs must be encouraged across various Retail formats – most importantly at Hypermarkets and Supermarkets.
In today’s economic slowdown, the biggest hit format happens to be Supermarkets. With most categories seeing less than 60% “fill-rates” due to various reasons, many SKUs being unavailable (partially) through the year and hardly any major difference among the various “brands” of grocery retailers, those who have an ATM will certainly see more walk-ins. Needless to say, there would be something or the other that they may want to pick-up and there you see – higher conversions! And yes, users visit ATMs not just to withdraw cash – today, banks offer many other services, such Cheque-Drop Boxes, Tele-banking, internet banking, details about new and existing products and services such as personal loans, home loans, insurance, etc. Many reasons why users keep visiting ATMs.
Other areas where I see advantages for Retailers – since most ATMs prefer to have a Security Guard posted 24/7/365, the Retailer and the Bank could share the cost. The ATM Booths could have fliers of Offers and Promotions at the Retail Store, thereby informing ATM users about what’s the latest in the store. Retailers could use the banks’ existing database and send them mailers (by post/email). In return, the Retailer could pick on a random basis, an ATM user over the past month and gift a voucher! Consumers who use a particular banks’ ATM/Debit cards could get special offers – Savings (Read: discounts) on products that they shop. Wow. And many more.
When most Retail formats have seen a 20-30% dip in their footfalls today, this could be a great way to bring more people even near or outside the Retail Stores. And yes, as I always believe in, its consumption that drives growth. Always.
11 April, 2009
Fore-court Retailing
To begin with, as I see, the main issue is ownership. Whilst most Outlets are franchised, the franchisee pays the lease rentals (if not owned by them, which is rare). The Franchisee makes about a Rupee or less for every litre of fuel that’s sold. No wonder, the franchisees spend a lot of time these days at the Outlets, to ensure quick and efficient service (with a smile) and thereby getting back these customers. Apparently, the Loyalty factor is among the lowest in this business, I am told. Some of us are quite particular about where we fill the fuel – but that’s just some! Many of them do not really plan their usage and hence drive into the ones that are closer, when they finish the tanks.
So, if there were (Organized) Retail formats here, then there is again an ownership issue – most of the Convenience (format) Retailers do not prefer the Franchise model and this could be a stumbling block. In Bangalore, there were some F&B operators who tried this – they are not popular coz’ they aren’t successful, possibly due the slow or nil growth. Larger Organizations wouldn’t be averse to this model, but I am particularly not sure what’s stopping them. In today’s times, where every square feet of space is expected to fetch returns, it’s not a bad idea to sub-lease a part of the premises for various other activities.
Just a matter of time, I keep saying (to myself), the eternal optimist that I am. Hopefully, my optimism will not be a dream. Let’s see.
10 April, 2009
Shopping @ Cinema..??..!!
And how does that benefit Retailers? Well, yes, it does. Most of us remember going to “theaters” when we were children, not just for the movie, but also for the Samosas, Pop Corn and Colas – something that were as important as the movie going experience itself. No one complained the quality of food or the smoke and smell of cigarettes in the lobby – all of us co-existed and also caught with up friends and their families from the locality, looking at posters and reviewing the movie. Although there was enough and more of food, there wasn’t any product retailing. However, this changed since early 2000, when Malls with Multiplexes started to redefine the whole experience.
Recent history is replete with examples of successful movies (and the ones that were not) having a huge impact on Mall traffic, especially the ones that hosted Multiplexes. Expectations went sour for some and were extremely positive in a few cases. The Tamil blockbuster “Sivaji” (2007) which saw people waiting outside the Multiplexes for days before they could catch up the movie had their time well spent at the shops, restaurants and food courts! And such movies that have a family audience only add up the footfalls. Ghajini (2008) which was a super-hit had an opposite reaction to a previous mega release Mangal Pandey (2005) that brought crowds to the Multiplexes only to see the Khan himself, although there weren’t too many takers to appreciate the movie.
With Summer 09 collections already in place, and drying up not just due to the scorching weather, but possibly due to lack of footfalls too, it would be worth the effort to woo shoppers to see movies – along which they could also know what’s the latest in the Department Stores and Exclusive Brand Outlets. And some smart Visual Merchandising (VM) would certainly help. After all, VM is expected in entice a passerby into a browser, a browser into a buyer a buyer into a regular buyer and a regular buyer into a Loyal buyer of the store or brand.
Retailers could look at tie-ups with the Multiplexes – before and after the show, to make moviegoers pass through their stores. Another option, of course, that needs to be integrated well in advance is the lay out itself with better merchandise assortments. It’s not uncommon to see the exit area of the Multiplexes through Food courts – people do feel hungry/thirsty after sitting for over three hours. But how about having a flow where movie-goers pass through Retail outfits – may not be full stores, but samples and mock-ups; mannequins sporting the latest collections - and a gift voucher redeemable on purchase at the respective stores! Even a 10% conversion would add a lot more value than not doing anything. After all, when people passing through Airports and other Transit points (world over) shop at these places where the primary objective is to transit from Point A to B and not really “shop”, one would wonder why people wouldn’t shop at multiplexes, where the primary objective (or so be it) is only to watch movies! Wishful thinking.. naah… experimentation. Leads to success. And Learn.
04 April, 2009
IPL - a reason to increase consumption
What I always liked about IPL 2 was its timing & dates – during the evenings and summer vacations; kids and adults can watch the Game at their homes/clubs/restaurants/bars et al. Am sure, this would certainly bring a BIG impetus to the heavily troubled F&B Industry across the country (footfalls have gone down by over 40% atleast in Bangalore, I am told) and people have become extremely choosy about what they are consuming. So, Restaurateurs must be planning their special menus & combos. Good luck to them.
I also hope the supermarkets are planning their bit too – Merchandisers and Buyers must be stocking Processed Food, Ready to Eats, Colas and needless to say, loads of beer and spirits. For an excitement starved Retail Industry over the past four months where families have reduced even their regular monthly purchases, am sure the next two months would bring more footfalls and higher sales, atleast on these specific categories. With the Cola companies planning a slew of new product launches and new campaigns already in place, am sure the thrust for higher throughput is not just incidental but a fact that they have to work very hard upon.
And not to forget the increased home deliveries – not just the ready to make Pop Corn sachets, wafers and Colas from the nearby Kira... errr.. the “Organized” Retail Stores, but also Pizzas and other food items from the local food joints. That the college exams would be over by then and some youth would have fun doing their bit of part-time jobs is sure shot – just that they must be encouraged to do so. (I have done that in my teens and I can vouch how exciting it can get).
This is the best time to increase manpower especially for door deliveries and work 2-3 weeks in advance, (that’s actually now) to tell the neighbourhood that they are ready for home deliveries. While I was in Hong Kong during Christmas 08, almost every meal that we had at my friend’s home where we stayed was ordered – on the Internet. There was this Guju restraurant closeby; make an order and pay online and you get your food at your doorstep in 30 minutes or lesser! Well, I know we are not yet so very “Organized” or ready for e-commerce, but am sure this is a good time to make a beginning... a reason to increase consumption. Needless to say, I do believe that consumption will result in higher growth and not necessarily otherwise. Wishful thinking! Let’s see what my neighbourhood has to offer.
29 March, 2009
The “un-nano” Effect...
But the larger role that I see for this “SKU” is the effect it could have on the Retail Industry – the so called Organized, the Unorganized and the Disorganized! It wouldn’t be a bad idea for Retailers to procure one car each and place it at their stores during the current economic slowdown when shoppers are shying away to even enter Retail stores, forget splurging like before. And just like the core categories, this car to be placed at the end of the store and – footfalls would grow multi fold, conversions would be higher and needless to say, shoppers would probably be buying more than now.
I don’t know how Mr. Tata and his Retail team would be thinking, but in five years from now, I see this car available for purchase at PDS Outlets, Gram Panchayat offices and even the weekend mandis across villages! I have always believed the saying that higher consumption leads to growth and what better way. Our rural consumers are probably a bigger bet than their urban counterparts. But what about roads in these villages, one may ask? With an estimated outlay of over INR 10,000 Crores planned by the NHAI in the coming years, these roads would actually be a reality soon. Deep interior villages in certain states such as Tamil Nadu, Gujarat, Madhya Pradesh, etc. are already examples of what can be foreseen.
And in larger cities, if the TATAs use their existing and future TRENT/Indicom outlets, one can imagine shoppers buying the Nano along with their Grocery/Household/ Telecom products. By the time a shopper finishes his/her shopping, the car could be serviced or water-washed and ready for takeaway! Or, if the car was already given for servicing on a Saturday or a Sunday morning, then by the time the family goes for their weekend/monthly shopping at the hypermarkets, the Car is already ready! Wow.
A Firefly finally takes off
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