Friday, March 29, 2019

Believing in what you sell is one of the most critical aspect in retail.

David Ogilvy, one of the gurus of advertising is credited with this quote; “I never assign a product to a writer unless I know that he is personally interested in it. Every time I have written a bad campaign, it has been because the product did not interest me.”

Decades later this maxim holds true for not only advertising but actually about almost everything we do in life. If we truly believe in something, we give it our best and the outcome is invariably a positive one.

This reality becomes critical in retail as the shopper is driven and motivated by the trust he or she reposes in the store. In reality, it is not even in the store but in the staff and their service.

It is no wonder that the staff are referred to as the “Face of the Retailer”.

In spite of this, the majority of training initiatives are focused on customer service, smiling and wishing the customer, etc. Very rarely have I come across a retailer who takes the trouble to sell their merchandise to their own staff and make them to truly believe in what they are being asked o sell.

That was the crux of the issue that was mentioned to me by a young retail manager and which led to this “Business Line” article; Do you believe in what you sell?

Apart from the interesting anecdote about my interaction with this your retail professional, the article also captures an essential milestone in the journey of modern trade in India, especially that of food/ supermarket formats.

Tuesday, March 12, 2019

Ten years and counting!

March 2009, when I decided to start my blog “An Indian and A Retailer”, has definitely become a defining moment in my life journey. Ten years and 1,00,000 plus views later, the blog still continues to attract regular readers who often use its contents as a reference with regard to Indian Retail.

The blog started off as a simple repository of my experiences and learning in the Indian Retail space. It went on to become the foundation stone of my journey as an author. This blog led to my first book “The INDIAN reTALEs”. That was followed by “Out Of Syllabus”, “BREAK FREE” and the latest one, “The Ultimate Guide to SMART SHOPPING”. This has been in addition to the various articles I have written for leading business publications. 

All these must total up to approximately four lakh plus words over the years.

A BIG THANK YOU to all my readers who found my writing to be of interest and use. Many of them have given private feedback as also written public reviews. 

Two anecdotes are worth sharing as part of this milestone.

The first is about the actual start of my journey in writing. In 2000 after I had returned from the UK after completing the Chevening Scholarship, Business Line invited me to write an article. This was to be about my stint at ASDA and was titled “Making an elephant dance”. The article detailed the interesting practices that were followed at ASDA to keep their large number of employees engaged and nimble footed to remain customer centric. The blog, in a manner of speaking continued from where this article had led me in the journey of being an author.

The second one is about the name for my blog. It was a challenge as I was conflicted by various ideas and options. The final decision was influenced by using the two identities that I am most proud of and has defined me as a person. 

An Indian; growing up in the pre-liberalization period and witnessing the contribution that an individual can make as an ordinary citizen of India has always been motivating to me. Post liberalization, this has only been reinforced. In spite of several options to pursue a career abroad, the appeal of being an Indian contributing to the country’s growth in whatever small way possible has held greater appeal for me.

A Retailer; is how I think and operate. The experiences from this sector have defined my outlook and continue to do so. I am immensely grateful that God led me into this sector and am thankful to all my mentors who have taught me about the various facets about retail.

One of the topics I have written extensively about is that the retail sector in India should be granted industry status. This would not only spur this sector to faster and better growth but also contribute significantly to the Indian economy. My fond wish and hope as “An Indian and A Retailer”, is that this happens soon. I hope that the industry status is granted and a comprehensive policy for this sector, including both offline and online retailers gets rolled out at the earliest. 

That would be fantastic and something to look forward to.

Friday, February 8, 2019

Is E-tail retailing or not?

E-Tail is a subset of retail and is largely about purchase of products (goods) online. However, the term e-commerce continues to be used for this segment. Apart from being misleading, this clearly is giving rise to policy approaches which disregards the aspects of a retail business which defines such e-tail operators.

If there is a defined FDI policy with regard to retail in India, there is no need for a separate policy and guidelines for e-tailing.

Yet, policy guidelines pertaining to e-tailing, wrongly described as e-commerce, keeps getting notified. The recent guidelines which came into effect from 1st February 2019, is a case in point.

Some points with regard to the dissonance created by guidelines pertaining to online shopping but defined as e-commerce have been explained in this article published in “The Hindu Business Line”. Click on this link to read the article titled, “The sting in the e-tail”.

Business Line, Retail, Indian Retail, Retail FDI, DIPP, V Rajesh Retail

The larger issue which is being conveniently ignored is industry status for the Retail Sector in India. Notifying this would not only help to streamline policy with regard to the various constituents of this sector but also enable the sector to growth.

Will this happen?

Thursday, November 1, 2018

Policy Clarity required to enable Indian Retail

Trade in India is centuries old and historically the stories of our spices, etc., reaching many foreign shores, abound. From a historical perspective, it was these riches that attracted traders from overseas and the subsequent developments led to East India Company establishing a trading base first and then making India into its colony. This historical turn of events might have left a deep and long lasting imprint on the collective psyche which might be manifesting itself in the form of the vigorous and violent opposition to FDI in multi brand retail, today. 

Over the years we have largely seen shop keepers with a few exceptions where businesses managed a chain of stores. It is only from the mid 90s that Retail as a concept emerged in India. Understanding the differentiation between "Shop Keeping" and Retailing is very important. Their approach to business and priorities are completely different. Similarly clubbing eTail (Online Shopping) with eCommerce with regard to policy is incorrect.

As a start, Indian Retail needs Industry status and a cohesive approach with regard to policy-making and governance. My thoughts towards enabling the sector has been published as a Retail Report titled as "Six steps to redefining retail rules" in The Hindu Business Line. (Click on the link to read the article)

Wednesday, October 4, 2017

Price and Value Perception; of products as also businesses!

I recently read an interesting article in Times of India (Click here to read the article) about physical retail offering competitive and lower prices. This is from a report published recently by Goldman Sachs and compares the prices of few categories and some examples are in the visual below. 

My long held view is that online is not going to destroy physical shopping. At the very least, this is not going to happen in the short or even medium term. I have seen concerns similar to this from the mid 90s and more recently in the context of FDI in Retail. When supermarkets and then hypermarkets came into India, everyone was predicting the demise of the local grocer (Kirana store), This has definitely not happened. In fact after almost two decades the modern trade segment is just about 10% of the total Retail sector in India. This is in spite of the fact that the retail sector has grown from approximately USD 200 Billion in 2000 to close to 600 Billion in 2015. This clearly indicates that the conventional outlets are growing and growing significantly. The share of modern trade (Organised Sector) is expected to increase to 13% by 2019 – 2020.

These percentages might vary depending on the report you read. However, the macro picture remains the same. Modern trade is still a small contributor to the overall retail sector in India. This share might drop much lower if food & grocery alone is considered.

Online retail is roughly 10% of modern trade or 1% of the total retail sector in India as of now. This article states that Goldman Sachs estimates that online retail would grow to be 22% of the modern trade in the next five years.

Seems to be extremely optimistic!

The widely varying, but always optimistic projections regarding online retail is best captured a detailed article in Livemint (Click here to read the article).

The variance between the lowest and highest estimate of online retail in 2020 USD 70 Billion. To put that in context, The modern trade contribution to the overall retail sector in India would be in the range of $ 60 Billion TODAY! 

In summary I can only hope that the investors pouring money into the online space do two things –
  • Physical retail is an important segment and investing there might be worthwhile.
  • Put someone to work to cross tally and tabulate all the various percentages and figures being quoted in the various reports about retail in India. The variances across all these forecasts and projections might be a wake-up call.

Image courtesy - Times of India

Wednesday, January 4, 2017

Think like an Omni Channel Retailer

Omni channel retail is being touted as the way forward and the future of retail. Hence the high interest levels as also the aspiration to move in that direction. However the road is not an easy one and there are multiple challenges. While a few are manageable, there are some challenges which would require a paradigm shift in thinking and that is where any such initiative might fail.

The first and foremost challenge is the integrated organizational approach that Omni Channel requires. Offline and online cannot be separate business units with independent deliverables. The challenge to managing this shift lies in being able to balance such an integration while not diluting the accountability and focus on each of these lines of businesses. Take the simple case of credit for sales. In the case of an online order and an offline pick up, who gets the credit for sales? This is important in the context of incentivizing the staff based on sales, which is the norm. 

Similar is the ownership of mistakes and the related costs. If the shopper has picked up products offline and opts for an online based delivery to their home, will the store deliver the purchases or will it go out from a central distribution center. In case of any mistakes with regard to the delivery, who will be responsible and accountable for the same? There are multiple such questions which need to be addressed in the context of Omni Channel and they can be done effectively only if a single unified perspective is adopted.

One possible solution is to adopt a shopper centric model where shoppers from specific geographic areas are assigned to a particular physical store. This could be basis the catchment or trade area defined for that store. Any online activity is treated as a value added service to the shopper and that cost can be apportioned to the respective store. In such a scenario the ownership of sales and other aspects will continue to rest with the store. 

A similar model can be flipped to link a set of shoppers to a designated Sales or Retail manager in the offline operations. In such a case that designated person gets to own the costs and the benefit of sales from that shopper group. They would be similar to a store manager and would operate in a similar manner.

These alternatives are assuming that every shopper opts for Omni Channel purchase which might be a reality in the future but it is not so now. In such a case an interim strategy is required to handle three sets of shoppers; offline, online and Omni Channel.

The biggest challenge would be to manage the shift in the mind set of the front line service staff. Even assuming that the management team buys into the need for change that Omni Channel requires, driving this change in mind set down the line will not be an easy task.

Lifestyle stores can at least adopt a relationship manager model where shoppers get assigned and linked to specific store staff. This would enable a higher level of personalized service as also ownership at an individual level. This would be possible for lifestyle formats because of the relatively lower number of shoppers that frequent such stores. How can such a model be applied for value formats like hypermarkets where thousands of shoppers come in every day and the number of front line staff are also relatively lesser than in lifestyle stores. There does exist a possible solution to this also and the answer might require some unconventional thinking.

However I have saved the biggest challenge for the last which is the temptation to spin off these business segments into separate units for the sake of valuation and funding. Some of the private banks which offered demat and online trading services through their subsidiary were soon tempted to separate this business from banking and also offer online investments on their banking platform. As a customer of such a bank, this has been most frustrating because two relationship managers now pressurize me to do the same thing on two different sites of the same parent bank!

What stops an Omni Channel retailer from spinning off their offline or online business for the sake of valuation and then try to reinvent the wheel by trying to make each of these into Omni Channel again.

The only thing which would deter such a move is a very strong shopper orientation and a constant reminder that the whole Omni Channel evolution is from a shopper perspective and not otherwise.

Thursday, November 17, 2016

No need for change!

Managing adequate change has always been a challenge in retail. Especially when the majority of shoppers tend to pay for purchases, even of the smallest value, with the largest of denominations! I had written about this a few years ago. CLICK HERE to read that article

I can totally empathize with the shop keepers in the context of demonetization and what they must be going through. Suffice to say that they are having a tough time but managing as they always do.

Getting back to the topic of change, it has always been a challenge and my guess is that it will continue to be so even after the supply of the various new notes has become normal. 

The key issue is the habit of carrying larger denomination notes and expecting change during any purchase. In smaller stores they often resort to handing out chocolates in lieu of coins to manage such situations. However, larger stores cannot afford to do this at least as the norm. Needless to say the problem of change does not arise for any credit/ debit card payment. Although technology has enabled digital payments as shown in the video, mass acceptance and use of such payment modes will take some more time to become a common practice.

Increasing use of non-cash payment modes has many benefits and one of the biggest of them all is that retailers need not worry about organizing change. If the current cash crunch ends up influencing the way people pay for their shopping, it would be a good thing.

Video courtesy - Social media forward

Wednesday, October 19, 2016

So, you want to become an Omni Channel Retailer!

The latest buzz word that I am asked about in various forums is Omni Channel and how a retailer can become one. In many cases the understanding of what Omni Channel Retailing is very hazy. In a few cases this is considered to represent a seamless shopper experience across the physical, online and mobile access points of any retailer.

Some of the successful examples of Omni Channel retailing being showcased is more about such a seamless experience. For example, Apple has linked their mobile app to their store and vice versa. The app can be used to book service appointments, order products, etc., and the integration helps the shopper get alerts when they are near a store, receive targeted messages, etc. Carrefour has simplified this by enabling the shoppers to place online orders by voice or scan. Once the order is complete, the same can be delivered or picked up from a store. Several other retailers are experimenting with technology such as electronic tags, Near Field Communication (NFC), etc.

However I feel that all these are more about a superior multi channel approach to retailing. Multi channel retailing is when both online and offline options can be accessed by the shoppers and there is some extent of integration between the two. Omni Channel would ideally be the next step forward where such integration between offline and online access becomes seamless. 

omni channel, online shopping, e tailing, multi channel, bafara, v rajesh retail, shopping, shopper
The key word in this context is - seamless and that cannot be limited to only the information gathering/ sharing or shopper interface. Shopping is after all about purchasing physical products and unless the physical dimension of shopping becomes seamlessly integrated across physical, online and mobile.

Omni channel retail should be defined by the acronym BAFARA. This stands for Buy Anywhere, Fulfill Anywhere and Return/ Replace Anywhere.

Most of the current examples tend to focus on the “BAFA” part whereas this is an incomplete value proposition from a shopper’s perceptive. One point of view is that the extensive analytics and shopper profiling that is done would enable retailers to deliver the exact requirements of any shopper. The logic is that, therefore the need for return or replacement would not exist. Hence the focus on “BAFA” is good enough for creating a Omni Channel offering. 

As someone who understands shopper behavior and expectations I do not think that this would be acceptable to shoppers. Whether they actually return or replace any product purchased or not, they would like to have that option available to them at any given time.

An ideal Omni Channel experience offering BAFARA would play out somewhat like this;

I am leaving office and suddenly remember that I was supposed to purchase a few items as guests are expected at home in the evening. Thankful for having remembered I place an order for these items on the mobile app and select the option for a store pick up. Since I have paid for the same, these are available for immediate pick up and I don’t even have to park my car. I reach home with the purchases only to find that a few products need to be returned. Since I am logged into my home computer, I access my shopping history online and place a request for the return of these products. Since I am travelling the next day, I select the pickup from home option for the return. 

I bought the items on my mobile, picked it up from the store and would be returning it from my home. BAFARA essentially means the convenience of being able to shop in this manner with various permutation and combinations. That would truly be Omni Channel retail.

Sounds simple enough but it is not so and the challenges start mounting if one were to truly deliver the BAFARA value proposition. 

The primary challenge and to some extent becomes a constraint is with regard to the organizational structure and management mindset. In a scenario where offline and online channels are treated as separate business units with independent deliverables as also responsibilities, they become competitors. This is a significant bottleneck in the journey to becoming an Omni Channel retailer.

There are several other strategic as also operational challenges which have constrained most of the Omni Channel initiatives to remain restricted to BAFA instead of offering BAFARA. I shall detail the key challenge with some ideas with regard to the same in another post.

In summary all I would say is that Omni Channel is not about technology and data alone. It is equally about physical products and owning the shopper experience, end to end. This holistic experience cannot be restricted to BAFA and must encompass BAFARA. Till that is clearly and very well defined as also executed, experiments in the Omni Channel space would remain just experiments.