Sunday, May 31, 2009

A wake up call

In today’s environment of equal rights and awareness about prevention of harassment of any kind, an incident which a young lady professional wrote to me is a rude wake up call. This young retail professional has done her management studies and used to work with a leading organisation. To say that I am shocked by what she mentions is an understatement.

it was a kind of torture.... my store manager want me to stay after 9:30 in the store.... he misbehaved... I complained but nothing worked.... nothing will happen as everyone is aware, but still do the same.....

I am not naive enough to think that this could be the only or first such incident. Also, I am aware that I have heard only one side of the story. However, I am publishing this and hope the following happens –

1. People who are exposed to such harassment are encouraged to stand up and fight.
2. Retail, which not only has many women employees but also depends on the goodwill of the housewife, should be especially sensitive to avoid any such harassment to the women staff.
3. With the expected growth in corporate retail, maybe it’s time to proactively create an employee ombudsman. Such a neutral arbitrator would encourage employees to come forward more confidently instead of losing faith in the system, like the person who mentioned this incident.
4. Lastly, there should be an open and secure channel of communication to the senior-most management level. This should be championed by the senior leadership and well publicised. Let us remember that most of the store staff are young and might be graduates at best. Their natural inhibition itself would be a barrier to report/ complain which can be easily exploited.

The prevalence of harassment is there in almost every industry. However, in retail it has enormous significance. If women face such situations and also lose hope that the organisation does not bother, the industry loses both an employee and a consumer! Which housewife would be comfortable shopping in a store which allows women to be harassed?

In the coming days of competition, no retailer can afford to lose either.

Thursday, May 28, 2009

Mobile and different; an innovative Retail Idea

The next article in my series about a sustainable retail model, focussing on the basics was published in 'The Hindu Business Line', today.

The article deals the first element of the model; A truly different store. An idea is presented for the readers to think and comment upon. Technically speaking it is not a store, but it is definitely a retail format worth exploring for India!

Click on this link to read this article -


Please do post your comments on the feasibility of this idea.

I would be personally delighted if any corporate or entrepreneur decided to experiment with this model and will be happy to provide inputs.

Tuesday, May 26, 2009

Reader's Feedback/ Comment

I would like to share a few comments received from a reader. My views are in italics.

Chanced upon your blogsite from one of your articles in tickled by life. It is nice. Though I am not a retailer by profession or passion - I thought of sharing my 2 cents on this topic.

1) Why do we have to ape the west in terms of retailing models & instead why not we have our own models?
It is very difficult to strictly compartmentalise formats and models as western or Indian. Even the over the counter model was prevalent in the west before the self service formats became popular. Broadly speaking retail can be either a convenience store, Supermarket, Hypermarket, Cash & Carry, Price Clubs, Specialty retail, etc. These are generic labels and universal. However, how it is implemented is country dependent. For example supermarkets abroad are typically much larger than the average 3,000 sq. ft. stores found in India. So, in that sense the format are being modified for India but it is in the evolutionary phase and one can expect to see a lot of action on this front.

2) For staples why not we have something like a pizza delivery model - where one could use a phone and have them delivered at home. (This one partly stems from my laziness of pushing the cart around in a shop) And for the other items, where the customer has usually made his mind on the brand, and why not adopt the above model.
This format is the key value offering of Kirana’s. They prefer this model to maximise sales from their relatively smaller store to leverage the kind of products that has been mentioned by the reader; generic grocery and products already decided by the customer. This was also tried out by a company in Mumbai – Sangam Direct. However, once the customer gets used to the “Touch, Feel & See” experience, it is difficult to substitute that.

It is a fact that as much as 30% of a customer’s basket in a self service format was unplanned purchases. If the retailer delinked the must-have purchases from the impulse ones, the overall sales would drop because impulse purchases would definitely decrease.

3) As for the issues of the customer trying new brands / in store promotion- why can't this be shifted to the customer’s house - will be more targeted / focussed and measurable.
The logistics and cost of trying this is not feasible. Earlier one would have seen sales people coming to the homes with samples and selling products of even famous brands. Increased security concerns and proliferation of apartments have made it difficult for such people to gain entry into homes. Also, as mentioned earlier, the retailer’s effort is to induce the shopper to enhance the basket while purchasing the must-have products. For that, the customer needs to come to a store where a range is on display.

4) And lastly why can't the local kirana stores be used as an order fulfilment mechanism - this way we do not drive them out of business and be on the right side (politically).
This is an idea worth exploring only if the retailer is operating a tele ordering/ web based or catalogue format.

5) Yes, I agree quality is one of the issues - but there are ways of tackling them - probably standardizing them. By this mechanism we save on retail space, high rentals and other costs.
As mentioned above, a virtual store can definitely leverage the local kirana as a delivery point. However, tracking availability, delivery of order, payment collection and transmission onwards would be very complicated unless the store became a franchisee.

Sunday, May 24, 2009

Store launch is like a 20:20 match!

While watching the past few matches of IPL2 I was suddenly struck by the similarities between a store launch and a 20:20 match. Both call for enormous planning and at the end of the day the difference between a win and a loss is all about proper planning and excellent execution.

Even today with the proliferation of stores of varying types, the opening of a store is a milestone and something that the whole team works towards.

My view has been that the opening day should be a grand gala event which should attract maximum number of customers from the catchment and generate positive word of mouth. The contra view is to open the store with minimal fuss and then market it well once everything falls into place. This has its merits but also means that the retailer loses an opportunity to make his presence felt. After all once the store opens or is launched, it is no longer a secret! The launch is an opportunity to make a large number of people ‘sample’ the new offering in the catchment and then work on converting them into loyal shoppers.

In that way, the launch is definitely like a 20:20, wherein maximum number of runs needs to be taken with minimal loss of wickets, in a defined period- the day of opening.
Getting more runs -
The trick is to start with a bang. Unlike in a test match, where the openers have all the time in the world to settle down, here, in 20:20 there is no such luxury – the focus is straight away on achieving a high run rate. Similarly, the first hour or so of opening needs to set the cash tills on fire. A good range and service would influence this. But an unbeatable promotional offer limited by time is a sure fire way to get customers to line up before a launch!
The next is to ensure a consistently high run rate. Blanket offers and promotions would mean that customers would choose to shop at their convenience, which is typically in the evening. Apart from letting the “run rate” decline in the lull period, this would create an enormous pressure on the staff and store infrastructure in the evening. Often this leads to more of dissonance, instead of creating a positive word-of-mouth message. Therefore, time based, targeted offers would ensure a run rate, which does not flag.

Lastly, the slog overs - which are precisely that. The evening of the launch requires adequate planning and preparation to manage the customer crowds, ensure stocks are still there on the shelf and most importantly the staff are physically and mentally ready to handle this.

Saving the wickets -
Saving the wickets, translates into saving these first customers and generating positive word of mouth, towards building a loyal base of shoppers in the catchment. Just like how a wrongly timed shot makes the difference between a sixer and a catch, similarly, high expectation with poor customer management experience is equal to the store being declared out.
The basic expectation of a retailer is to leverage promotions to attract the customers to come and experience/ sample the store. In this context, billing issues compounded by arguing with the customer means that the store has been clean bowled, out! In all these years of store launches I have seen, there will definitely be some minor glitch at least, especially with regards to promotions. The best stand is to gracefully honor the promised promotion and resolve the accounting later on.

An LBW is also possible. “Leg before wicket” is equivalent to customers without stocks for them to purchase! Low stocks or even worse, nil stocks, especially of the key promotions SKUs, is a sure shot LBW. Customers are drawn by the promise of these products and the offers on them. By not having adequate stocks to cater to this expectation, all the money spent for the launch becomes a waste!

Poor crowd management is No-No. In the early days of supermarkets, temporary cash tills were deployed to handle the expected rush. In fact a few were deployed at key locations near the exit to facilitate the customers. Today one has several IT led solutions to manage crowds and for queue busting, the favorite being a mobile POS. I will detail more about this in another post as this has several other benefits apart from only being used during a launch.

There are a whole host of things and detailed action plans that are required to generate a large number of walk-ins and subsequently manage the same successfully. But, I shall leave you with these basic things, which if done well should help win the match on the launch day.

Thursday, May 21, 2009

DIFM - Implications for Home Improvement retail

What does DIFM or DIY have to do with retail? Very simple - the model for a home improvement format has to duplicate the neighborhood hardware store in terms of having skilled workmen to do the job.

Given the clear mandate to the new government, expected economic recovery and hence an expectation of enormous amount of housing development, it is only a matter of time before this format attracts serious attention and players enter the same. There are a few stores in this format, but they are not majorly focused on the repair and maintenance part of home improvement.

Just like how supermarkets had to closely match the experiential differences offered by the Kirana to successfully attract customers, home improvement stores would need to offer services as the core value offering. Sales of the products would be almost by default as anyways the skilled workmen take a call on the majority of purchases.


Once customers experience the certainty and convenience of such a service offering, the dependence on the offering would drive loyalty to the store.


Alternatively, given the rentals in most cities, only a service centre can be there in most major neighbourhood catering to requirements. The store could be a warehouse type of format in the outskirts. Since such large purchases are usually once in a lifetime, a good range at very competitive prices and backed by the service offering would more than offset the trouble of going to a suburban store. And lastly, even that can be countered by the store offering pick up and drop facilities for large purchases.


Going forward, customer engagement and education programs might help in slowing ushering in a DIY culture. Mr. Ashwin Mahesh in his comment on the previous post about home improvement mentions about how painting the walls is a fairly simple job and he would do that himself. But, the reality in India is that such customers would be an exception to prove the rule and even if a small percentage of people started to do this, it would be a major step in that direction.

Monday, May 18, 2009

Will FDI in Retail happen now?

With a clear majority and a free “hand”, the new government might want to implement some of the things which had to be compromised in the previous innings. One such was the allowing of FDI in Retail without strings such as single brand or cash & carry, etc. Most people in the Retail sector today expect that FDI in Retail would soon be allowed and this would help big developments and also bring in global expertise.

A couple of points in my mind about this development and the expectations from such an outcome –
  1. Industry status for Retail is required immediately, thereby enabling Retail to avail various benefits from this. This would do much in addressing several issues related to licensing, statutory matters and more importantly access to credit.
  2. Regardless of the industry status, licensing requirements for Retail should be streamlined and unified. Today, depending on the range of products one has in a store as many as 13 – 15 different kinds of licenses are required across a wide range of governmental agencies/ departments. Apart from the time and effort required to get these licenses, which could also vary depending on the state, the effort needed to renew and manage these is time consuming and is a pain.
  3. MRP, do we need it? Had written about this earlier (http://v-rajesh.blogspot.com/2009/04/mrp-do-we-need-it.html ) and I think the time has come to do away with this or relook at its role. When significant investments are expected in Retail, be it the front end or the back end, the operators should be allowed to leverage pricing based on the other components of the value proposition. To force fit one price for all, disregarding costs of location, service, etc., is not viable in the long run.
  4. Zoning and classification in cities is long overdue and in some cases only on paper. How will this help? The rental costs would be rationalized, especially as we seem to be heading towards a recovery and possible escalation of real estate prices again.
FDI or no FDI, the above four points need immediate attention and some forward thinking solutions if Retail as a sector needs to grow and thrive over a period of time.
Of course, some would include a 5th point of defining/ restricting sizes, formats and locations to protect the small kiranas. However, I don’t think that is feasible and anyways with proper zoning classifications this would be taken care of in a way. Also, if Kirana stores were accorded a status similar to small scale industries, they would fare better. Anyways, as I mentioned in another post of mine (http://v-rajesh.blogspot.com/2009/04/hidden-advantage.html), their cost structure gives them several inherent advantages and the only disadvantage they have is not being able to aggregate volumes.

Which brings me to an important point with regards to entrants waiting to leverage the opening up of FDI. It would be prudent to understand the Indian customers and focus on the backend more than the front end and this can be done immediately without waiting for FDI rules to change. Worse case scenario, such operators can leverage the supply chain that they invest in for the other Retailers.
Here is where understanding Indian consuming habits is crucial. It is no use focusing only of distribution centres, transportation, etc. This would address only 60% to 70% of the household consumption in terms of FMCG/ packaged products. Also, given the MRP scenario, there is a limit to how much value can be generated by focusing on the supply chain of these categories.
30% to 40% of Indian consumption is basic staples and grocery items as also fresh products. Significant work needs to be done in this sphere to extract value from the supply chain. Being dependent on the same wholesale/ semi-wholesale chain with marginal infrastructure at the tail end will not help. Paradigm changing initiatives like end to end cold chain, cooperative/ corporate farm, etc. needs to be explored and indulged in to extract the value that is present, but is now lost due to damages and intermediaries.

Indian consumers have already experienced and in most cases embraced the self service, modern formats. Therefore, the game changer for a new entrant would not be setting up another air conditioned store with maybe better facilities but in offering a significantly better value proposition. And for that, the key would be the back end.
In summary, FDI might be around the corner. But, to truly leverage that the government should look at making crucial changes and the operators should start working now in putting the infrastructure in place.

Sunday, May 17, 2009

Home Improvement - The illusion of low labour cost!

We Indians are a DIFM (Do It For Me) type of customer when it comes to any kind of home improvement project. DIY (Do It Yourself) is an alien concept given the over abundance of labor in the Indian context. However, is it sustainable?

Traditionally the majority of urban Indians require an electrician to replace a blown fuse and therefore obviously the support of a plumber, carpenter and so on. Hanging a picture in the house is a major project because we need a carpenter for that! Why is that?

First and foremost, we are not taught even the basic skills required for some of the home related repair and maintenance work. And we don’t take the trouble to acquire these skills because of the existence of the neighborhood electrician/ plumber, etc. Therefore, we also don’t have the tools required to even do simple things like changing the fuse!

Secondly most neighborhoods have a hardware shop which has a resident plumber and electrician. These people are not employed by the store. They just use the store as their base of operations and a contact point. In return the sales generated due to the work they do is monopolized by that store. So, it is mutually dependent and creates a self sustaining cycle between the customer, the skilled worker and the store.

Lastly, given the cost of a proper tool kit, hand drill, etc., and while balancing it against the occasional repair needs as also the on-call low cost labor, most Indians prefer DIFM.

This is fine when paying a few hundred rupees to do minor stuff. Recently, the capacitor of one of the ceiling fans gave up. To replace the same we paid Rs. 75/- to the electrician who had come plus the cost of the capacitor. Even assuming that the price of the capacitor would not change, if I had changed the same, there is a savings of Rs. 75/-. Why did I not do that? Urban dwellers increasingly trade off money for time (Read this article about this concept - http://www.blonnet.com/catalyst/2003/05/08/stories/2003050800080200.htm). So, in my view the cost of the electrician’s time was far less than the value of my time and the required effort for this.

But, this also leads to conditioning and repetitive behavior. Even if I knew something about home improvement, I soon lose touch and my dependence on the skilled workers increases and thereby my latent need and dependence on contractors also grows, for larger home improvement jobs.

Now, imagine a slightly larger in scope but simple enough home improvement work. Painting your home or even one room! It is actually a simple enough job. One needs to sandpaper the walls and then paint the same. It becomes ridiculously easy of one were to use a roller instead of a brush. Yet, we usually ask a contractor to do this job.Ask anyone who has had to manage even such a simple job and there will pour forth a litany of complaints about how the painters usually did not come on time, made a mess and often left without cleaning and so on. If one were to calculate the cost of the time and effort required to follow up, supervise, clean up, etc., one would realize that the actual cost of the job was far more. Therein lies the irony of the supposedly low cost labor and completely undermines our main rational for being DIFM instead of DIY.

Friday, May 15, 2009

Ingenious Indian Retail

Have been invited to write a piece about Indian Retail for an international publication and while I was mulling about the topic I happened to see this coconut semi-wholesaler/ retailer. This is located in Mylapore, Chennai, India. This is the heart of a city where rentals are in the range of Rs. 100/- odd per sq. ft.

See how innovatively the space has been used. It is nothing short of genius. Also, given that the space would be normally treated as dead space, this guy would have got it at ridiculously a low rent. Just in case the premises was owned, imagine the ROI.

Can anyone guess the Sales per sq. ft. or GMROI or GMROF!!!!
End of the day, retailing is not rocket science. Remember the basic model and stick to it as an obsession!!

Thursday, May 14, 2009

Customers are predominantly honest!

In continuation of one of my previous post about shrinkage and in defense of customers, I would like to share this interesting incident.

Going back to my favorite period of reminisces, the early days of Foodworld, we were constantly trying to figure out why customers still preferred the neighborhood kirana store as compared to the air conditioned and more convenient supermarkets. After talking functional issues like pricing, the preferred quality of groceries, home delivery, etc., we were still unearthing some interesting insights.

One such insight was the comfort level that the housewife has in being able to send back stuff she is not happy with. In one of my earlier articles, I have mentioned how shopping is a habit, especially given the fact that we do not have adequate inputs for making truly rational purchases. In that context, the comfort that the store would take back/ replace something is a significant cushion for the housewife. I can’t say that the same holds true of today’s consumers. But that is another story.

A program was initiated to popularize the replacement policy, wherein anything excepting razors n similar personal items could be replaced/ returned with a defined number of days. No questions asked.

Surprisingly, the resistance to the program came internally from the store team. At the briefing meeting they were vehement in their protest and the biggest argument was how this would be grossly misused by customers. And so a pitched battle ensued between marketing and operations.

Finally the then head of Foodworld stepped in and mandated that the program should be given a chance. But, to be fair to the operating team we would meet again in a month and review.
The program was rolled out. Lots of banners all over the place, posters at the store, shelf edge material, etc. Basically, no customer could miss that message.

A month went by quickly and we were reviewing this initiative. I had not heard of any major incident of the program having been misused. But, I had also not heard any positive feedback of acceptance from the store team and was looking forward to what would be mentioned.
Finally when we discussed this program, it was a bit of an anticlimax. If I remember correctly there had been a few cases of misuse including a lady who brought back a half eaten can of cheese with fungus on it!

When compared to the total number of customers, the percentage of such instances was miniscule and the benefits of creating this kind of trust far outweighed the few cases.
Having said that, in most countries where retail is mature customers also evolve. Or rather people who want to misuse the systems and processes also evolve and therein lies the challenge for a retailer today.

To trust or not to trust!

Will leave you with this experience of mine at Makro, UK. While at the customer service desk I was aghast to see the lady staff accept a supposedly defective hand drill for return/ replacement. When I pointed out that the drill could be working, the lady drawled in her Manchester accent, “It could be working, luv. But if I were to check and got a shock the company would pay far more than what the drill costs. Also luv, why would anyone want to return a working drill”!! Is it any wonder that we get to read how some people purchase a nice dress on Friday and return it on Monday, after the weekend party!

Monday, May 11, 2009

Mr. Owen Price; And his priceless input!

The first year passed by fairly fast. For some time The R A Puram store was the only store in Chennai and most of the team members either stayed closed by or passed it enroute to office and home. Like all single children, the store and its team suffered from an over abundance of attention, feedback, action points, etc.

Interestingly most of us were from different industries. Not just Retailing but a majority of what we sold was new to us. We were busy learning the tricks of the trade while picking up inputs on how to differentiate between Toor and Urad Dal, how to select a good broom, etc. Our spouses were not complaining (As yet!!) because we were all venturing into the uncharted territory of the household shopping, grocery, kitchen, etc. Obviously there were many hilarious moments, but in the privacy of the home and will leave it at that!

I remember a plaintive cry to the operations head by the store team to debar our visits because just the day before not one or two but a whole bunch had visited and given inputs on how to display brooms!

The reality was also that customers would come, pick up a few items and leave. We yearned to see the large monthly shopping bags, but they were few and far between. As the marketing person for Chennai, it was my onus to bring in more customers and make them buy more.
Many ideas were shared by the then JV partners and most were implemented, including a monthly draw, special offers and what not.

In the meanwhile, the first year’s anniversary rolled by and like all first birthdays it was to be celebrated in style. We had a seminar on retailing and then a cake-cutting at the store with the works.

One of the special invitees for the anniversary was Mr. Owen Price from Dairy Farm International. He is the grand old man of Asian retail and he retired from the board of company in May 2007 after 33 years of association. He had requested that someone be attached to him to help him prepare his notes and speech for the seminar and yours truly was drafted for that role.

After completing my tasks and having attended the seminar and function, we went back to the hotel where I was to drop him and pack up. He invited me in for a drink and remarked that for all the help I had extended he would like to help me out. He asked me, what was the biggest challenge I faced as a retail marketer. Promptly I blurted out about customers not doing grocery shopping. He asked me about the places where most people shopped and agreed to come for a quick tour the next day, before leaving for the airport.

The next day, we went to all the Murugan stores, Bharat stores, etc in Chennai and Mr. Price was very intrigued by the huge bags of rice kept in these stores. Soon it was time to leave and on the way to the airport he taught me the core basic of retail. Identify the largest item in value and/ or volume that people buy. Ensure that they buy that from your store and everything else will follow. He left with a single sentence saying “Rice seems to be your key”.

I quickly did some homework and understood what he had meant. We had a major argument as to who would take on the cost of the promotion. The final arbitration was that marketing would take the cost, but if this proved successful it would be a merchandising cost. The first promotion we ran in 1997 on rice was 2 Kgs of Sugar Free with a 20 KG bag of rice. The floodgates opened. Soon we realized that basic items need to be driven by pricing and not by promotion. So pricing was focused upon and the term banner/balloon rice was born! (Mentioned in the earlier post www.v-rajesh.blogspot.com/2009/03/where-is-banner-balloon-rice.html) Needless to say, marketing did not get any debit for the initial promotion!

Mr. Price; A tall, regal looking person, I still remember his keen eyes and smiling face. In a way, he is my first Guru in the field of Retailing. He taught me to step out and learn firsthand about consumers and how crucial it is in Retail. Post this incident I realized that reports and data can tell you only so much. For a complete picture one needs to step out and experience it in totality.

Guest post by Mr. Owen Price on the Anniversary

Monday, May 11, 2009

I well remember the opening of the first Foodworld in Chennai in 1996 and the team of people so eager to learn about modern retailing and whose names will remain etched in the company’s history. At that time the Indian market was unique in as much that there were no self service supermarket chains and Foodworld was a true retailing pioneer.

I recall walking the one and only store at C.P. Ramaswamy Road with the manager the late Ms. Usha Ravi one day and trying to explain certain aspects of display. I think she thought that I was crazy but we shared some good laughs together. Such was the learning curve!

On this anniversary of the first store I would like to extend my congratulations to the founding team of Foodworld on starting the Indian retail revolution and to their successors on continuing it.

Owen Price

Sunday, May 10, 2009

Leveraging another brand!

I saw this interesting advertisement by Amul that has leveraged the current craze of Zoozoos unleashed by Vodaphone!




It is always interesting to see one brand leverage another and raises many points in the mind of a marketer, such as which brand actually benefits. Would I recall Amul better because of the Zoozoos or have the Zoozoo’s just got some more incremental exposure. Of course, it could very well be that this is a collaborative effort! But, one thing is clear. Obviously the Zoozoos have become a craze and Amul - in their usual style of leveraging current trends have featured this.

Retail advertisements always feature other brands; but that is to inform the customers about the range and choice available. It helps build the retail brand as range is an important element in the value proposition. However, Private Label is emerging as the alternative to the brands. That’s another topic and shall deal with it later. (Someone, please remind me of all the topics I have promised to deal with later!!!)

I am reminded of another such advertisement, which was not a collaborative effort and was a pleasant surprise when I opened the paper to see it!


This advertisement for Yellow Pages appeared in Bangalore in 2002/ 03. The obvious message was the enormous consumer franchise that the stores had built up - strong enough for another brand to leverage the same. Did Foodworld benefit or did Yellow Pages garner more advertisements; I don’t know!


Personally, I treasure this advertisement as the best certificate or award anyone can give me for my role as the marketing head for RPG Foodworld. In fact, I have this advertisement framed and put up. This is a valuable part of my memorabilia. It would be remiss, if I did not mention here that this became a reality because of the pioneering team which worked like a well oiled machine, in which I was a cog. In that sense, this is a public acknowledgement for the team which built the first successful and sustainable supermarket chain of India. Never mind what it is called today!!! :-)

Saturday, May 9, 2009

A delightful surprise

The anniversary of the first store had stirred up a lot more of emotions than I had thought!! I was fortunate to be at the store today morning and ended up participating in the Birthday celebrations. The customary cake cutting was there and I was invited to join in in my capacity as an alumni!! Shared some of the memorable nostalgia that people have mentioned, especially the vastu and puja bit.



Another picture for posterity and fond memories. Cutting of the cake and Mr. Murali offering the cake to Mr. Atanu. Truly Old is Gold!!




P.S. - I realised that the cake cutting happened at almost the same spot where Smt. M S Subbulakshmi had lit the lamp, 13 years ago!

Guest post by Mr. Ganesh Chella on the Anniversary

Mr. Chella in his comment, has expressed the keen nostalgia which runs as a common thread right through. A part of the founding team of Indian Corporate Retail - his comments for you as a Guest post.

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Dear Rajesh

This is a great initiative and my best compliments for doing this!

I continue to get nostalgic every time I think about my days at RPG Retail. Hiring all you guys at 30% less pay than what you last earned which was in any case very low, seeing the excitement with which all of you worked because you were creating history and not because you wanted to make money, working in the store, solving the innumerable problems for which we had to write rules every day and creating new knowledge which to date remains the only knowledge in organised retailing. We may not have become the biggest and in any case those things seem irrelevant today. But we created a legacy, a great bunch of Retail professionals who knew what they were doing and were deeply passionate about it and who remain the only blue blood retailers to date.

I cannot forget my first day at the R A Puram store. We ran out of sugar and atta by 11.00 am. Raghunandan and I went to our distribution centre (sorry, warehouse, sorry, godown) to pick up some replacement supplies and rush back in our car!!!I cannot forget all the great one liners - "bay watching", "gave Rs 10 for 9" (description in a petty cash voucher) and all the other hilarious events that unfolded every day.I cannot forget all the training programs we conducted in premises amidst construction, I of course cannot forget RIRM, the institution which created the finest front-line staff that India has ever seen.

Let us celebrate this spirit and be proud of what we created!

Ganesh Chella

Special Thanks

Whoever sees this on May 9th 2009 or later, history remains unchanged. The passion and commitment that went into creating a sustainable Corporate Retail model has its players and witness’s!

I sincerely thank everyone who responded to this emotional call to celebrate and reaffirm what we have done and achieved. Special thanks to Mr. Sundaram, who provided almost all the pictures you all saw and enjoyed!

I enjoyed putting this together. Thanks to everyone, once again!

Happy Birthday to Indian Supermarket Retailing!

May 9, 1996 is a special day in the history of corporate retailing in India. That was the day when the first Foodworld (The current Spencer’s Daily) store opened at C P Ramaswamy Road, Chennai and led the way for corporate retail to grow and establish itself in India.

For skeptics and detractors of this view, I quote what was written about the Wright Brothers in Wikipedia; “Although not the first to build and fly experimental aircraft, the Wright brothers were the first to invent aircraft controls that made fixed wing flight”

Similarly, there have been supermarket chains before and after Foodworld. However, Foodworld redefined the perception of grocery and monthly shopping and influenced the consumers to make the switch to self service formats in a sustainable manner. In a manner of speaking this early mover and the footfalls they were able to generate would have surely influenced many of the current operators to look at Retail as an investment option.


Hence, it would be correct to say that Foodworld is the pioneer of today’s corporate chains.
Some names who were a part of this historic moment: The senior team comprised of Mr. P K Mohapatra, Mr. Raghu Pillai, Mr. S Raghunandan, Mr. Shiv Murti, Mr. Ganesh Chella and Mr. Arindam Guha. The others in the team were Late Mr. K P Ramachandran, Mr. Ashoke Bhaskaran, Mr. Atanu Chakraborty, Ms. Geetha Mahadevan, Mr. Eby Mathews, Mr. Sundaram, Mr. G’boy Varghese, Mr. Rajat Das Gupta and so many more.

It would be remiss if I did not mention Late Ms. Usha Ravi, the store manager for the first Foodworld store. Possibly India’s first woman store manager!



The store was inaugurated by the Carnatic music icon, the late M.S. Subbulakshmi - a memorable moment. This went on to herald the pattern of huge crowds without which there never was a Foodworld store opening. With the crush of people inside the 2,400 sq. ft. store increasing and the four cash tills sprouting long lines, Corporate Supermarket Chains had arrived in style that day.


Ah, those heady days of pioneering work!




P.S. - I had mentioned about Indian Corporate Retail being like a teenager just a few days ago. It is indeed a teenager now. It is 13 years old.

Guest post by Shri. H Goenka Esq. on the occasion of the anniversary

In the early 90s, when RPG first conceptualized organized retailing for the Indian markets, consumers in India were largely comfortable with the neighbourhood provision store as their mainstay for home supplies. We knew we were early, as with any pioneering effort and we knew we were in for a long haul. However when we launched, we had a very encouraging response to our small format stores scattered all across South India. Besides retailing food and grocery we were also selling music through the MusicWorld channel, which has today grown to become the largest music retail chain in the country. Footfalls were reasonable at the time, but more importantly we built a strong merchandising process and farm sourcing chain. Our biggest break came when we decided to enter the hypermarket segment. It was the first time anyone had attempted this format in India. To our surprise, the response was overwhelming. We even had to extend the operating hours to much later in the night to cater to the flow of customers. The first hypermarket was opened in Hyderabad followed by Chennai and Delhi. The smaller format which was sized midway between a supermarket and a daily store was growing but at a slow pace. We had about 80 stores by late 1990s and about 40 Music World Stores. By 2004 retailing was gaining momentum and the number of players increased. We stepped up our growth plans and in that process decided to go forward on our own under the Spencer's name. Geographically too we spread across to western, eastern and northern India beyond the south where we had a strong foothold. The last 5 years have been a period of high growth. It has been an immense challenge. We have ensured that our standards on quality and customer experience are not compromised as we grow in scale. Today we have come a long way with over 350 stores across 60 cities covering a retail trading area of 1.3 million square feet and over 4.5 million customers a month. India is a unique market for retailing with a complex consumer structure and buying pattern. We are optimistic of the future of retailing in India in its varied forms as it evolves and matures into what will be the largest segment of organized industry.

Regards,
H Goenka

Reminisces by Mr. P K Mohapatra about the launch





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Friday, May 8, 2009

Guest Post by Mr. Raghu Pillai regarding the launch


" May 9th 1996". Ultimately History will be the judge; but I genuinely believe that this date marked the formal launch of "organised" retailing in India. The date and the details are etched in my memory as if it happened yesterday rather than almost 13 years ago. ......... The mad dash to the home at 3.30 in the morning from the store to change into a "Dhothi" for the puja starting at 4.30......... The anxious wait for the crowds........ The arrival of Shrimati M S Subbulakshmi and the almost magical two hours she spent at the store..... The sales that day... 3 odd lacs..... The press frenzy and the mad mad crowds in the evening...... The furious cops helplessly watching the worst traffic jam in Alwarpet’s history..... All those make memories, which will remain for a long long time.

I have been involved with over 1200 store openings post that day but the magic of 9th May 1996 will always be the freshest, most endearing and precious in my mind!

Raghu Pillai

Reminisces by Mr. S Raghunandan on his memories of the launch



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Pictures of the launch of the 1st RPG Foodworld store



Thursday, May 7, 2009

My personal view only!

Thanks to all the visitors who have viewed my posts and made the Hit counter cross 2,500 in a 45 day time span. The flip side to this is when there are questions addressed to me, of whom I favour? Or, do I represent anyone!!!

So, I thought of setting the record right. I represent India and Indian Retail. There is nothing partisan about my blog. Actually, there is nothing official about it!!! :-)

I am sharing memories, learnings and MY insights, while ensuring that nothing confidential or proprietary is in the public domain.

Hope all of you continue to visit “An Indian and A Retailer” as also spread the word amongst all your friends about this blog.

Wednesday, May 6, 2009

The Wallenda Factor

While chatting with a friend about keeping one’s self alive and well, he mentioned the term “Wallenda Factor”. I had to look it up in Google as it was a new term to me and what I found triggered some interesting thoughts in my mind.

Just in case there are others like me out there who have not heard of this, the Wallenda factor refers to the fear of falling or failing.

The full article can be read on this URL - http://tickledbylife.com/index.php/the-wallenda-factor/

Shrinkage and Shoplifting

I recently read a letter posted on a site by a lady about how she was traumatized when store staff suspected her of shop lifting and gave her a hard time. This set me thinking, especially when I read in another report that India has topped the Asia Pacific region in the Annual Global Retail Theft Barometer-2008 survey. Shrinkage is one of the bigger headaches for a corporate retailer and sometimes is the tipping point in making a store viable or not.

Very simply put shrinkage is the difference between the actual volume & value of the products in the store Vs what is being reported in the system.

There are various reasons why this happens and shoplifting or theft is one of them. There are various other reasons that contribute to this such as, wastage, improper billing, wrong receipt of goods, etc. I would focus on shoplifting in this post.

Most retailers tend to believe that customer theft is the largest contributor to shrinkage followed by employee theft.

How true and valid this is, is anyone’s guess. The reason I am skeptical is that just a few years ago, there have been reports of Employee theft being the single largest reason followed by customers. I find it funny that the trend has reversed, unless these very customers are being hired as staff nowadays!!!

The most common items for shop lifting are the obvious culprits. Expensive and branded products like perfumes, etc. or small impulse items like razors, blades, etc.

Now, the moot point is, Why do people do it? There is a small percentage of people who pursue this as a criminal career and also another group who are compulsive shoplifters or kleptomaniacs. But the majority is simply normal people who have succumbed to a moment of temptation coupled with an inability to pay.

On one hand I have seen our store staff apprehend a large group of women who would wear voluminous dresses and come to the store in Hyderabad as part of a well organized racket to literally cart away products after buying a few small items. On the other hand I have also witnessed an elderly man almost cry after he was intercepted for trying to take away a deodorant. His simple explanation was “I depend on my son and daughter-in-law nowadays and she says I don’t need any fancy products for my use. I sweat a lot and am miserable about it, plus don’t have money. It was just too tempting.”

Self service is here to stay as a retail concept. However in light of such instances, is there a social and human angle to keeping tempting products out of reach and behind a counter? If not, can we train the staff to differentiate and handle shoplifting differently, depending on the context?
Lastly, I also remember a lady who was intercepted with a few expensive cosmetics. Out came her phone and her spouse lands up. Incidentally he was a cop and surprisingly embarrassed by this instead of displaying the usual public servant bluster. No prizes for guessing what happened!

Sunday, May 3, 2009

" IS INDIAN RETAILING A TITANIC which has already hit the iceberg ?

A reader of the blog has posted this query and would like to share my views regarding the title -

First, Corporate Retail like any industry is going through the typical adolescent phase. Like all teens, who want to be an adult but are still young adults at best, Retail in India is still finding its feet.

The moot point is is there any any success formula which was missed out? I dont think so. Please consider the following facts -

  • Most Corporates who entered Retail have a wealth of experience in manufacturing and a few in some services. Retail is a very different ball game. It is the true example of 'Think Global Act Local'. And, this is easier said than done.
  • Yes, several expat managers flooded Indian Retail to help set up this industry. The reality is that India and Indians are not easy to understand. At best we can be managed! I remember when a foriegn retailer opened a hyper in Mumbai in 2003, they had a huge section of home improvement, inlcuding an entire run of paints. Do you think that the Indian managers would not have pointed out that this category does not sell like this?
  • Lastly, if one were to do a search on Linked In for Indian Retail, there would be hundreds of profiles today. Only a handful would have deep enough retail experience that spans more than even a decade.
So, what do we have;
  • A booming economy
  • Money to invest in an exciting new industry
  • Lots of people pulled from various industries.
Mistakes were bound to happen. Then came the slowdown. Demand dropped, funding dried up, debts became an issue, working capital was tight.

The good news is that this has made everyone sit up and start trying to correct their mistakes. I am not for a moment saying that everything is now fine and its full speed ahead. But, at least realisation has dawned that Retail is not as easy as it looks. It is not complicated, but requires tremendous attention to detail and focus on the basics.

In Retail it is always a chicken and egg story. Do you build scale, aggregate volumes and then put in a supply chain or do you invest in a supply chain and then work towards aggregationg volumes by opening stores. There is no right and wrong answer to this.

Today most operators have built scale and are focussing on building up supply chain capabilities. It should work.

Lastly, why this reaction to the current issues in Indian Retail? Firstly, it was over hyped and closely followed. Secondly, unlike in a manufacturing plant where the initial issues remain known only internally, in Retail, everything is visible to everyone.

I dont think this has hit an iceberg or its on the way down. Anyways, we are all going to be around and lets see if my understanding of Indian Retail has enabled a proper prediction.

Saturday, May 2, 2009

Perspective - Why Am I In Facebook?

In an article "The Three Email Challenge" The author, Abhijit Bhaduri makes mention about how many teenagers continue to express deep angst at the enhanced generation who have now taken over as Facebook users.

The statement struck a deep chord of identification with me as I experience it everyday. My son who is experiencing the very best and worst of teenhood at 17 is the self-proclaimed champion of teenagers. Facebook was his independent fiefdom till my wife discovered it and shortly thereafter I also signed on.

Please see this link for the complete article - http://tickledbylife.com/index.php/why-am-i-in-facebook/