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)

How taxing can a tax be?

Most of us are quite happy and content when we hear that the exemption limit for Income Tax has been raised or that there have been some marginal changes in the rate of tax in the budget. However, the fact is that we save on one hand and end up paying much more in most cases on the other hand. A recent article of mine details this and hopes to create awareness regarding indirect taxes on consumers.

How Taxing can a tax be?

Pop-up Retail

An emerging retail trend is that of Pop-up Retail or Pop-up stores. These are temporary stores that pop-up at any location, draws in crowds, generate sales and shut down. These could be used by any category of products but is largely used by apparel to create interest in the new lines and showcase the same.

 

It is a great idea and can be used in a variety of ways.

• Showcase a service which is difficult to communicate like how Singapore Airlines did last month.
• Demonstrate usage of a new product like how Nokia did for OVI services or Canon did for their products.
• Open a pop-up store in a new catchment or city where the regular store is expected to open soon to give the shoppers a feel of that store.
• Leverage seasonal events and festivals to reduce shopper overcrowding at the regular outlets.

I saw a great pop-up store initiative by Sri Krishna Sweets which is a chain of sweet shops as also is into restaurants. We all know the crowds that throng stores, especially apparel, sweet and firework stores during Diwali. This initiative must have been to reduce the crowd at the regular outlets as also increase penetrations by getting new customers to purchase the sweets as also get a taste of the dishes at their restaurants. Some interesting innovations, which I think will make this a sure fire hit are as follows –

 

 

• Centrally located at the heart of Chennai in a large wedding hall, ensures ease of access.
• It is positioned as a 48 hour event starting at 8 am on 3rd Nov. When most shops anyways are open till almost mid night during this season, this has upped the ante.
• 10% discount between 11 pm and 5 am ensures some amount of shoppers during the most lean period. Especially with Diwali being on 5th morning. I would not be surprised if customers actually went there on 5th early morning to make purchases.
• Apart from sweets being sold, there are food counters of various cuisines
• Plus, some of the sweets are being made fresh and hot for sales, which might again prompt people to go there on 5th morning.
• A thought to keep children entertained was evident from the clowns, a stilt walker, etc.
• Lastly to bring a festive flavor and also interest the adults there were traditional Tamil Nadu folk dancers and even one of those roadside parrot astrologer.

 

 

Needless to say, it was advertised and there was a sizable crowd by 4 pm on the 4th. Well planned and more importantly well executed. Check out the pictures and videos to get a feel of this pop-up store, which I took after taking the permission of the person in charge who seemed quite happy to have this initiative being noticed with interest.

 

Best wishes to all the readers of "An Indian and A Retailer" for a Very Happy and Propserous Diwali.

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.

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.

A few comments/ feedback to the article "Do you have eggs"

Very Appropriate article. Inspite of all the marketing, promotion and planning .....like the "last mile" in telecom...the Retail Store Manager is amongst the most crucial player in the retail game and plays a critical role in making a particular store a success or a failure.
Sanjeev Agarwal
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I read it fully Rajesh. It was “ THE YOU “ in you telling – meaning it was like you are talking to people in that sense. It was great and the example you gave of 20 kg stuff goes into the mind straight.
On the whole ownership needs to driven at each end and by everybody instituted by the top mgmt. Great stuff thalai!
Umasanker
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A beautiful eye opener for the Retail chain openers
Keep up the job
Rgds
Ashima
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Dear Sir,
This is apropos the subject article in Brand Line (19th March 2009). The article is symptomatic of the malady it attempts to highlight and discuss. Organised retail in supermarket terms could loosely be said to have really started in India with the arrival of Foodworld in 1996. However, the problems of poor stock levels, customer service and manpower that we experienced then, remain now, whether in Foodworld or in any of its i-wanna-be-better-than-foodworld competitors. Does not that reflect poorly on the so-called retail professional groomed in those early pioneering organisations and now handling top management roles in today's retail companies?
Everyone knows what the problems are. It's just that no-one seems to have a solution for them, and each new company insists on re-inventing the error wheel and learning the mistakes from scratch!
Sincerely,
Rajeev Iyer
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Hi,
I read the article before I even read your mail. Found it excellent and a true picture of current retail scenario. Please keep writing more such articles. They can be finally compiled as a book.
Regards
Shashi
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Dear Mr Rajesh,
I enjoyed reading your article. Really lucid and plainspeak.
A few days back myself and my wife were waiting in the billing counter of a retail store. The person before us obviously had purchased a lot of things and had difficulty in carrying them home. She was asking the counter girl whether they could be delivered at her house. The girl replied that it would have been possible if she had asked for door delivery before preparing the bill and since the bill had already been prepared and paid she could do nothing about it. The lady walked away saying that she would have to find a better outlet who was more aligned to customer needs for her next purchase. Had the girl in the counter been more responsive to the requirement of the customer by talking to someone to help her out, then she could have helped the store retain a customer.
I just thought I will share this with you. Hope yourself and your family are fine. Our best wishes to you.
regards,
Kannan
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Hi Rajesh,
Ths is a great article... gives one a true picture.
I have also personally experienced a similar situation... the shopping list not getting completely over is a common phenomenon.
In fact, I can add one more thing - the quality of stock. Due to the lackaidaisical attitude, no one worries about quality.
Its high time the retail biggies wake up to the reality. Else, retail business will still remain with the kirana merchants..
Thanks for sharing the article.
Regards,
Hema Narayanan
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Excellent article Rajesh.
Nothing like a personal touch and feel.
Empowerment of store is a big factor for the success of XXXXX. It also leads to loss of revenue.
It is a nightmare for the finance team to control shrinkages (loss of revenues, not necessarily inventory loss) as the ownership is diversified.
A franchisee model (where the franchisee is on the shop floor) address this in a flaw in a major way were ownership is at the last level and at the same time ensure the franchisee to be in touch with the customer as this income is dependent on how well he runs is business.
Regards
Mohan
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Hello,
A very well written article. Am sure its one of the reads that folks at super marts need to better understand ground realities and mindsets of their regular clientele with a view to retain and grow that segment.
Best Regards,
Rahul
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hI,
Nice article. I agree with you on all the issues . Firstly the supply chain should be put in place (which has never happened in all the super markets ). I had personally suffered because of this . They should go for 3PL .. Surprisingly XXXXX has dismantled CFA and had gone for company managed warehouse. XXXXXX is beyond repair. XXXXXXX closed (for whatever reason) . Also , retail outlet has been opened as if there is no tomorrow (blame numbers for this..) and therefore like you rightly said instant baptism is happening with no focus on customer relation, loyalty to the store, conversion, smile and what not..The trainer comes , schedules the programme, goes to the next location for training because store is getting opened. He is busy claiming how busy he has become training people (with no actual input or training )..
In my opinion there has to be merger of mushrooming retail companies and close unhealthy competion ..like having three supermarkets of different brands in a single location ( egg not being available in single lcation !) .. I strongly feel that neither the so called big retails guys are making money nor they are making small kirana stores to make money for survival. My suggestion is that they should talk to traditional kirana (annachi or the Bhai ) train them , and give them the franchisee WITH MINIMUM INVESTMENT and no high fly stuff...else the overall loss will be Phenominal.
Gave my thoughts and your article kindled the same..
Cheers...Kdu