An unexplored idea – Mobile Retail

As mentioned in my book and a few earlier articles, the vast majority of street hawkers is a massive and undiscovered Retail opportunity. Their network and relationships are strong foundations upon which corporate Retailers as also manufacturers can build sustainable distribution networks. I wonder why no one wants to do this.

Have written about this wonderful potential yet again for The Hindu Retail Plus and the URL for that is as follows –

They bring Retail to you!

Ownership of the Customer starts with ownership of the store

During a series of recent training programs for Retail Operations people, I was highlighting the importance of taking ownership of the store and hence the customer. In that context the standard question to the audience would be how many of you take ownership of the store and hence the customers.

 

Predictably almost everyone’s hand would go up. Great; everyone is taking ownership of the store and hence the customer.

 

End of the story? Hardly, it is the beginning.

 

The next question would relate to old, slow moving or dead stocks. Regardless of the format the fact of the matter is that any store has a certain percentage of stocks which are non-moving. These are dead investments and only block up the working capital.

 

So, next I would ask how many have such stocks in their respective stores. Be it 1% or 5% or 10%, etc. There would be an enthusiastic response that, yes there are such stocks.

 

Now my next question; If this was your OWN store and your working capital was tied up would you allow this to happen or would you return the stocks or sell it off at a discount and clear the same.

 

At this point, the crux of the ownership issue will come out.

 

• I don’t have approval from HO to do this. If it was my own store, I don’t need that.
• I informed the merchandising team and they have done nothing.

So on and so forth.

 

Beneath these excuses lies a sad story of helplessness. Under the pretext of control and standardization the Corporate Retail of India today has depowered the store. But, on the other hand they are told that they are the face of the Retailer and they need to own the store and customer. What a dichotomy!

 

Having said that, I am also aware of store managers who had the freedom to act and therefore misused it by putting products on discount to reduce stock, at prices below the cost price.

 

The point is that a happy medium is needed and needed soon. The operations team needs to know their boundaries of the game while the boundaries should be large enough to motivate them to take ownership of the store or customers.

 

Otherwise, ownership of the store and customers will increasingly become empty words spouted during meetings and training programs where participants will enthusiastically raise hands to claim ownership, enjoy some good food and then go back to status quo.

Lack of Ownership and Initiative

I have recently been conducting several training programs for store managers. A common theme that I like driving home is the point of ownership. This is a favorite topic of mine since chain stores constantly talk about this, but on a day to day basis, do absolutely nothing at all to ensure that the store staff have ownership.

A case to the point is my experience recently at two stores while doing Diwali shopping.

First is a chain of discount/ value apparel stores. The store was over merchandised with hardly any circulation space. The staff had left cardboard boxes of stock all over the store, including the stairs and one of the two elevators was blocked with these boxes. Bright spot lights with crowds and inadequate air conditioning was a sure fire-recipe for people to faint. Long lines outside the trial room led to shoppers using the wash room as a trial room and there was a line outside that too!!!

To cut a long story short, we were waiting to get billed and leave. The customer ahead of me was caught up in some complex promotion involving discount vouchers and all that. (That’s a different topic about why people have such complicated promotions).

Anyways, here I was standing in the line and sweating. Sweating - because the store had these nice bright spotlights as mentioned before and the air conditioning near the entrance where the cash tills were located was not working. When my turn for billing came, I asked the person who appeared to be in in-charge (who turned out to be the store manager) why something cannot be done to make this experience better. He was lost!

I suggested that he should get a fan at least near the cash till and he gave a half hearted reply. I can bet that if I went there after a few days later, there would be no fan and no change.

Because, the store manager and staff have no ownership! The guys at the head office grill them about sales and reports. But not about ownership! Sad. But true.

Compare this to a store down the road. A stand alone apparel store. The customer crowd was pretty much the same but one did not feel suffocated as the air conditioning worked, there were no boxes of stock lying around waiting to trip someone, staff were helpful, etc.

When I was billing, which was pretty fast given the crowd, my family members were not crowding around me increasing the tensions. They were enthralled by a magic show. Yes, a magic show being conducted near the billing counter.

I don’t know if this is a result of the owners having read my book, “The Indian reTALES” but I was thrilled that someone was directly implementing what I have written about billing and how to handle the same. It was great to experience ownership of the store where customers felt good after having made the purchases instead of feeling like prisoners who have escaped the Tihar Jail.

So, to my moot point - will the lack of ownership of store managers of chain stores be the death knell?

I think so. Wake up guys and change the way Indian Corporate Retail works.

Empower the store staff and make them own the customer experience.

The MRP Scam !!

I have been writing and speaking a lot about the irrelevance of MRP and also how most establishments flout this rule with impunity.

See the scanned picture of the bill which illustrates the point.

Recently we went to a restaurant for dinner and ended up paying Rs. 125/- for a can of Diet Pepsi!

Most restaurants get around the MRP rule by serving the soft drinks in a glass and billing it as soft drink. Whereas in this place they happily brought the can to the table and have blatantly charged Diet Pepsi at almost 4 times the MRP!

Adding insult to injury is the fact that this is printed on a tax invoice. This means that such bills are supposedly inspected by the sales tax officials once in a way. Does that mean that the sales tax department is not aware of the MRP rule or in true bureaucratic style one arm of the government is not bothered about a violation with regard to another!

It all comes back to you!

In my life as a Retailer the most common feedback/ complaint has been about bad service.

• The staff are not helpful.
• They don’t know anything
• They are rude.

Etc. Etc.

However no one pauses to thing how rude, insensitive and demoralizing we are as customers. Today, while shopping there was a pregnant lady who insisted on barging in to ask questions when the staff were attending to me. Subsequently, even while billing, she landed up again and bombarded the cashier with questions although the cashier was billing my purchase. Finally the cashier turned and asked her to please wait at which point the lady turned around in a huff and walked away.

Before someone justifies this behavior to the hormonal issues and stress related to pregnancy, let me ask : how often does one behave this way - man or woman?

Very often is the answer.

Is it any wonder that service levels are dropping?

At the end of the day it all comes back to you. Be a boorish, insensitive and rude customer - you get bad service. Watch this funny video which captures the essence of what I say.

Next time you shop, try smiling, wishing the staff, put back things that you dropped from the shelf and you will see a whole new level of customer service unfold before you.

Video courtesy – Neo Naem, Facebook.

Are Chain Stores promoting Cherry Picking?

Increasingly I read about promotions which make no sense. Some even border on the ridiculous. For example, many apparel stores offer promotions like buy 3 and get 5 Free or get 50% off and then 40% off.

Either the merchandiser is completely lost and is drowning in inventory and therefore desperate to liquidate stocks or someone forgot to tell them that promotions are very powerful tools and each type of promotion has a specific purpose. For example a bill value based offer is supposed to increase the overall average bill value and needs some thought and date to fix the optimum slabs. Recently I was reading about a promotion where there was an offer on a particular category’s purchase value coupled with an overall bill value and then additional discount for a specific credit card and so on. Does this make sense?

Absolutely not!

Promotions are tools to drive walk ins and also build loyalty through repeat purchase. One of the cardinal rules for promotion planning is that a single SKU cannot have multiple offers.

The other cardinal rule is the selection of SKU itself, especially for advertisements and other public communication. Today, I saw an advertisement for a leading supermarket chain. The communication highlights refilling the groceries and home needs. In other words it is trying to capture the monthly shopping of the household.

In such a case the core products and KVI is mandatory because that is what the customer will relate to immediately and it will also deliver the message of a better price.

Consider this advertisement, which does not feature Rice, Toor Dal or Sugar - some very important KVIs. Oil is featured but a 5 litre jar whereas the average consumption of oil in Chennai Households is 3 litres. What it does feature is Basmati rice, Slice and 7 Up. It does have a sweeping statement about groceries being available at prices expected by the shopper. Such statements rarely have any impact and I shall detail why in a subsequent post.

To be fair, I have seen other such bright advertisements which ignore core SKUs and highlight offers on SKUs which might not influence the monthly shopping decision.

In this context I wonder what the objective of the merchandising and marketing team is. Do they wish to have people looking to buy only Slice and 7 Up come searching for the offers on such SKUs or do they wish to increase the share of monthly shopping baskets in the catchment?

Something does not seem right.

Discussion Paper about FDI in Multi Brand Retail

In April 26th DIPP had announced (as reported in the press) that the discussion paper would be released and discussions would start next month. Promptly the next day the Commerce Minister categorically states that the government is currently not working on the possibility of FDI in Retail. This changing stance seems to find an echo in the paper even after it has been finally released. To quote a point stated right at the start of the note “The views expressed in this discussion paper should not be construed as the views of the government. The department hopes to generate informed discussion on the subject, so as to enable the Government to take an appropriate policy decision at the appropriate time”.

DIPP is a department of the Commerce Ministry. This is a detailed discussion note prepared by this department and quotes several facts, figures and refers to several research and studies done including one by a Parliamentary standing committee. Yet, it starts by absolving any Government perspective to the note. In light of this, how seriously can anyone take this note? Is it yet another document put together for the want of anything else to do?

A detailed perspective about this was published in "The Hindu Business Line"  today.  Look forward to your feedback and views.

Unleashing the Human Resource Potential in Retail

Coincidentally on the same day of my critique of the DIPP discussion note an exhaustive article of mine was carried in the “Brand Line” which is a supplement of “Business Line”.

Apart from detailing how Retail can harness India’s Human Resource potential, the article talks about how the same can have a significant impact on the Indian Economy. In a context where Retail is already amongst one of the largest employers in India contrasted with the reality that the majority of people employed would not even be paid minimum wages, Industry status is the most pressing need for Indian Retail.

The full article can be read online at Brand Line. 

Can Retail succeed where politics and diplomacy seems to be stuck?

The North Eastern part of our country has never been the center stage whether it was in terms of politics or commerce. In fact people from the North East have migrated to other parts of India and are slowly becoming a dominant factor in the Retail work force as per a recent media report.

It is in this region that our brotherly neighbor who was till recently our bhai bhai, started playing visa games by issuing a visa on separate pieces of paper under the pretext that the visa is actually an internal travel document and not a visa. In that context, it would do well for anyone who thinks of this as a supportive gesture that, in India, one can travel anywhere without any such “internal travel document”. Anyone can wake up tomorrow and book tickets to go to Leh or Kanya Kumari or Porbandar or Itanagar in Arunachal Pradesh. That’s India and one of the many reasons why I am proud to be an Indian.

Anyways, let’s get back to the topic at hand.

I have been reading about how our friendly neighbor has been insisting that a large portion of the north eastern area is actually not a part of India!!!

A few days ago I read a report in Business Line dated 12/5/10 that retail outlets such as Arrow, Titan, Big Bazaar, etc., are making a beeline for this region. When a few Retailers go, others can’t be far behind.

So, will India do a repeat of the East India Company in reverse? Will Indian Retailers establish such a strong presence and more importantly a consumer base, that our friendly neighbor’s claims are no longer tenable?

I think this is possible and my Retail brethren should prove me right by opening as many stores as possible in the “7 Sister states” as possible to create a vast customer base, who are a part of the larger Indian Customer base.

Last, but not the least is the reality of economic growth that Retail will bring to this region and bind it to India forever. And in that context, the Government of India should encourage any Retailer who is ready to take this step without turning a blind eye to the same.

Jai Hind.

Mobile Independence

Yesterday while coming out of a forecourt retail outlet in a petrol pump, I saw this very interesting and impressive sight. A mobile Coffee and Tea vending person.

What is so great about it, when cyclists with a stainless steel insulated jar abound in India shouting out Chai or Kapi, depending on the region.

Well for one was the design of this vehicle which is best seen rather than described and is as below. More importantly is the person, Mr. Shanmugam who is a physically challenged person. Instead of moaning and cribbing about his fate this person has taken up an interesting vocation and has been at it for the last 15 years. Recently he also got married and lets all wish him a great life ahead.

He typically sells Coffee and Tea and has a few biscuits/ cookies on the tray (mounted over the front handle) as value add for the customers.

The sight of him reminded me of my idea/ dream/ vision of a mobile and different retail format and I have suggested that he expand his assortment to simple things like recharge cards, etc.

He was quite excited about the idea while also expressing apprehension that there were many elements on the street who prey on people like him. They typically take things free under the pretext of taking credit and then never pay up.

Any ideas on how such a menace can be handled by mobile Retailers?

Vagaries of Indian Supply Chain

Sometime ago I had posted a picture of a truck with agri produce being transported on a barge across a river. Yesterday I happened to see this picture of camels transporting water melons. This brings to fore the point I have made in “The INDIAN reTALEs” about Indian Retail and SCM being a unique animal (pun intended w.r.t the camel) and needs to be understood well to be managed.

Imagine trying to apply international best practices like fleet optimization to this herd of camels, you will get the idea!!

Photo Courtesy: The Hindu

Initial Reader Comments/ Feedback

I am delighted with the few feedback/ comments received about "The INDIAN reTALEs". I share with you one such feedback from an academician. I am told that the physical copies of the book should be hitting book stores like Landmark, Higginbothams, Odyssey, etc., by the next week. Please do mail me if you spot the book at any store.

Feedback by -

Dr. Harvinder Singh,

Asstt. Professor,

BIMTECH, Greater Noida

 

I have completed your book. To begin with, let me thank you for writing such a wonderful book! I read it like a novel and this is the beauty of this book. Reading this book was like a guided tour of the world of retailing. What makes your book more relevant and different from other books is that you have not lost sight of the unorganized retailing. In fact throughout the book you have made contrasts and comparisons with the local stores and their practices. It is important to do so because this is where the competition lies for the moder format stores. Prominent textbooks on retail management completely miss this aspect. It may be OK with American and European authors doing so because their economies have a higher share of organized retail but what makes me feel sad is even Indian authors, while writing textbooks on retail, talk about organized retail only which has about 5-6% share in India.

True life customer stories and experiences in your book are great sources for insight for real-life decision-making. I specially liked the store launch experiences and 15 litre cooking oil packaging situation.

This book would definitely be a part of our library as an important reference. I am sure our students would benefit from this.

Wish your book great success. 

Is Retail an avenue to propagate a language?

When we were opening India’s First Hypermarket in Hyderabad a fair amount of time was spent in deciding the content and more importantly the languages to use for the signages. Finally we settled on English, Telugu as also Hindi because we expected customers from across socio economic classes to come to the store and they needed to find directions in a language they were comfortable with. The key consideration for any Retail communication’s language has to be the customer and their comfort with the same.

Recently the authorities in Chennai have decreed that all Shop names must sport Tamil versions and that the Tamil version needs to be as big or as important as the English one. This is supposed to be done by June 1st 2010. Is this done with the customers in mind? More likely it is yet another half baked idea with a political agenda. Let me explain why I think so.

A government ration shop must sport a Tamil name as the customers might consist of people who are not conversant in English or not comfortable with that Language. A neighborhood supermarket in a predominantly North Indian Locality might do better to have signage in English and Hindi, while Tamil boards would mean little to the customers.

By the natural laws of market dynamics this is already in vogue amongst shops of all kinds and sizes. I have even seen stores near the Hyundai Factory near Chennai with Korean names in that languages script. Imagine having those stores, which cater to the Korean Expatriates, have boards sporting Tamil.

I am a big fan of vernacular language and have posted about why the staff in several Retail chains are being forced to communicate in English. But, I am a bigger fan of customer orientation and anything being done which is not customer oriented is a complete waste of time.

The effort and cost of altering or replacing boards could be channelized towards so many other productive purposes. But now, the poor Retailers will be busy wasting time and money towards this futile exercise. Yet another instance when the lack of an Industry status hurts the Retail segment as there is no one to take up their issues.

In my book “The INDIAN reTALEs” I have detailed how the Industry status is not only important for the Retail chains as many erroneously believe but more so for the 12 or 14 million odd outlets spread across in India. I hope that the book is read by the relevant people in the Government, who sit up. Take notice and act upon the ideas given.

What a Birthday present!!

Almost to the day, it has been a year since “An Indian and A Retailer” made its debut. The thoughts of this blog grew into an in-depth, experiential book about Indian Retail, titled “The INDIAN reTALEs”.

All this happened in the space of the past 365 or maybe 366 days!

And on the first birthday of the blog, I hold a physical copy of “The INDIAN reTALEs” and wish a very happy birthday to the blog.

This book has been published by Unicorn Books and is now available for purchase with an online discount of 25% at pustakmahal (dot) com. It would be available at leading book stores over the next couple of weeks.

Please start enquiring at your nearest book store about the book and get your hands on it as soon as possible.

Thanks to everyone who supported, encouraged and motivated me along this journey. Hope you enjoy reading the tales as much as you have this blog.

To be launched soon...

March 20th, 2009 is a memorable day as that is when I started the blog “An Indian and A Retailer”. It was actually started suddenly on a whim and before I knew, it had gained a life and momentum of its own. A whole lot of people saw the blog, wrote to me and commented on the posts. Very soon, it was being quoted by Retail and Strategy consultants during their presentations.

I came to know about the widespread popularity of the blog when one such consultant referred to a post during their presentation regarding supply chain. Several members of the audience were my good friends and ex colleagues. Obviously they wasted no time in calling me up and congratulating me.

The blog has been receiving a steady viewership and the walk-in counter is set to cross the 12,000 mark soon. Indicating that on an average 1,000 odd people view my blog every month. 30, persons a day. Not bad for something I started just like that!

My sincere thanks to all those who have steadily viewed and supported the blog.

This support and motivation was voiced to me by several visitors to the blog in the form of a suggestion. Why not write a book. Their contention was that given the depth and detail of Retail information and knowledge available, why not expand on the same and publish a book. It would reach more people and benefit them.

In June 2009, I started acting on this suggestion and worked on putting a book together while contacting publishers. March 2010, this dream effort is ready to see the light of the day. Just ahead of the first anniversary of this blog.

Presenting - “The Indian reTALEs”

The book should be published shortly and for now the cover and an overview can be viewed on @ unicornbooks (dot) com.

Look forward to a similar support to the book. Please do spread the word; Post on your Facebook profiles, Tweet about it, mail your contacts, etc. Please help propagate the news of “The Indian reTALEs”.

A moment of disappointed irritation

The finance minister makes mention of a sector that contributes 8% to the GDP and I expectantly looked at the TV.

Yet again Retail whose size is as big and bigger than some other industries and also contributed approximately 8% to the GDP was left out in the cold.

Starting from simple expectations about offset of service tax to mammoth ones like industry status, the wish list was long. But was ignored.

Sad.

Food Inflation @ 18%. What a joke!!

I received a SMS from my friend Vishy which reads as follows –

“Tur dal rates for one Kg as on 8 pm today (10/2/10) – Nilgiris Rs. 115/-, Spencer’s Rs. 99/-, More Rs. 79.98/-, Fresh – Rs. 88.45, Nadar Kadais – vary between 68 to 85. How can there be so much variation in a KVI like Tur Dal? Do people cross check amongst stores?”

When I spoke to him he was visiting wholesale markets in places like Gulbarga where Tur Dal was being sold for Rs. 38 per kilo. Smaller farmers who sell locally at villages might realize even less at Rs. 32 or so per Kilo. The talk in the wholesale markets was that the prices of Tur Dal had actually come down over the past few weeks. But at the retail end in an urban market, it was soaring!

First is that, this reflects rather poorly on chain stores who are supposed to aggregate volumes and therefore be able to influence the supply chain in order to create value for the consumers. This does not seem to be happening. These chains are at best sourcing from the millers. So, the question is that what or who is driving up the prices? And who is going to bring in changes and advancement of the supply chain if not Retail?

At least Tur Dal can be stored and inventories managed as a buffer to commodity price fluctuations. Now, take the case of a perishable like Tomato. A decade ago the farm gate price used to be Rs. 2 as compared to the Retail price of Rs. 8, while for Potato it used to be Rs.6.5 and Rs. 12. Nowadays, with the retail price being in the range of Rs. 20 odd, do you think there would have been a significant increase in the farm gate prices? Not at all.

Today the price of Hybrid Tomato was Rs. 18 and Potato was Rs. 23 and the sourcing price was only Rs. 3.50 and Rs.9. respectively. Again the point of whether the farmer is benefiting from the increase in prices is there. The Retail price rise is not even proportionately matched by the farm gate price. Today evening, the prices of Tomato and Potato had dropped to Rs. 16 and 11. Does the farmer get such low prices to buffer such huge price variations, by the others?

Why does this happen?

Consumer habit, dependence on the retailers and even some amount of apathy, leads consumers to overlook prices of items purchased from their regular store. Trust drives their habit and the same trust also ensures that they do not check the prices or the bill.

As a consumer, when was the last time you checked the price or the bill of some of these basic items?

P.S. – The Retail prices of tomato and potato have been averaged out across a few stores.

Is it Retailing?

Recently while travelling back to Chennai I was at the airport in Kochi and saw a large number of shops at the domestic terminal. After checking in I decided to explore these shops. What I saw and experienced was an eye opener and on a magnified scale seems to be the problem with most shopping malls.

There were approximately 50 odd shops and most of them were closed. That by itself is OK, given that it was only 7 a.m. But what completely flummoxed me was the sheer repetition and lack of differentiation. I counted 6 odd book shops and the balance were roughly equally divided between Kerala handicrafts, spices, etc. and Kerala Sarees, Apparel, etc.

When I tried finding some differentiation between these similar stores, there were hardly any. Similar or rather the same books, similar packets of banana chips, similar white sarees with designs and so on.

I wonder how these businesses are surviving.

I do not think they differentiate on price because the others would react to any attempts at discounting. Range seems similar. Service might be a differentiation, given that only a few were open so early. Maybe they have devised a staggered timing system where each group of shops opens at different times during the day.

Even then, it seems to be an enormous waste of retail space, inventory and other related investments to create similar shops in a confined environment.

The potential to offer a larger and more diverse range obviously exists. Similarly, I have seen several malls which have focused on getting occupancy instead of ensuring that the right retail mix is ensured for a lasting consumer value proposition.

An airport might still survive with such an approach to retailing with a worse case scenario of reduced income from this area of operation. Whereas a mall which does not ensure an optimum mix will lose out on the long run simply because that is the merchandise mix of a mall and needs as much attention as a Retailer needs to give to their merchandising strategy

Wake up, Wake up, Government of India

In a recent article about supply chain as also in several other forums I have been talking about how the recent price increase of food articles is hitting the consumers without benefiting the farmers and producers. What does it mean?

The long winded supply chain is possibly the key reason behind the price rise.

The constituents of this chain protect their margin without adding any value and in the light of increasing volumes, the wastage also goes up. So, who ends up paying for it? The consumer. While the poor farmer still gets his meager few rupees per kilo as farm gate prices!

Am I talking through the hat? Not really.

Way back in the late 90’s the price of onions shot up to an extent that the central government was reported to have been shaky due to it. During that period the RPG Foodworld stores sold onions at retail prices which were significantly lower. Was it sold at a loss or at lower margins? Not at all.

Smarter sourcing and better supply chain ensured that the chain was able to offer this value to consumers.

This view has been endorsed by the recent India Today, which talks about how fruit and vegetable prices can be managed and moderated by enabling Indian Retail.

Wake up, Wake up policy and legislation makers. It is time to take Indian Retail forward!

Rural Retail and it’s potential

In one of my earlier articles about supply chain in India, I pointed out how Indian Retailers seem to have a love affair with urban shoppers to the extent that I can even dare to call it a fixation. Rural markets while not so densely populated and lacking the purchasing power of urban ones, compensate through sheer numbers.

My view is that there is a huge 360 degrees opportunity in the rural areas which includes sourcing as well as selling. It is estimated that 2/3rds of the 14 Million Retail outlets are in the semi urban and rural areas. Need I say more about potential?

There is most definitely an unrealised sales potential of the rural and semi-urban markets. Recently an article in “The Hindu Business Line” strongly validated my views and shows the sheer potential of these markets if anyone is ready to venture into them.

The very interestingly written article details a village market and the links to the article and a photo feature of the same is as under.

http://www.thehindubusinessline.com/2010/01/19/stories/2010011951410800.htm"target="blank"

http://www.thehindubusinessline.com/todays-paper/tp-life/article1015100.ece

Lastly, if one were to forget these stalls as being independent and separate but look at it as a seamless part of a whole, what do you have?

Voila, a rural hypermarket!

Anyone interested in this opportunity?