Dear Raghu, RIP.

Mr. Raghu Pillai, one of the founding fathers of Indian Corporate Retail, was a great leader and an outstanding human being. In the years of my association with him, I have seen him help, counsel, mentor so many people including myself that it is almost impossible to keep count.

To say that he was a simple and a very nice person is so inadequate when one remembers him and recalls the many instances of interactions with him. Outside his apartment complex today where many cars were parked and several drivers were gathered talking together, I heard one of them remark “He was such a good person at heart” and everyone else agreed wholeheartedly. A senior industry captain to have touched the lives of people from every economic background and be remembered as such is not something one gets to see or hear often.

Indian Corporate Retail, nay, Indian industry itself has today lost a true and natural leader who knew every facet of business inside out. His views and comments were based on sound basics learnt literally and figuratively at the shop floor. His genuine care and concern for his team was something to be experienced in order to understand the depth of this loss. He always set a wonderful example for others to emulate.

These few words are so small to try and capture the essence of the person that Raghu was and his myriad achievements. May his soul rest in peace.

Loyalty Cards; The new toy!

I went to a supermarket a few days ago and was informed by a staff member that they have launched a loyalty card. Later while billing, the cashier thrust an envelope at me and said that it is a loyalty card and I can become a member. I politely declined and after another half hearted suggestion to enroll in the loyalty program the cashier gave up.

The following thoughts ran through my mind in a flash –  

• The typical cost of any loyalty program averages at 3% of sales. So, this supermarket chain is now going to incur an additional cost and that is going to put pressure on its other operational parameters. 
• Any event or activity that is to be implemented in Retail needs simplicity and clear cut directions to the store staff. The impression I got was one of a standard briefing email about the new loyalty program and a courier with all the application packs. That could be a key reason why the cashier was not able to highlight the benefits and make me interested in the loyalty card. If the store staff are not sold about a program, how can they sell it to the customer?
• There are a few more supermarkets on the same road and a few of them also have loyalty cards. As a customer if I do not get what I want in shop A, I will go to shop B without being bothered about the loyalty card. Here lies the issue with regard to Indian Retail. When availability of many products is still a common problem faced by supermarket customers, why should the business waste time, effort and money to run a loyalty program. Customer loyalty can be gained by simply addressing the stock out issues, as a first step! The usual argument to justify such loyalty cards is the possibility of targeted data and therefore better decision making. Frankly, this is a myth. Indian Retail can generate enough data from the POS sales to manage adequate stocks. In fact, the reality is that the POS data itself might have an accuracy of anywhere upwards of 65% to 70%. So, how does data from one more source help?

I have faced many situations when someone suggests that we should run a loyalty program and I have some very strong views about it.

Loyalty programs per se are not bad or wrong. It is like a sharp instrument. In the hands of a doctor the instrument saves a life and in the hands of a murderer it takes a life. Similarly, if loyalty programs are run without adequate thought, preparation, briefing and very good execution, it will only take the life of that Retail business. The funny thing is that most enabling businesses like the loyalty program implementer, card supplier, etc. will all strongly endorse loyalty programs because it ensures revenue. Whereas the Retailer who gets influenced and implements the program will spend and spend, while a long wait awaits them to realize the fruits of such an initiative, if at all there are any.

There is a common saying about easy ways to lose money. It is said that the two easiest ways are to get into gambling or get into Retail without knowing Retailing. A faster and surefire way to lose money is to start a loyalty program as if it were a new toy and play with it!

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.

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.

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!

Why transactions are at the heart of all our living

The Retail Plus team wanted me to write on an interesting theme. All about transactions and how they are at the heart of all our living. The more I thought about the topic, the more fascinating it was. At the end, I was constrained by the word count and could only capture the essence of what I thought.

Transactions start at the moment we neogiate with our parents for something we desire and promise all kinds of goodness and saintly behavior in return. It goes on to the more common and recognizable retail transactions we indulge quite often.

The fact of the matter is that transactions can happen only when both parties have something perceived to be of value by the other. Is it any wonder that Retail in India has taken wings only as recently as two decades ago. After all if someone had to book a scooter and wait for a year or so, how many people will be able to have such transactions.

Please click on the link below to read why transactions are at the heart of everything.

Why transactions are at the heart of all our living

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.

Who is managing the store!

Over the past few weeks or rather months I have been noticing a dangerous trend in the supermarket chains I tend to go to. Barring one as an exception the store manager/ in-charge seems to be missing in action.

Either he or she is nowhere in the store and my guess is that in most instances they have been called for some meeting at the office. Such a meeting would debate at length on why sales are dropping and what can be done to increase the same.

In a few cases the manager emerged from the store back office in response to a request by some cashier to unblock the billing machine. This is a safety or rather security need wherein in certain cases like changing the prices of products, an authorization code is required for the cashier to continue billing.

After unblocking the machine the manager glares at the cashier and customers alike and retreats into his office again, to do God knows what. If I were to be charitable I would presume that he is compiling piles of reports that someone in the office has asked for, which will all finally end up as a bullet point on a presentation.

Why is this dangerous? Simply because others will follow as they are being led.

I have often stated how the staff are the face of the Retailer and they define the interactions which make or break shopper loyalty and hence the viability of the store. If the staff see their store in-charge being more internally focused in terms of primarily pleasing their bosses, having none or very little time for customers, wont they emulate the same?

There is a ritual called store walk which ensures that the store in-charge takes stock of things literally and figuratively. If not done, it is a guarantee that the store will go down the drain in terms of hygiene, display, etc.

Lastly, the staff are on their feet almost through the eight hour shift. Being on the floor with them, guiding them and motivating them is the best form of leadership and is guaranteed to have positive results.

Instead of this routine, which is core to Retailing I hardly see the store in charge interacting with either customers or the staff.

Maybe the change should start with the bosses. They need to leave the conference rooms and be at the store more often. While at the store, have stand up meetings if required.

However, the best bet would be to talk with the staff and customers and they will get millions of ideas to improve sales. More importantly, such ideas will work!

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”.

Retail = Fast reflexes and foresight

I appreciated this Retailer who has reacted by leveraging the budget. Although they do not lose anything because the stocks would have been invoiced at existing prices, this preemptive strike is very good for the following reasons –

• Customer trust and loyalty: Customers would increasingly trust this Retailer because they demonstrate responsiveness. A key factor in building loyalty.
• An opportunity to increase sales and liquidate stocks: Especially in a format where stock holding value is high and any opportunity to sell is welcome.
• Vendor respect: Such a Retailer would stand tall in the eyes of the vendors who would then increasingly cooperate instead of having conflicts.

All in all, a smart move and well worth emulating.

Now, advertising is not a simple business. One needs to have the artwork ready, media space booked, the material sent in advance and so on. So, how did this Retailer react in less than 24 hours?

Simple. It’s all about Foresight.

Book media space. Give a material. Meanwhile have two artworks ready. One talking about how the prices are reduced from today (If the budget led to price drop) and another about holding the old prices in the case of price increase. The budget speech ended post lunch yesterday. An hour or so to decide and send a new artwork to the publications.

Sounds simple isn’t it? It is. But involves a lot of planning and thinking and hard work. That’s Retail Marketing for you.

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?

An idea whose time has come?

On the 4th of Jan 2010, I got up to face the first working day of the year and decade. After a nice vacation with the family the obvious tinges of blues in the air while I was wading through the news paper. I turned the pages and suddenly my brain went into overdrive and all thoughts of blues or greens vanished when I saw the cartoon as shown below.

I saw this interesting cartoon in “The Hindu” and was struck by how wonderfully the cartoonist has captured the essence of an article of mine “Mobile and Different” which was published last year in May ’09.

- Mobile and Different

Either the cartoonist has read the article and the thought was powerful enough to inspire this cartoon or he has seen and heard of expectations and indications from consumers and vegetable cart sellers and feels that the trends indicate such developments.

Either way, looks like the idea mentioned by me in 2009 is interesting and might even see the light of the day as its time seems to be coming, if not having come!

Cartoon courtesy: The Hindu dated 4th January 2010

2010; Here we come!

Phew, 2009 is almost through and what a year it has been. I am sure everyone would be looking forward to 2010 with a lot of hope and wishes for positive things to happen and hear about.

Although personally 2009 was not too bad and is the year which saw the start of “An Indian and A Retailer” as also its rapid acceptance and widespread popularity as seen from the 10K plus walkins in less than a year. Thanks to all of you for that.

2010 is awaited and everyone might have a wish list or two. May as many wishes as possible come true for everyone. The coming year is expected to be a milestone in terms of how economies manage the recovery, how companies leverage opportunities that are sure to emerge in the recovery phase. Indian Retail is also expected to have an exciting journey and a few things that I expect to happen are –

• Consolidation - either by collaboration or purchase. There is not enough of aggregation of volumes for a true retail play and this might change with either collaboration in the back end or simple M&A.
• Coming of age of the conventional outlets: The humble Kirana proved that their business model is not only sustainable but also recession proof and robust. With increasing awareness and education I am sure that this hardy tribe would leverage their business model to become better and more competitive.
• Beyond ERP: Post the scramble to implement the big bucks ERP everyone was struggling to get it right and in no mood to look at any other IT initiative. A whole host of tactical and strategic IT solutions exists and now is the time for Retailers to start exploring and exploiting such solutions.
• GST? I am not brave enough to predict that GST would come in and change the way trade happens in India. But, I definitely hope that this happens soon and in 2010 itself. As also, I wish that the government starts recognizing Retail as an important industry segment and accords it due recognition and support.

Will sign off 2009 with my Best Wishes to all of you for a Very Happy New Year and hope that all your wishes and plans come true.

What an idea!

Sometime ago while I was browsing in a supermarket I noticed a person checking out products on the shelves and then fiddling with his mobile phone with a stylus. He would again check out something on the shelf and shift his attention back to his mobile. At first I thought he is one of ‘those’, people who are chronically addicted to their mobiles. Having seen increasing instances of such mobile centric behavior, I have a strong thought that human evolution might lead to ears with Bluetooth like capabilities and fingers which are more like the stylus.

Anyways.

Coming back to the story, I realized that the person was actually noting down something from the shelves. I could think of only two possibilities; one being that he was checking the stocks or he was checking the prices and was from a competing store.

(Please overlook the poor quality of the picture as it was taken with my mobile in indoor lighting)

My curiosity was piqued and I approached him to enquire. He was indeed taking stock and also taking down the requirements for each of the SKUs as he was the distributor’s representative. Being very impressed by this use of technology I requested a picture of his devise, which is what one can see here.

It is indeed heartening to see the slow intrusion of such technology into Indian Retail which has typically chosen man power options in the technology vs. people cost benefit analysis.

This person visits the stores, checks the stocks and captures the requirements, goes back to office and updates everything by plugging his phone to a computer. Technically he need not even go to the office and can do this from anywhere by sending it over a call or as a message.

This is just a representative use of technology in retail which is today affordable and helps increase efficiency and productivity. More importantly, the accuracy increases vastly in a context where data accuracy was guestimated to be anywhere from 60% to 80%.

Of course there are myriad such things which can bring about significant operating changes and shall detail a few in the coming posts.

Lastly one should remember why adopting such technologies is considered difficult in the Indian context. It is simply a matter of cost.

Quite a few number of years ago when a new store was being planned, the debate was about having a hand held, radio frequency based device to manage stock receiving, inventory checking, etc. versus having it done manually. Needless to say the manual way won out because the other option costed some 3 or 4 times that of doing it manually. With technology costs coming down (take the case of Netbooks) Indian Retail might find the time right to explore some interesting technological options in several functional areas. However, the fact of the matter is that a device that appears affordable at USD 1,000, might trigger second thoughts because; at INR 45,000 for a 3,000 sq. ft. store, it is Rs. 15 per sq. ft. and the meter starts ticking if multiple such devices are required to make it effective.

Bucking the trend

Customers in Chennai look forward to the annual year end sale extravaganza unleashed by almost every consumer durable retailer. So it was a pleasant surprise to see these advertisements by a consumer durable retailer who is trying to break this pattern while attempting to grab a larger share of consumer spends by changing the rules of the game. After all Retail is all about breaking shopping habits and gaining through this disruption of established consumer behavior.

In fact the story behind the year end sales itself has its genesis in similar intent; that of wanting to break established consumer behavior and gaining in that process.

December 15th to January 15th is a period called Margazhi in the Tamil calendar and this is somewhat similar to the shradh period observed in Northern Indian. Margazhi is supposed to be a month dedicated to devotion and prayer. Marriages are not conducted during this period and usually any materialistic activity like big ticket purchases is avoided in this month.

Although the idea and intent of this belief was steeped in tradition, religion and culture, it did hurt the Retailers of big ticket items rather badly. Lack of marriage led purchases coupled with people not making even routine purchases for their home led to very sharp decline in sales and usually left the Retailer and manufacturers with large inventory levels at the end of the year.

One innovative Retailer decided to buck this trend and started the concept of year end “Cost Price Sale”. The USP of this activity was very simple and of great interest to consumers. The initial few years saw this sale being conducted on the 30th and 31st of December and the 1st of January. Advertisements and adequate publicity created enough consumer craze and even mild hysteria to get the best deals. All the previous conditioning of Margazhi went out of the window and one could see hordes of people thronging the outlets. It went to such an extent that the Retailer had to take separate premises to conduct this sale in order to manage the crowds.

Like all good things, imitation followed and soon every consumer durable Retailer started having the year end sale in some form or the other. Typically this craze kicks off from the 25th of December and goes on till the 1st or 2nd of January.

I guess the Retailer whose advertisement I have shown above has decided to rewrite the rules of the game by advancing this sale by a whole month.

It might work well enough for the Retailer this year, but whether this is sustainable is doubtful because of the following reasons;

This year Diwali was very early and so November did not see very heavy expenditures by consumers. This is not the case in most years wherein Diwali and its associated expenses is during November and hence shoppers would need at least a month plus to recover.

What started off as a single Retailers innovative gambit has now become a market occurrence and consumers play the cherry picking game by visiting every retailer and comparing prices. In that context would customers blindly trust that they are getting the best deals and make purchases without the reassurance of comparison? I doubt it.

Anyways, let’s wait and see how this pans out and whether a new trend is established.

Making a mountain out of a molehill

The “Global Retail Theft Barometer 2009” report has led a flurry of news reports and yet another opportunity for India bashing. Headlines like “Nation of shoplifters?”, “Indians are world’s best at shoplifting” make for attention grabbing news while the more balanced publications still did succumb to headlines like “India No. 1 in Retail theft”, “India tops list of shoplifting nations”, etc.

This is a classic example of misunderstanding or maybe even misrepresenting facts to create a distorted perspective. In that context, let us do a reality check by examining certain facts without colouring them in any way.

First is the study itself. This is based on a confidential survey of only 1069 Retailers, although 4,200 large retailers were supposedly contacted. Which means that 75% of those contacted did not reply or participate in the study. I wonder why?

I have tried to see what kind of a questionnaire was used and am unable to access a copy online. So, will limit my view to the simple fact that one cannot, I repeat, one cannot effectively measure theft. At best it is an opinion expressed. What a Retailer can measure in the difference between physical and system stock. How can this be segmented with precise percentages between theft and other reasons.

There are various components of shrinkage. Wrong receipts, Wrong billing, Inaccurate stock audits, Unaccounted breakage/ damages and of course willful theft in transit or by store staff or customers. Any retailer can first of all only measure the overall shrinkage and even that is a guesstimate in the case of many operators. To expect them to be able to measure the component of shoplifting is incredibly hilarious. I just loved the decimals in the figure of 45.2% of shoplifting and 23.3% employee theft! It does create an aura of absolute accuracy.

So, it means that the entire range of system and process related issues are responsible for only 31.5% (Note the decimal point!) of the shrinkage. Having been in the industry for so long this is incredibly unbelievable. Most Retailers would state that their fill rates hover between 70% to 85%. In a context where system inefficiencies cannot ensure optimum stocking, to state that the contribution of system/ process errors is far lower than theft is at best wishful thinking.

Only the shrinkage figure of 3.2% has some validity because it is objective and is based on reality. In fact even that is suspect in the case of certain operators who do not have a robust stock audit system in place.

Let’s retain some objectivity when reviewing such reports and not get carried away by fancy headlines and provocative reporting.