Indian Retail - Point & Counterpoint: Great ideas are a waste of time without execution focus

A few days ago I woke up to see a half page advertisement of a national Retail chain which was trying something new and interesting. They had affixed a scratch card to the advertisement and I am guessing that they were hoping that this would trigger curiosity and drive walk ins.

Sadly, the scratch card had been already scratched out and the offer was visible which completely defeated the very purpose of a scratch card. The other evident lack of execution focus was that the scratch card had been affixed upside down as you can see in the picture. (Retailer’s name has been masked)

 

 

A good idea and this is in line with the basic Retail focus of generating customer footfalls and then focusing on conversion inside the store.

However this good idea did not factor in some basic ground realities. Namely, that a scratch card which has already been defaced will have absolutely no impact on any potential customer. The other reality is that anyone will be tempted to scratch and see what is in such a card, very similar to the universal fixation of breaking the bubbles of a bubble wrap sheet.

So, another great idea which sounded fabulous when being presented seems to have fallen by the way side.

How could this great idea become very effective?

Very simple, factor in the reality that news paper agents will have access to these and if they can insert pamphlets in a paper, they can definitely scratch and see what is hidden.

Just print a random number sequence on a card which is stuck on the advertisement. This card can be shown while billing and the offer pertaining to that random number can be accessed from a data table which is uploaded in the billing software. The curiosity value is retained and the idea becomes effective.

Lastly, there could be one more perspective. In Tamil Nadu there is a ban on lottery or what is called as game of chance. This is one reason why coupons always have a slogan and then gets defined as a game of skill and not chance. (A leading ice cream brand had to withdraw a national promotion only in TN, a few years ago due to this reason). Maybe, the scratch cards were defaced deliberately. In which case why spend so much of money in making these cards and getting them fixed onto the news paper advertisement.

A distinct lack of execution focus seems to be coming through and that is a big NO, NO in Retail.

CLICK HERE to join the discussion about “Execution Focus” on my page and share your perspectives and examples.

Indian Retail - Point & Counterpoint: What is Customer Orientation?

Change has always been an issue for any Retailer and this is about the change in terms of currency. As shoppers we all tend to hand over large denomination currency and expect the Retailer to give us change. Smaller, stand alone stores handle this by giving small toffees in lieu of change and if we do not want that, it is either give the exact change or live with it!

 

Larger stores especially the chain stores cannot afford the indulgence of handing out toffees or sweets instead of change. It is expected that they give the correct change to the customer. Therefore these chains try and get adequate amount of change from a variety of sources apart from the banks that even include the groups of beggars. Read more about this in my earlier post.

 

This is both a business need which is painful as also a sensitive point with regard to customers.

 

That is the context, when I saw the following poster in a shop and I was very impressed by this initiative and also astute step. In a single stroke this Retailer has combined his business need with a shopper issue and has managed to create value all around.

• Value to the customer because they will benefit for no significant extra effort.
• Value to the business because, for no incremental cost, the Retailer is resolving an issue without having to run around for it.

 

This is what I call as a true customer orientation: a solution to a business need that clearly benefits the customer directly or indirectly.

 

So, customer orientation is not a separate, independent activity or department’s responsibility. It is about ensuring that every business activity of the Retailer delivers an end customer benefit and conversely, that also helps the business.

 

CLICK HERE to join the discussion about “Customer Orientation” on my page and share your perspectives and examples.

"Basic Retail Model" video

There is a "Basic Retail Model" which I have written about and propagate as it is relevant to any Retail business.

The model explains how to make any store successful as also will help any Retailer to develop a strong competitive advantage in a sustainable manner.

This video shows the "Basic Retail Model" being explained by me in one of the Retail Management class.

 

Indian Retail – Point & Counterpoint; The gain and pain from MRP

Once again my oft repeated grouse about which I have posted several times crops up again.

Times of India carried a news item titled “Chilled drinks drain the pocket as shops charge extra for power” and had the following chart which as part of this news report. This clearly shows how shops are selling soft drinks, juices, etc. at prices which are 10% to 25% more than MRP. Needless to say this is illegal and in February 2012 IRTC has been fined Rs. 10 Lakhs by New Delhi District Consumer Disputes Redressal Forum.

 

 

Who benefits from MRP? Or rather the key question is who follows MRP?

Today MRP has become redundant and market dynamics defines pricing at the Retail end. The fact that a majority of shops in India sell many products above MRP and get away with it is ample proof that this legislation is outdated.

The typical counterpoint to this is how consumers are protected against being overcharged because of MRP.

Is that a valid statement? Not at all.
 

As consumers we all pay what the shop keeper asks whether it is below, on par or above the MRP. This is not restricted to only shops and the same reality exists in Hotels, Restaurants, Malls, Airports, etc. The only saving grace is that many of the corporate and larger entities today source products which has “For sale in select trade channels” printed on the product. This enables them to pursue a differential pricing which is invariably above the usual MRP.

Even in the above mentioned article a shop keeper is quoted as saying “I can't possibly charge more because if I do, then customers will walk into the supermarket a few meters away and buy the product there at MRP.”

Sure, IRTC has been fined for charging more than MRP. But, how many others have been penalized for flouting the MRP rule in spite of this being an open secret. Interestingly, the Judiciary seems to have a different perspective about MRP. In 2007 The Delhi High Court passed a judgment that hotels and restaurants can charge more than the MRP. This was justified in the ruling because such places provide ambience and services to their customers. However, this does not apply to shops and retail outlets.

I wonder why?

By this same logic the “cooling charge” is not illegal as it does constitute a “service”. Anyways, the stand alone stores do charge above MRP if possible and also gets away with it. By the same logic, the self service chains also provide service and ambiance and should therefore be exempt from the MRP rule.

So, who is then left to follow this out dated MRP concept? Therefore, if every channel has a reason and logic to charge more than MRP, why have this at all?

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Picture courtesy - Times of India, Chennai edition dated 10th March 2013

Point & Counterpoint: Employment Vs Entrepreneur approach to leverage Retail opportunities

Every interaction is a give and take, even when one is teaching or training. This was validated after a recent interaction with students of a B School about Retail. A few of them came up to me and in the midst of the typical queries about FDI, future or Retail, etc., they asked me something which has actually set me thinking and the take out I got from this session.

 

They wanted to know whether the expected Retail boom had entrepreneurial possibilities similar to what happened during the IT boom.

 

Invariably I keep talking about the great employment potential and career opportunities in the Retail sector and this question has taught me to think in a whole new perspective.

 

While I answered that there are indeed entrepreneurial opportunities, I would like to share my views for comments and inputs from others simply because such opportunities definitely exist.

 

Some initial ideas which can be built upon and experimented with are;

• Partner, take over or even start a standalone store which follows the “Basic Retail Model” and will therefore offer a viable value proposition. Franchising is a good option to explore.
• Set up a consolidation business for the small vendors who typically are not covered by the existing distribution system. One recent discussion I had with a person was about trying to do something along these lines for the vegetable sellers in his village.
• As I often point out Tier II and II towns are great growth stories waiting to happen. Explore that.
• Chain stores today require many support activities and that presents a whole new world of entrepreneurial options. For example; Physical stock checks are a tedious and painful process. If a credible service to manage this is given, there might be takers.

 

The underlying theme in all these ideas is a strong focus on a sustainable and viable value proposition.

 

Lastly, thanks to this question by the student I will start to build upon inputs that will help Retail related Entrepreneurship which has a great future.

 

The point to debate is, I was asked about entrepreneurial opportunities by a few students out of my interactions with 1,000 plus students in the past year. Before talking Retail entrepreneurial ideas, should we focus on kindling and developing a basic entrepreneurial spirit?

 

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Point & Counterpoint: Protection Vs Encouragement

A few days ago when I went to a local fruit and vegetable chain store called as Kovai Pazhamudir Nilayam, it was a pleasant surprise to see a poster wherein they are attempting to leverage social media network as a marketing initiative. As you can see from this picture, it is a simple database building initiative and incentivizes the customer with a discount coupon.

 

 

 

It is interesting to see how this regional chain is adapting and innovating to create and maintain a competitive advantage. They have approximately 35 plus shops largely in and around Chennai and Coimbatore and predominantly sell fruits and vegetables. Interestingly this is a category which even the larger chains find to be very challenging to manage.

This reminded me of another chain in the pharma space; Pasumai chain of pharmacies. They operate on a franchise model and are again regional with stores largely in Tamil Nadu. They leverage the core concept of Retailing which is aggregation of volumes, thereby creating value.

I am not sure if the coincidence that both these chains are from Coimbatore is an important element given that the region is known for being home to a large number of entrepreneurs.

The larger message pertains to the fact that Indian Retail chains and also stand-alone shop owners have it in them to keep pace and be competitive while also evolving to keep pace with times. Why can’t this spirit of initiative and competiveness be encouraged and enabled by well thought out policies and assistance?

Is it better to assume that these shop owners are an incompetent lot that requires protection from the big ‘bad’ international Retailers or it is more practical and viable to create an enabling environment for these businesses to develop and grow?

In that context I wonder what would have happened if our small and medium manufacturers had been enabled and encouraged to compete on a global scale. Would they have given China a run for their money?

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Point & Counterpoint: Experience vs Convenience

An interesting debate has been going on about the future of physical things in the face of so many virtual options. What will happen to paper books with the wave of eBooks, especially when one of the leading newspapers abroad recently claimed that their online readership has overtaken the print for the first time in their history.

 

Related to that has been the physical stores Vs Online shopping debate.

 

In my mind it boils down to experience Vs convenience. Will there be a time when customers will completely forgo experience in favour of convenience? Many online shopping fans have been espousing this and they look forward to the same. However, given human nature I somehow don’t think that the appeal of physical experience can ever die down and therefore physical stores will not disappear.

 

The question then arises whether this might happen for a particular category or a particular format? Will any specific space in retail become go completely online and the physical ones disappear?

 

I hope not and recently read an article which validates my view by reporting how online retailers are now seeking physical space by opening brick & mortar stores or at least connect point. Experience might prevail over convenience after all.

 

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Point & Counterpoint: Jugaad is a great competitive advantage

Jugaad; an essentially Indian word which stands for the ability to work out an out of the box solution for problems. The solution may be permanent or not, but it does work as a quick fix and definitely helps makes life easier.

 

Recently when I had been to a newly developing part of Chennai for some classes I saw this very interesting sight; heavy duty electrical cables joined together in an impromptu manner and then capped with cut off pieces of water bottles.

An interesting and amazing Jugaad!

 

Sure, this is not very safe and neither is this long lasting but it provides an interim solution and keeps things working. More importantly it does serve the intended functional purpose.

 

Click here to read a wonderful Retail perspective to Jugaad and join the discussion about whether this will continue to be their core competitive advantage and also be sustainable.

 

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