Buying Sales, Hundred million at a time!

“Buying Sales” is not necessarily a bad thing unless one does it without having a clear idea about why it is being done. So, what is buying sale?

It is a term used to define very deep discounts and/ or killer deals which will by default lead to very high sales which usually also results in a loss of margins. In effect the Retailer then spends a lot of money to generate that sales, hence the term; “Buying Sales”.

This approach will obviously require deep pockets and unless there is a clear agenda for the same, it ends up as being a waste since it is not easily sustainable.

The recent hype about a eTailer’s one day sale and the resultant deluge of shopper angst coupled with the statements by the eTailer expressing happiness and satisfaction from this promotion makes me wonder about the contradiction. What was the reason and logic for this activity? Were they “Buying Sales” and if so, was it done with an objective?

These questions and also what can be the expected impact of this on eTailing and the other players have been captured in an article published in ET Retail. Click here to read the full article.

Picture Courtesy - www.gpxgroup.com

Joining the bandwagon

A few days ago I was quite surprised to see this advertisements for a fairly well known silk saree shop which has several outlets in the city. End Of Season Sale (EOSS) is by now a familiar sight in the Indian Retailscape with lifestyle stores screaming offers of up to 50% or even 70% Off.

This seems to be actually a new trend and is worth watching out for – Start Of Season Sale (SOSS) or is it a sign of desperation and this actually means Save Our Store Sales (SOSS)!

Some key elements which are worth debating about;

• The festival season kicks off with Navratri/ Dushera and extends all the way till Diwali. This is the time for large spikes in sales, especially in the apparel segment and silk sarees would definitely qualify. Why should the Retailer have such aggressive Buy One Get One Free offers along with some very steep discounts also.
• If the intent is to clear stocks, then their pitch of updated collection is misleading and is actually bound to create a negative impact in the shopper’s mind set if that is not true. This category is very high on the impact of word of mouth and such misleading information will soon spread the negative message.
• If the range is indeed updated and has new designs for the festive season, why this aggressive offer? This segment sells based more on design, colour, quality and service. In that context, why is the Retailer making it into a mass merchandise?

Too often nowadays I find Retailers who opt for the easy way out of “Buying Sales”. This means that they have offers and promotions which have no long term or even medium strategy and usually the only objective is to increase sales with no perspective about the cost of getting such sales. Which is why I have used the terms “Save Our Store Sales” (SOSS). Such offers invariably lead to conditioning the customers to start waiting out the Retailer till they offer such promotions and very soon the Retailer is forced to make this into a regular occurrence.

On the other hand, this might be a very canny Retailer who is starting off a new trend of Start of Season Sales and will try to capture a larger share of the customers festival spends in this category. However, even in such a situation the long term impact is not very positive and it is bound to become a compulsive habit not only for that Retailer but for that segment as a whole.

Apart from the EOSS trend there are two examples to validate the fact that these trends can very soon lead to a repetitive habit forming pattern. The first is the year end sale in the CDIT stores which was started by a Chennai based Retailer to beat the low sales during that period and is now a annual occurrence across this segment. The other is the “Aadi Sale” which has a similar background and now has become a default annual affair. Although these occasions are now used to clear old models and excess stocks, am not sure whether this pattern of having some sort of sales for almost half the year is a healthy trend.

Industry status for Retail in India might now be considered

In June  2014 I had penned “A Retailer’s wish list to Shri Modi” which was published in ET Retail. Within a span of 100 days I got an update about one of the points highlighted in the wish list.

The Deputy Secretary of the Ministry of Consumer affairs, Food and Public Distribution has written to The Secretary, Department of Industrial Policy and Promotion requesting that the proposal of according industry status to retail be discussed and further necessary action to be taken if found to be suitable.

This letter was copied to The Hon'ble Prime Minister of India and myself.

The key highlights of why industry status would be of great help is as follows –

• Would help classify Retail and define different guidelines for the various segments.
• Streamline the licensing and other regulatory systems into a single window.
• Help to enable national platforms like a national registry of products which will make the introduction of computerized billing easier.
• Enable skill and vocational training and employment generation
• Ease of financing as guidelines which are specific to Retail can be notified.

Plus, there are many more game changing implications. I do hope that this Retailer's wish comes true.

I am very impressed and needless to say thrilled to have received this letter copy. Kudos to the Prime Minister and his team for reading and responding to this Retailer.

Click here to read the wish list

Indian Retail & Social Media

When the whole world is going gaga about social media and now people are starting to talk about the possible decline of the same, Indian Retail seems to be watching this trend from the sidelines with some token presence here and there.

Big Data, the next big thing in Analytics has caught everyone’s attention but the root of this lies in being able to connect the dots across various data points of a consumer, especially their behavior and preferences expressed on social media. I wonder how Indian Retail will leverage big data without any meaningful engagement of the shoppers on the various social media platforms.

A recent initiative by a toy store chain led me examine this issue and ET Retail has published a two part article about this. 

Click here to read Part 1 which examines this in detail.

Click here to read Part 2 which is prescriptive and outlines some of the basic steps that are required to engage the shoppers on social media platforms.

In summary, the core thought is that social media needs to become an integral part of the Retailer’s strategy and cannot be limited to SEO efforts only.

Image courtesy - slashgear.com 

Online 3D printing store... What next!!

Several months ago, when exploring future trends about Retail and shopper behavior, a convergence of technologies like 3D printing and Google glass presented a huge opportunity which might redefine the way shopping was done. In a post I had talked about how this might redefine shopping and Retail as we know it today.

It is heartening to see that this prediction seems to be coming true. Amazon.com launches an online 3D printing store. Next step I look forward to is the integration of technology like Google glass to this trend. Click here to check out this new 3D store.

A Retailer's wish list to Mr. Modi

In the din created by the argument and debate about FDI in multi brand Retail, several key issues about Indian Retail is falling between the tables. The fact is that the largest constituent of this sector; the 12 to 14 million stand alone stores cannot be ignored in any policy decision.

However, these hardy, smart and extremely resourceful businessmen do not need pseudo protectionism but a whole series of policy initiatives which will empower them to grow and succeed.

Having been a part of the Indian retail story I have put down a list of things which would benefit the various constituents of the Indian Retail sector. The first in this wish list is granting of industry status for Retail and a whole set of policy directives built around the industry status.

Click here to read the complete “Retailer’s wish list to Mr. Modi”.

Ingenuity of the small shop keeper

Sometime ago I had written about the app developed by Neiman Marcus and how they had rolled it out under the umbrella of NM Service which offers a personalized shopping experience. They then discarded that by giving their store staff iPhones to be able to connect with the customers. It must have cost them quite a bit to go through that learning curve.

My admiration for the small, stand alone shop keepers in India went up another notch when I read this article about how one of them has started to leverage WhatsApp for better customer connect and service. Although several Retailers and shop owners have populated facebook and some are even active on Twitter, the use of WhatsApp to be able to connect in real time and provide immediate service is a great idea.

I am sure that many more such store owners will soon adopt this idea. This flexibility and nimble footed response to customers is just one of the things that chain Retailers need to learn. The other interesting lesson is the ability to adopt low cost or even zero cost resources to improve their businesses.

Such a cost sensitive thinking towards effective solutions will go a long way in ensuring success, especially in retail which is a low margin business.

Learn to let GO...

In the late 80’s and through the 90’s when the Indian economy was growing, a common issue cropped up with many business houses which had been family run and managed. Most management experts gave almost similar kind of advice to all these family business. Let go of control, bring in professionals, hold them accountable but give them the freedom to operate and actually deliver results.

Many business families acted on this advice and reaped big benefits. There are also examples of families who did not want to let go and they have suffered for this.

This piece of input; Letting go, is most visible in Retail across every function and level. A store manager who breathes down the neck of the store staff will never have a great store. Similarly a merchandising head who tries to micro manage every decision being taken about the purchase or placement of every SKU will end up with chaos.

This aspect of letting go is very well described in the book “Gung Ho” by Ken Blanchard and Sheldon Bowles. The book talks about “The way of the beaver” using that animal as an example for the fact that the player needs to be in charge of achieving a goal while having the broad boundaries and the rules being clearly defined.

I would share the same thought to the players in the Indian political landscape on this day of a historic mandate.

For the incumbent party who has been swept in with a massive mandate:  Let go of control, and Mr. Modi who is the professional in this context should be held accountable but be given complete freedom to deliver results. The massive mandate itself is proof that letting go works   and would have been difficult or even impossible if the person in charge had not been given the freedom to be in charge of achieving this goal.

For the party which has suffered a most depressing defeat:  Wake up and let go. The organization is more important than the family. Get professionals involved instead of old timers and loyalists. Most importantly hold the professionals accountable but give them complete freedom.

Interestingly there are still many family-run organizations in India and also in various other countries who will do well to heed these inputs and learn to let go. Not only that, everyone needs to learn how to let go in order to be successful.