Imitation is the best form of flattery

After my recent article in Business Line about the basic retail model I got a newsletter from someone claiming to be retail consultancy. Lo behold, my article rewritten nicely, thank you (!!) and forwarded to their mailing list. I checked the name of the author who is the head of that firm and the supposed author. Of course, I had sent him the link to the article 3 days before the newsletter was circulated.

One more reason why retail in India is in such shape. Imagine the plight of the clients of such guys who claim to be retail consultants!!

Cash and Carry; Is this format the dark horse to pip the post?

India is a land of traders. And also small businesses. As also eateries.

That shows that the 3 main customer groups that a cash & carry store targets exists and exists in large enough numbers. But is that enough?

Let’s examine eateries first. Most eateries serve the Indian staple of Iddly, Dosa, Chapati, Puri or Poha for breakfast and meals for lunch or dinner. These are all made fresh and offer limited scope for mass production either in a heat-&-serve or ready-to-eat manner. To some extent batter or dough for these items can be mass produced and sold. However, how much of a value add it would be vs incremental cost is a matter of debate. There exists a niche in the HoReCa segment. The large hotels and specialty restaurants might find value in certain offerings like imported food, wine, liquor, etc. Is that enough to sustain an entry strategy into a country like India? No!

Small businesses thrive on network and connections, not only for business but also for their purchases. They might perceive value in a cash & carry offering and patronize the same. However, they are not the focus from an international perspective. So, when international operators start cash & carry stores, they would not be deciding on the ranging strategy basis this segment.

Last but not the least is the great Indian trader/ retailer. Approximately 12 million of them, of which almost 2/3rd is in rural markets. India also boasts of some of the most intensive distribution systems by companies like ITC, HLL, etc. and yet almost 1/3rd of the retail outlets are not serviced by this system. They manage their supply chain through the wholesale and semi-wholesale markets depending upon their size of operations.

My guess is that these retailers would be the secret behind the success of cash & carry stores in India. Subject to the following ground level realities –

Access - The cash & carry store has to be in the outskirts to leverage lower land costs. Public transportation is not one of the strong points of most Indian cities. However, the existing wholesale markets are usually situated near the public transport hub. How can the trader come to the cash & carry store, with minimal effort and cost?

Assortment - Small semi-urban and up country traders are regular visitors to any city’s wholesale market. Their ranging would be different and predominantly include Beedies, coir ropes, etc. Would cash & carry sell beedies and coir ropes?

Price/ promotion – The wholesalers are amongst the most networked in India. They leverage trade schemes and offers across states to ensure very fast turn around of stock at minimal margins. Cash & carry stores need to be extra responsive with regards to pricing and promotions. For the trader customer, his loyalty follows the next 0.1% extra margin he might get!

Yet, in spite of these constraints, there exists a chance that Cash & Carry might end up pipping the post in the first round of corporatization of Indian retail.

Cash and Carry; What is this?

Cash and Carry is a format type which is supposed to operate in the wholesale and semi-wholesale space. The stores would be very similar to hypermarkets, except for the pricing and certain range of products. Typically benchmarked with the wholesale markets, these stores would offer competitive prices on bulk purchases as also run promotions. Typically, the smaller family run businesses like mom & pop stores, local café’s, etc., patronize these stores. The customers require a membership card to purchase which is usually given only to businesses. Of course, there are end consumer sales which are supposed to be for the personal use of such business owners/ operators.

Typically such stores focus on 3 broad types of customers.

• HoReCa – Which is an acronym for Hotels, Restaurants and Café/ Caterers /Canteens
• Traders – All the stand alone stores
• Other Business – Typically small and medium enterprises who would require things for their pantry and office supplies.
  

Internationally the HoReCa customers are the primary target audience for any cash & carry store. These stores sell a wide range of heat-&-serve as also semi cooked preparations which are picked up by the HoReCa customers for their businesses. Apart from being high margin products these create high levels of loyalty because of the differentiated range that be offered. Given the high incidence of eating out by individuals abroad, this is a very lucrative and fast turn around business segment.

With the spate of Cash & Carry plans being announced largely driven by the FDI cap in India, will this strategy work in India? Would these stores succeed where other corporate retail formats have floundered?

India Needs You

In spite of a high decibel public awareness campaign about voting, it is disheartening to see lower voter turn outs in most states. Of course, there is an increase in the young voter numbers. But the larger voter turnout among this group seems to have been canceled out by the smaller number of voters from other segments.

Why can’t we realize that voting is not optional?

Please read the complete article on - http://tickledbylife.com/index.php/india-needs-you/

Tickled by life

This is an interesting site with lots of general interest articles about motivation, life lessons, etc. I could relate to this immediately as Retail is all about people. In fact, Retail is possibly the only industry where one can have such an amount of human interface and learnings. I write for this site and would like to share it with all of you, as there are learnings everywhere if we choose to see!!

Please look up my first article about parenting and children. Is it not very similar to managing a really young work force which has very different orientations!!!

http://tickledbylife.com/index.php/growing-up-with-my-children/

It’s not different enough!

"The basic retail model is really basic and once retailers latch onto this self-sustaining cycle, the store will attract customers and sustain and succeed as each of the elements would feed off the other and also contribute to and build the other elements..... "

Please catch my latest article about creating sustainable retail stores, in 'The Hindu Business Line', at

- It's not different enough!

Would also request you to comment on the same, as also add this page to your favorites and add it to your feeds and sites like Digg and Stumble.

CRM in a Kirana's Context!

What is the service that the Kirana delivers that constitutes value? He caters to our whim and fancy; literally and figuratively. By sending even a small item to our homes, taking orders even at 9.30 p.m. and so on. And also by remembering the exams of our children, remembering to ask how your backache is, being contrite when something is not good and so on.

And what enables him to do that? CRM. Not the customer relationship management that one usually reads about. His CRM is Care, Respect and therefore the Motivation to shop with him.

There are two parts to this; His ability to recognize you and your family members, remember your shopping habits and more importantly your monthly spends. Then his brain analyses and generates business intelligence in the form of your lifetime value to him.

I used to stay alone in Bangalore for work and there was the ubiquitous Kirana near the apartment complex. I went and introduced myself and was promptly given his telephone number with a promise that I can call anytime for anything. A few days later I called for some soft drinks as I had guests. He was apologetic but could not come as his delivery boy was not there. As I was coming down in the lift, his delivery boy entered the compound with some things to deliver, obviously not for me. What had happened? He must have done his homework and determined that my lifetime value to him was not worth the trouble!


Lifetime value of a consumer - This is the intent behind most loyalty programs. But how many deliver?

Why was the sales low yesterday?

Since 1996 when the first Foodworld store opened, a regular query to the store staff would be, "Why was the sales down yesterday?"

Over the years, regardless of the format, I have heard some really interesting reasons for that question. And the fact of the matter is that, in most cases every last one of these have some element of truth. Some of the memorable ones are;

1. It started drizzling at 5.30 pm and so the customer walk ins were low (Coupled with reason 2 or 4, this becomes a bit of an oxymoron!!).
2. It was the India- Pakistan one day international sir. (Unsaid - Are u a moron to even ask?)
3. The latest Rajni film was on the cable! (Now, thats something one can't question when the city of Chennai itself appears deserted!)
4. It was the world cup finals sir! (The 'moron' comment running in the bakground again!)

Now, why this post.

With the start of IPL, especially planned to coincide with the prime time shopping, I definitely expect walk ins to drop in by as much as 25%. How will this affect the sales of Indian Corporate Retail, remains to be seen. Already there are announcements of promotions to leverage the overseas IPL. But, given the downturn, is not the IPL a great excuse to keep the family at home and save some money and yet have a great time!!!

However, the guys who would come out laughing all the way to the bank is the fast food guys as also the neighbourhood Kirana. After all, they do deliver at home when you run out of soft drinks or snacks.

Lastly... Go, Go, Chennai Super Kings!!!!