Retail In India

Nuances of Luxury Retail In India

2011-11-24T17:58:00.000+05:30

I have been researching the luxury market in India and havecome across very interesting facts, trivia and the like, sometimes what wouldappear hyperbole……but that’s what luxury has been in India. For instance, itwas interesting to find out that during the great depression of 1930s. many aEuropean fashion houses stayed afloat because of their Indian patrons…who elsebut the Maharajas…..interesting commissions like a diamond necklace which had adiamond the size of a golf ball , a bed which had statues of four naked womenas the 4 posts. And all this in late 1800s or early 1900s.

Having said that luxury has evolved noticeably since then.Now we have what is commonly known as the ‘massification’ of luxury. So, itsnot limited to a rich few but has truly spread out. Culturally, India isattuned to luxury in ways very different than the west. We have always worn custommade clothes and we have bought gold jewellery on weddings (and every otheroccasion if possible!). Talk of couture and fine jewellery.

And now with the burgeoning middle class and global connectivity,we want more of those brands …..more so given that in the North of the country(Read ‘Delhi’) brands and labels are a part of a person’s identity. So, luxuryretailers of the world, bring it on!!!

Cooperative Buying in Retail

2011-08-10T14:45:00.000+05:30

Cooperative Buying – The Mechanics

A buying cooperative is a group of people or organizations that come together for each person or group's mutual benefit. A cooperative buying model allows a group of buyers with a common interest to pool their buying power in order to negotiate more favorable pricing on goods and services. Cooperatives—also known as group buying organizations or buying consortia—are set up to aggregate buying volume from many different companies and increase the buying power from each individual.

According to the National Cooperative Business Association (NCBA – An Amercian association), there are about 250 buying cooperatives in the U.S. offering group buying services.

Cooperatives are owned by members and are democratically structured. The important characteristics of a cooperative are:

Voluntary and Open Membership
Autonomy and Independence
Objective is to benefit everyone and , in fact, run it like a business. The profit is shared among the member/owners.
The only owners are the members of the co-op.

Some of the benefits that accrue to a member firm are :

Thus, cooperative buying can be an important element of any organization’s procurement strategy because it allows member organizations to aggregate volume of specific commodities, and in doing so, achieve bettering than they could have on their own.

Retail Brand Extensions

2011-07-29T18:17:00.000+05:30

Brand Extensions has always been a very dynamic concept and theoretically there have been line extensions and product extensions.

So how far can you extend? Virgin is a case in sight where the Virgin brand is extensions into many diverse categories, some successful, others not so much.

Brings to my mind when Neiman Marcus extended the NM brand to Galleries by NM - a smaller, jewelry focused format. Think they had 3 stores going but this extension didn't quite work for them. From competing with Saks 5th Avenue their competition for this format changed to Tiffany. They did decently on the organization structure for this format, but perhaps they could never get past the fact that large stores were destination stores but a medium sized store couldn't do that.

There must have been multiple reasons, so I will revisit with more dope on Neiman Marcus and brand extensions.....

Ciao!

Indian cafes' : Atmospherics vs. Product Quality

2011-07-28T11:14:00.005+05:30

Coffee business in India is not as new as it appears to be. Coffee came to India in 1800s or so. In its current 'new and improved' cafe' avatar though, coffee business is a symbol of cultural changes in India.

Conceptually, sit down cafes are just what would work in India - what with people looking at meeting friends ad acquaintances outside of homes ...and not all of India can go to 5 star hotels. So, cafes' it is. Implicit here that coffee 'to go', 'on the go'. 'take away' doesn't seem to find many takers in India - what with large part of India having detailed breakfasts at home, and if you are down south then there is 'filter coffee' available outside at your lane at Rs 5 !!

That said, the customer who goes to the cafes spends upwards of 1/2 an hour there. What it means is he is looking at more 'eats'. Also, to this customer, it doesn't seem to be important whether there is 'circulation space', 'comfortable seating' etc. (Now that explains, the upright wooden chairs at Barista and 1 1/2 half feet aisles at Cafe Coffee Day. (Why am I thinking of having read that 'Indian customers enjoy the jostling').

Anyway, so the atmospherics don't seem to be very important. But most people feel that the taste and temperature of coffee are important. More about my study on atmospherics vs product quality in Indian cafes at another juncture.

Keep coming back.

The Irony of Luxury Retail In India

2011-07-01T18:18:00.003+05:30

I have begun some work on luxury retail in India and am still astounded at the opportunity....I mean even in these times.....with a phenomenal food inflation, apparel retailers under tax pressure et al. While there might be a different opinion if this was looked ta a micro level, there is no denying that largely the opportunity in luxury in India is still unexploited.a survey conducted by AT Kearney (‘Luxury In India -A CII-AT Kearney Report,2010) estimates that the Indian luxury market is worth $377 million and is likely to grow at an annual rate of 28% in the next three years And this opportunity extends beyond the top of the pyramid.

Take jewellery for instance...of paramount importance in Indian families - even in the lower middle class. Precious gems and jewellery are a part and parcel of Indian traditions and customs. `According to a report by NCAER (How India Earns,Spends and Saves, 2008)gold has traditionally been valued in India as a savings-and investment vehicle and even today, continues to be the second most popular instrument after bank deposits.It goes on to say that 16% of the total investment made by an Indian household is in jewellery.And when we say this we include the great Indian middle class.

In a very ironic manner, its the saving culture of India that boosts the spend on luxury (jewellery to be specific). While I research these cultural aspects, will keep you posted on the various cultural aspects of luxury buying behaviour in India.

Indian Retail's Catch 22 -pushing up real estate prices

2010-10-08T14:30:00.006+05:30

Enough retail space in India and yet the real estate prices are shooting up. And then the prohibitive real estate makes the margin pressed industry squeeze margins further - not good for the customer. (http://tinyurl.com/2eby7sz)

Models for Retail - Strategy and Execution

2010-09-17T14:47:00.002+05:30

I had designed a partnering model with Rajeev while I was at Milagrow with the objective of consulting with Small and Medium sized retailers - mostly for projects involving scaling up their businesses.
http://www.milagrow.in/b-solutions/industry-specific-practices/milagrow-retail-practice

However, on a new look I am trying to reexamine and figure if more value can be added to a retail business by tweaking this model somehow. So, this is work in progress, come back for more.

India Challenges The Best !

2010-08-16T19:06:00.003+05:30

Credit and Home Delivery - something that Walmart does only in India. There would be many other similar services, am trying to think of some..... In any case, the challenges that India poses have befuddled the very best. Read on.....http://www.business-standard.com/india/news/it-happens-only-in-india/404665/

Bharti Walmart

2010-04-14T12:19:00.002+05:30

Scott Price, CEO, Walmart Asia is in India. His interview in the Economic Times today's was reticent, and yet full of hope. I am tempted to believe him, see if you are...
http://economictimes.indiatimes.com/opinion/interviews/India-can-be-the-worlds-food-basket-Scott-Price-CEO-Wal-Mart-Asia/articleshow/5799274.cms

Category Killers (Spurt in Sports)

2010-04-05T11:39:00.004+05:30

We are seeing a spurt in category killers in India now. I believe that next year when I teach retail fundamentals at B Schools, I wouldn't have to say that the category killer format isn't really pervasive in India.

At the moment, in the sports category there is action in Bangalore. So there is SPORTXS ( Forum Mall, Whitefield, Bangalore) and Decathlon (Sarjapura, Bangalore). Both worth a watch.

Profitable Expansion It Is !

2010-04-01T20:29:00.002+05:30

A new year has dawned.....or so it seems. I, of course, have woken up from my slumber as far the blog is concerned. Have been active in retail, but haven't got down to writing in sometime. So the new year (ok, so it is the 'financial year'....well 'new' anyway)

Today, I hear reverberation of store on store profitability from two major retailers in India.
So Aditya Birla group says, any store that is not making money by the next fiscal would be shut down.

(http://economictimes.indiatimes.com/articleshow/5748697.cms)

And ITC Lifestyle is looking at expansion in tier 2 and 3 cities and profitable expansion at that!

(http://www.thehindubusinessline.com/catalyst/2010/04/01/stories/2010040150080300.htm)

There is a difference also....while Aditya Birla is shutting down stores in tier 2 cities, ITC is looking at expanding there. The former believes that deep discounting has happened in the smaller cities and these markets are becoming difficult for the retailers (read 'organised retailers').

Just today, had a discussion in office about the tremendous non-mall and non-modern format retail opportunity in India. All suppliers/ vendors listening?

Long time....

2008-09-17T12:45:00.002+05:30

February to September...indeed a long time.....I have been busy setting up a new recruitment firm. Now that it is up and running, I am touching back on retail a bit. For some time now I have been looking at writing a book on retail - in the Indian context, mainly retail operations. I do have an outline ready , just have to get down to it.

I have lately been taking up a module on Facility Management - couldnt really find a good Indian book for the same. Also, being September , now again many B Schools are coming back to me about content development across modules in retail. Maybe , I will be able to spend more time on knowledge work, as Ajay (http://www.linkedin.com/profile?viewProfile=&key=6957913&fromSearch=0&sik=1221285088344&split_page=1&rd=in&authToken=kEkq&authType=NAME_SEARCH&goback=%2Esrp_1_1221285088344_in) was mentioning today - add some value and feel good job.

So long!

Mall Management In India

2008-02-18T09:43:00.003+05:30

I haven't written in some time, though I have been working on mall Management Modules for a couple of B Schools. Simultaneously, I have also been thinking about Franchising vis a vis Joint ventures as against FDI entry in retail in India. More on that later. For now, what we have all been noticing is that malls are moving quickly from selling most of their space to leasing all of their space to retailers. And they are increasingly also Zoning the malls in great detail in order to ensure space productivity.

Largely, mall management which has been sketchy as a function so far in India(and has been confused with facility management) is now beginning to be looked at as as a revenue generating function rather than as a support function. That itself give sit the importance it deserves. However, to make it a revenue generator, mall management has to be looked at from the following 2 key elements as strategic initiatives:

Mall Positioning
Zoning

Positioning to mean that the product categories and prices included are aligned with a particular profile or segment basis demographics, psychographics etc.

Zoning would stand for dividing the mall space into various categories of stores and therefore deriving the tenant mix.

While infrastructure management, which would include managing all kinds of mall facilities like security and housekeeping would be a support function. As an outsider, one could be able to evaluate this just by looking at a mall and evaluating whether or not it has a clear positioning and zoning. Like they say, retail is no rocket science!!

Rural Retail In India

2008-01-20T10:51:00.001+05:30

Much has been said about rural retail in India and much still remains. During my teaching assignments a couple of my students have shown a passion for this domain and I don't think it emerges out of a social cause but sheerly out of the great learning and business opportunity that it is. Some of my very committed students Neha, Priya and Deepak(student of IILM, Gurgaon) have done a preliminary report on Rural Retail , it would benefit people who would want to have a basic analytical and fact based understanding of Enables and Impediments etc in this space. Happy Reading!

Jobs In Retail

2008-01-17T19:50:00.000+05:30

I have been trying to put in perspective the job market in retail and am amazed at the sheer demand in the sector. Currently, huge requirements exist for front line staff, supervisory staff and all support functions. Of course, we are looking at expats bringing in huge knowledge and experience pool at leadership levels.

I was at a B School a while ago, looking at hiring a couple of people for the retail practice at Milagrow (www.milagrow.in). Every such transaction leaves me gasping at the lack of applicable knowledge. I have has some brilliant students in retail courses who have through sheer good choices and then performance found good careers in the industry. However, they are not a rule. Here, I am not even mentioning the commercialization of management education in India. What I am really deliberating on are the huge gaps in the minds of students about the roles.jobs, moneys associated with them and mapping them against real knowledge and skills.

I was probably hard on a few students but real time work is harder. Hope B Schools encourage 'thought led action' for students and help our largely rote oriented new generation.

Forward Integration In Retail in India

2008-01-17T19:15:00.000+05:30

I have typically seen India manufacturers in apparels and even more so in Consumer Durables forward integrate to retail sales and/or service to cover all customer touch points. Lately, this trend has been extended to another industry of stationery and related categories.

We have seen 'Just Linc' exclusive brand outlet (EBO) chain which has an assortment as large as 100 SKUS in a good ambience, ease of shopping and 'try and buy' concept. Tthen in a similar format, there is Pidilite which is promoting 'Hobby Ideas' which is basically an assortment for art, craft and related hobbies.

I am sure, other manufacturers in the same category are also looking at increasing business channels and thereby exploring opportunities in either export or domestic retail. The space is still new and we will have many players to watch.

Retail Training In India

2008-01-16T18:17:00.000+05:30

Retail probably is the biggest customer interface industry and worldwide marred by little education at front end level. 8% share in total employment in India and 80% attrition. Could translate into huge employment opportunities for many.
After recruitment, training seems to be a large opportunity in this space which many are looking at. So we have many training schools focussed on retail.
As a retailer what perhaps I would look for is customised training for my front end team, ability to successfully circumvent the 'just looking', and be able to advise. Seems like a great challenge! Also, as far as I know very little customisation is happening in the retail training space. SO there definitely seems to be a gap.
Also, a standardisation of knowledge and skills might be required. Groups like RAI (Retailers' Association of India) could look at certification for front end and supervisory levels just like they are trying to raise the bar for retail education in B Schools.

Luxury Retail In India

2008-01-16T18:16:00.001+05:30

I recently visited the Select CityWalk mall (http://www.selectcitywalk.com/) in New Delhi. Whoever has had a chance to visit the mall would have no doubts about the viability of luxury retail in India. I have also had a chance to briefly meet and hear their CEO Pranay Sinha (http://www.linkedin.com/in/pranaysinha). Besides being an eloquent speaker, Pranay displays an in depth understanding of retail and mall management. All of this reflects in the mall.

Lest this sound like an ad for that mall, I only want to comment on the upswing in the high end retail in India. Whilst we all keep talking about the income pyramid being a diamond in India, thus denoting the expansion of the middle class, the footfalls and conversions at some destinations stand to question this. Perhaps, the top of the pyramid is also rapidly expanding. There is tremendous underlying opportunity for high end retail in India and hereafter, the biggest constraint i.e paucity of appropriate location is taken care of. Way to go!

Drivers of Retail Growth in India

2007-12-28T20:27:00.000+05:30

DEMOGRAPHICS

60 % of Indian population is less than 30 years of age
6 metropolitan cities contributes 6% of Indian population , 14 % of Indian GDP & 60 % of shopping malls.
Urban population spends 2.5 times more than rural population.
Greater per capita income
Increase in disposable income of middle class household

Growing at a pace of over 10% per annum over last decade

Falling interest rates.
Easier consumer credit

6.The Urban Consumer

Getting exposed to international lifestyle
Inclined to acquiring assets
More discerning and demanding than ever
No longer need-based shopping
Shopping is a family experience
Increasing tendency to spend
Post Liberalization children coming of age
100 mn 17-21 year olds. Tend to spend freely.
Greater levels of education

ECONOMIC STABILITY

8% annual growth.( service driven GDP growth)

FER( foreign exchange reserve)= USB$140

FDI = USB$8

20 % increase in export from last year..

Private consumption is 68% of GDP( India is the highest nation in terms of private consumption).

Second most favoured destination after china for FDI.

Unemployment rate has decreased to 7.8% in 2006 as against 10.3% in 2003.

24% decrease in unemployment post liberalization.

India ranked 1st in the A.T Kearney Global Retail Development Index.

(Considering the Country risk, Market Attractiveness, Saturation & Time Pressure)

PWC India Retail Report for 2007

Are The Indian Customers ready for self checkout system at showrooms?

2007-12-28T20:23:00.000+05:30

The question from Kabilan prompted me to think about the modernity in the mind of the consumer. Modernity is it ? Or would it be a need based act? So many apprehensions in the service providers minds emerge from the vastness and uniqueness of the Indian customer. As I look at it, in the vastness and uniqueness lies the answer to all the questions. The variety in our behaviour and the volatility is in some ways a huge opportunity. As if to better that, a service driven economy is a ramification of the fact that we adapt to new technology with a fair amount of ease. So all's well I think for IT providers. Volume driven formats would have no go eventually but to adapt high end technology rather than depend on people purely because of customer convenience and consistency across stores. Watch out for Self Check out technology implementation and keep me posted too!!

LinkedIn: Answers: Are the Indian customers ready for self checkout system at showrooms?

Real Estate and Retail In india - Friends or Foes?

2007-12-28T20:22:00.000+05:30

What prompted me to write this was(besides the fact that I hadnt written in along time and was missing it) was the acquisition of Piramyd Retail by Indiabulls Real Estate (through their subsidiary Indiabulls Wholesale Services).

At many forums lately, I have sen the explicit (and some times tacit) conflict between real estate developers and retailers. Now that India has some of the most expensive mall/business districts, it is difficult to fathom the relationship any other way. This definitely isnt helping the mass retailers, especially if they havent been foresighted in space acquisition.

An if you turned this process around, real estate developers are leveraging the space availability and treading into retail. And like they say, makes it convenient to acquire an existing chain

Books on Retail Management

2007-12-28T20:20:00.000+05:30

I have been teaching at various B Schools as adjunct faculty for more than 3 years now. The process has evoked mixed feelings and thoughts. While its wonderful to see so many students prepare themselves - mostly,for the corporate world, the gaps in education strike me as glaring. More on that later....

Because I teach Retail management, I have had the opportunity to read many a text book in this time, and some books have been as good as to inspire me to write a text book myself.

Amongst the Indian books I find, Swapna Pradhan's book - Retail Management - text and cases, holds a lot of information in the Indian context.

ANd then, IIM-A Prof Piyush Kumar Sinha's and Prof D P Uniyal's co-authored book titled ‘Managing Retailing’ is very insightful and contextual for Indian students. The approach taken in this book is especially worth mentioning, because it is that of 'retail decision making'. also, it gives retail the imporatnce that it deserves- that of creating value for all the stakeholders. So if you want to learn it the right way, go with it.

Catalog Retailing or Multi Channel Strategy

2007-12-28T20:17:00.000+05:30

I have been wondering about the appropriate timing of catalog retailing in India. Was glancing through one of the zillion retail newsletters yesterday, which had this report on how online shopping has increased leaps and bounds in India. And believe me, I have met many VCs who have made me open my eyes to the opportunities in the internet space.

And then I think, buying movie tickets, railway tickets, air tickets, music, books etc.etc is one thing and shopping for clothes, personal products, even gifts is quite another.

So, has the time for catalog retailing in India arrived? I saw the Hypercity-Argos site (www.hypercityargos.com) and interestingly,their catalog shopping was 3 pronged - you could shop online/phone/brick n' mortar store , have merchandise delivered home/pick it up from the store. Catalog retailing? More like multi-channel retailing. And I but agree, the time is right for multi channel retail!!




	Shop from your catalogue at home or in store or Browse our complete range online at

Store Design - Customer Convenience Vs. Space Productivity

2007-09-17T18:18:00.000+05:30

Time and again I have come across the now cliched customer service motto/philosophy of retailers which is expressed in may different ways

we put customers first
customer is king
you want it , we have it
we don't just provide goods, we provide the experience

Sets me thinking of the times when.....

i went to a store for a pair of black trousers and found it at the fag end of the store
i went for a white blouse and was told "the white regular shirts are in the formals department, the new ruffled blouses are in the casual department, and there were perhaps another 3 places where I could find white blouses.
i wanted staples like milk and eggs and had to walk around an entire hypermarket to find them near the exit.

Both the above lists are totally oxymoronish. Here we are telling our customers (and ourselves) that we do everything for your convenience and there we go playing games with her trying to ensure that our space gives us maximum returns.

Agreed that there is a trade off between the two. However, rest assured that there is a way of resolving the customer inconveniences beginning from the stage when we are arriving at the retail concept/format.

More importantly, gain clarity on whether as retailers, we are committing to customer delight or not in the first place. We could just be committing to the lowest prices and not much more. We need to come out of the garb of great customer service when it isn't truly a part of the plan or even when we aren't sure of fulfilling the commitment.

However, taking a position of 'best customer service' etc. we need to remember that every thing in the store (right from layouts to checkouts) stand true to our commitment.

Small And Medium Retailers In India

2007-09-14T06:23:00.001+05:30

Small and Medium Enterprises in India is a very large and extremely difficult market . To use a cliched phrase, India behaves like many different countries. Also, geographically, you don't know where the customers are, which city and which marketplace. Therefore to support these businesses it is important to create a comprehensive ecosystem around them rather than piecemeal efforts. This obviously takes longer than one would expect, given the infrastructure, lack of education and awareness etc.

From the SMEs' perspective, what they are looking for is a

a solution that will help address their business needs
a solution that can be easily implemented, and
a solution that is cost effective in the short and the long term.

By an estimate by AMI Partners Inc., there are 2.7 million small businesses in India (less than 99 people) which do not have a single computer and a major proportion of them belong to the wholesale and retail sector. Also, India has the largest no. of retail stores in the world, Highest shop density (11 outlets for every 1000 people) . With close to 12 million retail outlets the country has one of the highest retail densities worldwide.However, the per capita retail space is one of the lowest in India, which is a ramification of the small sizes of the stores. Which again reflects on the largely unorganised retail industry in India.

Impressions about the Small and Medium retail being largely unorganised are authentic, however , by the same logic all large retailers may not be organised. Paying/Not paying of all applicable taxes being the conceptual distinction between organised and unorganised retail, retailers are increasingly moving to the terminology of 'modern retail' vis-a-vis 'traditional retail'. (which was mostly the meaning anyway even earlier when 'organised' and 'unorganised" terms were used)

All these traditional retailers fall in the purview of Micro and Small Businesses,. Needless to say, the challenges for this sector are only magnifying by the day.

Besides all the vocalised needs , what might make a difference to these businesses is mentoring in a structured manner. Evaluating the areas of mentoring ......i will leave for the next post. Watch this space...........

Our Workshop at The India Retail Forum 2007

2007-09-14T05:27:00.000+05:30

I and Rajeev anchored the "Mentoring SMEs in Retail" at the India Retail Forum 2007. While we had detailed preparation, it was still exciting to find that people responded so well to our workshop. The response was tremendous - by the end of the workshop there was no place to stand , leave alone sit. We talked about the imperatives for a Small/Medium Sized Retailer, especially knowing and monitoring the basic metrics, keeping your eye on the cash flow, focusing on providing the Right product at the Right time and the Right Price to the identified target segment.

Simple as it may sound, at the retail practice at Milagrow we come across many such small retailers who are struggling with cash flow challenges for instance. It is of paramount importance for them to know this well and make the right investments at the start up stage. To build organisations ready for scale, we have to keep our eye on the customer and the product while building capabilty inside!

Drivers of Retail Growth in India

2007-03-02T19:32:00.000+05:30

DEMOGRAPHICS

60 % of Indian population is less than 30 years of age
6 metropolitan cities contributes 6% of Indian population , 14 % of Indian GDP & 60 % of shopping malls.
Urban population spends 2.5 times more than rural population.
Greater per capita income
Increase in disposable income of middle class household

Growing at a pace of over 10% per annum over last decade

Falling interest rates.
Easier consumer credit

6.The Urban Consumer

Getting exposed to international lifestyle
Inclined to acquiring assets
More discerning and demanding than ever
No longer need-based shopping
Shopping is a family experience
Increasing tendency to spend
Post Liberalization children coming of age
100 mn 17-21 year olds. Tend to spend freely.
Greater levels of education

ECONOMIC STABILITY

8% annual growth.( service driven GDP growth)

FER( foreign exchange reserve)= USB$140

FDI = USB$8

20 % increase in export from last year..

Private consumption is 68% of GDP( India is the highest nation in terms of private consumption).

Second most favoured destination after china for FDI.

Unemployment rate has decreased to 7.8% in 2006 as against 10.3% in 2003.

24% decrease in unemployment post liberalization.

India ranked 1st in the A.T Kearney Global Retail Development Index.

(Considering the Country risk, Market Attractiveness, Saturation & Time Pressure)

PWC India Retail Report for 2007