Cooperative Buying in Retail

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

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

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

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

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

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.