Leap of Faith


November 8, 2005

Leap of Earth


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Bazaar Truths


November 5, 2005

Weekend Rush Blues
The ’burbs go shopping on weekends and malls must learn to handle the crowds, find Namrata Singh and Aradhana Takhtani

Five-year-old Shefali knows that Saturday mornings are reserved for the regular weekly jaunt to the nearby mall in suburban Mumbai. She is usually ready with her list of things she wants her office-going parents to buy. Along with the regular grocery for the home, the Sharmas also pick up chocolate and ready-to-eat snacks for their little one and top it with a relaxed lunch at the food court located inside the mall.

The Sharmas are among several thousand Indian families who are increasingly thronging malls and supermarkets over the weekend. It’s a reality that retailers are already grappling with. A long line of cars and queues at the check-out counters are now a regular occurrence over the weekend at most malls, supermarkets and department stores. Not surprisingly, weekends form 40-50% of the week’s sales for a big retail store or hypermarket. At Inorbit Mall, one of the biggest malls in suburban Mumbai, 60% of the week’s business is done over the weekend. “On an average, we get nearly 50,000 footfalls on the weekend as against 22,000 during weekdays,” says Anupam T, unit head of Inorbit, Malad. It’s the same story at most Food Bazaar outlets, says Damodar Mall, president, foods, Pantaloon. “Our sales over the weekend tends to be double that of any other week day.”

Clearly, weekend shopping is a trend whose time has come. In the metros, hectic work lives, dual income nuclear families and lack of quality time has ensured that most working couples have no time for shopping other than over the weekend. “For many, it is a way to unwind and also spend quality time with the family. Much of the shopping is done jointly because this is the only day that the husband is free and able to drive the family around,” says Mall. Devangshu Dutta, chief executive, Third Eyesight, a Delhi-based consulting firm in the retail sector, says weekend shopping in organised retail will grow as consumers want to be in the thick of things.

Much of this is borne out by the research on shopping behaviour done by KSA Technopak, a leading consultancy. The increase in the number of women in the workforce is directly influencing the weekend shopping trend. Says Arvind Singhal, chairman, KSA Technopak, these women are creating a new category of Double Job Nuclear Households, for whom the only time available for shopping is the weekend. Secondly, these families are combining shopping with leisure. Again, weekend options, especially where malls have come up, include multiplexes and food courts, rather than pure shopping.

However, for retailers, this skew is beginning to raise serious infrastructure constraints. Unlike the West, where the concept of weekend shopping first evolved, in India it is somewhat different. There, large stores and malls, as a rule, are generally located on the edge of town. Distances are relatively greater and consumers tend to stockpile goods for a fortnight or even for a month. On the other hand, malls in India tend to be located in the heart of town and often, without any planning for peak traffic, says Dutta. The worry is that the resultant crowds will put off the serious shopper. And so most largeformat retail outlets are beginning to grapple with the phenomenon. At Food Bazaar, store managers have begun experimenting with incentive programmes that induce non-peak-hour shopping. For instance, shoppers are offered a bagful of vegetables free, if they shop before 6 pm on a weekday.

Even a 50-year-old retail store, Premsons, has now recognised the weekday phenomenon. Located at Breach Candy in Mumbai, Premsons has had a single outlet for decades. Six months ago, the family decided to remain open on Sundays too—a break from the tradition. No doubt, the footfalls increased rapidly. “Shopping is becoming more of a family affair. Men, in particular, are more relaxed on a weekend as they are away from work, and can spend more time browsing. This only enhances sales,” says Premsons’ owner Bharat Gala.

But the moot point is whether it makes sense for retailers to reverse the trend. According to Samsika

Marketing Consultants CMD Jagdeep Kapoor, some retailers may try promotional programmes for weekdays so as to get more crowd in on these lull days. “But it is not logical to level out things. Instead of making 20 into 30 on weekdays, it is better to make 100 into 300 on weekends. In fact, retailers should further enhance sales on weekends by operating 24 hours on weekends,” he adds. Food Bazaar’s Mall says their focus instead has been to beef up service levels by cutting down any promo activity during peak hours, and keep many more checkout counters open.

However, in their older stores, consumers living close to the store have become smarter: they have begun to beat the crowds by choosing non-peak hours to complete their shopping. But Third Eyesight’s Dutta says Indian retailers need to do more. Instead of blindly copying western formats, they need to think of novel ways to ease congested aisles and improve the shopping experience. Like the shopping trolley for instance. “It is a Western concept tailored for people who buy in huge bulk at one go, typically for a fortnight. Indians tend to buy for three-four days. Why do we need such huge trolleys that leave no space to even walk during the weekends?,” asks Dutta. Bangalore’s Central Mall has begun to make some headway: it has a netlike basket with wheels that can be shortened and extended based on the needs of the shopper. TNN

Source: Times of India

Bazaar Truths


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Indian Consumers


September 23, 2005

Indian Consumers


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What should Jewellers be doing next?


September 16, 2005

The jewellery trade and industry has taken a hit. The global economic meltdown, the winds of recession, the slump in diamond and jewellery exports, massive lay-offs, closure of factories (SEEPZ, Surat), the volatile prices of gold and, most importantly, the dampened sentiment of the consuming class (especially for non-essentials like jewellery) have adversely impacted this sector.

And as if these were not enough, the fear psychosis created by the recent terror attacks in Mumbai has further dampened sentiments.

We cannot of course sit down and cry about the gloom and doom. The time is for action – as the saying goes, when the going gets tough, the tough get going. We need to leverage the goodwill and strengths we have and carryon. Abhilasha Kale spoke to industry players and experts and asked them…

“SMEs (Small and Medium size enterprises), manufacturers, and wholesalers are feeling the immediate pinch as the dollar has strengthened (against the rupee) to Rs. 50. America, which consumes nearly 45% of diamonds. Has been hit by economic problems and that too during the festive season. This is also due to the fact that their major exposure has been to a particular market the diamond rotation is of 150 + days, so the previous cycle payment has been affected and current sales too are affected, and the future is uncertain. Whilst this may all be true to an extent, the fact also remains that you have to weather cyclic business variations. Now in this time of economic crisis, Brands would be stretched to think innovatively stretch the rupee, find out what the consumer really needs and see how they can provide it at a cost that is acceptable to the consumers."
Anaggh Desai ex-CEO of Damas

What Next?

The issue of survival than sustenance holds a prime position in the current economic meltdown. In this scenario, will "wait and watch’ policy be the right Move? Or could you do something to Minimise the severity of the economic disaster?
In tough times, studying the success stories of others or understanding "industry experts’ opinions is a great source of inspiration and learning. Such understanding helps you to evaluate your business.
We spoke to industry players and experts on various aspects of the) jewellery trade, and gathered various workable approaches to ensuring survival and prosperity in the long run.

In the following story we see how staff training, technology, design and marketing and promotional initiatives have to be leveraged, especially in troubled times.

Consumer connect

Jewellery is one of the industries which require constant touch with customers to survive or thrive. In troubled times ¬as right now n right and optimum use of capital is necessary to connect with consumers. In the absence of a healthy customer relationship, it is possible for you to lose some customer base. This loss can be greater than imagined. Though Indians love for jewellery will never allow the industry to die, current scenario has made consumer extra cautious when it comes to spending.

But does that mean one stops marketing and promotional .activity, stops connecting with the consumer? The answer is a clear NO. Unfortunately, advertising and promotional programmes/or events are first to face the axe for reasons of "cost savings." "What’s the use of advertising and marketing?" is the common refrain from many players in the jewellery trade, not realising that these are the times when communication with consumers is most crucial.

Hammer Plus Managing Director Suchita Khandwala has decided to go against the tide. The company has come up with increased number of ads this year and also encouraged retailers to do it locally and share the cost of their related local ads.
Moreover, it is not mandatory that publicity campaigns should include ads only in print or electronic media. In other words, there are other avenues too; one needs to invest time and thought. Sohil Kothari, Director of Fine Jewellery, pursues innovative and cost-efficient ways to reach out to customers like tie-ups with premium restaurants, web sites and other top brands, and also regular activities like launch of new collections, direct mailers, and consumer offers. "For retailers, it is more to do with keeping the brand at top of the mind re-call of their consumers." explains Kothari.

Navin Sadrangani, Director at Nyuz, a jewellery retail service provider, looks at promotional programmes as trust-building exercises. It is the most important factor that brings old as well as new customers to a store. "There are other ways like internal signage, visual merchandising, direct mailers, and coop associations with leading companies that promote trust … all of this has to be used effectively and efficiently."

Ashok Minawala, Chairman of All India Gem and Jewellery Trade Federation (GJF), believes this is the most appropriate time to keep customers informed of the store and new products as the message is heard more effectively in a period of slowdown. He recommends joint advertising campaigns which will give a larger exposure to a group of jewellers in a city or Locality.

Expressing faith in Minawala’s ideas Subhash Bhola thinks healthy and strong relationships are the best bet in any situation. Bhola contacted 30 persons (some old customers, some potential ones) with whom he had lost contact since last two three years. To his surprise, he managed to turn some of them into customers.
Anaggh Desai suggests that marketing needs to change from advertising to catchment driven Bft (Below the Line) activities to attract consumers. BTL sales promotion programmes are cost effective. They may include events, consumer offers, direct mailers, tie-ups with other brands, etc.

Understanding consumer mindset

This emotional connect lends an opportunity to a company to understand the consumers’ mindset, lifestyle, taste and purchasing patterns. It helps to identify consumer trends, which guarantees jewellers that he will never go out of customer’s mind. C Ravishankar, Manager, Strategic and Commercial Intelligence, KPMG puts forward a simple activity – that is, to develop an experimental part of the store where a jeweller can tryout different and newer designs. Exhibitions and fairs, jewellery magazines, etc. are also useful tools to keep abreast of the changes.

Navin Sadrangani considers that updates on customer track record of purchases through a customized loyalty program monitoring allows each store to know the customers line of purchases, frequency of purchases, kind of jewellery preferred, references that he has given, etc. Such a study is more possible through direct offers and personalised proposals than advertising and promotions. Understanding consumer demands and then planning accordingly on such inventories according to the season around the year holds the key.

To achieve this end, Ashok Minawala says jewellers should continue to do events at his store, create new lightweight products, and improve service and marketing plans. "Try to see the stow-moving stocks and change them to fresh, acceptable collections, slow down new purchases and stop overtrading," adds Minawala.

Employees: Best asset to invest

A bunch of quality people is your best tangible asset. An employee works as a medium between you and your costumer. In the absence of proper training and product knowledge this asset may turn into a liability for your company. Motivation, recognition, right remuneration and skill – enhancement training are the factors that promise well-groomed staff with a result-oriented attitude. Such personnel win consumer confidence and consequently earn money for you.

“Transparency ethical behavior on the part of seller is sure to provide a competitive edge, whether at the customer end or any where in the supply chain.”

Devangshu Dutta
CEO, Third Eyesight

Building best sales staff is possible through skill advancement programmes. These programmes are a "must" to contribute to the bottom line as well as maintain one’s position as a serious player Sohil Kothari says he won’t be making any compromises when it comes to Fine Jewellery’s policy of staff training. For him a team of ill- informed, ill-trained sales staff can’t do justice to well-conceptualised, quality products. Sucheta Khandwala agrees with Kothari. As Hammer Plus deals in concept based spiritual jewellery, sales teams without proper knowledge of Indian culture, tradition, and values, would actually put their product at risk.

Being directly responsible for sales, sales personnel deserve special attention and training in customer handling. They are expected to be updated with product knowledge, market conditions and process orientation to get the vocabulary right in order to dose a sales deal convincingly. Commenting on this aspect, Navin Sadrangani explains, "The kind of sales personnel training required is on the lines of creating jewellery retail sales consultants in store. They should be able to comprehend what customer is looking for through conversation and questioning."

In a current situation, ‘getting a fair deal’ would be a huge driver — guaranteeing product quality and the salesperson’s strong knowledge to steer the customer towards the best product to fit the budget could be a differentiator.
way business thrives on consumer confidence, so also an employee’s confidence increases if the employer has faith in their abilities.. Moreover, it becomes necessary to keep your staff’s morale high and provide them adequate training in keeping with the changing times. A procedure of grooming an employee doesn’t stop with professional training. The way you need honest and hardworking staff. they too need your faith and recognition.

In tough times, they look forward to motivation from you to deliver their best. You may not be thinking of reducing headcounts but t~e very fear of losing

job in a gloomy situation might force your staff to perform poorly. That is not good either for you or your staff. It is inevitable that tough financial situations lead salespeople and businesses to look at reducing costs to increase profit l"QaLgins, and that can potentially lead to unethical behaviour. Therefore, keeping yourself and your staff motivated irrespective of market conditions is the need of the hour.

Tune in to technology

Technology remains the most neglected area in jewellery. As a part of security programme, technology has been a long-time companion of jewellers. However; one will find little evidence of use of technology in day-to-day business transactions. Technology in customer relationship management (CRM) is considered a new opportunity. "Use it to provide information that shall assist the staff to sell more/convert more. Understand the CRM element that would get results", instructs Anaggh Desai.

"We use technology in the area of CRM to increase our efficiency and productivity, which helps to position our brands in the market", says Balaji, Marketing Head at Kirtilals.

Describing the tech savvy nature of Hammer Plus, Sucheta Khandwala observes, "Together with some of the most advanced jewellery manufacturing machines and techniques, we use a number of on-floor product movement software for better time management and increased productivity."

Says Fine Jewellery’s Sohil Kothari: "The implementation of new software helps to connect our entire delivery chain – from the production to end consumer and also been useful to handle quality related issues."

Designing success

Design was a "zero investment" zone till date. Indian jewellers used to copy international designs in Indian style except a few chosen ones. However, it is better late than never. Jewellers are now beginning to take design seriously. The change in jewellers’-attitude is the direct result of a shift in consumer taste patterns.The possession of gold or diamonds is considered an investment. Now, Indian buyers’ horizon has broadened over the period, thanks to exposure to global trends through media and travel. There is a certain group taking shape within the larger Indian consumer group, and this group pays more attention to design. According to Navin Sadrangani, there is an audience that buys jewellery simply based on design, and then the similar tactics need to be used to communicate the design.

Sohil Kothari runs design and research cells in India and Hong Kong. He basically travels the world to study the latest trends and understand consumer needs. He observes, "With the socio economic changes in the country, Indian women have acquired an international taste. Corporate dressing also has a place for delicately designed jewellery, which the Indian women have started accepting as part of their office ensemble."

Prakash Chandra Pincha, Director, Kolkata-based Jewel India partly agrees with Kothari and Sadrangani. According to Chandra, the biggest share of sales is based on traditional basic designs but presented in a contemporary style. Some basic changes have appeared with the rise in the number of educated women, But still, the root to taste has not changed if we compare the percentage of sales of the so-called changed pattern. In the long run, jewellers need to provide well designed, quality products based on proper market research and with proper promotional and pas backing – thus providing a comprehensive package to the ultimate client.

Classical designs are heavy, intricate, and expensive, while the "impulse" or the "fashion" jewellery market demands light jewellery with clean lines. Traditionally, the two segments do not sit well next to each other. Some global jewellers have tried but failed to span segments under the same brand. In trying to overhaul their merchandise, companies have failed to gain new consumers, and at the same time lost the old ones. "In this context, the best bet would be to have a distinctive different brand under which to place the different segment offerings, and even within stores, segregate the offerings physically — ideally on different floors", suggests C Ravishankar.

Anaggh Desai opines that designs which have a high perception value but are cost effective and price friendly are the answer to increase sales. .



September 16, 2005

Over the last couple of years India has been highlighted as the next hot retail destination and one of the most promising markets of the future.

With many battle-scars earned over many brands and several years, and around $40m in annual sales, American apparel giant VF Corporation seems like a veteran in the Indian market. Its story so far – including a newly announced joint venture with Arvind_brands – gives credence to the Indian philosophy of reincarnation.

VF’s first step into India came when it granted the license for Wrangler denimwear to DuPont Sportswear (no relation to DuPont, the chemicals to fibres company) in the late-1980s. At that time, VF took an aggressive approach to the market, and initiated several other dialogues with Indian companies of all shapes and sizes. Within a short time it also appointed Arvind_Mills, the world’s third largest denim fabric manufacturer, as a licensee for Lee.

Arvind had its own mid-market brand, Flying Machine, and was looking at selling international brands in the premium segment in India. Lee became Arvind’s first pitch at the upper end of the market.

One could argue about the pros and cons of VF’s pitching two of its own brands head-to-head in the premium segment. The fact was that, while the sister brands were fighting for the small space at the top, the market itself was evolving with several mid-market Indian brands coming into their own.

Therefore, despite initial successes, the relationship with DuPont Sportswear delivered less than VF expected. Despite the head-start, by the mid-1990s Wrangler already seemed like an “also-ran.”

Where Arvind had invested in creating exclusive Lee franchise stores in addition to the distribution through multi-brand outlets, backed by large amounts of advertising and significant trade credit, DuPont Sportswear’s small size meant that it could match Arvind’s strategy only partially.

Eventually, by the end of the decade, VF decided to transfer the licence to Arvind Mills. Arvind re-launched Wrangler in 2000, and invested in revitalising the brand.

Nevertheless, at present in terms of sales Lee’s lead remains, evident in the fact that exclusive Lee stores will number 74 compared to 55 exclusive stores for Wrangler by the end of this financial year. Together, Lee and Wrangler are estimated to account for about 80% of all sales of VF brands in India, and 10-12% of the total denim market.

Licensee constraints
VF’s other launches in the early-1990s also fared poorly due to the choice of the licensee. It first launched Healthtex children’s wear with Ocean Knits and then Vanity Fair intimate wear in 1995 through Very Fine Apparels, both companies being largely held by the same owners.

Both brands were constrained by the lack of capital available to create an impact in price-sensitive and fragmented market segments for each.

Healthtex was launched first through ‘Little Kingdom’ stores (also owned by the common owners) which was the leading retail chain for children’s wear at the time. Its wholesale foray was less than successful – with indifferent quality, an uphill struggle in marketing the product, poor financial backing and the demise of the parent chain, Healthtex had died a quiet death by the mid-1990s.

Upon the expiry of the term of the first licence, VF expressed confidence in Arvind again by transferring the Healthtex licence to it, for a soft-launch in 2002. However, the brand was allowed to fade away in India, as VF subsequently sold the brand globally to Lolly Togs Inc.

Vanity Fair’s launch story was an even briefer flash-in-the-pan. It entered the market in 1995 as a totally imported product at very high retail prices, and died-out for much the same reasons as Healthtex.

However, as with its other brands, VF has been persistent with Vanity Fair in the Indian market, and re-launched it in 2003 through La Reine Fashions, a group company of Maxwell, the leading undergarment group in India.

This time, the product range has been a mix of domestically manufactured and imported styles, and available from one-third the price of the initial launch a decade ago. Although it is still pitched at the premium end, the market around it has grown further with brands such as Triumph, Marks & Spencer and others, and is expected to perform better than it did in its first incarnation.

Having established a fairly wide and deep distribution network through its licences of VF and other brands, as well as its own, Arvind Fashions also launched Jansport and Kipling accessories. By 2005 its relationship with VF covered four leading brands.

With this clutch of brands under the same licensee, it was logical for VF to place confidence in Arvind again for its most recent major brand acquisition, Nautica.

At its launch in 2006, Denise Seegal, Nautica president and chief executive, said: “Arvind’s reputation for successfully launching and maintaining international brands make them an ideal partner for us.”

Arvind opened the first free standing Nautica stores in India in Bangalore (a 6,800 sq ft exclusive store) and in New Delhi in May 2006, with plans to operate the first 12 stores and to franchise the subsequent stores.

Joint venture vehicle
As the involvement with India has intensified, VF’s desire to take control of its presence in a strategic market such as this has come to the fore. Since 2004, Arvind Brands’ president, Darshan Mehta, has spent significant amounts of time in the USA, negotiating the details of a deal that culminated into VF’s very first joint-venture in the world.

The 60:40 joint venture, VF Arvind Brands Pvt Ltd, between VFC and Arvind Brands, brings in-house activities related to the VF brands handled by Arvind. The team of about 180 people from Arvind Fashions, the main licensee, have been transferred to the joint venture, along with assets and the existing licences. On its part, VF is paying US$33m for its 60% stake in the business.

The joint-venture is now expected to be the vehicle for further launches of VF brands in India, and also of any potential acquisitions of Indian brands in the future.

The current retail infrastructure will be retained by Arvind, and is expected to expand to 300 stores by March 2007 from around 270 currently. Discussions are also reported to be on with the new retail business of the US$20bn Reliance Industries, to launch Hero (by Wrangler) and Riders (by Lee) in the mid-market segment.

Darshan Mehta takes over as the CEO of the joint-venture, reporting to Eric Wiseman, president and chief operating officer of VF Corporation, who will be chairman of the new company.

Thus, VF’s involvement with India has gone from tentative entry in the 1980s with one brand, to multiple licences and multiple brands. Its consolidation now into a majority-holding in a joint venture reflects VF’s desire for control of a growing business in a strategic market.

Underlining this, Mackey J McDonald, chairman and chief executive officer of VF Corporation said upon the formation of the joint-venture: “With its rapidly expanding economy, growing retail base and favourable demographic characteristics, India presents a source of enormous future growth for our brands.

“This move underscores our commitment to leveraging VF’s powerful portfolio of brands to capture new growth opportunities in expanding markets.”

This report is based on industry research and inputs gathered by Third Eyesight ( www.thirdeyesight.in ), a consulting firm focused on retail and consumer products sectors.