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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
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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…
(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."
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.
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.”
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."
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. .
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.
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.
Transcript from "Value for Money" on the Indian television channel – NDTV Profit (2005)
Ambika Anand (Studio Anchor, NDTV Profit): In 2005 pay packets of Indians increased more than workers in the rest of Asia. Sonia Bhaskar finds out what it means for consumer spending. After all, what are Indians doing with more money in their hands.
Sonia Bhaskar (Correspondent, NDTV Profit): In the last ten years the amount that you or I have been spending out of our wallets has grown at over 10%. That is faster than the rate of growth of our economy. The reason for this: more money in our pockets, and the willingness to borrow more to fulfil our aspirations.
Indians, young and old, are riding high on desires to acquire all that money can buy. This stems from the fatter paycheques that most Indians are taking home today. Global Human Resource Services firm Hewitt Associates in its preliminary Asia Pacific salary increment survey finds that salaries in India grew faster than 11 other countries in the region.
Says Nischae Suri, Hewitt Associates (India), "Given the current economic context, the way organisations today are able to deliver pay-packages is more employee-friendly. Which means that you give them the money and tell them, well, spend it the way you want, and I think that is the element of flexibility that’s being built in. What’s really helped is that the income tax laws have provided for that avenue today."
So Indians are on a buying spree. What are they spending on? Quite a few things; from eating out, to electronics, from children’s education to domestic help. Experts categorise the spending into regular spends – things that we normally spend on – and emerging spends – things that we are now beginning to put our money into. In the regular spend category, the top categories include food and grocery, eating out, personal care items and consumer durables. As far as the emerging spends are concerned, topping the list for Indian consumers is the payment for household help, and then there’s mobile phones and even computers and laptops. In the last one year, emerging spends have grown 20% compared to just 4% for the regular spends.
"I think it’s younger people who are spending more on account of relatively high salaries. In TVs, music systems, we’re seeing a huge growth this year. TVs, especially the flat TVs, are going to be a big driver in the consumer electronics market in the years to come. People are buying bigger capacity refrigerators. So these are some of the areas where we are seeing a very direct impact of higher salary levels," says Arvind Singhal of KSA-Technopak.
The spending pattern is not just confined to the metro areas – experts believe that it is widespread across cities and towns of India. But yes, it is an urban phenomenon, and rural India is yet to see the surge in income and the desire to spend. As for the future, experts say that the trend is likely to continue. Increasingly, your salaries are going to be linked to performance. So the harder you work, the more you earn, and that will determine how much you can splurge.
Ambika Anand (Anchor, in the studio): To discuss the increase in consumer spend in India, I am now joined by Mr. Devangshu Dutta, He is the chief executive officer of Third Eyesight, a retail consultancy. Mr. Dutta, thank you so much for joining us on the programme. Let me begin by asking you what are the factors responsible for the spurt in increasing consumer spending in India, and do you see a let up in the years ahead?
Devangshu Dutta (CEO, Third Eyesight): There are two main factors that I see behind the increasing consumer spending. The first one is that there is a real rise in incomes. For the last 10-12-14 years there has been a growth in the economy, there has been a growth in business, there has been a growth in employment and a real increase in salaries. In fact, in the recent years the salary increases in India have topped increments on a percentage to percentage basis when compared to the other Asian countries. The second one, is that there is a real generational change – so if you take the generation that has come into the workforce over the last 3-4 years, this is a generation that I would call a post-colour TV, post-ASIAD generation, which has seen options, always. So there is an option to choose from multiple channels, colour is an option over black and white, there are options while choosing cars – in everything there is an option. And that means that they are also oriented towards spending on something that offers them choice. Today we have more choice available, and that group of consumers, the young consumers who are coming into the workforce are also, therefore, more oriented towards spending more time in areas which give them more choices. Shopping is one of them, and there is an increasing propensity amongst them to spend that money as well, whatever they are earning. As for the trend letting up: I don’t see it letting up anytime soon. We do see rises and falls, we do see what we might call booms and busts, but overall it’s an upward curve as far as I see it for now.
Ambika Anand: What impact is this increasing consumer spend having on the economy at large?
Devangshu Dutta: The increase in salary gets invested, in a sense, back into the economy, it goes back into business through shopping, and as it comes back into the economy it is an upward spiral. Broadly, that’s a beneficial impact.
Ambika Anand: But do you think the mall mania in India is really sustainable?
Devangshu Dutta: The retail sector has been developing organically over a long time. The real boom happened in the last 5 years, let’s say, when Delhi’s Ansal Plaza and Mumbai’s Crossroads took off, everybody else started thinking that there was a boom in the making. When there is a boom in the making, everybody wants to start investing. What has happened as a result is that real estate developers, shopping centre developers, various owners of parcels of real estate have got into the act of building a shopping centre. Whether those shopping centres are sustainable or not is a big question mark in my mind. There are shopping centres which are coming up now which are better planned, which are better integrated with the rest of the environment around them, and they are definitely sustainable over a longer term. There is an estimate in the market that there are likely to be 350-odd shopping centres that are likely to be developed in the country over the next 2-3 years. If I were to guess, a third or maybe even 25% might do very well, a bunch would completely fail, and the rest would get converted into other uses – maybe office blocks.
Ambika Anand: There are also a lot of speciality malls coming in; you have the Gold Souk, you have a Wedding mall. Are they really value-for-money?
Devangshu Dutta: When we look at the malls that are coming up as specialised malls or specialised shopping centres, they are structured around 3 or 4 themes really, at the moment. One is wedding. Now, if you take weddings, you have a number of products which you need to buy for a wedding, you need to buy a number of services, there’s lots of gifts – it’s a variety of things. So a wedding mall looks like a workable option. Too early to say, they are very new at the moment, but the concept looks workable. Another theme is home. If you take home, construction, design, if you mix all of that together, there’s a huge variety of products that you could be putting across to the customer. And that’s something again which is very, very workable.
Ambika Anand: Going ahead, one hears about a lot of hypermarkets coming into India, large format stores. Do you think Indian consumers’ pockets are deep enough to make them sustainable or do you see a shakeout?
Devangshu Dutta: The hypermarket is a "value department store", if I can call it that – I’m stretching the definition a little bit. It’s run by one retailer, it’s owned by one retailer. You might have concessions of different brands in the hypermarket, but it’s one operation. Which is different from a mall or a shopping centre, because in a shopping centre you have different tenants, each of which is a discrete operation by itself. A hypermarket, therefore, has one advantage over a shopping centre, which is that there is one company driving the whole strategy.
Ambika Anand: What are the challenges that you see, which could spoil the party for the malls and the hypermarkets?
Devangshu Dutta: Differentiation is a huge, huge challenge. Where do we discover new brands? How do we differentiate one shopping centre from the next one? The second is oversupply. The number of malls that are coming up concentrated in a very, very small geographical expanse – where will they get the customers from? When you look at it from the urban planning side, most shopping centres that are coming up in India are not at all integrated with the towns and cities that they are in. One clear example is traffic. They are planned for an average flow of traffic, so whenever you hit a weekend, you will have local residents almost fearing to get out of their house because there is this mad rush on the road – not just side roads but arterial roads getting blocked because of the traffic getting into the mall. There is no holding area, there is no traffic planning into the mall. When you take the product mix, it is not relevant to the local catchment, typically, because the shopping centre operator wants to fill the mall as quickly as possible, so they’ve gone and got the tenants out as quickly as possible. And that may be completely the wrong mix. And that has an impact on the success or failure of the shopping centre and the tenants. These are some of the major issues – there are others, but these are really big concerns.
Ambika Anand: Mr Dutta, thank you so much for joining us on this programme.
By Diwakar Kumar
The fast growth of digital media has amplified the potential of modern retailers to gain momentum in pushing brand building and consumption of their respective products among younger consumers. Opportunities in online brand building are particularly important to understand, given the tremendous pressure Indian retailers face in generating revenues robust enough to counter high operating costs.
The proliferation of social networking media is an offshoot of the remarkable role digitisation plays in a modern consumer’s life. The galloping internet penetration in urban India has opened up avenues for marketers to target shoppers at a minimal cost compared to traditional media of ATL advertising. The cost per contact here is lower than in any other medium, which makes it that much more ‘user friendly’ for the advertiser.
Social networking websites such as Facebook, Linkedin, Twitter etc are categorised by the users’ general information about age, sex, areas of interest, etc, which may allow branding specialists to customise and target specific audience groups. E-retailers know the dynamics of what encourages consumers to transact online, and for that they (e-retailers) pay for advertisement on social networking websites and their success metric undeniably depends on sales per pixels rather than sales per square foot in general retailing.
Weekly poll question and experts’ view
Tapping into the marketing potential contained in social networking media, however, is still fairly under-leveraged by brands and retailers in India. In response to our weekly online poll question – Have Indian retailers under-leveraged social networking media to push brand building and consumption among younger consumers?, 96.03 per cent of our audience responded in the affirmative, while the balance 3.7 per cent believe that Indian brands are doing enough to push online branding on such vehicles.
Devangshu Dutta, chief executive of Third Eyesight says, "Social networking media such as Orkut, Facebook and Twitter are still experimental as far as marketers around the world are concerned, so Indian brands and retailers are not really that much behind the curve." He further adds, "Web 2.0 is more about buzz and creating a pull, which is difficult for most traditional marketers to grasp as they are more accustomed to creating a push through the traditional media. Overall internet penetration is also a barrier."
"Lastly, the overlap between social networkers and the target audience for most retailers in India is small, which is why other media remain more in focus," Dutta underscores.
Commenting on the same, Karthik Nagarajan, associate director, IT Practice/Nielsen Online, The Nielsen Company, says, "For retailers in India, word-of-mouth buzz and focussed advertising are critical to the success of their marketing plans. Social networking communities offer both, as it is consumer-generated media and is also made up of a captive youth audience."
"In the current economic climate, it also offers the best ROI for advertisers. The continuing, astronomical rise in popularity of social networking in India further sweetens the deal. However, in India, the potential is more than the uptake as of now and this is probably a segment that will see a lot of action in the coming days," he notes.
"Over the years, social networking media – especially sites such as Orkut or Facebook – has become very trendy in India. Youth of every age are hooked on to these sites or any other form of media – thus becoming an important platform for Indian retailers to push brand building and consumption among younger consumers," says Vijay Bansal,MD, Cantabil Retail India Pvt. Ltd.
"In Cantabil, where new and fashionable international clothing lines are provided at Indian prices, social networking media is hugely useful for brand building and promote the products," he informs.
Manmohan Agrawal, MD, Bigshoebazaar.com says, "Social networking media, be it in the form of internet sites or other, have become very popular in every part of the country – from rural to urban areas." These are also an important platform to publicise new product introductions, launches etc. In Bigshoebazaar.com, which itself is an online store for footwear, social networking media have proved to be a boon, Agrawal admits.