admin
August 10, 2013
Priyanka
Pani , The Hindu Businessline
Mumbai,
August 10, 2013
Ishaq Rawuther was very disappointed with his ‘Id’ shopping.
The malls and supermarkets, which were doling out usual offers during the month-long fasting festival as part of their regular sale period, hardly had any merchandise or product to offer that was related to the festival.
“I could not find a nice pair of pathan suit at any of the malls. Finally, I got it stitched,” said Rawuther, a resident of Kalamboli in Navi Mumbai.
Ramzan, the holy fasting month of the Muslim community, has somehow failed to attract the attention of retailers and consumer goods companies.
A few retailers such as Kishore Biyani-owned Future Group, a pioneer in driving occasion- and festival-led sales, have not missed this opportunity. Some malls conduct events such as ‘qawali nights’ or ‘sufi evenings’ to attract shoppers from this community. Devendra Chawla, President, Food Bazaar, the supermarket division of Future Group, says the company has always believed in every festival and Id is no different.
But many retailers, including Shoppers Stop, refused to comment on why there were no special offers for Id.
Traditionally, the beginning of the holy month sees a jump in the sales of food items, garments, footwear, accessories, electronics and gold jewellery. But most of the offers are from unorganised retailers.
Dev Jyotula, Centre Manager at Mumbai-based Korum Mall, says, “Id falls under the regular sale period and hence it can be a reason why retailers don’t promote it as Id sales. However, it is a good idea. We have started celebrating this festival in malls from last year and it has contributed to higher sales.”
Several marketers and research firms feel that a festival is always an opportunity but retailers have limited themselves to a few occasions such as Diwali and Christmas. About 83 per cent of the population is Hindu. And Christmas leads up to New Year celebrations.
SHIFT IN STRATEGY
“Marketers go by numbers and not sentiments. However, with the new generation, this opportunity (Id) can be tapped into,” says independent marketing consultant Harish Bijoor. Citing an example from the US market, Bijoor says that retailers in that market are evolving and shifting their strategy of celebrating holidays and not religious occasions. “India should also follow the same.”
Devangshu Dutta of marketing research firm Third Eyesight says many retailers do have offers in markets with higher concentration of Muslims like Kerala, Hyderabad or Lucknow.
“Many paint India as a religious country, but actually it is a pragmatic country. It goes by numbers.”
admin
August 8, 2013
Priyanka
Pani , The Hindu Businessline
Mumbai,
August 8, 2013
Department store chain Shoppers Stop is charting out plans to
evolve as an omni-channel retailer in a bid to provide seamless
access to consumers in physical stores as well as online. They
expect this to make customers buy more — at least 15 to 30
per cent more — as some research studies have shown.
With consumers increasingly turning to online shopping, brick-and-mortar retailers are devising ways to stay ahead by offering incentives to walk-in customers. The omni-channel strategy is one such initiative.
Shoppers Stop Managing Director Govind Srikhande said, “Globally, several departmental stores, such as Macy’s, John Lewis or Sacks have come back strongly through omni-channel retailing. About 9-20 per cent of their overall sales come through this channel.” He said this trend would slowly catch up with Indian retailers, too. The Mumbai-based retailer that got into e-commerce three years ago recently revamped its online channel.
Other retailers, such as Future Group, Lifestyle, Tata’s
Croma Retail, too, have similar plans.
Online platform
Rajan Malhotra, President (retail strategy) at Future Group, the country’s largest retail company, said the firm doesn’t want to be a pure play e-commerce or physical store but an omni-channel retailer.
The group’s consumer durables and electronics business, eZone launched an online platform three months ago and has witnessed a 50-60 per cent jump in sales sequentially, he added. “The plan now is to integrate both offline and online in a flawless manner,” Malhotra said, adding that eZone’s online business will fetch over Rs 200 crore within a year from just Rs 1 crore at present.
The Landmark group’s value retail arm, Max Lifestyle, is also planning a similar strategy in the next four-five months. However, the company refused to divulge any details fearing competition.
Devangshu Dutta, founder of a marketing and retail research firm, Third Eyesight, wondered whether retailers had the necessary expertise to meet customer demands.
“They have to invest heavily in creating and integrating all the channels and technology systems to act as one,” Dutta said.
Retailers will have to add quick pick-up counters for online purchasers, train their staff to handle instant check-out though a smartphone or tablet and gather data to personalise the shopping experience, he added.
(This article appeared in The Hindu Businessline on 8 August 2013.)
admin
August 7, 2013
Sharleen D’Souza, Business Standard
Mumbai, August 7, 2013
The
influx of apparel brands has taken the count to 200 for consumers
to choose from. ColorPlus was one of the earliest entrants, 20
years back. Raymonds bought it out from a Chennai-based company
in 2002. It is now Raymond’s casual wear brand for men but analysts
worry that it might have lost its appeal without anything new
to offer over the years. Raymonds has now put in place a plan
for overhauling the brand.
An analyst in the know but who did not want to be quoted says,
"When it launched it was India’s strongest homegrown apparel
brand. It used to have an amazing quality product offering but
this is not the case today and it has lost its share to other
brands."
The new look planned to rejuvenate the brand will see its exclusive stores concentrate on entire looks for its consumers rather than individual items of clothing. The stores will themselves wear a look to highlight its theme of ‘Colourful Life’. There will be a system of wardrobes based on collections at the store.
"We earlier tested this format in the south and we have received encouraging response. We have now opened seven to eight stores and by the end of this fiscal plan on opening 25 more stores," says Hetal Kotak, COO of ColorPlus. A feature wall at the ColorPlus stores will have spools of yarn, tying the colorful visual merchandising theme with product-linked props.
The brand has trained its staff to guide customers as style consultants, a model Raymond has tried in its namesake Made-to-Measure stores. "Our representatives will help customers to put a whole look together. They will also give the customer space so that they can look and feel the fabrics and enjoy the experience," explains Kotak.
Stressing on an orchestrated look rather than piecemeal garments, will allow the brand to push its accessories as well, in an effort to increase sales. For now, accessories form a small part of its revenue.
Shoes were launched six months ago and leather bags will be launched at Diwali this year. The bags will be priced upwards of Rs 2,495 and shoes from Rs 4,495. ColorPlus shoes, after being piloted in 30-40 stores, will now be launched across India. The brand also plans on launching eyewear in the near future. It had also tested a sports line six months back and plans to introduce that as well.
"Consumers have responded to the change very well and we are seeing buoyant response. This is showing in the number of order that we have got for our autumn-winter collection and it is at an all-time high which shows that despite tough market conditions we are doing well," Kotak adds.
The change would breathe some freshness to the brand which analysts say has lost its relevance with time. In its heydays, ColorPlus was known for wrinkle-free shirts and chinos which established it as a premium brand and gave it a loyal fan following.
"It did help increase Raymond’s revenue as it was already an established brand when taken over. But it lost its level of intimacy and momentum. Also, market conditions changed since we moved from a market with about 40 international brands or so to some 200 international brands offering competing products," says Devangshu Dutta, CEO of the retail and consumer consultancy Third Eyesight.
Competition such as Madura Fashion and Lifestyle too has proved tough for Raymond’s apparel business, especially its brands such as ColorPlus. Some analysts point out that the brand has also suffered from surplus inventory due to which its summer collection is carried over to the autumn and winter seasons affecting the product offering.
However, its makeover could help matters.
This year Raymond hopes to see a 25 per cent increase in ColorPlus’ revenue owing to the change in store format, as well as its extension into accessories. According to sources, the brand’s turnover was around Rs 200 crore last fiscal.
Raymond claims that after the trials, customer walk-ins, word-of-mouth and conversions increased, fuelled by the imagery of a refreshed premium brand. How far ColorPlus is able to grant all its exclusive brand outlets on which it depends for majority of its revenue a new retail identity will determine its success.
admin
August 5, 2013
Abhilasha
Ojha, Business Standard (The Strategist)
New
Delhi, August 5, 2013
There
is a rule in business that if you are not growing, you may be
dying. But grow too rapidly and you may still find yourself on
the fast track to the business graveyard. That will happen if
you are not alert or constantly looking out for the speed bumps
that will come your way when you are riding on a highway at top
speed. Typically, the growth challenges relate to outgrowing the
infrastructure, losing talented people, stretching the human capital
resources too thin, attracting new competitors and flagging customer
service.
These are also the challenges that face the retail industry in India today as it whizzes along on the fast lane. Being a labour intensive industry sector, workforce management has emerged as the single biggest task for human resources managers. Companies are being challenged to reorganise and adapt their employees to become more efficient. The Deloitte Changing Times, Changing Roles report 2013 sums up the key concerns for HR as hiring skilled talent, retaining critical talent and engaging and motivating employees.
Before we get into the specifics, here is a glimpse of how the industry has grown so far. At $450 billion (or Rs 20.85 lakh crore, according to an April 2013 Deloitte Touche Tohmatsu study), it contributes 14 per cent to the national GDP. The sector employs 7 per cent of the total workforce and is the second largest employer after agriculture. Organised retail, which is about 17 per cent of the total, is expanding rapidly at 20 per cent per year, compared with traditional retail where growth is pegged at 7 per cent. This growth is driven by the emergence of large-format retail outlets and shopping malls.
Such scorching growth has meant there is a huge shortage in skilled manpower. It doesn’t help that employee churn is quite high in the sector. Company heads and experts that The Strategist spoke to reckon that the attrition level in the retail sector would be around 70-80 per cent, and even higher in some cases. Globally, the attrition rate is 30-40 per cent.
The situation gets complicated when you consider how the workforce is deployed. In most companies, 80-90 per cent of the staff is employed at the front end. A majority of the staff that represents this front end – where the consumer actually interacts with the brand – is from economically weaker sections and needs thorough product knowledge and training to be able to understand the consumer needs and address them effectively. A senior executive at a popular apparel retail brand explains it well: "That branded dress you purchase from the store at a glitzy mall would cost the same as the monthly grocery bill that the sales person’s family would run up. Imagine the disconnect!"
Also, retail is a thin margin business compared with other service industries where the rewards and dividends are far higher. So, the task of retaining key people becomes all the more difficult. Experts say most of the attrition happens in the first year when bulk of the training is imparted. Which means a lot of training money simply goes up in smoke.
The task of attracting the best people and keeping them happy is big enough to keep every HR head awake at night. Of course, players are learning the ropes and reacting fast. Here are some lessons from the recent experiences of the big boys in Indian retail.
Planning is key
Spencer’s Retail, the Rs 1,400-crore food and grocery chain from the RPG Group, faced two sets of issues when it decided to shift tracks some eight years ago. The first related to downsizing, which required retooling the workforce and the second concerned expansion of its repertoire, which needed a different kind of training altogether.
Around 2004-05, just when the sector was beginning to take off, the company embarked on an expansion spree opening new and bigger stores in newer and bigger markets. In five years, as the market turned competitive and growth slowed down, it had to take the harsh decision to cut the flab. As it began closing down outlets in markets where business was indifferent, the company realised that it had more people on its rolls than it actually needed.
By 2010, the company had calculated that roughly 250 stores had to be shut down in a span of nine months. Which meant 4,000 employees had to make an exit from the company. Spencer’s decided it would go the extra mile to ensure employees did not feel deserted.
"We realised that though we hired hastily, we could not fire hastily. It had to be done with a lot of care," says Nihar Ranjan Ghosh, executive director, Spencer’s Retail. So a damage control exercise was devised. First, the company created cross functional teams to identify and retain the top performing employees at the front end. Second, it had "frank, transparent" one-on-one discussions with the staff that was being laid off explaining why it had to take such a step. Third, the employees, depending on the grade, were given anywhere between 30 and 90 days to look for a new job.
During this time, Spencer’s arranged for specialists to come to the stores, train this laid-off workforce and help them update their resumes. The company made a special request to its recruitment agency to ensure all its employees get placed elsewhere. Many of the internal managerial staff were asked to refer these employees. By the end of the first month of this exercise, roughly 1,000 laid off staff had secured jobs in other companies. Spencer’s also decided that when it would go into the hiring mode later, the first right of refusal would be given to employees who were asked to leave the company.
A big task, according to Ghosh, is to understand how a lay-off can affect a person psychologically. "These were people who came from an economically challenged strata of the society. Merely asking them to go with a severance package would have been unfair and we didn’t want them to feel they had some shortcomings," Ghosh explains. The exercise of hiring specialists, training the laid off staff and connecting them with recruitment agencies cost the company an additional Rs 60-70 lakh (over and above the severance packages that were given), but the company says it was a worthy cause.
But its problems were far from over. While Spencer’s was getting out of unviable markets it also realised the time was ripe to look beyond the food and grocery format. It got into apparel but found it was a completely different ball game.
The people attending to the food and grocery section (who only needed to ensure stock supply, address grievances, keep the store spic and span) now had to interact more intimately with the consumer who would ask questions about design, cut and fit of garments etc, all of which required a different kind of expertise. As its complaint boxes began to fill up, the company roped in Pearl Academy of Fashion to devise a training programme specifically for the Group, which made all the difference.
Training has been a big area of focus for the Future Group as well.
With 90 per cent of its staff comprising the frontend workforce who face consumers as part of their daily routine, training has become the key tool to build employee confidence and improve sales. "Given the high attrition rate in this sector, our endeavour is to nurture employees for the long term and ensure their commitment leads to outstanding professional growth," says G R Venkatesh, head, People Office, retail businesses, Future Group.
Sometimes, however, the best intentions can backfire. The Future Group realised a standalone training programme doesn’t help – in fact, it increases churn as the trained people quickly begin to look out for ‘better opportunities’ outside. What is required, says the company, is marketing the company to its people and making them aware about their growth path there. So now, with author Devdutt Pattnaik as its chief belief officer, the Group has embarked on a plan to demonstrate to its employees where they fit in in the overall scheme so they feel part of a bigger mission. It hosts off-site programmes and team building exercises more often and in most of its training modules uses examples from Indian mythology to drive a sort of emotional connect between the corporate entity and its people.
Building emotional connect is imperative, agrees Venkatramana B, president, group HR, Landmark Group, because employee disengagement is a direct result of the kind of job retail entails. The front end staff stands for eight to 10 hours at a stretch attending to the customer; those in senior positions feel there is not much scope to grow as the market itself is at a nascent stage. To make things better for the people, Landmark has devised as many as 10 training modules aimed at reducing what Ventakramana calls "infant mortality" or exits within in the first three months. It also continuously looks out for signs of disengagement among workers. When Landmark figured that despite all its efforts attrition was touching 80 per cent some years back, it introduced internal job postings (something that didn’t exist before) to identify existing talent and fill up posts with candidates from within the organisation instead of looking out. "This allowed us to look at the career graphs of our employees more closely and give them a fillip," he adds.
Sometimes a well-planned move can fall flat on its face. At one point, when the company was looking at ways to cut costs, Landmark decided to hire people on a part-time basis during lean seasons, idle weekday hours and so on. Soon, the management realised that people under this arrangement had zero accountability and were hardly involved in the work assigned to them. "The aim was to ease matters for our full-time employees but it didn’t work," says Venkataramana.
For electronics retail chain Croma, training is top on the check list if only to serve customers better. Ajit Joshi, MD and CEO, Infiniti Retail, says in his category the staff needs to be absolutely thorough in their knowledge of the products and their understanding of customer needs. So, besides offering a training programme that is a mix of on-the-job and classroom sessions, Croma has started sending daily SMS snippets to its employees with updated information about the products, brands, categories that are stocked by the company. One small move that has gone a long way in boosting the sales person’s confidence; it has also ensured the employee feels looked after, says the company.
Evidently, the challenges are many and there is no one-size-fits all formula for success. A lot depends on how proactively firms pick up the warning signals, says Devangshu Dutta, chief executive of Third Eyesight, a retail consulting firm, rather than "plug the holes after things begin to fall apart".
ROAD AHEAD
Talent acquisition
Talent management
Talent development
admin
August 2, 2013
Nigam
Prusty and Nandita Bose, Reuters
New
Delhi, August 2, 2013
India relaxed sourcing and investment rules for the retail sector on Thursday in a renewed attempt to attract foreign supermarket chains such as Wal-Mart Stores and Tesco.
Foreign companies have been keen to enter India’s $500 billion retail market since the country allowed foreign investment in its supermarket sector in September 2012 but ambiguity around entry rules has kept them away.
The issue remains politically controversial because of worries that millions of small shopkeepers could go out of business and India has so far not received a single application from any global retailer.
A previously announced rule that foreign chains must source 30 per cent of their products locally when they enter had been a major sticking point.
In the new announcement, the government retained the 30 per cent sourcing requirement but said it can be met over a period of five years initially and after that it has to be met on an annual basis.
It also said that global chains will only have to invest 50 per cent of an “initial” mandatory investment of $100 million in setting up cold storages and warehouses as against the earlier policy, which said half of the entire investment by foreign chains in india had to be in building back-end infrastructure.
“The new rules have removed some major stumbling blocks and should encourage foreign retailers to enter India,” said Devangshu Dutta, who heads retail consultancy Third Eyesight. “Although most retailers are still likely to wait for the outcome of the elections next year before they make a decision.”
National elections in India are due by May 2014 and a change in government could result in the controversial retail reform, being reversed and any newly opened supermarkets being shut, according to industry officials.
A Wal-Mart spokeswoman said the company was studying the revisions to the foreign direct investment policy.
“We appreciate the government’s willingness to consider our requests for clarity on conditions contained in the new FDI policy,” she said in a statement.
The revised policy also allowed global retailers to procure from small businesses that have intial investment in plant and machinery not exceeding $2 million – up from the limit of $1 million set out earlier to ensure modestly-sized Indian companies benefit from the influx of foreign firms.
These businesses can continue to remain suppliers even if they grow and cross the $2 million investment cap at a later stage, an essential requirement for global retailers who want to be sure of maintaining a stable supply chain in the country.
The government allowed Indian states that have decided to support foreign direct investment in retail to make a decision on where they would allow foreign retailers to set up shop. The earlier rule stated foreign chains can only open stores in cities with a population of more than a million.
Several Indian states oppose moves to allow foreign supermarkets and currently only 11 out of 28 Indian states have agreed to let foreign operators in.
(Additional reporting by CK Nayak; Editing by Anthony Barker)
