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Looking for malls that think like brands

Sayantani Kar, Business Standard

Mumbai, 16 February 2015

When the million-square-foot mall broke into the concrete jungle in 2007-08, onlookers worried the local markets would find it difficult to sustain. But the Indian consumer proved to be less brand conscious than expected. The neighbourhood markets dodged the doomsday predictions, and continue to coexist. But the destination malls took a toll on their smaller brethren, especially in heavily-contested catchment areas.

In the last two years, it has been reported that no less than 30-40 malls have downed shutters. But, even though thrice that number of malls have come up, retail analysts say most lie vacant because they don’t meet the criteria brands have. Standalone brands, anchor stores, restaurants and multiplex chains usually make up the tenant mix. What do brands, then, look for in a malls?

Devangshu Dutta, chief executive, Third Eyesight, a retail consultant, says, "Brands have to weigh whether they can be supported in a catchment area or not. If a rival brand is present, it could mean that it has primed the customer for the second brand’s merchandise." Delhi and Mumbai and their satellite cities have seen malls come up in the same neighbourhood, leaving brands to mull whether to jump ship or straddle both.

There is, of course, the set of hygiene factors. Brands agree that location is the most critical. As is the track record of the developer, its credibility and marketing skills. The layout of the mall, to allow the crowd to circulate evenly, and not get concentrate in certain pockets is important. The tenant mix, parking, accessibility and maintenance become more important as more malls vie for the same audience in larger cities.

Atul Chand, divisional chief executive, ITC Lifestyle Retailing, says, "Outdated malls with tired concepts have lost footfall to new developments. A brand would have to take a call on a transition in order to stay contemporary. Constant reviewing will also help decide whether stores in both can be viable or not."

Sadashiv Nayak, CEO, Big Bazaar, the hypermarket of Future Group, says, "If we have Big Bazaar in a town, say Nagpur, and another mall comes up that we would like to be in, then we turn to our other brands such as Food Bazaar or FBB (fashion store), as these are distinct from each other."

PVR, the leading multiplex chain, recently found one of the malls it was present in, in Mumbai’s suburbs (Mulund), decide to wrap up. Nirmal Lifestyle, a 500,00-square-foot mall, opened in 2003, could not keep up with competition. Sanjay Kumar Bijli, joint MD, PVR, says, "We did well, got a lot of support from the developer. We have no regrets but a competing mall came up in the neighbourhood and the footfalls shifted to it over a period of time. You can’t always help such a scenario. But we have tried to counter it where possible. A case in point being Whitefield in Bangalore. We are in the Phoenix mall and also in VR, coming up next to it. The malls’ positioning is different from each other. Phoenix caters to a large population in the upcoming suburb, while the PVR in VR would have more Gold Class theatres and IMAX."

Dutta says, "Brands need to see whether the developer identifies the customer and builds around it. Select Citywalk is doing the best among malls in Saket, Delhi, because it homed in on the South Delhi woman as its customer and actively curates the brands, even culling those that don’t click."

Nayak agrees, "We look whether the mall owner’s wavelength matches our customer-centricity or not." Chand says that a tenant mix with the same target audience, rather than a general mix, helps collectively woo the shopper to the mall.

Nayak says that with standalone stores outnumbering Big Bazaar’s mall stores, the strategy is agnostic of format. Big Bazaar has to be accessible by private vehicles and public transport because of the cross-section of audience, and have smooth movement inside, and have parking, washrooms etc.

Darshana Shah, senior vice-president, marketing and visual merchandising, Hypercity (Shoppers Stop’s hypermarket), says, "The financial viability is a big factor. Besides revenue share, developers also share the capex, especially in tier-II towns. Malls get in trouble when they sign up anchor stores but fail to attract smaller tenants and some of their floors remain empty." Chand reminds that "size matters because it means more categories to keep the consumer engaged, with but doesn’t work without requisite infrastructure."

Veteran retail consultant and founder of Trrain (Trust for Retailers and Retail Associates of India), BS Nagesh, warns brands to not cite e-commerce as an excuse, "Brands have panicked due to e-commerce competition and in malls, they seem to have forgotten the other elements that add up to their experience, and are only saying it is the price and going in for frequent sale. As a result, it has affected them and the malls. We see people in the food-court, so brands need to rethink ways to get them back to their stores. But you can’t devalue the brand just because of online competition. Online sales are around 5 per cent, while modern retail are 8-10 per cent, so why not look at the 85 per cent that is there for the taking."

(Published in Business Standard.)

Online retailers step in to cater to special needs of the elderly

Varun Jain, The Economic Times

New Delhi, 18 February 2015

E-tailers in India are coming up with products and offerings exclusively for senior citizens, turning their attention to a category of consumers that they had hitherto ignored in their rush to reach the growing young population in the country.

Mumbai-based Rahul Upadhyay, whose Seniorshelf.com caters exclusively to senior citizens with mobility aids, toilet safety products and items meant for arthritis patients, said the venture was inspired by a personal experience when he went to visit his parents and then spent three hours looking for a blood pressure machine.

"It was just not available. That is when I realised that there is virtually no retail – online or offline – which is catering to the elderly while they are the most vulnerable ones. Despite having the means, senior citizens in India are mostly left to fend for themselves and in many ways the market has ignored them as a consuming class with needs of their own," said Upadhyay, who was encouraged by the growth of e-commerce business in the country to take the plunge.

A similar situation faced by the promoters of oldisgoldstore.com led to the opening of this south India-based online and offline company, which sells health care products exclusively for the senior citizens.

"There are over 120 million people over the age of 60 in India. That is more than the entire population of most of the countries in the world. With improved health care, more people are living longer and this is increasing the need for home health care as well. This means that there is a significant growing market for e-commerce players in this sector," said Sanjay Dattari, one of the three promoters of oldisgoldstore.com.

New Delhi-based Healthgenie.in, which started about two years ago and is in talks to raise $1 million (about Rs 6.2 crore) in funding, has a category especially for elderly health care. According to Manu Grover, founder of Healthgenie.in, whose family has been into manufacturing of medical devices for 50 years, the health care requirement of a person over the age of 60 years increases drastically.

"Combine this with better life expectancy and we can see the market size increasing and gaining a substantial foothold in the coming five years. But still there are not many e-commerce players in this domain who cater to the elderly," said Grover.

The lack of easy availability offline of the products required by senior citizens also provides a ready opportunity to such ventures. As per Upadhyay’s estimates, the e-commerce market for the elderly is barely 5% of the overall market that is estimated at Rs 10,000 crore.

"Hence there is a huge potential to leverage this gap and enable elderly access products and services regardless of which part of the country they live in," said Upadhyay.

According to Devangshu Dutta, CEO of retail consultancy firm Third Eyesight, products that are targeted at seniors will also be those that are not easily available through other channels, and therefore discounting pressures on the seller are less and the business can make healthier margins. "Provided consistent products, sensible pricing and excellent service, the consumer’s stickiness with the retailer would also be higher," said Dutta.

These e-commerce players have tied up with various medical services companies which provide doctors, nursing physiotherapy, diagnostics and equipments at home, to provide a seamless experience for the elderly. One such company, Portea, whose large portion of customer base is the elderly population, is also associated with e-commerce players catering to senior citizens.

(Published in The Economic Times.)

North-eastern states fast emerging as growing markets for India’s e-commerce players

Varun Jain, The Economic Times

New Delhi, 5 February 2015

India’s North-Eastern states are fast emerging as the drivers of growth for some leading e-commerce companies, which claim double-digit growth in the market after having overcome last-mile delivery challenges.

In this region, where hilly terrain and limited road and flight connectivity have posed hurdles for companies wanting to expand operations, demand for goods online is being fuelled by unavailability of certain products and the deep discounts being offered by e-commerce companies on a host of goods, including branded products.

Snapdeal’s VP – operations, Ashish Chitravanshi, said the North-East region is not only an important market for the company but also has the potential to be at a par with Delhi and Mumbai, in terms of business potential.

"The region is among the fastest-growing markets in the country for us. We have been steadily growing in double digits monthon-month in the North-East markets, with a steady increase in the number of orders from the region," said Chitravanshi. "As we take our reach deeper into the region we anticipate this number to grow phenomenally."

While Snapdeal services large parts of the North-Eastern region covering more than 1,100 pin codes, its rival, Flipkart, serves customers in over 80 cities in the region in partnership with logistics players eKart and India Post.

Flipkart has seen healthy growth in the region in recent years and is now scaling up its supply chain capabilities and support facilities to create a seamless shopping experience for customers there, a company spokesperson said, adding that the region has a relatively younger customer base as compared to the rest of the country and categories like apparels, games, music and books are popular.

Similarly, as much as 15% of Fashionandyou’s revenue comes from the North-East, said Manav Narula, its GM for marketing.

Sanjay Sethi, CEO and co-founder of ShopClues.com, said that though the percentage contribution to gross merchandise value(GMV) is in single-digits, the company expects it to grow to 10-12% in the years ahead.

Devangshu Dutta, chief executive of retail consultancy Third Eyesight, said taht due to logistical constraints, managing a network of physical retail points is cumbersome in the North-East, while e-commerce is at a specific advantage in this region, since it allows a virtually unlimited range of product offering to be presented rapidly to the customer at a relatively low cost.

India’s largest fashion e-tailer Myntra established its distribution centre in Guwahati a year ago, followed by a centre in Mizoram’s capital Aizawl. "When we started the Aizawl centre, it showed us 500% jump in sales," said Ganesh Subramanian, head of new initiatives at Myntra.

For Myntra, a year ago, the North-East region was growing at 1.5 times the overall growth of the company and the business coming from this market is currently in line with the company’s overall growth, Subramanian added.

But it is not just mass e-commerce players who are seeing traction from this region. Specialty and niche players are also in the game to conquer this still untapped region.

Gaurav Singh Kushwaha, founder and CEO, Bluestone.com, an ejewellery company, said the region contributes to about 11% of the company’s revenue. Also, the average selling price from the North-East is higher than the average selling price from other non-metros, he said.

FirstCry.com, a retailer of children’s products that has four service centres in the region, of which the ones in Agartala and Guwhati are owned by the company, plans to add another two distribution centres in Silchar and Shillong in a few months, said founder and CEO, Supam Maheshwari.

The region’s difficult terrain has thwarted efforts to build roads and improve airline connectivity. This, in turn, has hindered growth of offline retail and availability of branded products. "It is the ideal use case for e-commerce where customers are not buying because of discount but because of lack of availability of options and variety" said Kushwaha of BlueStone.

Some e-commerce players see this region as a game changer if the logistical challenges are addressed.

Chitravanshi of Snapdeal explains, "The region forms 8% of India’s landmass and has only 4% of country’s population, which means the population is thinly spread across a largely mountainous area. This certainly presents a logistical challenge in terms of connectivity and cost involved to all e-commerce players."

Vipul Sharma, director of ecommerce Association of India, feels that the development of IT infrastructure at a faster pace can really turn the tide for the region

(Published in The Economic Times.)

Xiaomi may follow Amazon model for its online portal in India

Anand Murali & Jayadevan PK, The Economic Times

Bengaluru, 4 February 2015

Xiaomi will likely set up a marketplace platform and bring on board third-party retailers to sell the phones on its portal Mi.com

When Chinese phone maker Xiaomi starts its own portal to sell phones in India, it may adopt the model followed by Amazon and Flipkart to work around the country’s retailing regulations.

Xiaomi will likely set up a marketplace platform and bring on board third-party retailers to sell the phones on its portal Mi.com. Xiaomi will supply the sellers so that it doesn’t flout retailing norms, according to sources. By creating a marketplace-like structure, it will avoid regulatory issues around retail foreign direct investment, said a person aware of Xiaomi’s plans in India.

"Technically, they can’t set up a business-to-consumer ecommerce site in India because that’s not allowed," said Devangshu Dutta, chief executive officer of retail consulting firm Third Eyesight.

Xiaomi, one of China’s largest smartphone vendors, has been selling devices in India by holding flash sales on e-tailer Flipkart and through AirtelBSE -1.08 % stores. The company is yet to finalise its own online plans.

"We’ve been seeking expert advice on how to structure it. We won’t do anything which is against the spirit of the law," said Manu Jain, head of Xiaomi India.

Creating a marketplace-like structure and working with third-party retailers is one of the options but the company hasn’t finalised anything, said Jain, who was one of the founders of e-commerce portal Jabong and joined Xiaomi in June last year.

The sales strategy centred on its e-commerce portal will also help offline sales as merchants from smaller towns can buy Xiaomi phones online and sell them in their stores.

Foreign direct investment is not allowed in online retailing, unless the company provides a platform to sellers. Amazon and Flipkart have Indian partners that sell a majority of the goods on the marketplace. The norms apply to Flipkart because it has received FDI in the form of venture capital and is domiciled in Singapore.

Prione Business Service, a 49:51 joint venture between Amazon and Catamaran Ventures, is one of the largest sellers on the platform. Most sales on Flipkart are through WS Retail, a company hived off by Flipkart to comply with Indian regulations on retail.

Xiaomi will continue to sell on Flipkart even after it launches its own portal, said Jain.

(Published in The Economic Times.)

Van Heusen’s bespoke pitch

Sharleen D’souza, Business Standard

Mumbai, 3 February 2015

In search of the next sales pitch, some of Madura Fashion and Lifestyle’s (part of Aditya Birla Nuvo) apparel brands are turning to customisation. The first to let consumers have a go at it was Madura’s Louis Philippe, but that was seven-eight years ago. Now, Van Heusen, its mid-to-premium formal clothing brand and its casual clothing brand extension, V Dot, are set to take it up on a mass level.

Ironically, the readymade apparel market flourished and overtook the unorganised tailoring segment when customers eschewed bespoke shirts and pants. And yet, one of the major readymade players is bringing some of the latter’s characteristics back.

Van Heusen is calling the move MY FIT, and it will run parallel with its regular readymade offerings. Van Heusen’s entire range will be customisable in the next one month, at its own stores. The consumer can change the collar style, sleeve length and add or take an inch or two for a better fit.

Van Heusen is betting on the fact that most of its competition, such as Park Avenue (Raymond), Zodiac and Blackberry, operating in the same price range, do not offer such customisation. However, it will go up against Raymond’s ‘Made to Measure’. Both will now have shirts priced upwards of Rs 2,000 (inclusive of Van Heusen’s extra charge of Rs 300 for customisation). In case of Louis Philippe, customised shirts begin at Rs 6,000.

Van Heusen will deliver the garment in seven to nine days, with plans to cut short the delivery time to five to six days. "We are looking at a deeper customer engagement with the brand. This is a complete change in our business model," says Vinay Bhopatkar, chief operating officer of Van Heusen.

The jury of experts seems to be divided on the move. Some feel that customers walk into a branded readymade apparel store because they want to buy what is available and not spend their resources of time and money to add to that task. "Customers want a complete product when they walk in. They are not designers who would want to alter a product if they are not happy with it," says Prashant Agarwal, joint-MD of retail consultant, Wazir Advisors.

Yet others say the hybrid model could be a way forward. "It is a fairly significant move for the brand. For a customer, buying readymade clothes is a question of trial and error. Not every product suits the body frame. The concept of the brand going back to the single piece is huge," says Devangshu Dutta, chief executive at Third Eyesight, a retail consultancy firm.

Aditya Birla Nuvo, which has been shoring up its apparel business by not just adding to the count of its branded stores but also with acquisitions such as Pantaloons, has been trying to include a greater scope for customisation across its brands. Besides Louise Phillipe and Van Heusen, its casual clothing brand, Allen Solly, too, had introduced the option of choosing from a palette of 670 dyes for a custom colour, last year. These options can also drive footfall to the brands’ exclusive stores where these are available, rather than shop-in-shops or multi-brand outlets where trade margins are lower.

Van Heusen’s litmus test would be the extension of MY FIT to its women’s line in the next few months, as Bhopatkar informs. Launched in 2007 but scaled up since 2013, it contributes 10 per cent to revenues (in 2013-14, Van Heusen’s total sales stood at Rs 1,500 crore). Women’s readymade clothes are the largest ready-to-wear segment and Van Heusen claims its business is growing at 30-40 per cent.

The brand will dedicate 10 per cent of its in-house manufacturing capacity to customisation. The store staff,too, has been trained to guide customers.

The overall apparel market is around Rs 2.75 lakh crore of which branded apparel is around 25 per cent.

(Published in Business Standard.)