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September 22, 2014
Ankita Rai, Business Standard
New Delhi, 22 September 2014
* Future Group plans to invest Rs 100 crore over next 18 months to provide consumers a ‘single view’ of its many brands across physical and digital channels. It is targeting 30 per cent increase in business once its omni-channel platform becomes operational.
* Infiniti Retail, which operates a national chain of multi-brand electronics stores under the brand name Croma, has started delivering orders placed online the same day in 16 cities where it has its stores. The number of daily clicks on Cromaretail.com stands at 2,10,000.
* Textile manufacturer and the flagship company of the Lalbhai Group, Arvind Ltd, recently launched its online custom clothing brand, Creyate, on the back of which it hopes to build a Rs 1,000 crore business in the e-commerce space over the next three years.
* Trendin.com, the e-commerce website of Aditya Birla Nuvo-run Madura Fashion & Lifestyle, has witnessed 200 per cent growth in its online orders since its launch in 2013 and is planning to launch store pick-up and return services. Trendin.com showcases merchandise for men, women and kids and houses brands such as Louis Philippe, Van Heusen, Allen Solly, Peter England and People.
Get the drift? Most traditional retailers are moving towards omni-channel marketing. As consumers move seamlessly between digital and physical channels, even during the same shopping trip, the lines between online and in-store shopping is getting blurred, and reaching out to consumers through all possible shopping points is becoming imperative.
"When we see the world through the eyes of our consumers, we make better marketing decisions," says Kit Yarrow, professor of Marketing and Psychology, Golden Gate University, San Francisco. "A big adjustment that businesses need to make is to understand that their shoppers do not see the world as online versus in-store. It is fully integrated in their minds and lives. But until very recently, most businesses were set up with an online division that often competed with their brick-and-mortar division. That’s just going to confuse consumers, and it is not leveraging insights across teams for the betterment of the company," Yarrow says, adding, "Omni-channel retailers need to get out of silo thinking and integrate various functions."
Indeed, the survival of traditional retail depends on it. How? According to the latest AT Kearney report on omni-channel, shoppers who jump in and out of platforms are more loyal and spend more than single-channel shoppers. It also showed that brand loyalty is directly related with retail channel usage. Such consumers are 15 per cent more likely than single-channel consumers to recommend a retailer and that the average spend of three-channel consumers is more than twice that of single-channel shoppers. "It is about staying relevant. With the way the retail ecosystem is evolving, technology will change the way a customer experiences retail," says Ankur Bisen, senior vice-president, retail and consumer products, Technopak Advisors.
Think of it this way: traditional retailers are in a unique position to reap the rewards of a well-laid out omni-channel strategy. As Kumar Rajagopalan, chief executive officer, Retailer Association of India (RAI), points out, "These players already have a trusted brand. An extension of the brand offerings over other channels helps in creating better customer-centricity."
Endless aisles
The biggest challenge physical stores face is being able to showcase all the stock they have under the roof. High real estate and distribution costs also stand in the way of rapid expansion. According to a Technopak report, ‘E-tailing in India’, 56 per cent of the total organised retail is in the top 24 cities, which includes metros, and Tier-I cities. This is where the learnings from their peers in developed markets – namely, Walmart and Best Buy – can come handy. To counter the challenge posed by the likes of Amazon, most big box retailers in the US have gone online and are also opening smaller standalone stores. That’s the idea behind endless aisles, which implies that consumers have access to not just product held by the high-street outlets, but smaller stores or even online. The in-store computer terminals and kiosks allow customers to shop and purchase from a retailer’s entire inventory. Says Kumar of RAI, "Offline retailers in India can use multichannel capabilities to bring to life the concept of endless aisles, which means they would offer things that are not necessarily restricted to the physical location or capacity of the store. "
Now look at how Indian retailers are building their omni-channel capabilities. Tata Group’s retail arm Infiniti Retail advertises a shop-online-pick-up-in-store service on its online portal. Consumers can also return or exchange the products bought online in the stores. It also plans kiosks at places like airports where people can surf and place orders. Ajit Joshi, CEO and MD, Infiniti Retail, explains the benefits, "The ‘store pickup’ concept, which allows customers to order online and pick it up later from store, is popular in electronics as consumers need a little bit of handholding in terms of personalising the product being purchased."
Future Group is targeting 30 per cent increase in business once its omni-channel platform becomes functional. It recently announced a tie-up with Hybris Technology to roll out its omni-channel platform. "By next year, consumers will have the option of shopping online from our stores. We plan to first implement it in Ezone, followed by Planet Sports and Big Bazaar. We will offer services like cash on delivery; we will set up kiosks manned by franchises who will deliver at your doorstep; you can order online and pick from the store. We want to reach the customer whom we can’t reach through physical stores," says Kishore Biyani, CEO, Future Group.
"We will leverage our modern warehouses, the distribution centres and the huge customer data that we have to offer a seamless experience," adds Biyani.
Shoppers Stop, which also operates an e-commerce portal, is confident that its omni-channel approach will start showing results within the next 24 months. Says Govind Shrikhande, customer care associate and managing director, Shoppers Stop, "Our omni-channel retail approach aims to create a seamless and convenient shopping experience for customers. A customer can shop at the neighbourhood Shoppers Stop store, shop online (www.shoppersstop.com), browse through the latest trends on our six million-plus-strong Facebook page, view a fashion tutorial on our YouTube channel and buy merchandise, shop at our airport stores… you name it. Customers can shop online and exchange products at our physical stores."
Aditya Birla Group-led Madura Garments, which owns brands like Louis Philippe and Van Heusen, unveiled its shopping portal TrendIn.com last year and goes as far as to offer an in-store alteration facility for orders placed online. Says Shivanandan Pare, head of e-commerce, Trendin.com, Madura Fashion & Lifestyle, "We launched Trendin.com to cater to the changing consumer. The idea was if the consumer is going online, the brand should be there. The same thinking led us to launch exclusive branded outlets 10-15 years back." The brand also has a responsive mobile optimised site. The experience is similar to an app browsing screen.
Eyewear retail chain GKB Opticals launched its e-commerce portal in 2012. While eyewear can be a difficult category to market online, the 50-year-old retailer hopes to leverage the learnings from its 60-plus retail outlets to power its online stores. The website has a ‘try on mirror’ and a ‘face shape’ guide to help customers try-out products sitting at home. Consumers can also return, exchange and get the frames they purchased online serviced at all of its retail outlets. Dhruv Gupta, CEO, GKB Online, says, "Having an online presence has also increased traffic and engagement at stores."
For its part, Arvind’s Creyate allows consumers to create a garment on a three-dimensional (3D) visualisation engine. Customers can touch and feel apparel material and sit at the store’s iMacs to design their clothes. A 3D visualisation engine allows them to see how their final garments would look. The store also has a magic mirror that can be operated through hand gestures and consumers can use it to virtually try on garments. "As the Indian e-commerce market evolves, customers will become more discerning and come to the internet for things other than discounts and wide offerings. For the apparel category, experiential e-commerce will become more relevant," says Kulin Lalbhai, executive director, Arvind Ltd.
Easier said…
"For brick-and-mortar retailers to successfully move into other channels needs radical rethinking in terms of the service ("always open"), speed ("right now"), scale ("everywhere")," says Devangshu Dutta , chief executive, Third Eyesight.
An effective omni-channel strategy really needs to embrace every touch-point as one unified whole. "Studies have shown that physical retailers who simply try to mimic pure-play online retailers are not taking advantage of their legacy," says Nikhil Prasad Ojha, partner & head, India’s Strategy Practice, Bain & Company. "Firms must integrate both the channels if only to avoid duplicity of efforts." Agrees Vivek Mathur, CEO, Giftease Technologies, "Given that many of these are older, larger businesses, silos are often too hard to break, unless driven from the top."
In contrast, in the more developed Western markets, physical stores have played an instrumental role in the growth of omni-channel retailing. According to a recent Forrestor study, ‘Minding the Omni-Channel Commerce Gap’, such synergy has many benefits – physical stores can cut merchandising costs and improve customer satisfaction when they move online. By delivering products from local stores, online players can cut delivery cost and time. "Brands need to use their distribution network when going online. Instead of fulfilling an order from a central warehouse brands can use their nearest stores to fulfil orders," says Sushant Kashyap, who heads fulfillment and omni-channel services at Delhivery, an e-commerce-focused logistics service provider, which also offers omni-channel services to retailers to help them integrate their myriad channels.
Gupta of GKBOptical.com says that the biggest challenge is to ensure that the product is shipped on time. "Leveraging inventory across channels and geographies becomes difficult when you take into account various state tax laws," he adds. Infiniti Retail’s Joshi says, "We are working with our suppliers so that we can track each other real time. For instance, if we are pushing a sale, they should be in a position to transfer stock to the nearest distribution centre. We are also trying to minimise the time taken for a supplier to reach our local warehouse by improving our logistics intelligence."
Croma is leveraging its distribution muscle to deliver orders the same day in 16 cities where it has its stores. "If a consumer orders before 2:00 pm, a Croma employee will deliver it the same day. He will brief the consumer in case she wants product demonstration and help with data transfer for mobile phones. This is a key differentiator because everybody else is using a courier service," says Joshi, adding, "Currently, Croma has 97 stores and it has distribution centres in Bangalore, Delhi, Mumbai, Chennai Hyderabad and one in Gujarat. With this network we are currently servicing more than 300 cities and towns."
On its part, Madura leverages its central warehouse backbone to ship products. "Earlier the warehouses were shipping bulk orders. But once we went online, we had to build capability to ship individual customer orders. This required huge investment in technology and employee training to equip them to handle single shipments," says Pare.
(Published in Business Standard .)
admin
September 21, 2014
Purvita Chatterjee/M. Somasekhar, The Hindu Businessline
Mumbai/Hyderabad, 21 September 2014
At a time when Swedish retailer Ikea is making big plans to enter India, the country’s largest retailer Reliance Retail is winding up its furniture format under Reliance Living.
All the stores under Reliance Living are now being shut down across cities such as Bangalore, Delhi and Hyderabad.
“We had 12 Reliance Living outlets across the country and most of them have shut down as furniture is no longer a focus area for the company,” said an official from Reliance Retail.
Reliance Living stores occupied large space across these metros stocking furniture, furnishing, home ware and kitchen items. Even other organised players such as Future Group’s Home Town and Lifestyle Group’s Home Centre have been struggling to make money from their respective formats.
In the case of the Future Group, it had to merge its Home Town stores with its durable format under e-zone to help it break even.
Slow churn
According to Devangshu Dutta, Managing Director, Third Eyesight, a retail consultancy, “The slow stock turn is the biggest issue for furniture retailers as the inventory and retail space get locked up unlike in the case of fast moving categories such as apparel, food and grocery.
“Besides, competitiveness of the fragmented unorganised retailers is too strong for the organised players to make money easily. Indian furniture retailers have yet to discover a model which works for them.”
Apart from furniture, last year, the multi-format retailer shut down its books and music format — Reliance Time Out — and even its non-vegetarian offerings under Delight. “Almost 40-odd stores under Reliance Time Out were shut since categories such as books and music have moved to the digital platform. We are constantly rationalising our formats depending on what works for us,” the official added.
Value format
However, other specialty retail formats such as Reliance Digital and Reliance Jewellery are helping boost margins and profitability for the company.
Today, it is the value formats (Reliance Fresh, Super & Mart) which are the biggest growth drivers for Reliance Retail. Value retailing now accounts for 55 per cent of the company’s ?14,500-crore turnover.
It is in the process of expanding its value formats and e-commerce will be a major part of these. Damodar Mall, CEO – Value Format of Reliance Retail, said: “We are already doing a pilot among our employees for e-commerce.”
Meanwhile, its ‘cash and carry’ format under Reliance Market has established leadership position in the category with 32 operational stores and 1.2 million registered members.
(Published in The Hindu Businessline.)
admin
September 17, 2014
Nikita
Garia, MINT
Bangalore,
17 September 2014
Cab
booking service TaxForSure, which recently raised $35 million
in funding, has cut rates sharply, joining a fare battle with
rivals Olacabs and Uber to grab a bigger share of a rapidly growing
market.
Although TaxiForSure had earlier said it would resist price cuts,
the company, controlled by Serendipity Infolabs Pvt. Ltd, announced
a 25% price cut for booking through its app; a week earlier, it
cut prices by half for rides booked between 10am and 4pm via its
app.
TaxiForSure was under pressure to cut prices, as rivals OlaCabs
and Uber have seen a significant jump in demand after they slashed
prices over the past two months.
“We are running the discount to promote booking through
the app while our usual prices remain the same. We don’t
plan to change our price model,” said Aprameya Radhakrishna,
co-founder of TaxiForSure. The company plans to run these discounts
“for at least more than a month.”
Radhakrishna said the company was giving discounts to encourage
users to book rides through its app and that the price cuts were
not influenced by competitors.
“If the booking comes through our call centre, on an average
we have to incur a cost of Rs.30 per transaction, considering
into account the rental costs and salaries of the staff. So giving
the customer discount for using the app or our website in the
short term will eventually be good for us as we would be spending
less on our call centre later,” said Radhakrishna, adding
that at present it receives 50% of bookings through call centres,
35% through the app and the rest from its website.
“The move will help us get more transactions done by employing
the same number of people in the call centre.”
This week Uber, which raised a mammoth $1.2 billion in June from
the likes of Google Inc., Goldman Sachs and others, slashed the
price of its higher-end service UberBLACK by 25% in New Delhi.
In August the company cut prices on all its rides by 25% in Bangalore.
The San Francisco-based mobile app is also offering discounts
of 50% on airport rides in Bangalore. Olacabs, which received
Rs.250 crore from investors in July, reduced fares by 25% last
month.
Olacabs and Uber say they have seen a spike in demand since they
announced price cuts over the past two months. “There has
been a significant rise in demand after the price cuts,”
said Anand Subramanian, director of corporate communications at
Olacabs, adding that the “earnings of drivers has gone up
by upto 40% as the drivers are now doing more trips.”
Uber, too, has seen a jump in demand after it cut prices by 25%
on all its rides in Bangalore, the largest market for cab companies.
Both Olacabs and Uber say that they have reduced prices because
they are squeezing out more rides from each driver and also adding
hundreds of new cars.
While Olacabs has announced permanent fare changes, Uber like
TaxiForSure is running promotional offers.
“There is no time line on how long we will continue with
the reduced price offers. We are continuously analysing data on
driver earnings and customer demand, both of which have gone up
after the price cuts. So we may either hold on to these prices
or may further reduce them,” said Bhavik Rathod, general
manager at Uber in Bangalore.
Raghunandan G., co-founder at TaxiForSure, had told Mint in an
earlier interview that discounts put pressure on the earnings
of companies. “When we ran a discount last time, we had to
pay the extra money to the drivers from our pocket. The other
players are losing money on each ride because of these price cuts.
If they continue with these low prices, how will they earn money?”
he had said.
Analysts cautioned that cutting prices and losing money at the
cost of gaining share wouldn’t work over the long term.
“These businesses have raised money in the recent past,
but they need to balance out their operating costs. A loss making,
market share gaining strategy can be managed for a short while
but it won’t work in the long term.” said Devangshu
Dutta, chief executive at Third Eyesight, a consultancy.
(Published in MINT.)
admin
September 11, 2014
Reghu
Balakrishnan, Business Standard
Mumbai,
11 September 2014
Indian
private equity (PE) investors are gearing up to participate in
the e-commerce growth story. In recent past, back-end logistic
players have been on radar of PE players. India’s e-commerce market,
which is expected to reach $20 billion by 2020, has seen the presence
of five-six large organised specialised logistics players.
Devangshu Dutta, CEO of Third Eyesight, a retail consultancy, said: "While building a retail and consumer brand carries a potentially high reward, they are also high risk as shown by the attrition among e-commerce companies. On the other hand, no matter which specific front-end companies survive, back-end services and vendors will be needed by most of them."
Logistics services company Delhivery has raised Rs 212 crore led by Multiples Alternate Asset Management in series C fund-raising, with the participation of existing investor Nexus Venture Partners.
Another Delhi-based e-commerce logistics solutions provider, Ecom Express, raised Rs 100 crore ($16.5 million) from Peepul Capital earlier this week.
Srini Vudayagiri, investment director at Peepul Capital Advisors, said: "Any business, which is part of the e-commerce space, will also see a significant momentum in future. Logistics, which contributes 9-10 per cent of the overall e-commerce market, will have a huge potential when e-commerce will touch $20 billion in a few years."
According to him, specialised e-commerce logistics providers have an upper hand over the other normal business-to-business logistics players, because collection of cash (in case of cash-on-delivery), returned items and delivery need special attention compared with general logistics.
According to a recent report by Accel Partners, online shopping of physical goods will increase from $2 billion in 2013 to $8.5 billion 2016, while online shoppers will double to 40 million in 2016 from 20 million in 2013.
To tap the fast-growing market, logistics players are all set to grow rapidly with the latest round of PE funding. T A Krishnan, co-founder and CEO of Ecom Express, said, "From handling five million packages in FY14, we plan to grow to 20 million packages by FY15." The company will increase the number of employees from 3,000 to 10,000 in the next five years. It will also expand into 500 cities over the next two years from 100 cities at the moment.
Recently, Delhi-based Holisol Logistics, a provider of back-end logistics services to e-commerce companies, received $1.5 million in venture funding. Holisol’s customers include Fab Furnish, FreeCultr, Jabong and OfficeYes, Pepperfry and Urban Ladder.
"One of the factors in favour of back-end companies is modest valuation multiples compared to emerging retail or e-commerce companies, and a back-end vendor with a reasonably diversified customer portfolio is a lower risk investment over the mid-to-long term," Dutta added.
However, competition will get tough for specialised players as major logistics players such as DTDC Courier, Gati (Gati Connect), Blue Dart and Aramex are already in the e-commerce business with their new divisions. Last year, DTDC Courier & Cargo set up DotZot, a separate unit for providing logistics support to online retail service providers. Similarly, eKart, the in-house logistics arm of Flipkart, had also extended its services to other sellers.
(Published in Business Standard.)
admin
August 30, 2014
Ekta Sharma Verma, Franchise India/Retailer
New Delhi, 30 August 2014
Commencing
a new restaurant biz or an outlet in India usually comes with
a lot of challenges for entrepreneurs. But the challenges and
dares are more when you replicate a foreign brand’s model
in India. So, what are the challenges that the far-off food brands
see while foraying in India. Let’s talk to experts from the
F&B sector and know more on this.
As per Third Eyesight, a consulting firm – The number of international
brands continued to grow each year at a steady pace until the
early 2000s and took off exponentially thereafter. It is growing
with each year passing. The brands prefer mostly franchise route
for entering India. However, few also choose licensing and JV’s.
Fast food is not a new concept in India. With roadside shops,
chat places and other easy pick eatables, Indians have always
been very well aware of the offerings. But with the entry of McDonalds,
KFC, Pizza Hut, Dominos and many others in the Indian market,
whole scenario changed. Indians have loved the westernisation
of Indian fast food. Like a tikki in a burger with a little twist
is now recognised as Aloo patty.
Another brand, The Chocolate Room is an Australian brand and
entered India via the franchise route. Chaitanya Kumar, Chief
Managing Director, The Chocolate Room opines: “Indian franchisors
are very eager to get franchise partners for their brand. But
once they get an investor, most of the franchisees face problems
in inadequate awareness of brand, training, communication, quality
and customer service standards. Lack of franchisor’s follow up’s
and support to the franchisees results in rumors about the brand
in the market place. Few of the major challenges for the restaurants
here are fragmented market, operational challenges, real estate,
manpower and supply chain.”
License intricacies and challenges to run a resturant
In India, obtaining the requisite licenses, e.g. health license,
food safety license, police license, No Objection Certificate
(NOC), from the fire department and the state pollution control
board, and so on is a major obstacle hindering the smooth operations
of a restaurant. The process is not centralised as yet and requires
filing applications with individual stakeholders, which involves
a lot of paperwork and is a time-consuming activity. The licenses
required to start a restaurant are the same throughout India,
except in some states like Maharashtra. A player needs approximately
12-15 licenses just to open a restaurant. In comparison, the licensing
requirements internationally are not as intricate as in India.
As a result of globalisation and consequently diminishing trade
barriers, our economy has opened new avenues of opportunities.
With these opportunities, comes a great deal of challenges that
threaten the success of business. Multinational brands on entering
a new market, sometimes strive to create a competitive advantage
over local established brands. There are a lot of challenges that
an international food service brand faces when entering a market
like India. According to Manpreet Gulri, Country Head, Subway
Systems India Private Limited: “some of the major challenges
are adapting to the local taste and preferences, developing familiarity
with ethnic differences and abiding by them, operating under the
legal framework of the market, establishing a connect with the
consumers, keeping with the brand value and maintaining standardisation
in the systems and also a few challenges related with the supply
chain.”
Engaging the local customer
A major challenge for an international Quick Service Restaurant
(QSR) brand is to engage the local consumer. Keeping in view the
local preferences, Subway has adapted to the local palate by introducing
vegetarian and non-vegetarian offerings such as Chicken Tandoori
and Paneer Tikka. For a sensitive market like India, vegetarian
and non-vegetarian service counters are kept separate as far as
possible. Another challenge is to have a system in place wherein
standardisation of the products and their quality is ensured throughout
the market which is why, Subway franchisees are supported by locally-based
Development Agents and their staff that provides additional business
expertise. This helps in running the operations smoothly.
Gulri of Subway adds: “In food service industry, there are
no set formulas or shortcuts to excel in the business. An idea
that works for other countries might not work in India. The key
to gain an edge over the established home-grown brands is: Research
– Adapt – Innovate.”
To conclude, in order to create and sustain a global competitive
advantage, multinational companies today need a systematic approach
to research, renew and enhance their core capabilities before
entering a new market. Localisation strategies like competitive
pricing, store expansion, delivering value for money products
and engaging with the consumer can help one operate successfully
under such circumstances.
Other major challenges for restaurants in India:
(Published in Retailer.)
