Written By Deepti Chaudhary

Kalyan Krishnamurthy, CEO, Flipkart. The ambitious targets from the e-commerce platform come at a time when several consumption driven sectors are reporting a dip in sales. Bloomberg

Walmart-owned online retailer Flipkart hopes to double sales during its flagship Big Billion Day (BBD) event, two people aware of its sales targets said. The company is also aiming a gross merchandise volume (GMV) of about ₹1 trillion (about $14 billion) this fiscal year, up at least 45% from a year ago, the people said on condition of anonymity.

According to RedSeer Management Consulting, a research and advisory firm focused on the consumer internet market, Flipkart had a 60% share of the $2.5 billion sales by e-tailers during the five-day event in 2018. The Flipkart Group—including Jabong and Myntra—had posted a GMV of $7.5 billion for FY18, according to British investment bank Barclays.

When contacted, Flipkart refused to comment on its financial targets. Flipkart, however, confirmed that the upcoming Big Billion Day sale will be its biggest on the back of increasing sellers’ base, new products and pocket-friendly financing options, among other reasons. The Big Billion Day is Flipkart’s flagship annual festive season sale, where discounts are sometimes as high as 80%.

“The Big Billion Day for us brings forth all the values we stand for in our customers’ mind — access and affordability. With innovation as our rallying call, we are confident that this BBD will be one of the biggest that the ecosystem as a whole will experience. From our nurtured sellers to our trusting patrons, there is something for everyone,” said Kalyan Krishnamurthy, CEO, Flipkart.

Nandita Sinha, head, customer growth and engagement at Flipkart corroborated that “this will be our biggest BBD in terms of number of customers transacting and engaging with us”. “We have been working with brands to create really exciting propositions. Our share of wallet across categories will increase,” she added.

In the run-up to BBD and the festive season, customers will have the opportunity to earn what the company calls SuperCoins, earned by shopping on Flipkart or on any of the SuperCoin partners, and use them to avail of deals during the sales period. It has also increased the number of sellers, particularly from tier III cities, by 50,000. “There is a 40-50% increase in the number of sellers participating in the festive season sales,” said Nishant Gupta, head of marketplace, Flipkart.

During this year’s festive season, Flipkart will provide credit to close to 50 million customers through innovations like Flipkart Pay Later, Cardless Credit and Debit card EMI. Customers will also be able to avail of no-cost EMIs on many products. Flipkart, under its co-branded card programme, will also be offering cashbacks and no-cost EMI options through co-branded credit cards.

Nearly 50 new fashion brands will be available during the festive season sales. Flipkart and Myntra customers can browse across 11 private label brands from Lifestyle including brands such as Forca, Code, Fame Forever, Nexus, Juniors, Melange and others.

Flipkart’s ambitious targets come at a time several consumption sectors are reporting a decline in sales. The country’s largest carmaker Maruti Suzuki India on Sunday reported a 32.7% decline in sales at 1,06,413 units in August. A Parle Products Pvt. Ltd official recently said the biscuit maker might lay off up to 10,000 workers as falling demand and slowing economic growth in the rural heartland could lead to production cuts.

Devangshu Dutta, chief executive of retail consultancy Third Eyesight, says while GDP growth has gone down, it’s still growing and that individual businesses can still grow. “It is possible for Flipkart to grow this year too, particularly if they are going to be aggressive with pricing. If a customer feels she/he is getting value at this platform, then they will buy. When there is a perceived slowdown, people are primed to look for value. Flipkart might step up aggression on EMIs, and other financial options, which help will in the cash flow of customers. With aggressive discounting, EMIs, and advertising, once can push traffic and conversion,” Dutta said.

It will, however, boil down to how much Flipkart promotes the offers now. “The question is – net, net, will it be a profitable season after promotions for Flipkart? Only the company can tell,” says Dutta.

Source: livemint

Neighbourhood kirana owners are sprucing up their stores and joining hands with big retailers to meet India’s insatiable appetite for shopping. And consumers are not complaining.

Written By ARNIKA THAKUR AND ANSHUL DHAMIJA,

It is a hot and humid Tuesday afternoon. One would assume there wouldn’t be too many people out shopping. But Delhi is different. Modern Bazaar in the basement of Select Citywalk, one of the city’s busiest malls, is abuzz with activity. The outlet, the grocery chain’s third store, was set up by Kunaal Kumar in 2011. Later he opened the spruced up version in the basement with an investment of ₹5-6 crore. The genesis of the business dates back to 1971 when Kumar’s father set up the store in Delhi’s tony Vasant Vihar neighbourhood. It soon expanded into a four-floor emporium and ran successfully for three decades before it was gutted in a fire in 2004. Kumar, who joined his father in 1991, decided to start afresh; he set up the store again in the same market with a capital of ₹40 lakh—some of which was his own money and the rest was borrowed from friends. “Business was thriving. I was able to pay back my friends within six months,” he says. So what brought about Modern Bazaar’s transformation from a small department store to a modern retail chain? Kumar’s forward-thinking strategy.

Modern Bazaar was never a typical neighbourhood store; it was always fancy with some imported products to tickle the taste buds of Delhi’s elite and moneyed class—Bollywood icon Amitabh Bachchan and former Congress president Sonia Gandhi have been famous patrons. The store is a great example of how modernisation and knowing the pulse of the consumer helped it nurture a single store into a full-fledged chain. It has 10 stores and now competes with biggies from the retail world such as the Future Group’s Big Bazaar and Foodhall, and Nature’s Basket, at least in Delhi and Gurugram.

The secret sauce, experts say, is the way the store is stocked: a good mix of Indian groceries with some amount of imported goodies, enough to satisfy shoppers’ aspirations while giving them their fill of the basics. Kumar says now they also service some 18,000 orders each month online. The company wants to double the number of outlets in the next three years and aims for revenues of ₹500 crore by then. It expects to finish the year with ₹200 crore.

While Modern Bazaar’s story is unique, neighbourhood stores across the country are having a moment of modernisation, led by technology. And like Modern Bazaar, they are trying to keep up with the taste and aspirations of the new Indian shopper. So while the neighbourhood store might sell you a Lifebuoy soap or Aashirvaad flour, it will also have a selection of imported cheese and Ferrero Rochers. Devangshu Dutta, CEO of retail consultancy Third Eyesight, says there has also been a generational change in typically family-owned stores. “The younger generation wants to run a different kind of shop. It needs to be upgraded in look, feel; they want to incorporate the changes they have seen in the market,” he says.

Kunaal Kumar, director, Modern Bazaar.

Modern Bazaar, under Kunaal Kumar, has grown from a small department store to a modern retail chain of 10 outlets.

In Delhi’s Hauz Khas market, for instance, another old neighbourhood store, Narang Marche, got a makeover after the next generation joined the business. The once-cluttered store which stocked everyday needs such as dals and soaps now also stocks more niche products like Davidoff coffee and Raw Pressery juices to keep up with customer demand. It also added a freezer and a meat and eggs section, which it didn’t have earlier. “Rising personal disposable incomes and changing lifestyle of consumers—giving preference to convenience—have led to this trend being adopted in full swing across sectors of consumers, including retail, food and beverage, FMCG, apparel and footwear, consumer durables, and electronics,” Deloitte says in its report, Unravelling the Indian Consumer.

Industry is gung-ho about consumption growth. “Education [level] is rising, the economy is growing at anywhere between 7% and 8% leading to rising incomes, therefore our entire consumption basket has to rise,” Saumya Tyagi, director-marketing, South Asia of Tetra Pak, had told Fortune India in an earlier interview.

Research also supports the optimism. According to a Boston Consulting Group report, India is expected to become the third-largest consumer economy by 2025, reaching $400 billion in consumption. Its per-capita monthly income is estimated to have increased by 10% to ₹10,533.83 in FY19 from ₹9,579.83 in FY18, according to government data. The country also ranked first in the Global Retail Development Index 2017.

In the early 2000s, during the retail revolution in the country, experts had predicted dark times ahead for mom-and-pop stores, and said their share in the Indian retail scenario would fall significantly, Dutta says. The belief was reinforced after the government allowed foreign direct investment (FDI) in retail and e-commerce took off with companies like Flipkart and Amazon spending billions of dollars to attract the Internet-savvy Indian consumer.

The fear was that deep-pocketed global and domestic players, leveraging their partnerships with manufacturers and distributors, would lure customers away from neighbourhood shops through innovative value-added services like customer loyalty programmes, discounts, and deals. “For general trade to survive they have to bring in technology, and they have to bring in the science of retailing,” Sanjiv Mehta, chairman and managing director of Hindustan Unilever (HUL), said in an investor presentation.

He cited space and funds as two major constraints for small shopkeepers across the country, whose number India Brand Equity Foundation (IBEF) data pegs at around 12 million. India is a land of small- and medium-sized businesses. After agriculture, independent businesses are the second-largest source of livelihood for people. Kirana stores account for 90% of retail and FMCG sales, modern retail 8%, and ecommerce 2%, according to reports. Some kirana stores are so popular that generations of a family have been customers. So despite the competition from swanky supermarkets, modern retail, and e-commerce players, the kirana ecosystem has continued to fight back. In the early days of the retail revolution, kirana stores were threatened by big global and domestic players armed with superior technology and deep pockets. However, two decades later, these big players are joining hands with kirana stores to tap more consumers.

A little over 50 years ago, M. Ekambaram opened a small 144- sq. ft. provisions store, M.P. Store, in Bengaluru. The store, like many other kirana stores, stocked daily need items, but no perishables because it did not have a refrigerator. Over the years, Ekambaram, now 68 years old and father to three sons, expanded his store to 900 sq. ft. Customers thronged the shop even though it only added a refrigerator when it modernised the store in January this year. “Our customers can now come in and browse through our 1,600 SKUs [stock-keeping units],” says Ekambaram’s eldest son, Arun Kumar, who joined his father in the business in 2000. “There is also more space for branding,” he says, pointing to four large display units within the store. “Business has grown between 40% and 50% due to better visibility of our products and stocking of more expensive cosmetics.”

Kirana stores will remain evergreen as people in India still rely on their neighbourhood shops for their daily essential needs.

M.P. Store’s renovation into a more upmarket convenience store is an example of how German wholesaler Metro Cash & Carry is helping kirana store owners grow their business manifold. “They guided us all the way and even monetarily helped us in the renovations,” says Kumar.

Metro, through its ‘Kirana Success Center’ programme, provides product management solutions to small traders for more holistic and sustainable growth besides educating them on retail concepts such as planograms and inventory management. As a customer base, kirana stores account for about 40% of Metro’s revenue in India. In FY18, its revenue was €776 million. “Kirana stores will remain evergreen as people in India still rely on their neighbourhood kiranas for their daily essential needs,” says Arvind Mediratta, managing director and CEO of Metro Cash & Carry India. “The local stores do free delivery for a small product pack in less than an hour and also provide a handy credit facility to their regular customers.”

Mediratta says the company has provided these stores with point-of-sale (POS) systems to track their inventory, sales and revenue, run promotions, and track slow and fast-moving items just like any modern retailer. However, he says “the biggest arsenal for kiranas is their business model”. “It is much simpler to set up a kirana shop with fewer stock-keeping units vis-à-vis a retail store with huge capital cost and inventory.”

Retail giants like the Future Group, Reliance Retail, and HUL as well as e-commerce majors Walmart and Amazon are not far behind. They, too, are engaging with small neighbourhood establishments. HUL’s Mehta says the company is experimenting with different business models in collaboration with retail partners. “We help the retailer by upgrading the categories, by getting more return on investment for the cubic feet of space that they have with the science of retailing,” he said during an investor call. “We firmly believe the science of retailing that we have and the way we are customising our assortment, we will be able to customise our assortment for a store based on the locality and the kind of shoppers that exist in the vicinity.”

In 2014, global e-commerce giant Amazon in India launched the ‘I Have Space’ programme (an India-first innovation) under which it partners with local store owners, kirana shops included, to deliver products to customers within a 2-4 km radius of their stores. Amazon trains the store partners on customer management skills to deliver a positive customer experience. Akhil Saxena, vice president, customer fulfillment, Amazon Asia, says that in 2017 they had tied up with close to 17,500 such stores in 225 cities, which increased to 20,000 retail partners in over 350 cities in 2018. “Amazon has successfully unlocked the potential of such store owners, allowing them to supplement their regular income and generate more footfall in their stores,” Saxena says.

Last year, when Walmart bought a 77% stake in Flipkart for $16 billion, it also said it would partner with kirana owners and members to help modernise their retail practices and adopt digital payment technologies. At the annual general meeting of Reliance Industries last year, India’s richest man Mukesh Ambani spoke of a ‘New Commerce’ platform that was a hybrid online-to-offline model. While the model would be created by integrating Reliance Retail’s physical marketplace with Jio’s digital infrastructure and services, Ambani stressed on the importance of kirana stores in taking the model to fruition. “We see merchants and small shop owners as critical customer interaction and fulfilment points, who will share a mutually beneficial win-win relationship with us,” he had said.

Even smaller startups like StoreKing and Razorpay are vying for the attention of kiranas with their technology and offering them credit for modernisation. StoreKing, a technology-enabled retail distribution platform, supports local languages and enables rural retailers to buy and sell products. HUL, P&G, Marico, Samsung, and Xiaomi, among others, use StoreKing’s 50,000-strong retailer network to access consumers in tier 3 markets and beyond. “We are probably the only company to focus on rural India,” says StoreKing’s founder Sridhar Gundaiah. Amazon India, too, is enabling customers in smaller markets to get access to the convenience of online shopping. Through Amazon Easy, it is partnering with the offline retail ecosystem to bridge the trust gap; it trains small offline stores and local entrepreneurs in smaller towns to help customers with online shopping.

But the growth of modern trade, says Deloitte’s Rajat Wahi, will also depend on how much real estate gets created in the form of malls. He expects modern retail to grow to 18-20% of total retail trade in the next 10 years and e-commerce to about 10%, depending on how quickly last-mile delivery, warehousing, and other issues can be sorted out. He says 60-65% will still be general trade, a part of it will possibly be more modern like a supermarket, but still be individually owned or in some cases by a consortium of owners. Globally as well, general trade forms a large part the retail industry. “In all of South Asia, 60-70% of the trade is still general trade. Even in developed countries like Germany, Holland, Italy, mom-and-pop stores are still thriving,” says Wahi.

India, the fifth-largest global destination in the retail space, isn’t the easiest market for multi-brand retailers, as government policy only allows 100% FDI under the automatic route for single-brand retailers. While this policy is seen as helping kirana store owners, it continues to be a sore point among global retail giants operating in the country. “Kirana stores fuel a culture of entrepreneurship and all efforts need to be made to boost entrepreneurship that will create further employment opportunities. Hence, it is essential to empower them, upgrade their traditional methodologies and train the store owner and their staff,” says Mediratta. With huge numbers across India still excluded from the Internet and mall culture, the country has enough room for kirana stores to coexist with modern retail, and thrive.

This was originally published in the August, 2019 issue of the magazine.

Source: fortuneindia

Written By Alnoor Peermohamed, ET Bureau

BENGALURU: Top scooter rental companies — Vogo, Bounce and Drivezy — are increasingly adopting the assetlight business model pioneered by ride-hailing companies Uber and Ola.

These firms have tapped a handful of companies to own the thousands of scooters that run on their platforms, unlike ride hailing where individuals own the cabs. The obvious advantage — assets, scooters in this case, go off-book, even as they still get a reliable supply of vehicles, something that has been a huge problem for Uber and Ola.

Source: economictimes

Written By Deepti Chaudhary

(Photo: Pradeep Gaur/Mint)

BENGALURU : Bengaluru: Walmart’s Flipkart unit is set to introduce a free video streaming service to draw new users from small towns and cities in India and take on rival Amazon’s Prime Video service.

Flipkart is eyeing the next 200 million consumers who are coming online. The company believes that most consumers are introduced to the internet through online videos. Hence, video content and entertainment could play a big role in getting consumers to come and buy online.

“We believe that great content, if made available to a wider base of consumers, especially the ones who are new to e-commerce but not internet, can bring them on board on an everyday basis and help take away any anxiety that they may have towards online shopping,” Flipkart group chief executive Kalyan Krishnamurthy said in a statement on Monday at the launch of Flipkart Videos, a curated range of movies, shows and entertainment series. Customers, he added, should not pay extra for premium content.

The video content offering is focused on three primary aspects: it’s free, curated and personalized.

Experts say the content market is still evolving, considering the number of customers paying partly or fully for subscriptions to Netflix, Amazon Prime and Hotstar.

“It’s still a small number. The pricing is too high for a customer base that is accustomed to free or cheap content,” said Devangshu Dutta, chief executive of retail consultancy Third Eyesight. “Also, there is a lot of fluidity in terms of the platforms used. In India, content and pricing will be critical.” He added that both Netflix and Amazon Prime are “Indianizing” their content in a big way. Pricing dynamics are being worked out as well.

Amazon India started its Prime video service in December 2016 and has since developed a strong fan base with hit shows such as Made in Heaven and Mirzapur.

The big question is—will people watching the particular content eventually buy the products on the platform? It needs a mental switch—the mindset while shopping is very different from what it is while watching a movie or a series.

According to Krishnamurthy, the focus is on attracting customers, particularly those in the age group of 20-30 and those who consume a lot of user-generated and professionally created content.

“We want to ensure that a user keeps coming to the platform every day. Over time, we will figure out how this ties into the e-commerce ecosystem, but today that’s not the objective. Its just to ensure that the consumer is hooked to Flipkart,” Krishnamurthy said in an interview.

Dutta, however, believes that there may be another reason for Flipkart’s video streaming service. “It may be less expensive or more profitable to service existing customers by expanding the share of wallet than to acquire new customers. Hence, companies try to add as many products or services to the customer relationship as possible,” he said.

According to Dutta, the metrics and operating levers of merchandise and streaming content businesses are very different. “Done well, content may add to a group’s revenues, but operationally it has to be managed with a very different business mindset,” said Dutta.

India’s video streaming industry is set to grow at an annual average pace of 21.8% to reach ₹11,977 crore by 2023, according to a report by global accounting firm PwC.

Subscription-based video-on-demand platforms are projected to grow at an average yearly rate of 23.3% to reach ₹10,712 crore between 2018 and 2023.

The 34 companies present in the cluttered market comprise US platforms such as Netflix and Amazon Prime Video, as well as Indian services such as ZEE5, Voot, Eros Now and ALTBalaji.

In the meantime, Flipkart is launching its service in Hindi with a Hindi-language “audio visual guided navigation” to enable easy on-boarding for new consumers.

It is also redesigning its app, which will allow users to access their preferred language, curated entertainment content and content feeds through the navigation bar at the bottom of the home page.

Source: livemint

Written By Writankar Mukherjee, ET Bureau

KOLKATA: The Tata Group has infused more than Rs 1,150 crore equity into the group’s consumer businesses across retail, ecommerce and white goods in the first quarter of this fiscal year, as per latest regulatory disclosures.

These funding has been made in four entities: Tata UniStore (which owns Tata Cliq), Infiniti Retail (which runs the Croma chain of electronic stores), Voltbek Home Appliances (which is into durables) and Trent (lifestyle chain Westside and Star hypermarket).

Source: economictimes