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July 20, 2019
Go with a battle plan, scan the racks to get the best deal. Make a killing. Here are tips on how.
Written By Madhushree Ghosh
Don’t get so excited by the discount that you lost sight of the price.(iStock)
How the sale calendar has changed (and why)
The retail business was traditionally linked to the social calendar, so big discounts were offered around religious and cultural occasions (Diwali in India, Christmas in the West). The idea was to tap into the celebratory mood and encourage more buying in seasons of giving, when people were shopping anyway.
As the retail industry grew, the business decided it would help to create demand at other times of year. Which is why some department store chains have sales and ‘promotional offers’ on at almost all times.
In India, the single biggest driver of sale-season buying is the feeling of getting a ‘great deal’, says Devangshu Dutta, retail consultant and chief executive at the consultancy firm, Third Eyesight.
Outside of the festive demand cycle, but also sometimes within it, retailers play on this trigger by promoting ‘one-time discounts on MRP’ or package deals that encourage you to buy more than one of an item. It’s a form of advertising that actually gets you to pay, in the end, often for something that wasn’t selling to begin with.
If you’re looking to fill gaps in your wardrobe, now’s the time. High street brands offer up to 70% off in end-of-season sales, three to four times a year, and the current monsoon sale season is now underway.
There are two types of sale-season shoppers — the kind that barely notices a sale is on, and ends up paying full price (what a loser) instead of scanning the racks to get the best deal; and then there’s the type that goes in with a battleplan. Be that type. Make a killing. Here are tips on how.
DON’T GO ALONE
Take a trusted companion, but make sure it’s someone who won’t whine about the crowds, lose interest halfway or hijack a sweater you picked up first. Pick someone who will stand in the trial room line for you, no matter how serpentine. Or go in teams so that when someone is choosing and trying, others can get in line (don’t forget to queue in advance at the cash counters too).
Everything in life is easier with a list. Decide what you need (please don’t forget that fast fashion is now one of the most polluting industries in the world, so do the species a favour and don’t buy stuff you already have). A list will also keep you organised. Head to the appropriate racks. And, if shopping online, sort and add items to your cart in advance, so when sale starts all you need to do is click.
DO NOT GET BLINDSIDED
Don’t get so excited by the discount that you lost sight of the price — it may be half off, but if it’s still a Michael Kors bag way outside your budget, put it down. Also, don’t take home something you don’t really like, just because it’s on offer at a ‘never-before-never-again’ price. If you don’t like it at first glance, you’re never. going. to like it.
Do you really need a Bluetooth headset, or is it the dopamine talking? It might help to remember that sales are conducted to create a sense of need. So are you buying that dress because you have a slot in your wardrobe for it, or ‘because it’s your cousin’s best friend’s birthday in a few weeks’ (which, we know, is code for, I just can’t resist it right now).
Source: hindustantimes
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July 18, 2019
Ratan Tata-backed Snapdeal having lost steam after its merger with Flipkart was called off while Amazon too had displaced it as among the leading e-commerce company apart from Flipkart is now steadily regaining its lost ground but in a new avatar.
Written By Sandeep Soni
Around August 2017, Snapdeal had called off Flipkart’s offer of buying it out for $850 million, down from $6.5-billion valuation it had in early 2016. Snapdeal’s sales had plunged, products count has also gone south even as Amazon had displaced it to become the new formidable competitor to Flipkart’s stronghold in the Indian e-commerce sector. The ecosystem had almost written it off with media reports narrating the fall. More than two years after the company’s founders Kunal Bahl, Rohit Bansal decided to battle it out on their own with a renewed Snapdeal 2.0 focusing on its core business of online retail, the lost mojo is coming back for Bahl and Bansal.
“The inflection point in Snapdeal’s journey was when they stepped back from the cut-throat competition that was happening between them, Amazon, and Flipkart in 2017. Snapdeal took that decision when they had little cash in the bank. It was a hard time to take that decision because any other alternative strategy would have also needed capital. So they took that decision to focus on core business,” Devangshu Dutta, CEO at retail consultancy Third Eyesight told Financial Express Online.
Snapdeal’s revenue grew by 73 per cent year-on-year from Rs 536 crore in FY18 to Rs 925 crore in FY19 even as losses shrunk by 70 per cent from Rs 611 crore to Rs 186 crore, Kunal Bahl said in a LinkedIn post as part of the company’s audited financial results for FY19. Snapdeal’s traffic went up 2.3X to 70 million unique users per month. But what led to Snapdeal’s founding that lost zing back? There are a couple of factors.
Capturing value-conscious Buyers
Kunal Bahl in one his blog last year had said that the company would focus on the value-conscious buyers — around 400 million that are still at an early stage of discovering and buying goods online. This lot doesn’t speak fluent English, less disposable income, lives beyond metro and tier-I cities and are not brand conscious. “Given their vast numbers, the supply of value-priced selection is growing online exponentially – mirroring the selection found in the bazaars of India. This is a market worth nearly $163 billion and only about 1-2% of this is online,” Kunal Bahl said in the blog.
“It is a shift from discounts to value. Snapdeal is trying to get customers’ mind off the price element. If you are looking at a product’s price, you are looking at it as a commodity. If you are looking at it as a commodity then you are looking at the like-for-like comparison and going for the lowest price,” added Dutta. This echoed with Kunal Bahl’s focus for next year. “We are not aiming for triple-digit growth rates,” said as he believed that “consistently compounding revenue growth create large and valuable enterprises.”
Rebuilding Seller Base
Snapdeal has been able to grow its listings to 200 million with 50 million listings coming in the last two years with more than 60,000 new sellers even as it uses artificial intelligence and machine learning to help its sellers aware of new trends and gaps in the product-pricing mix unlike “some other marketplaces use these interventions to promote their private labels or favourably position their proxy sellers,” Bahl said. For example, Snapdeal’s machine learning-based smart courier allocation tool analyses “the first-mile decision (pick-up) with a last-mile decision (delivery) identifying the partner(s) who can deliver the shipment in the most efficient manner.” “This is certainly a factor for their growth because if you are playing a pure marketplace game then sellers are relatively more comfortable because you are not a competitor to them,” said Dutta.
Tech Shift
Not just on the seller end, AI has become integral to Snapdeal’s efforts of ensuring that its no-frills customers can come across products that they want to buy — affordable and unbranded. AI helps in optimising catalogue and enhancing search based on which the customer is offered personalised and relevant products more than just top deals of the day or top discounts or top-selling items. Snapdeal has also created multiple short videos on the functionality of products for customers to understand them.
“Clearly at one point Snapdeal realised that investors are backing away from investing more money into them because the sense then was that Amazon would take over the market. You need really deep pockets to acquire market share if you are losing money on every dollar earned. However, e-commerce is at a nascent stage and we shouldn’t deal with it as if it is a short window of opportunity that is closing,” Dutta said. Moreover Snapdeal has been constantly engaging with its customers in their offices by inviting them to understand one-ono-one about how they shop and what they shop.
Source: financialexpress
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July 15, 2019
Hindustan Unilever’s Hamam, Jyothi Labs’ Margo, Wipro’s Chandrika soaps and Cholayil’s Medimix have been trying to up their game by adopting brand purpose, brand ambassadors and, in some cases, even product innovation. But popularity, especially amongst the youth, evades them.
Written By Venkata Susmita Biswas
Lack of product innovation, unappealing marketing and dull packaging haven’t helped matters.
The quintessential green, no-frills soap bars wrapped in boxes bearing images of neem leaves once enjoyed a place of prominence thanks to their ‘medicinal value’. Today, even as Indians are increasingly opting for ‘natural’ and ‘herbal’ beauty and skincare products, these green soaps are finding fewer takers.
Hindustan Unilever’s Hamam, Jyothi Labs’ Margo, Wipro’s Chandrika soaps and Cholayil’s Medimix have been trying to up their game by adopting brand purpose, brand ambassadors and, in some cases, even product innovation. But popularity, especially amongst the youth, evades them.
Lacking colour
These green soaps are mainly the traditionalist’s favourite; they do not have a pan-India consumer base. K Ramakrishnan, MD, Kantar Worldpanel, South Asia, says that the segment of natural soaps is led by and grows most in the South.
Oddly, these soap brands have not been able to leverage evolving consumer preferences — towards organic and herbal products across categories. According to Ashwini Deshpande, co-founder and director, Elephant Design, it has to do with the brands’ indifference towards enhancing user experience.
Lack of product innovation, unappealing marketing and dull packaging haven’t helped matters. “As newer products and brands have come up, consumers who can afford better products are gravitating towards multinational brands or Indian brands with better fragrances and brand positioning, rather than these green bar soaps,” points out Devangshu Dutta, CEO, Third Eyesight, a consulting firm.
Marketing communication from these brands has typically focussed on attributes like the authenticity of the ayurvedic formula and the purity of ingredients. Deshpande says that while prioritising these aspects, “brands miss out on enhancing internal and external sensorial factors such as shape, fragrance, colour of the product, and the look and feel of the packaging”.
Neem-based and herbal products from brands like Himalaya or even the premium Kama Ayurveda have found takers owing to their appealing positioning and product innovation. Whereas traditional legacy brands, Dutta says, are consciously pitching to a customer who is looking at price as the driver.
Quick fixes
To appeal to younger audiences, Margo underwent a revamp in 2017, and Medimix brought on actor Parineeti Chopra as its brand ambassador earlier this year. The Rs 300 crore soap brand Hamam has used brand purpose to establish the soap as one that empowers women. Meanwhile, Wipro’s Chandrika soap refreshed its packaging this month.
Product innovation has been conspicuously missing in this category, though. Medimix launched a green ayurvedic face wash in 2017 that looks similar to the Himalaya Neem Face Wash. Margo, which earns Rs 192 crore from its personal care segment, plans to launch a face wash variant of its neem soap later this year. Additionally, to expand its market share by getting non-traditional users into the fold, Margo experimented with a glycerin-based neem soap in West Bengal in 2018. In its annual report, the company mentions that it plans to roll out the product in other parts of India.
Since the prices of these soaps (around Rs 30 per 100gm) are similar to that of the soap category leaders Lifebuoy, Santoor and Dettol, they do not have an edge. In the face wash category too, the pricing is not much different — a 100ml face wash of Medimix costs Rs 99 as against Rs 120 for Himalaya. The choice is, hence, not difficult for the brand conscious consumer.
Medimix has tie-ups with hotels which helps in sampling, but does not yield high dividends. “Only 3-4% of the total revenue comes from hotel tie-ups because the value of the product sold is low, even though the volume sold is high,” informs Pradeep Cholayil, CMD, Cholayil.
Source: financialexpress
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June 28, 2019
Written By Suneera Tandon
In the year ago period, Zara had posted a profit of ₹82.59 crore (Photo: Mint)
New Delhi: Spanish fashion brand Zara posted a 13.4% drop in net profit for the year ended 31 March, 2019 at ₹71.49 crore, amid increasing competition and a general slowdown in consumer demand in the market.
Revenues at the seller of fashion clothing, and accessories were up 17.7% at ₹1,438 crore, its local partner in India, Trent Ltd, said in its annual report on Friday.
Inditex SA—the world’s largest fashion retailer that owns brands such as Zara, Pull & Bear, Massimo Dutti globally—is present in India through two joint ventures with Tata Group’s retail arm Trent Ltd.
Inditex Trent Retail India, a 51:49 joint venture with Trent Ltd runs the Zara business in India.
“During the year under review, the Zara entity recorded revenues of ₹1,437.87 crores and PAT of ₹71.49 crores,” Trent Ltd said in its annual report for financial released on Friday.
In the year ago period (2017-18), Zara had posted a profit of ₹82.59 crore with revenues of ₹1221.67 crores.
In FY19, Zara added two stores in India expanding to 10 cities, including its first store in Kolkata, while also selling its clothing, shoes, and accessories online—sales of which started in India in late 2017. In FY17, Zara had seen a 40% drop in profit in its India business after it took price cuts on its inventory during the financial year.
New store openings for the brand Zara, which first entered India in 2010 and found popularity among the more upmarket, urban Indian shoppers will remain calibrated, the company said. “The incremental store opening program for Zara continues to be calibrated,” said Trent Ltd, which owns home grown lifestyle retail chain Westside, about Zara.
An email query sent to Trent Ltd remained unanswered.
“The numbers could reflect a dip in same store sales growth,” said a retail industry expert on the condition of anonymity. “Also, during the year India saw no major new net mall additions in large cities for a brand such as Zara to open add more stores,” he added.
In its annual report last year, Trent had maintained that while it plans to add more stores for Zara in India over the next three to four years, availability of high quality real estate remained a challenge. “The primary challenge to faster expansion is the availability of high quality retail spaces which can be expected to generate reasonable sales throughput,” Trent Ltd said then.
“There is a general consumer slowdown across sectors,” said Devangshu Dutta, chief executive of retail consultancy Third Eyesight. While Zara entered India to a strong reception, over the last few years it has entered markets where demand for its fashion clothing is limited, Dutta added.
Massimo Dutti Private Limited, the second joint venture between Inditex and Trent that runs the more premium Massimo Dutti brand in India posted revenues of ₹63.58 crores for the year up 39% from the year ago period. During the year, the company added no new stores for the brand that has three stores here.
Zara’s drop in numbers come at a time when its rival Swedish brand H&M has been opening stores at a much faster clip in India. The brand, which entered India in 2015, much after Zara, already has over 40 stores in the country— a number it plans to take to 50 by 2020.
Sales at fast fashion retailer Hennes and Mauritz (H&M) India grew 29% to ₹1,108.2 crore in the year ended 30 November, 2018, the company said in its annual earnings earlier this year. During the year the fast fashion retailer known for its cheap and affordable clothing also launched an online sales channel in India. H&M follows a December to November financial year.
Indians spent ₹5.4 lakh crore on buying clothes in 2018, a jump from the ₹1.92 lakh crore they spent in 2010. The market for apparel in India grew at a CAGR of 13.8% in FY18, according to a report on India’s apparel market by CARE ratings.
However, competition in India’s apparel market is growing, especially as more consumers are shopping on discount-fuelled e-commerce websites.
Japanese retailer Uniqlo is set to enter India later in this year,making it more challenging for existing retailers such as GAP, Forever 21, H&M, and Zara to lure shoppers into their stores.
Source: livemint
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June 27, 2019
Thailand is a good bridge for modern retail in India, believes Tanit Chearavanont, MD of LOTS Wholesale Solutions
Written By CHITRA NARAYANAN
Balloons and festoons greet shoppers at the three stores of LOTS Wholesale Solutions in the National Capital Region. There are lucky draws, discounts, and a host of exciting offers too.
It is exactly one year since Thailand’s Siam Makro, a part of the $50-billion Charoen Pokphand Group (CPG), launched its first cash and carry store LOTS in India.
It has been a year of learnings for Tanit Chearavanont, the young managing director of LOTS, who was accidentally thrust into the job of leading the Thai group’s charge into India. “I was not the original project leader for LOTS,” he confesses. That person quit and Chearavanont, who is a scion of the family that owns CPG, was made interim MD. Eventually the Hong Kong-schooled, Harvard-educated retailer was told to take charge.
Chearavanont has been in India for over three years, right from the feasibility studies. An additional challenge was that Siam Makro, a well-known name in Asia, could not use its brand in India. The reason, explains Chearavanont, was that Siam Makro, the first modern retail store in Thailand, was formed in 1988 as a JV between CPG and Dutch trading group SHV Holdings. In 1997, when the Asian financial crisis struck, CPG sold its stake to SHV but bought it all back in 2013. However, when it bought it back, the licence to use the Makro name excluded India — it could use it in other parts of South-East Asia.
Brand and retail consultancy Fitch created the name LOTS which was crafted keeping India’s young demographics in mind.
Ask Chearavanont how an Asian retailer will compete against big western players like Metro and Walmart in India and he grins, “Don’t forget Makro has Dutch vibes in its DNA.”
More seriously, he believes that India’s retail journey evolution is quite similar to Thailand’s and this will help LOTS. He points out how, in OECD countries, modern formats are very pervasive, while in Thailand modern retail and kirana have a 50:50 ratio. “India is evolving the same direction as Thailand except for the e-commerce piece, which is bigger here,” he says. He feels the Indian consumer behaviour is also quite similar to Thailand, and trends are same. For instance, Siam Makro had to change its product assortment from apparel to food in Thailand. In just a year, Chearavanont points out how the assortment at the LOTS stores has similarly evolved. The target customers are small and medium-sized retailers, the food service industry, and self-employed professionals.
The last six months, says Chearavanont, LOTS has intensified its focus on understanding its business customer. “I have got our buying merchandising team to meet all our customers to understand what products and what price points are most important to them,” he says. For instance, initially there were 100 sheets of branded paper napkins priced at ₹20 but when that was perceived to be costly, the store started stocking unbranded napkins at lower price points as well.
Despite India’s strong tradition of kirana stores that need wholesale supplies, large-format cash and carry stores have not had an easy journey. Metro, which was the first to open in 2003, took over a decade to turn profitable.
Market dynamics
According to Devangshu Dutta, Chief Executive of Third Eyesight, the challenges for the B2B-focused cash and carry formats are to get the location right, get India’s real estate reality (high land costs and rentals) and consumer reality right as well as learn to negotiate with strong local FMCG suppliers. Several cash and carry stores initially opened in far out locations as they needed the space for their big-box formats. But as Dutta points out, “There is a cost to transportation for the kirana store owner who is often the shopper too.” Sourcing is quite disaggregated in India and products are door-delivered to kiranas.
Chearavanont seems cognizant of these realities. He says LOTS took a conscious punt on location — choosing to put their stores in the heart of the city, close to customers, even if it has had an impact on cost. Plus, he says, store formats have been shrunk, averaging 30,000 sq ft.
As for consumer reality, he has been doing the rounds of retailers and restaurateurs. “At many places we found that kirana stores are selling products below MRP,” he exclaims. That set off thinking within the group as to how they could help the kiranas differentiate themselves. One solution was to give them interesting imported products — flavoured nuts and dried fruits, snacks and confectionery sourced from Thai or Japanese producers with a better value proposition.
“If you want to make imported work, it has to be sold at democratised price,” he says. Also, this would differentiate them from other western cash and carry stores. For example, when Indians think about nut snacks they think of Tong Garden – the premium Singapore brand. “But in Thailand we have a brand called Koh Kae. We could get that in,” he says.
Going forward, Chearavanont says there will be focus on imported food products and leveraging its own private labels. This could also reduce LOTS’ dependence on local suppliers, who have a lot of bargaining power. “We want to be more food focused and the non food focused items will also be geared towards HORECA (hotel/restaurant/cafe) customers with a strong assortment of stationery items and disposables”. Over 7,000 active HORECA members shop daily or weekly at the store and their numbers are rising by 10 per cent every month, he says. To get more footfalls, from 7 am to 10 am there are early morning discounts in the food category.
“If a HORECA customer walks into my store, can she find 80 per cent of her basket in my store? If that is so, there is connect happening,” he says, adding the full focus is on that. Right now present in NCR, the plan is 15 stores in three years in cities in UP, Punjab and Rajasthan. Investment of ₹1,000 crore has been set aside for that.
While lots is happening at LOTS, Dutta cautions that there is an over-expectation of modernisation in India. Also, one approach will not work in the whole of India. So, what may work for LOTS in the North may not work in the South or West, when it expands.
Source: thehindubusinessline
