admin
August 7, 2013
Sharleen D’Souza, Business Standard
Mumbai, August 7, 2013
The
influx of apparel brands has taken the count to 200 for consumers
to choose from. ColorPlus was one of the earliest entrants, 20
years back. Raymonds bought it out from a Chennai-based company
in 2002. It is now Raymond’s casual wear brand for men but analysts
worry that it might have lost its appeal without anything new
to offer over the years. Raymonds has now put in place a plan
for overhauling the brand.
An analyst in the know but who did not want to be quoted says,
"When it launched it was India’s strongest homegrown apparel
brand. It used to have an amazing quality product offering but
this is not the case today and it has lost its share to other
brands."
The new look planned to rejuvenate the brand will see its exclusive stores concentrate on entire looks for its consumers rather than individual items of clothing. The stores will themselves wear a look to highlight its theme of ‘Colourful Life’. There will be a system of wardrobes based on collections at the store.
"We earlier tested this format in the south and we have received encouraging response. We have now opened seven to eight stores and by the end of this fiscal plan on opening 25 more stores," says Hetal Kotak, COO of ColorPlus. A feature wall at the ColorPlus stores will have spools of yarn, tying the colorful visual merchandising theme with product-linked props.
The brand has trained its staff to guide customers as style consultants, a model Raymond has tried in its namesake Made-to-Measure stores. "Our representatives will help customers to put a whole look together. They will also give the customer space so that they can look and feel the fabrics and enjoy the experience," explains Kotak.
Stressing on an orchestrated look rather than piecemeal garments, will allow the brand to push its accessories as well, in an effort to increase sales. For now, accessories form a small part of its revenue.
Shoes were launched six months ago and leather bags will be launched at Diwali this year. The bags will be priced upwards of Rs 2,495 and shoes from Rs 4,495. ColorPlus shoes, after being piloted in 30-40 stores, will now be launched across India. The brand also plans on launching eyewear in the near future. It had also tested a sports line six months back and plans to introduce that as well.
"Consumers have responded to the change very well and we are seeing buoyant response. This is showing in the number of order that we have got for our autumn-winter collection and it is at an all-time high which shows that despite tough market conditions we are doing well," Kotak adds.
The change would breathe some freshness to the brand which analysts say has lost its relevance with time. In its heydays, ColorPlus was known for wrinkle-free shirts and chinos which established it as a premium brand and gave it a loyal fan following.
"It did help increase Raymond’s revenue as it was already an established brand when taken over. But it lost its level of intimacy and momentum. Also, market conditions changed since we moved from a market with about 40 international brands or so to some 200 international brands offering competing products," says Devangshu Dutta, CEO of the retail and consumer consultancy Third Eyesight.
Competition such as Madura Fashion and Lifestyle too has proved tough for Raymond’s apparel business, especially its brands such as ColorPlus. Some analysts point out that the brand has also suffered from surplus inventory due to which its summer collection is carried over to the autumn and winter seasons affecting the product offering.
However, its makeover could help matters.
This year Raymond hopes to see a 25 per cent increase in ColorPlus’ revenue owing to the change in store format, as well as its extension into accessories. According to sources, the brand’s turnover was around Rs 200 crore last fiscal.
Raymond claims that after the trials, customer walk-ins, word-of-mouth and conversions increased, fuelled by the imagery of a refreshed premium brand. How far ColorPlus is able to grant all its exclusive brand outlets on which it depends for majority of its revenue a new retail identity will determine its success.
admin
August 5, 2013
Abhilasha
Ojha, Business Standard (The Strategist)
New
Delhi, August 5, 2013
There
is a rule in business that if you are not growing, you may be
dying. But grow too rapidly and you may still find yourself on
the fast track to the business graveyard. That will happen if
you are not alert or constantly looking out for the speed bumps
that will come your way when you are riding on a highway at top
speed. Typically, the growth challenges relate to outgrowing the
infrastructure, losing talented people, stretching the human capital
resources too thin, attracting new competitors and flagging customer
service.
These are also the challenges that face the retail industry in India today as it whizzes along on the fast lane. Being a labour intensive industry sector, workforce management has emerged as the single biggest task for human resources managers. Companies are being challenged to reorganise and adapt their employees to become more efficient. The Deloitte Changing Times, Changing Roles report 2013 sums up the key concerns for HR as hiring skilled talent, retaining critical talent and engaging and motivating employees.
Before we get into the specifics, here is a glimpse of how the industry has grown so far. At $450 billion (or Rs 20.85 lakh crore, according to an April 2013 Deloitte Touche Tohmatsu study), it contributes 14 per cent to the national GDP. The sector employs 7 per cent of the total workforce and is the second largest employer after agriculture. Organised retail, which is about 17 per cent of the total, is expanding rapidly at 20 per cent per year, compared with traditional retail where growth is pegged at 7 per cent. This growth is driven by the emergence of large-format retail outlets and shopping malls.
Such scorching growth has meant there is a huge shortage in skilled manpower. It doesn’t help that employee churn is quite high in the sector. Company heads and experts that The Strategist spoke to reckon that the attrition level in the retail sector would be around 70-80 per cent, and even higher in some cases. Globally, the attrition rate is 30-40 per cent.
The situation gets complicated when you consider how the workforce is deployed. In most companies, 80-90 per cent of the staff is employed at the front end. A majority of the staff that represents this front end – where the consumer actually interacts with the brand – is from economically weaker sections and needs thorough product knowledge and training to be able to understand the consumer needs and address them effectively. A senior executive at a popular apparel retail brand explains it well: "That branded dress you purchase from the store at a glitzy mall would cost the same as the monthly grocery bill that the sales person’s family would run up. Imagine the disconnect!"
Also, retail is a thin margin business compared with other service industries where the rewards and dividends are far higher. So, the task of retaining key people becomes all the more difficult. Experts say most of the attrition happens in the first year when bulk of the training is imparted. Which means a lot of training money simply goes up in smoke.
The task of attracting the best people and keeping them happy is big enough to keep every HR head awake at night. Of course, players are learning the ropes and reacting fast. Here are some lessons from the recent experiences of the big boys in Indian retail.
Planning is key
Spencer’s Retail, the Rs 1,400-crore food and grocery chain from the RPG Group, faced two sets of issues when it decided to shift tracks some eight years ago. The first related to downsizing, which required retooling the workforce and the second concerned expansion of its repertoire, which needed a different kind of training altogether.
Around 2004-05, just when the sector was beginning to take off, the company embarked on an expansion spree opening new and bigger stores in newer and bigger markets. In five years, as the market turned competitive and growth slowed down, it had to take the harsh decision to cut the flab. As it began closing down outlets in markets where business was indifferent, the company realised that it had more people on its rolls than it actually needed.
By 2010, the company had calculated that roughly 250 stores had to be shut down in a span of nine months. Which meant 4,000 employees had to make an exit from the company. Spencer’s decided it would go the extra mile to ensure employees did not feel deserted.
"We realised that though we hired hastily, we could not fire hastily. It had to be done with a lot of care," says Nihar Ranjan Ghosh, executive director, Spencer’s Retail. So a damage control exercise was devised. First, the company created cross functional teams to identify and retain the top performing employees at the front end. Second, it had "frank, transparent" one-on-one discussions with the staff that was being laid off explaining why it had to take such a step. Third, the employees, depending on the grade, were given anywhere between 30 and 90 days to look for a new job.
During this time, Spencer’s arranged for specialists to come to the stores, train this laid-off workforce and help them update their resumes. The company made a special request to its recruitment agency to ensure all its employees get placed elsewhere. Many of the internal managerial staff were asked to refer these employees. By the end of the first month of this exercise, roughly 1,000 laid off staff had secured jobs in other companies. Spencer’s also decided that when it would go into the hiring mode later, the first right of refusal would be given to employees who were asked to leave the company.
A big task, according to Ghosh, is to understand how a lay-off can affect a person psychologically. "These were people who came from an economically challenged strata of the society. Merely asking them to go with a severance package would have been unfair and we didn’t want them to feel they had some shortcomings," Ghosh explains. The exercise of hiring specialists, training the laid off staff and connecting them with recruitment agencies cost the company an additional Rs 60-70 lakh (over and above the severance packages that were given), but the company says it was a worthy cause.
But its problems were far from over. While Spencer’s was getting out of unviable markets it also realised the time was ripe to look beyond the food and grocery format. It got into apparel but found it was a completely different ball game.
The people attending to the food and grocery section (who only needed to ensure stock supply, address grievances, keep the store spic and span) now had to interact more intimately with the consumer who would ask questions about design, cut and fit of garments etc, all of which required a different kind of expertise. As its complaint boxes began to fill up, the company roped in Pearl Academy of Fashion to devise a training programme specifically for the Group, which made all the difference.
Training has been a big area of focus for the Future Group as well.
With 90 per cent of its staff comprising the frontend workforce who face consumers as part of their daily routine, training has become the key tool to build employee confidence and improve sales. "Given the high attrition rate in this sector, our endeavour is to nurture employees for the long term and ensure their commitment leads to outstanding professional growth," says G R Venkatesh, head, People Office, retail businesses, Future Group.
Sometimes, however, the best intentions can backfire. The Future Group realised a standalone training programme doesn’t help – in fact, it increases churn as the trained people quickly begin to look out for ‘better opportunities’ outside. What is required, says the company, is marketing the company to its people and making them aware about their growth path there. So now, with author Devdutt Pattnaik as its chief belief officer, the Group has embarked on a plan to demonstrate to its employees where they fit in in the overall scheme so they feel part of a bigger mission. It hosts off-site programmes and team building exercises more often and in most of its training modules uses examples from Indian mythology to drive a sort of emotional connect between the corporate entity and its people.
Building emotional connect is imperative, agrees Venkatramana B, president, group HR, Landmark Group, because employee disengagement is a direct result of the kind of job retail entails. The front end staff stands for eight to 10 hours at a stretch attending to the customer; those in senior positions feel there is not much scope to grow as the market itself is at a nascent stage. To make things better for the people, Landmark has devised as many as 10 training modules aimed at reducing what Ventakramana calls "infant mortality" or exits within in the first three months. It also continuously looks out for signs of disengagement among workers. When Landmark figured that despite all its efforts attrition was touching 80 per cent some years back, it introduced internal job postings (something that didn’t exist before) to identify existing talent and fill up posts with candidates from within the organisation instead of looking out. "This allowed us to look at the career graphs of our employees more closely and give them a fillip," he adds.
Sometimes a well-planned move can fall flat on its face. At one point, when the company was looking at ways to cut costs, Landmark decided to hire people on a part-time basis during lean seasons, idle weekday hours and so on. Soon, the management realised that people under this arrangement had zero accountability and were hardly involved in the work assigned to them. "The aim was to ease matters for our full-time employees but it didn’t work," says Venkataramana.
For electronics retail chain Croma, training is top on the check list if only to serve customers better. Ajit Joshi, MD and CEO, Infiniti Retail, says in his category the staff needs to be absolutely thorough in their knowledge of the products and their understanding of customer needs. So, besides offering a training programme that is a mix of on-the-job and classroom sessions, Croma has started sending daily SMS snippets to its employees with updated information about the products, brands, categories that are stocked by the company. One small move that has gone a long way in boosting the sales person’s confidence; it has also ensured the employee feels looked after, says the company.
Evidently, the challenges are many and there is no one-size-fits all formula for success. A lot depends on how proactively firms pick up the warning signals, says Devangshu Dutta, chief executive of Third Eyesight, a retail consulting firm, rather than "plug the holes after things begin to fall apart".
ROAD AHEAD
Talent acquisition
Talent management
Talent development
admin
August 2, 2013
Nigam
Prusty and Nandita Bose, Reuters
New
Delhi, August 2, 2013
India relaxed sourcing and investment rules for the retail sector on Thursday in a renewed attempt to attract foreign supermarket chains such as Wal-Mart Stores and Tesco.
Foreign companies have been keen to enter India’s $500 billion retail market since the country allowed foreign investment in its supermarket sector in September 2012 but ambiguity around entry rules has kept them away.
The issue remains politically controversial because of worries that millions of small shopkeepers could go out of business and India has so far not received a single application from any global retailer.
A previously announced rule that foreign chains must source 30 per cent of their products locally when they enter had been a major sticking point.
In the new announcement, the government retained the 30 per cent sourcing requirement but said it can be met over a period of five years initially and after that it has to be met on an annual basis.
It also said that global chains will only have to invest 50 per cent of an “initial” mandatory investment of $100 million in setting up cold storages and warehouses as against the earlier policy, which said half of the entire investment by foreign chains in india had to be in building back-end infrastructure.
“The new rules have removed some major stumbling blocks and should encourage foreign retailers to enter India,” said Devangshu Dutta, who heads retail consultancy Third Eyesight. “Although most retailers are still likely to wait for the outcome of the elections next year before they make a decision.”
National elections in India are due by May 2014 and a change in government could result in the controversial retail reform, being reversed and any newly opened supermarkets being shut, according to industry officials.
A Wal-Mart spokeswoman said the company was studying the revisions to the foreign direct investment policy.
“We appreciate the government’s willingness to consider our requests for clarity on conditions contained in the new FDI policy,” she said in a statement.
The revised policy also allowed global retailers to procure from small businesses that have intial investment in plant and machinery not exceeding $2 million – up from the limit of $1 million set out earlier to ensure modestly-sized Indian companies benefit from the influx of foreign firms.
These businesses can continue to remain suppliers even if they grow and cross the $2 million investment cap at a later stage, an essential requirement for global retailers who want to be sure of maintaining a stable supply chain in the country.
The government allowed Indian states that have decided to support foreign direct investment in retail to make a decision on where they would allow foreign retailers to set up shop. The earlier rule stated foreign chains can only open stores in cities with a population of more than a million.
Several Indian states oppose moves to allow foreign supermarkets and currently only 11 out of 28 Indian states have agreed to let foreign operators in.
(Additional reporting by CK Nayak; Editing by Anthony Barker)
admin
July 28, 2013
Raghavendra Kamath, Business Standard
Mumbai, July 28, 2013
Reliance Digital, the consumer durables and infotech (CDIT) retail chain of Reliance Industries, is becoming a challenger to Croma, run by Tata Sons-owned Infinity Retail.
Though Croma is the “first large specialist retail chain for electronics and durables” (as it calls itself) for electronics and durables with its Croma mega stores, small version Zip stores, kiosks and online vertical www.cromaretail.com, Reliance Digital seems to be doing everything to catch up with the pioneer.
While Croma, which set up its first store in 2006 in Mumbai, has 90 stores, Reliance Digital, which debuted a year later in Ghaziabad in the National Capital Region, has about 151 stores which includes 19 iStore in tie-up with Apple Inc.
Reliance opened nearly 46 stores in FY 2013 and 12 stores in Q1 of FY 2014 while Croma’s numbers are not known. It is looking to open 15 stores this financial year.
Retail experts say the renewed focus of Reliance on its digital formats has been prompted by the fact that this business has been the first to break even among all its formats. For the financial year 2013, Reliance Digital made a profit after tax of Rs 64 lakh on a turnover of Rs 2,166.38 crore. In FY 2012, it made a loss of Rs 55.13 crore on a turnover of Rs 1,234.04 crore. The digital vertical contributed 19 per cent to Reliance Retail’s Q1 FY 2014 turnover at Rs 3,474 crore and had a like-to-like growth of 17 per cent during the quarter.
In comparison, Croma, whose revenues were around Rs 2,500 crore in the last financial year, is looking at a 30 per cent growth this year. The retail chain saw break-even at the profit before depreciation, interest and tax level in FY 2013 and is looking at a net profit this year.
Retail experts say organised chains such as Reliance and Croma are eyeing the huge organised opportunity in the CDIT market, which is pegged at around Rs 125,000 crore, and organised trade is just 10 per cent of that. The total market is expected to double by 2016.
“There is no surprise that Reliance is looking at this segment so seriously. At their revenue target of Rs 40,000 crore- Rs 50,000 crore, CDIT will be the second biggest area after food,” said Arvind Singhal, chairman of Technopak Advisors, a retail consultant. “The market opportunity is so much that there is room for more players.” Pankaj Gupta, practice head, consumer & retail, Tata Strategic Management Group (TSMG), said,”The bigger competition is between organised and unorganised players.”
Business model
Croma entered the segment and tied up with Australian retailer Woolworths for sourcing and backend support. Subsequently, Croma bought the India wholesale arm of Woolworths. This partnership gave Croma a strong footing in sourcing, offering a wide variety of products and price advantage vis-à-vis others, and also helped them in private label development, said consultants.
Croma sells over 6,000 products and has 200 private labels in niche categories. The chain is looking at 7-10 per cent of its turnover to come from private labels.
Since the beginning, Croma followed a deeper penetration strategy in cities such as Mumbai and Bangalore where it is present. The early mover advantage gave Croma access to prime properties, strong partnership with vendors and good customer recall among others, retail consultants said.
Beginning with large format stores, Croma rolled out Zip stores and kiosks at airports, hypermarkets and so on and launched its e-commerce venture.
Reliance Digital, on the other hand, hired services of retail consultants and domain experts for the retail rollout and took care of its backend operations itself. For Reliance, forging a tieup with Apple for iStore was one of the plus points, though it also started focusing on smaller Digital Express stores later. These stores mostly stock high- tech connectivity and entertainment products Here, it brings in the services of ResQ, its multi-product service, to explain and inform about high-technology products.
However, Reliance insiders say unlike Croma, the company is not focusing much on the e-commerce. Croma, on the other hand, is expecting a Rs 2,000-crore turnover within two years from its e-commerce venture.
Reliance also launched durable and electronics private labels under the Reconnect brand which contributes five per cent of Digital’s revenues. The products are 20-30 per cent cheaper than national and overseas brands.
Reliance Digital says ResQ is its biggest differentiator, as no other retail chain has such a multi-product, multi brand and multi-location service network.
Though retailers such as Vivek’s in Chennai has tried out multi-brand service centres in the past, some consultants, however, say such ventures are challenging given the lower margins in the business, price sensitivity and fickle mindedness of consumers. “Service does not help you attract customers unless you get them through word of mouth,” said Devangshu Dutta, CEO of Third Eyesight.
On its part, Croma has a 24-hour call centre support besides the Croma Care Centre for its private label products.
admin
July 22, 2013
Anshul
Dhamija, The Times of India
Bangalore,
July 22, 2013
International retail brands will increase prices in the upcoming
Autumn-Winter season, with the rupee depreciation having raised
costs for them.
The rupee has depreciated by 12% against the dollar since February.
The new season for shoppers, which would begin in the second week of August, is expected to see most international brands raise prices by at least 10%.
German sports lifestyle brand Puma has seen costs escalate by 30% since January this year. "So far, we haven’t passed on the burden to consumers, but this Autumn-Winter season we will increase prices by about 10%," said Rajiv Mehta, MD, Puma India.
He said if the company passed on the entire cost increase to consumers, sales would take a beating. Puma’s India business has been growing at a cumulative annual growth rate of 37% over the last six years.
International apparel and accessories brands such as Tommy Hilfiger, Mango, Promod and Zara are expected to revise prices as their high percentage of imported content does not allow them to absorb the costs entirely.
Mukesh Ambani’s fashion business Reliance Brands, which has franchise agreements with premium to luxury brands Kenneth Cole, Paul & Shark, Diesel and Ermenegildo Zegna, among others, is also said to be looking at a price revision for the upcoming full-price fashion season.
On the other hand, Daniel Hechter and Manchester United, part of Kishore Biyani’s Future Group-owned Indus League Clothing, which have a 10% exposure to imports, are unlikely to increase prices. Benetton and M&S are the other international brands that won’t be impacted by the dollar due to a high percentage of local sourcing.
Pinakiranjan Mishra, partner and national leader (retail and consumer products) at consulting firm Ernst & Young, says that since brands are already offering huge discounts, any steep price hike in the next season could dampen consumer spending. "It will be difficult for consumers to accept anything above a 15% price increase," said Mishra
For franchises of ultra-luxury international brands, the problem could be particularly acute. Genesis Luxury – which markets and distributes labels such as Armani, Jimmy Choo and Paul Smith – has been advertising large discounts to revive waning sentiments of luxury shoppers. And this elite segment has the option to buy at neighbouring shopping hubs such as Dubai and Singapore.
"International brands that operate on a franchise model in India, where the local franchisee has a high exposure to currency fluctuations through imports, will definitely have to go in for a price increase," said Devangshu Dutta, CEO of retail consultancy Third Eyesight. He added that international brands that have set up JVs in India might look to absorb the increase in costs, with a view that the situation is a short-term phenomenon.
At present, both domestic and international brands are riding high on the year-end sale season, as consumers are lapping up discounts ranging between 30% and 50%. These are expected to further deepen to as high as 70% with the sale season entering its final leg. Dubai-based Landmark Group’s multibrand retail store Lifestyle has already reported 50-60% growth in sales over last year’s end-of-season sale.
