admin
June 20, 2007
OUTLOOK BUSINESS , 20 Jun 2007
Ranjana Kaushal
Veering to the left of the Hero Honda roundabout in Manesar,
Gurgoan is a nondescript road. A 100 meters down this path stands
a building, which symbolises the rising global acceptance of
India’s fashion design industry—the 3,50,000-square
feet designing and manufacturing unit of Orient Craft, one of
India’s largest export houses. On the ground floor of this
Rs 750-crore company, in a glass cabin overlooking the work
stations of 100 associates, 42-year-old Anoop Thatai, Joint
Managing Director & CEO of the company, is busy discussing
the new spring collection for a US customer. Finally, after
hours of discussions, a few cuts, silhouettes and fabrics are
short-listed. Then the design team of around 100, along with
a support staff of 700, begins work on rolling out the products.
Says Anoop Thatai: "The team has to complete the project
in the next 14 days. Then we begin work for a major European
retail brand. I am running at full capacity. Besides manufacturing
prototypes, we are developing our own design lines."
For Orient Craft, it has been an eventful journey, for, just 10 years back it was manufacturing apparel for international clients with little value addition. But the company has climbed up the value chain. Says Sudhir Dhingra, Chairman and Managing Director, Orient Craft: "Out of the 65% women’s wear produced by us, almost 40% have our own design input and we produce 2,000 design samples a day. This differentiates us from competition and certain clients get back to us for particular designs."
The design element in the apparels and accessories industry—apparel alone is a Rs 30,000-crore market—has risen by almost 80%. Graduating from assembly line operations for Western labels, Indian design firms are now creating their own lines based on strong in-house R&D capabilities. Says Devangshu Dutta, Chief Executive, Third Eyesight, a Delhi-based fashion consulting firm: "The days of cut, copy, paste are coming to an end as every exporter looks for a distinct image. This is possible only if you innovate in design."
While big export houses like Orient Craft are enhancing their businesses by emphasising on design, international firms are looking at India as an outsourcing hub. This is spawning many start-ups, such as Bangalore-based Munch Design and Delhi-based Bricolage, which are developing lines of apparel and accessories for global brands like Nike, Reebok, Esprit, Adidas, Zara, Guess, Macy’s and Gucci. Says Narinder Mahajan, Founder, Bricolage: "Clients depend on us for forecasts and trends. Right from deciding on the theme-based collection names to the final sampling, everything is done by us." Bricolage is now developing a casual clothing division for Reebok and a range of shirts and tees for Benetton.
A Cut Above The Rest
Design in apparel as a key differentiator comes at a premium. According to industry sources, a prototype consignment of 10,000 shirts to the US would cost $10 per shirt. But with elements of design like embroidery, embellishments and cuts, the same shirt would cost $20 or more. Says Vijay Agarwal, President of Apparel Export Promotion Council: "India’s strength is design, whereas China is a mass producer. We need to balance the two—numbers and design innovation—for enhancing exports."
However, not just exports, the design element is slowly creeping into the lives of domestic consumers too. No more the plain shirts for the Indian male. The choice has widened to embroidered, pleated, crushed, crystal-laden and metallic shirts. For women though, there’s practically no end to the need for choice.
Homegrown companies like Pantaloon and Madura Garments are busy satiating the design needs of Indian consumers. Says Hemchandra Javeri, Senior Executive President, Madura Garments Lifestyle Brands and Retail: "The importance of design will be further heightened in future as Indian consumers get more in sync with global trends. Indian companies will have to compete in design, branding and retail. I see these as the key differentiators of the future." Madura Garments owns brands like Allen Solly, Allen Solly Womens, Peter England, Van Heusen, SF Jeans, Louis Philippe, Byford, Elements and San Frisco. "We try to balance fashion, innovation and commercial logic," he adds.
Pantaloon Retail too offers a variety of apparel and accessories targeted at men, women and kids. Says 43-year-old Kishore Biyani, MD of Pantaloon Retail: "We are a design-centric company. Right from kids wear—the Gini and Jony range to middle class brands like Big Bazaar to high-end fashion like Pantaloon—each product has a strong design element. This, I would say, is the biggest value add-on."
Points out Kailash Bhatia, CEO, Apparel Line: "Designers travel a lot, get customer feedback from surveys and marketing before launching a line for a particular season." Bhatia is aided by a team of 30-inhouse designers. For global players with a presence in India, apparel design is a key element. Says Manjala Tiwari, Brand Head, Esprit India: "Our business has grown three-fold over the past two years. We present the same range in India as overseas. We cannot present a six-month-old Western line in India."
Sums up fashion designer Ritu Beri: "When I joined the industry in 1990, fashion was a diversion for a small elite. Now, it’s more about being well dressed all the time."
More To The Design
The impact of design has spread to bags, shoes, hair clips and even interior furnishings. This has resulted in institutes such as NIFT launching courses to address this new market segment. Says Jatin Bhatt, Professor, Department of Fashion & Lifestyle Accessories, NIFT: "Seeing the market demand for trained accessory and interior designers, a four-year degree course, called Fashion and Lifestyle accessories, was launched. We now train students in leather, metal, jewellery and interior designing."
At Magppie, one of the first branded steel accessory players, products are designed by 10 designers in India and 28 overseas. Says Vinod Jain, MD of Magppie: "For an accessory player like us, design is the only differentiator. Consumers are ready to pay a premium for better designed products."
Agrees V Govind Raj, Vice-President, Tanishq: "9 out of our 10 customers prefer designs in terms of jewellery." Every season, the Rs 3,000-crore company introduces a new collection developed by its in-house team of designers. "We also promote our designs through cinema. Actress Rani Mukherjee adorns our jewellery in the movie Paheli. The soon-to-be-released Jodha-Akbar too will have our collection," he says. Earlier, Madura Garments had promoted its range of formal wear for men and women through the film Corporate.
Handbags and purses have also undergone changes over the years. From being a utility item, these have assumed the status of a style statement. Global brand LVMH (Moet Hennessy Louis Vuitton) is looking to acquire 20% stake in the Pondicherry-based leather goods maker Hidesign. Dilip Kapoor, Founder and MD, Hidesign reveals: "We will retain our brand identity and not be the outsourcing destination for LVMH. My team of nine designers is working closely with the team of LVMH to develop new collections."
The old idiom ‘A man is best known by the shoes he wears,’ stands true even today, as shoemakers Bata, Liberty, M&B, Nike, Reebok, Mirza Tanners and Adidas invest heavily in the Rs 11,000-crore domestic shoe market. Points out Bhupinder Kharbanda, ex-Head of Design, M&B: "The concept of having multiple pairs of shoes of different designs for different occasions is new in India. People are now paying more for a better-designed product than they were five years back. However, we are still at the tip of the iceberg."
With international and Indian consumers becoming more design-savvy,
the dynamics of design is sure to change in the coming times.
admin
May 15, 2007
Special Correspondent Raj Menon, Mumbai (From TDCTrade.com)
With long-term experience in modern supply chains and provisioning,
Hong Kong firms in the food and related products sectors – the
likes of Heng Tai Consumables and ABS Procurement Co – are sure
to be viewing the changing Indian retail scene with more than
passing curiosity. Others, like ACM China, the greenhouse specialist,
are already getting involved.
Recent news tells a fascinating story: Reliance Retail is to invest
US$5.5 billion by 2010-2011, to create 100 million sq ft of retail
space. Bharti-Wal-Mart is to invest US$2.5 billion by 2015, to
create 10 million sq ft of retail space. Future Group (Pantaloon
Retail) will invest US$260 million by 2008, to increase its retail
space to 10 million sq ft. The list goes on.
Subhiksha, the US$73 million discount store will set up 1,000
stores in India by the year end, while Metro AG is investing US$400
million over the next three years to set up some 18 stores in
the country.
Other giants of the mass provisioning industry are not out of
the picture either. The ninth largest food retailer, France’s
US$50 billion Auchan, is eyeing the Indian retail market, while
Carrefour is in talks for tie-ups with some of the top Indian
industrialists.
So also venture the UK’s Tesco and Home Retail – the latter signing
an MoU with Shoppers’ Stop and HyperCity, the retail ventures
of the K Raheja group to develop Argos Retail Format Stores.
Local groups are shaping up as well, with the Aditya Birla Group
and Tata Group among those also finalising new and exciting retail
plans.
These retailers have big ideas to speed up the revolution in the
US$300 billion Indian retail industry. The sector is expected
to increase to US$427 billion by 2010 and to US$637 billion by
2015. Organised retailing, which up to now has accounted for just
3% of the total retail market, will increase its share to up to
18% by 2015.
According to a study by ICICI Property Services-Technopak Advisors,
most of the investments being planned are in the supermarket/hypermarket
format, where food and other groceries with related household
goods will attract maximum investment. Food and other groceries
account for 70% of total retail sales in India.
The Indian food and grocery retail market is estimated at US$168
billion, of which foodgrains and unprocessed fruits and vegetables
account for half of total food and grocery sales. Given the predominance
of the sector, it is understandable that most international and
domestic retailers are making a beeline for it. Apparel, home
furnishings, furniture, electronics are other product segments
of interest, if slightly less lucrative.
With almost all retailers moving into these segments, the need
for differentiation, quality enhancement and value for money are
all becoming increasingly pressing. Retailers are moving fast
to set up supply chain infrastructure and lines with vendors,
to spruce up sourcing operations.
Retailers estimate that total investment in supply chain infrastructure
is to the tune of US$500 million. Backend operations are taking
front seat. Until now, volumes in the organised retail sector
were small, which did not require too much investment in supply
chain management.
However, every big retailer today is investing in this crucial
operation to control costs, improve efficiency, cut down inventories
and source quality products.
Another reason for this is the entry of the international retail
giant Wal-Mart, through a joint venture with Bharti Group, whereby
Wal-Mart will manage the back end operation, and Bharti the front
end.
Wal-Mart has stated that it would replicate its global supply
chain model in India, while taking into account the unique features
of the Indian market. Also, emphasis would be on local sourcing
of goods, as far as possible. Wal-Mart officials, after a study
of the Indian retail scene, are confident they can offer better
prices to Indian consumers.
This has got other retailers moving too, to enhance efficiencies
of their own supply chains and bring down costs, while offering
consumers the lowest possible prices.
It is well known that Wal-Mart operates on volumes, and can buy
the entire production of its vendor plants, thus lowering costs
and passing on the benefits to consumers.
Wal-Mart, through its international operations is also in a position
to source globally. The company is set to roll out its first set
of stores by the first quarter of 2008, in cities that have a
population of one million. The formats would be hypermarkets,
supermarkets and also partnerships with some existing local stores
through franchise.
Food and grocery is expected to account for up to 40% of the venture’s
turnover, and the retailer would offer lower pricing on home products,
clothing and kitchenware, which are globally sourced.
Wal-Mart claims it will take 35% of the Indian retail market by
2015.
In response to this, India’s Future Group is sprucing up its vendor
network. The company has identified up to 40 anchor vendors, each
with turnovers of US$45 million, to achieve economies of scale.
The group is keen to ensure that its smaller vendors are able
to reach turnovers of around US$1 million and a growth rate of
40% annually, to be able to pass on the benefits of scales. The
company is also working towards bringing its 1,200 vendors online,
like Wal-Mart.
Reliance
Retail looks at the small picture
Reliance Retail has announced plans to set up one store for every
3,000 families within a radius of 2 km across all locations by
2011. The company is competing directly with the large number
of traditional local provision stores. Reliance Retail is either
going to set up new stores in the identified areas or take over
existing stores. The company has already done that in Mumbai and
other cities.
Of the four million sq ft of retail space to be created under
the “Reliance Fresh” brand (for groceries), one million will be
through acquisitions. The retailer is also moving into laundry,
personal care and apparel product lines, in which it plans to
launch private labels.
Reliance is planning to roll out its specialty format stores this
year, beginning with consumer durables, for which it has struck
sourcing deals with companies in Hong Kong, the Chinese mainland
and with Videocon in India.
To strengthen its links with farmers, the company is setting up
integrated agri-retail business centres, which include three processing
and distribution centres, 51 retail outlets for farmers and 75
rural business hubs, all with an investment of US$445 million.
Many companies, looking at the retail boom in food and grocery,
are setting up ventures to help retailers source these goods.
Field Fresh, a joint venture between Bharti Group and NM Rothschild,
is providing premium quality fresh produce to markets worldwide,
has over 5,000 acres of land under cultivation all over the country
producing many varieties of fruits and vegetables and is planning
to double land under cultivation by the end of 2007.
The company is to supply fresh produce to the Bharti-Wal-Mart
venture. To ensure best qualities and varieties, Field Fresh has
engaged ACM China, an industry leader in building greenhouses,
to set up state-of-the-art glass-based greenhouses at the FieldFresh
Agri Centre of Excellence in the Punjab.
Field Fresh is also planning investments to the tune of US$220
million in the backend, including investments in cold chains and
warehouses.
The Indian fresh produce marketing, till now controlled by state-owned
Agriculture Produce Marketing Cooperatives (APMCs), is also changing
with reforms in the APMC Act in many states. This has opened up
the space for private players, and all major retailers are planning
to set up private ‘mandis’ (marketplaces/bazaars), from where
they can directly source their requirements of fresh foods.
Bharti’s Field Fresh will enter this segment within the next three
months. A number of companies are also venturing into this segment
to service the backend needs of retailers. For instance, DCM Shriram
Consolidated Ltd (DSCL) finds that sourcing fresh foods for major
retailers is big business and is in the process of tying up with
them to source fruits and vegetables from farmers and supply to
the retail chains.
DSCL is already doing this for Future Group’s Food Bazaar, south
based Subhiksha and RPG’s Spencer. The new tie-ups would help
the company to operate on economies of scale, and to operate all
over the country.
Importers have a ramshackle infrastructure
Almost all retailers in the food and other groceries segment have
a section for imported fresh fruits and vegetables from Hong Kong,
the Chinese mainland and some European countries. These are normally
costlier than the Indian goods, and quality is almost always never
good, because of lack of warehousing infrastructure on landing
in India.
Being novelty products, however, these are finding a place in
Indian kitchens. Realising this, Indian companies, through their
contract manufacturing, have begun growing the same in Indian
farms.
Brands such as Godrej Nature’s Basket are planning to begin global
sourcing directly, to ensure better quality, product mix, handling,
and continuity in supplies. Subhiksha, which is expanding its
retail outlets very rapidly, has a separate team that continuously
looks for best prices in groceries across the world. Reliance
Retail has stated that it stocks over 100 international brands,
which are not available in other formats.
The retail boom is creating a flurry in the other product segments
too – apparel, furnishings and furniture, electronics. While global
sourcing in these segments is only 5% of total merchandise, it
is growing at a rate of 50% per annum.
According to Devangshu Dutta, a retail consultant with Third Eyesight:
“most of the international retailers would prefer to have localised
sourcing as quality, inventory, cost is better managed. However,
there is the issue of whether Indian manufacturers can supply
the volumes that Wal-Mart, Reliance Retail, and others will demand
over the next few years.”
Almost all retailers, big and small, have some percentage of goods
which are sourced mainly from Hong Kong, the Chinese mainland,
Thailand, Malaysia, Indonesia, the Middle East and Europe.
Future Group (formerly Pantaloon) has recently set up a sourcing
office in Hong Kong as well as on the Chinese mainland. The main
items sourced are apparel, fashion accessories, furniture and
furnishings and electronics.
Meanwhile, almost every Indian apparel exporter has begun supplying
to domestic retailers too. And most of these exporters – Orient
Craft, Texport Syndicate, Leela Lace, Kaytee Corporation and Creative
Outerwear – are set to increase their production for domestic
supplies.
Of the non-food domestic products stocked by larger retailers,
a lot of furniture is also being sourced internationally, again
from China, Malaysia and Indonesia. Specialty stores such as Durian
in India source almost 90% of their merchandise internationally.
Also, some Italian companies have entered the Indian market, and
are retailing from some of the big retail chains such as Shoppers’
Stop. Tata Trent Ltd, which has set up Westside chain stores,
sources a large part of its kitchenware and fashion accessories
from Hong Kong and the Chinese mainland.
Industry circles feel as domestic retailers grow in size, more
and more chains will look at the option of setting up overseas
global sourcing hubs, mainly in Hong Kong and some selected centres
on the Chinese mainland.
However, global sourcing would still remain small in Indian retail
due to continued the high import duties in India. “The sourcing
happening today is mainly to bring in variety that is not available
within the country,” says Dutta.
admin
May 10, 2007
MOINAK MITRA & BHANU PANDE
The Economic Times
DELHI, 10 May 2007
If temping is passé, weekend temping is the new passport for retailers to tide over footfall pressure during the weekends. As families make a beeline for high streets and malls during the weekends, the normal workforce looks helpless.
So, retailers are increasingly training their eyes on droves of undergrads who’re willing to work for money, recognition or just the fun of hanging out. Heavyweight retailers like Shoppers’ Stop, Wills Lifestyle, Timex and Airtel to name a few, who see a sudden spike in footfalls over the weekends, are roping in agencies for outsourcing manpower for that short one-to-two-day duration.
With organised retail breaching the Rs 48,000-crore mark, there’s no telling where outsourced manpower can go, especially on Saturdays and Sundays. Temping agency TeamLease has witnessed a huge demand for workforce across the retailscape over the weekends, and aptly cashed in on the opportunity.
“The numbers (of outsourced manpower during weekends) fluctuate owing to seasons, festivals, launch of a movie or a product,” says Rituparna Chakraborty, vice-president, TeamLease. She cites the summer sun as a key driver for weekend temping.
“People also want to escape the summer heat and throng air-conditioned stores. Soaring footfalls call for more people to manage those footfalls,” she adds. TeamLease engages 500 people at Shoppers Stop through the weekend temping model.
Even retailers who have so far shied away from the weekend temping format, seem keen. Take the case of Kishore Biyani, managing director, Pantaloon Retail. For his mid-market retail chain, Big Bazaar, weekends account for as high as 45% of the business and that jacks up manpower requirement by almost 25%. “This is the real issue facing us today,” says Biyani.
“We are figuring out ways to address it and looking for firms that can feed us with temporary staff during the weekends.” For now Pantaloon and Big Bazaar are managing in-house, using the students who attend courses run by Future Group in 14-15 educational institutions across country. “While they get first-hand retailing experience, we get our spike in weekend manpower requirement fulfilled,” Biyani explains.
Acknowledging the crunch, ITC’s apparel chain Wills Lifestyle, recently signed on the dotted line with TeamLease. “During the weekends, footfall pressure on average is twice, and at times, thrice that of on normal days.
But since our requirement is very specific, even when we outsource talent, there’s substantial handholding from our end,” points out Chittaranjan Dar, CEO, Wills Lifestyle. Countrywide, Wills hires 40-50 people over weekends as temporary workers.
For Devangshu Dutta, chief executive of Third Eyesight, a retail and fashion services firm, the retailers face real manpower issues during the weekends and this is bound to go up. “For Indians, shopping is more of an entertainment than just a plain utilitarian activity and that explains the chaos in malls during weekends. So retailers need staff reinforcement for basic functions such as attending to customers, restocking, etc,” he says.
admin
May 9, 2007
By Rajiv Banerjee & Shuchi Vyas
BRAND EQUITY, THE ECONOMIC TIMES
9 May 2007
At the MTV head office in Mumbai, the channel’s seven CEOs troop in every month to report their observations. And just like their Mumbai counterparts, CEOs from six other Indian cities too mail in their reports diligently every month. Meet the campus executive officers — the eyes and ears of the music channel, which sweep colleges across India looking for what’s hot or cool.
It’s the kind of information which enables MTV to get deep into its target audience’s minds. “The insights may not lead to a radical overhaul in our offerings, but we do incorporate elements into our shows — in the style and packaging — to make it contemporary and in tune with our target audience,” says Aditya Swamy, vice-president – marketing, MTV Networks India.
While MTV keeps its antennae tuned to the latest fads, Sanjay Luthra, MD, Mattel, bemoans a missed opportunity. The Pixar ‘Cars’ phenomenon isn’t even a whimper in India, even though Mattel factories across Europe and America are falling behind on orders. “In India, it didn’t work as well as expected,” admits Luthra.
The reason, in all probability, could be traced to the fact that Cars (the movie) wasn’t as big a hit in India. “A fad has to be identified and supported by more than one party. Today, when a fad emerges, it has a high-intensity, high-velocity impact, whereas earlier it was a gradual build up. The potential return is high, but there are risks as well,” Luthra adds.
It’s a conundrum which marketers today are grappling with. A fad today has a faster build-up and a shorter lifespan than ever before. He-Man moved from a fad to a trend with a life long enough for marketers of every stripe to ride on it.
Today, it’s Pokemon to Yu-Gi-Oh to Pixar, re-mixes to Brit-Asian to hip-hop — all flashing by on fast forward. While some do last long enough to become more durable phenomena, others have a very short shelf life. Time it and you ride the wave; miss it and you come crashing down.
The question that begs an answer: are fads worth all the effort? BS Nagesh, MD of Shoppers’ Stop, says that the fashion and lifestyle format no longer counts on short-term spikes. “We learnt this lesson during the days when Valentine’s Day was a hit. We used to work towards giving the occasion a spike. Now it’s just faded away. So unless it’s a product which creates a fad, which still has to be well planned, we don’t look at short-term waves,” he says.
Some of the fads that Titan’s FastTrack has seen are the neon collection in the watches category, and the amber-coloured and mirror effect range in sunglasses. “We see that when a campaign is taken off air, the demand drops. When put on air the second time, it revives interest only for a small segment,” says Simeran Bhasin, marketing manger, FastTrack, referring to the interchangable range launched for women, which did not pick up after the first few months.
But Bhasin also sees comebacks after a three-to-four year lull — in sunglasses, ‘avaitors’ and ‘bug eyes’. Trendspotter Robyn Waters, who’s written a best-seller called The Hummer and the Mini: The Contradictions of the New Trend Landscape, believes that today, as soon as something becomes commonplace, the early adopters move on to the next thing. “That makes it even trickier for marketers to capitalise on fickle fads.
It’s easier to identify because it’s so ubiquitous, but harder to capitalise on because the product lifecycle is so compressed,” she says. Dharen Chadha, MD, Momentum Strategy Consultants, says that fads are an example of downstream marketing. “They have their importance in certain categories like children-oriented ones in which you need to keep the stimulus fresh.
Brands should be about the eternal rather than the ephemeral,” he warns. And even in a kids’ category like toys, for players like Mattel, knowing what fad will catch children’s fancy in the future is crucial. For instance, Luthra has to be ready when kids go on holidays in April 2008.
“Even as children are more globalised today, they are ‘getting older younger’ (GOY), which means a move away from interest in sustained medium-intensity activity to short-term high-intensity fads,” he explains.
The shortened time line for fads owes to the faster dissemination of information through media like the internet and mobiles. Social networking sites and blogs allow anyone to propagate what he or she thinks is cool. “Earlier, a customer was exposed to a fad through a marketer.
Today, as the exposure is so large, sustaining a fad is becoming very difficult,” says Nagesh. Adds Santosh Desai, CEO of Future Brands: “Today, we are able to forget very easily. It’s a hallmark of media-based society. We grew up at a time where everything was given and stable. Today, it is based on change. What’s changing is growing.”
One outcome of the global information exchange is that Indian customers now see hardly any lag before a fad that takes shape in another country reaches India. Devangshu Dutta, chief executive, Third Eyesight, a Delhi-based consultancy, points out that this market is still very different from Japan and the US, where the electronic media is more dominant and specific market segments are smaller.
“There is still a significant ripple creating power in India. Fashion has more of a pan-India effect, while fads trickle up, down and sometimes across,” he says. Citing the example of an international retailer that he worked with, Dutta says two years ago, the retailer noticed there was an increase in demand for ‘ponchos’ and so they made 25 varieties of ‘ponchos’ for the UK market.
“They sold large volumes, but when other companies tried it just six weeks down the line, no one really bought them, and within two-and-a-half months, almost no customers picked them up,” he says. Even when it comes to fashion, Bina Mirchandani, head – category management, Future Group, believes time spans are coming down, even in India.
Two years ago, Pantaloons introduced Seven Seasons, with each season lasting around two months, which according to Mirchandani, proves that the timeframe for trends is decreasing. “We see that silhouettes last for a longer period of time compared to colours.
Also, comfort level is a factor that determines whether a fad goes on to becoming a trend. For instance, kurtis started out as a fad, but because people found that it is a comfort outfit, its lifespan has increased.”
So marketers are looking increasingly at capturing trends, rather than going after short-term fads. Ashwin Rajgopal, GM – marketing, L’Oreal, explains: “We are in the business of science and technology. Fashion is just a part of the entire spectrum.” Explaining the emphasis on creating trends rather than riding fads, Rajgopal says that considering the size of the country, if it’s just a fad, it may get restricted to major metros like Mumbai.
This also explains why the company does not indulge in limited editions — barring the recent Aishwarya Rai lipstick shade — dismissing it as a short-term game. “The challenge for us is to appeal to a large cross-section of people, especially when others join the bandwagon soon after we’ve introduced something in the market,” explains Rajgopal.
Most marketers believe that identifying fads is part scientific and part gut feel. While enormous amounts of time is spent researching consumer behaviour, preferences, media habits and language, whether tapping a fad will rake in the moolah for marketers is a matter of chance — and timing. To know what the target audience would be interested in the future, Mattel depends on Play Plus, a research which combines both internal and external sources.
“The idea is to service the play needs of a child, whether he wants a toy or internet or games. The list we have seen is getting more and more crowded,” Luthra says. One insight which came from the Play Plus research was children spending more time with mobile cameras.
So Mattel came out with a digital camera which, according to Luthra, is gaining popularity all over the world. Mattel has launched this in India too, but it remains to be seen whether kids here will latch onto what is a rage in other markets. “At the end, Play Plus will identify five properties — three may do well and two won’t. But it’s a continuous bet,” he says.
Ashish Patil, VP – creative & content, MTV Networks, admits that it’s a combination of research and going by the gut. “But what we bank on is our experience of what’s worked in the past, and whether something will work or not. That understanding gives us the confidence of saying this will work the minute we see it or hear it,” he says, adding that there are some broader trends like Bollywood.
But even within that there are fads like a ‘John Abraham’ from Dhoom 1 to a ‘Hrithik Roshan’ in Dhoom 2. “Today humour is big, but the kind of humour where you have fun at someone else’s expense is a fad.”
It’s not always easy predicting fads — they can be sparked by just about anything. Take, for example, the Motorola Pink Razr, which the company launched in a market dominated by black and grey coloured handsets. Lloyd Mathias, head – marketing, Motorola, says the initial reaction to the idea was met with skepticism.
“People thought it was bizarre. But we decided to go ahead with it and see the reaction,” he says. Within a fortnight, the company was inundated with calls from all over India with youngsters, particularly girls, asking for the Pink Razr. “We thought it would be temporary, but it went on to become a trend.
We took a gut call and decided to break the clutter. It worked for us,” says Mathias.
Interestingly, Dutta of Third Eyesight points out that mobile caller tunes have moved from being a fad to a permanent feature. “When the application was first introduced, youngsters used to change the caller tunes almost everyday,” says Dutta.
Marketing is rife with examples of trends that were mistaken
for fads and vice versa. And while fad creators almost always
gain disproportionately, cashing in is invariably a function
of knowing when the end is nigh.
admin
February 20, 2007
By RASUL BAILEY
MINT (Exclusive Partner The Wall Street Journal)
DELHI, 20 February 2007
Bharti Enterprises, the parent of India’s best selling wireless service provider Airtel, confirmed that it will invest up to $2.5 billion (Rs. 11,026 crores) in the next eight years to roll out convenience stores and hypermarkets nationwide, joining a raft of companies looking to profit from an expected boom in organised retailing.
As reported on Monday by Mint, Rajan Mittal, the youngest of the three founders of Bharti, will head the retail foray, dubbed Bharti Retail Pvt. Ltd. Bharti’s Investment will be financed by a mix of debt, internal accruals and equity. The investment excludes the cost of real estate.
The company is targeting Rs. 20,000 crore of revenues by 2015 but didn’t say how many stores it plans to put up and where. The company will need 10 million square feet of space for its stores and did not say whether the company would go the leasing or purchase route, or a combination of the two. The first stores are likely to start a year from now.
Bharti is also partnering with Wal-Mart Stores Inc. for managing the back-end supply chain and logistics for its new retail foray. There were very few details on that front from Bharti pending a visit by Michael Duke, vice-chairman of the Bentonville, Arkansas-based retailer later this week.
“I think putting the supply chain in place will be the critical element for Bharti,” said Devangshu Dutta of retail research firm, Third Eyesight. “It makes sense for them to open early next year as an investment of this nature and magnitude needs a year or so for the supply chain and real estate to be put in place.”
Retail has become the latest target of Indian corporate giants trying to diversify and rush into emerging opportunities. As organized retail takes roots in India, as much as $25 billion is expected to be invested in the sector in the next five years, compared with $2 billion in the last decade.
France’s Carrefour SA and Britain’s Tesco PLC are also looking at ways to enter India’s $300 billion annual market. But analysts say Bhartis major competition is expected to come from other home-grown retailers including India’s largest listed retailer, Pantaloon Retail (India) Ltd. and Reliance’s retail arm as both companies separately plan to open thousands of stores in th enext five years. Much of the criticism about organized stores hurting mom-and-pop stores has pointed the finger at the likes of Wal-Mart, even though Bharti’s retail investment is significantly lower than what the likes of Reliance have said they will spend in more ambitious roll-outs of stores.
Mittal said Bharti Retail will create 60,000 direct jobs but would also “provide linkages to farmers and small artisans”, to its stores selling everything from food to furniture.
