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March 13, 2023
Tushar Goenka, Financial Express
March 13, 2023
Flipkart Supermart, the online grocery delivery platform of the Walmart-owned ecommerce company, is betting on regional brands to unlock the next phase of growth. Over the past few months, the e-tailer has been listing brands and making them more readily available in cities where their recall value is high.
The regional push targets staples and is pronounced across categories such as atta, tea, pulses, among others. So, instead of offering, say, just the Tata brand of tea, Flipkart also showcases local favourites like Nameri Tea for the residents of Assam. Similarly, instead of selling Nestle’s Maggi and ITC’s Yippie noodles across the country, Flipkart will also let customers pick brands selling Korean noodles, popular among north east teenagers.
The shift in focus is vital in a country whose grocery bill totals $600 billion, of which offline sales account for a staggering $592 billion, while online is a much smaller $8 billion. Further, of the total grocery bill, the share of regional brands at around 60% is much higher than organised national brands that stood at 40%, according to rough estimates from EY.
So far, the plan seems to have worked for the company. Smrithi Ravichandran, head of grocery, says her unit has grown 2.5X between June 2022 and February 2023.
The reason for this shift in focus is easy to understand. In Ravichandran’s own words, “The Indian palette changes every 150 kilometres.” Consider this. The kind of toor daal consumed in Chennai is different from that consumed in Madurai. That is, even within a single state (Tamil Nadu in this case) there is a huge difference in preferences. And that is true for most categories.
Next, look at the potential. Ravichandran’s department sees about 65-70% of its orders coming from Tier 2 and beyond, with metros and Tier 1 cities accounting for the rest.
Analysts believe Flipkart’s initiative is a step in the right direction. Says Devangshu Dutta, CEO, Third Eyesight, a retail consulting firm, “Focusing on regional brands makes eminent sense not just to cater to tastes in a particular geography but to also serve consumers who have moved away from their hometowns and might find it difficult to buy their chosen brands.”
That said, catering to regional preferences is easier said than done. “If one has the same selection even for the same state, it doesn’t help. But there is a cost in catering to that varied choice and we’ll need to operate more fulfilment centres,” Ravichandran adds.
From what to how
Flipkart’s plans to double down on the regional selection in grocery will mean partnering with some of them. Here consumer data available with Flipkart will come in handy, says Ravichandran.
Angshuman Bhattacharya, national leader, consumer product and retail, EY India, believes that by offering more regional brands in categories like atta, Flipkart will deepen penetration, giving smaller players a chance to tap a wider customer base. “Smaller, regional brands will be hungrier for growth and may end up offering healthier margins than what a nationalised player would do,” he adds.
In this, Flipkart’s approach is similar to that of Future Retail under Kishore Biyani, who underscored the importance of a regional brand-led strategy. “The Future Group had launched around 10 private labels of atta and that is no easy feat. A regional brand-led focus might prompt Flipkart to toy with the idea of launching its private labels at a later stage. Or it may even end up asking the regional brands to package staples under its brand, thereby yielding much higher margins,” Bhattacharya of EY points out.
Flipkart isn’t drawing the line just yet. The company will invest in technology to tell customers about the origin of the products they order. “Conscious consumerism is another aspect we will focus on. So, on the packet of a toor daal, consumers will have traceability regarding where and when exactly the daal was harvested,” Ravichandran adds.
This journey will not be a cakewalk for Flipkart. Analysts point out that to be able to partner with Flipkart and address its customer base of over 450 million, smaller brands must up their supply chain spends. That apart, there is always the fear that if the e-commerce giant does not get the desired results, it might discontinue such tie-ups, leaving the regional players in the lurch. Flipkart must allay these fears right at the outset.
(Published in Financial Express)
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November 4, 2022
Christina Moniz, Financial Express / BrandWagon
November 4, 2022
Direct-to-consumer (D2C) lingerie brands, often credited with transforming the category and the way women shop for innerwear, are expanding their offline footprint in response to growing demand from tier-II markets and beyond. Zivame, whose journey began online just over a decade ago in 2011, has grown its offline presence to over 120 stores and also sells through over 4,000 partner outlets. In its recently concluded Grand Lingerie Festival, Zivame saw its sales grow three times,with a 120% increase in new customer acquisition. “Tier-II markets are showing massive potential and though tier-1 remains our highest revenue contributor, we are seeing significant revenue baseline shifts in tier-II locations,” says Khatija Lokhandwala, head of marketing at Zivame. The company has announced that its focus will be retail expansion in the second half of this fiscal, going beyond metros and tier-I markets.
Another decade-old D2C player in the innerwear segment, Cloviais eyeing the immense opportunity presented by smaller markets with aggressive expansion plans in place. “Clovia currently has 45 exclusive brand outlets in the country and has been diversifying its product range, with plans to open 130 outlets by the end of this fiscal. Ours has always been a mass- market brand, and most of the repeat customers come from tier-II and tier-III markets,” explains Pankaj Vermani, founder and CEO, Clovia. He notes that over 65% of its customer base is from the non- metro markets, and average order values are 20% higher in these cities compared to the metros. Earlier this year, Reliance Retail Ventures acquired an 89% stake in Clovia’s parent company (Purple Panda Fashions) for Rs. 950 crore. Vermani adds that Clovia will ben- efit from the conglomerate’s scale and retail expertise, driving up growth and love for the brand. Reliance Retail had picked up 15% stake in Zivame back in 2020.
Shaping the market
The women’s innerwear market in India is set to double to reach $11-12 billion by 2025, according to a report by RedSeer. Aside from the key segments of bras and panties, ancillary products like athleisure, sleepwear, swimwear and lounge wear are also boosting the lingerie category’s growth in the country, as is evident from the widening portfolios of leading brands. The online segment for women’s innerwear is expected to become a $1 billion market by 2025.
Experts believe there is a large opportunity for companies to grow since 60% of the $6-billion women’s intimate wear market in India is unorganised, and the category is still largely underserved.
“The lingerie market is an example of improving supply feeding into a growing demand, and the increasing demand expanding the opportunity for more brands to step in. Larger cities, with their higher income profiles and demand concentration, are the logical first-choice market for companies such as Zivame,” points out Devangshu Dutta, CEO, Third Eyesight.
The competition in the large cities is greater, with a plethora of Indian and global brands, which is why Dutta recommends that e-commerce led companies should push aggressively in smaller markets to drive sustained growth.
The fact that D2C brands have better data sets at their disposal to glean insights about Indian women and their concerns when buying innerwear has also worked in their favour.
“Intimate wear shopping can be overwhelming for a lot of women. Finding the right size and choosing styles for their specific needs requires an environment free of embarrassment and judgement. At Zivame, we help women choose the right size and perfect fit, ensuring a private, comfortable and discreet shopping experience,” says Lokhandwala.
While lingerie can sometimes be prohibitively expensive, Vermani points out that Clovia’s feedback-led design approach helps it keep pricing competitive.
The brand creates each product in small quantities, and uses technology to predict future sales based on customer feedback, thereby determining the right quantities for production. He states, “With this approach, we have created a fashion brand that is low on cost, high on consumer appeal and efficient in inventory, leading to better margins and cash flows.”
(Published in Brandwagon, Financial Express)
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October 11, 2022
SHARLEEN D’SOUZA, Business Standard
Mumbai, 10 October 2022
In early 1994, Titan started selling watches with precious stones in them and called this new line, Tanishq. It went on to become a separate division of Titan Company and grew into the country’s largest branded jewellery outfit, helping raise Titan’s sales to ~28,799 crore last financial year.
Thirteen years later, in 2007, Titan Eye+ set out to shake up the eyewear market. Though it also sells sunglasses of other brands, it is the prescription segment that Titan redefined and now, according to its website, has 550 Eye+ exclusive stores in 229 cities.
In 2017, Titan sought to do an encore in yet another large market in which the demand, as in jewellery and eyewear, was almost recession-proof and largely commoditised, leaving ample space for a pan-Indian branded chain. Thus was born Taneira, with an avowed intent to become the country’s largest organised saree retailer.
“Titan had earlier tried to organise the jewellery market through Tanishq, which is successful, and this is an attempt by Titan to organise the saree market,” Ambuj Narayan, chief executive officer (CEO) of Taneira, told Business Standard.
What is unsaid is that jewellery to sarees can also be seen as a horizontal brand extension, the two do go together on occasion.
Natural extension
The Indian wear market is a 5,000-year old segment estimated to be worth ₹50,000 crore a year and growing at a compound annual growth rate of 6 to 8 per cent. Sarees account for 80 to 85 per cent of its sales, with kurta sets, blouses, and lehengas comprising the rest. Yet, despite the size and growth, there is hardly any nationally known brand in this segment, with Nalli Silks being one of the notable exceptions.
Titan insiders say the company believed sarees to be a natural extension for it, given its past success with design-led lifestyle brands. They say the company organised an internal competition to see who came up with the best expansion strategy.
The result is a bouquet of design-differentiated products — primarily sarees and kurta sets — made from pure natural fabrics sourced from all over India. The company put together more than 100 craft clusters representing the diverse weaves. These include the Banarasi sarees from Uttar Pradesh, Kanjivaram from Tamil Nadu, Chanderi and Maheshwari from Madhya Pradesh, and Jamdani from West Bengal. The output is a mix of contemporary ethnic wear for women across life stages and occasions — college, office wear, party wear, festivals, and weddings, with bridal sarees being the speciality. The prices range from ₹1,000 to ₹2,00,000.
“The Tata group’s ventures have always been consistent with their approach — they stay the course beyond initial hiccups and eventually scale up the business. This is very much how Titan and Tanishq worked their way from initial struggles to eventually scale and become nationwide brands,” said retail expert Devangshu Dutta, CEO at Third Eyesight.
To say that Taneira has had initial hiccups would be an understatement. Three years after its launch, the Covid-induced lockdowns and restrictions brought the entire retail sector down to its knees.
Baptism by Covid
“Pandemic restrictions and high Covid-19 anxiety among the people kept socialising and weddings at a very low level of activity over the past couple of years. For Taneira, being a nascent brand with a yet-to-be-established customer base, the operating environment has been particularly tough,” Titan Company said in its FY22 annual report.
Taneira used this time to realign its strategy of connecting with customers. Thus, during 2021-22, which braved the second Covid wave in its first quarter — the dreadful Delta — and saw the third wave creep into its fourth quarter, sales at Titan’s Indian dress wear division grew by 55 per cent.
Narayan, the CEO, attributes this growth to initiatives that included staying close to the customer through e-commerce. “We really drove e-commerce out and reached out to our customers through video calling and try-at-home activities,” he said.
As consumer sentiment started to improve, Taneira already had two collections ready — wedding weave and the summer collection — which boosted sales. During 2021-22, it also increased its store count to 20 by adding six more. During the fourth quarter, Taneira sales rose 4 per cent.
Today, there are 27 Taneira stores in 11 cities across India. It plans to expand to Tier 1 and Tier 2 cities in the first phase and then to Tier 3 in the second phase of its store expansion.
However, Vishal Gutka, vice-president of research (consumer and retail sector) at Phillip Capital, said: “Taneira follows the same principle Titan used for Tanishq, where it entered an unorganised category and expanded it. But it is still early days to gauge how Taneira will pan out. Also, the company needs to give more clarity on the unit economics of each store.”
Weaving an expansion plan Titan’s annual report talks of a robust expansion plan for Taneira this financial year: “We plan to grow at an exponential rate and make our store count around 60 by the end of the current fiscal year and open overseas stores in markets having an Indian diaspora such as the US.” It adds that Taneira will become a more significant contributor to the overall revenue of Titan in the medium term.
At the heart of this grand ambition lies the humble weaver. Taneira now has close to 1,200 dedicated looms and has a programme called Weaver Shala to support them with technical expertise and in modernising their facilities. It has introduced frame looms along with basic workspace facilities for the weavers in collaboration with the localised weaver-led organisations.
The brand has closely worked with the weavers in Varanasi, Uttar Pradesh, and Champa, Chhattisgarh, and aims to take Weaver Shala to other parts of the country.
Taneira leverages Tanishq’s brand strength; mannequins at Tanishq stores, for instance, are dressed in Taneira sarees.
However, Narayan said Taneira and Tanishq will not be sold under the same roof because Titan wants to establish Taneira as a distinct brand in its own right.
(Published in the Business Standard)
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September 5, 2022
Akanksha Nagar, Financial Express
September 5, 2022
Can you give a brand a second shot at life?
Reliance Retail Ventures certainly thinks so. It has acquired Campa-Cola for an estimated `22 crore from Delhi-based Pure Drinks Group on the assumption that it will not only be able to revive the five-decade-old brand but can also use it to springboard into the dog-eat-dog soft drink market in India.
It will not be a cakewalk surely. The ones who were fans of the brand—which was launched in the 70s—have moved on, and younger customers have little or no association with the brand.
Samit Sinha, managing partner, Alchemist Brand Consulting, believes that Reliance must have been very keen on getting into the soft drinks category as a part of its overall strategy of retail expansion. In any case, it hasn’t had to shell out a bomb for the brand so it is a less audacious gambit than starting from scratch. There is one other factor that might work in its favour—which is the formula, the taste of which had near widespread acceptance in its heyday.
Sandeep Goyal, managing director, Rediffusion Brand Solutions, who is handling a similar resurrection of Garden Vareli sarees, says giving an old brand like Campa-Cola a new life will be far from easy—the Campa-Cola generation is now in their sixties and therefore there is very little monetisable value in the nostalgia.
RESURRECTION RULES
Breathe life into an old brand if:
1. The market presents an opportunity to refresh the brand without compromising on its core promise
2. There are positive connotations for the brand that can be built upon in the current market context
3. The company has the resources and inclination to be a “caretaker” or “steward” of the relationship that had been created between the brand and its customers
Courtesy: Devangshu Dutta, CEO, Third Eyesight
Launch versus resurrect
From the looks of it, Campa-Cola will have to fight sip for sip, bottle for bottle.
Rohit Ohri, chairman and CEO, FCB Group India, who had managed the Pepsi account for more than a decade, says it will be difficult for a new brand to find space in a market dominated by multinationals like Pepsi and Coke. While the residual equity can help get the foothold, the real challenge would be to woo a younger consumer set.
Naresh Gupta, co-founder and CSO, Bang In The Middle, concurs: “When you try to resurrect a brand, you do it knowing that the brand isn’t doing well or has been out of circulation. That is big baggage for the brand to wipe out. Often the residual awareness and following are limited to the audience that is less likely to be your core audience today.”
There is also the fact that young people in the metros are moving away from colas, preferring healthier drinks or niche artisanal products instead. At the same time, soft drink is an impulse category and needs a large dose of salience to fly off the shelf.
Gupta says Reliance can try and build on the Indian-ness that Campa-Cola exudes. His guess is the old brand will be used as a calling card in trade and there would be a host of new launches that build upon it. “Campa-Cola may fuel a lot more fresh fizzy drinks launch from Reliance,” he adds.
That said, just the sheer time an old brand has spent on the shop-shelves would give Campa-Cola an edge over any new brand that its current owner might want to launch. An old brand can appear to be proven, experienced and secure, while a new brand could be seen as untested, raw, and risky. An old brand may have had a positive relationship with the consumer but may have been dormant due to strategic or operational reasons. In such a case, reviving the brand is clearly a good idea, says Devangshu Dutta, chief executive, Third Eyesight.
Reliance could have launched a new brand but if the existing brand has residual awareness or connection, it could be the pivot around which other brand properties can be built. Here, the new owner also has the benefit of having a wide retail network. As on March 31, 2022, Reliance Retail operated 15,196 stores across 7,000-plus cities with a retail area of over 41.6 million sq ft. This, if nothing else, will give Campa-Cola a start any new brand will die for.
(Published in Financial Express)
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July 27, 2022
Written ByAlakananda Chakraborty
Brand’s positioning may be just below Starbucks
It is against this background that Reliance Brands (RBL) announced its strategic partnership with global fresh food and organic coffee chain, Pret A Manger (PAM).
By Alokananda Chakraborty
India may boast of the presence of several marquee international coffee chains, but none of them, with the possible exception of Starbucks, have been able to make much of an impact. The reasons are obvious; for one, India is largely a tea-drinking market, with coffee penetration still at just about 11%. Coffee remains largely an in-home consumption drink. Then there are the usual challenges of getting prime real estate at a reasonable cost and consumers’ capacity to pay. The pandemic, which disrupted food supply chains and the overall demand, delivered a body blow, leading to shutdown of around 8% of the outlets during 2021.
It is against this background that Reliance Brands (RBL) announced its strategic partnership with global fresh food and organic coffee chain, Pret A Manger (PAM). The first store will open by the end of this financial year. While RBL is tight-lipped about the pricing or positioning strategy, experts say PAM’s biggest advantage is its association with Reliance.
“PAM is a late entrant and would have been at a huge disadvantage if it went alone,” says Anthony Dsouza, executive director & country service line leader, innovation, Ipsos India.
So what does Reliance brings to the table? “Significant investment capability, real estate strength and know-how of retail. These could lead to a much higher scalability and access to the right locations,” says Angshuman Bhattacharya, national leader, consumer product and retail sector, EY India. “However, running a café chain also involves building out the right supply chains across the country, which the brand would need to build,” he adds.
Bhattacharya is bang on. The success of an F&B franchise business depends on getting real estate at the right price. Reliance can offer a tremendous advantage here to PAM. Not only does it run a very large retail business, it also owns malls.
Experts say a lot would also depend on the right pricing. Pramod Damodaran, who had relaunched Costa Coffee India in his earlier stint as COO for that firm, and is now CEO of Wagh Bakri Tea Lounge, says, “There’s a big space between the 240 and170 for a cup of cappuccino, that is, just below the Starbucks/Costa Coffees of the world.”
PAM will probably occupy that window – it is unlikely to be a premium offering for two reasons. One, PAM is primarily a sandwich chain in the UK and it’s not clear how much premium it can command for a pre-made sandwich. Two, if PAM were to take advantage of the retail footprint of Reliance and were to follow a shop-in-shop format, say, in a Reliance Trends store, it can’t afford to be premium. The positioning would be a consequence of that captive audience.
In other words, the store location will, to a large extent, determine both the pricing and positioning of PAM. Agrees Devangshu Dutta, chief executive of Third Eyesight, a specialist management consulting firm: “At the end of the day, PAM is more a quick service outlet than a cafe. (Pret A Manger means “ready to eat” in French). And the consistency of its offering comes from what is called the pre-prep.”
All PAM outlets in the UK follow the concept of “freshness of ingredients” and “quickness of service”. The hero product – the sandwich in this case – is still a convenience food, a grab-and-go item. It is prepared by a central commissary or multiple commissaries and is at the most heated or packaged at the counter. “So it is not a restaurant and it can’t charge a restaurant price,” says Dutta.
In a sense, Domino’s has perfected this model with a lot of pre-prep done at the commissary end but the actual pizza is prepared “at location” or in the store. “In this case (PAM), you are not doing that volume of work at the consumer-facing counter,” Dutta adds. And if that is the model RBL plans to replicate in the country, the positioning, by default, is mass.
“The PAM-Reliance combination is likely to be a mass market offer, with value pricing and highly localised strategy,” Dsouza of Ipsos says.
But mass or premium positioning, PAM’s entry will no doubt roil the waters. “Incumbents have to up the food game if they want to take on the might of Reliance,” says an executive with a rival brand. Beverages form a dominant part of the café industry sales. Besides food and beverages, merchandising, which is employed largely for branding, is rapidly becoming a source of additional revenue. About 60-65% of café sales come from beverages, followed by food which forms about 20-25% and about 10% from merchandise.
For one, Tata Starbucks, which witnessed a 76% growth and logged `636 crore revenue in FY22, has been working at its food menu and delivery for some time. In a recent interview to FE BrandWagon, Sushant Dash, CEO, Tata Starbucks, had said that the brand had to “re-prioritise” because of the pandemic, with innovation becoming more important to keep the brand relevant. Starbucks innovated with the menu to keep the interest level up among customers and introduced new food items and gave the existing food items an Indian twist,” he had said.
Earlier this month, Starbucks added masala chai, filter coffee and an array of bite-sized snacks and sandwiches to its menu card. Its new milkshakes will be priced starting at 275, while masala chai and filter coffee will start from190. It also introduced the ‘Picco’ – meaning ‘small’ in Italian – starting at `185.
Will that be enough? Given PAM’s strong presence in the food space, there is no denying that existing café chains in India have to tweak their food menu considerably. In other words, they will have to get out of their comfort zones.
Source: financialexpress
