Boston Days - Part 4

The USD 10 Airport shuttle ride. And What It Taught Me About Loyalty Tiers.

(I am writing “Boston Days” as a series of articles for quick reference for myself and other retail pilgrims. This article covers the “Retailer’s focus towards Consumer Loyalty”)

The airport shuttle from Boston Logan to my hotel was a shared one.

A van, rather than a cab. And at the wheel was a lady driver who, without being asked, helped me load three weeks’ worth of luggage into the back — heavy bags, packed for a long working stay — with the kind of quiet efficiency that makes you feel looked after before you’ve even sat down.

The exterior of the vehicle carried the branding of Holiday Inn — clean, recognisable, the unmistakeable IHG logo doing exactly what logos are supposed to do.

Inside, already seated, was a couple. First-time visitors to Boston, though they had lived in the US for over two and a half decades — originally from Dallas, Texas. Warm, curious, easy to talk to. We fell into conversation almost immediately.

And then came a moment of mild confusion.

The couple were headed to the Marriott. I was headed to the Holiday Inn Express, next door. The driver, to her credit, sorted it out quickly — but for a few seconds, all three of us were momentarily uncertain about the sequence of stops.

I explained to the couple that the shuttle served both hotels as part of a shared airport transfer arrangement — a practical, cost-efficient solution for properties in close proximity.

What stayed with me, though, was not the logistics. It was the pricing.

USD 10. For both.

The Marriott guests and I paid an identical flat fare, rode in the same vehicle, loaded bags in the same hold, and were dropped at adjacent lobbies within minutes of each other.

The Marriott couple had chosen premium — a globally trusted brand, a higher nightly rate, and the reasonable expectation that a more expensive stay would reflect itself in the quality of every associated touchpoint.

I had made a different, deliberate call. Value-driven. Functional. Perfectly suited to a three-week working visit for a senior leadership programme.

But the shuttle made no such distinction.

And as I dragged my bags through the Holiday Inn lobby that evening, my mind — as it almost always does — travelled home. 

To Indian retail. To our loyalty programmes. To the elaborate tier architectures we have built, named with such aspiration, and then quietly failed to bring to life on the shop floor.

Shoppers Stop’s First Citizen Club runs across five named tiers — Classic Moments, Silver Edge, Golden Glow, Platinum, and Black — each defined by escalating annual spend thresholds. Pantaloons segments its Green Card membership by spend. Lifestyle’s Inner Circle moves loyalists deliberately through Silver, Gold, and Platinum designations.

The nomenclature is aspirational. The investment in building these structures — the CRM systems, the points engines, the tier communication — is real, recurring, and significant.

And yet.

The Platinum First Citizen member frequently stands in the same billing queue as the Classic Moments enrollee. The Golden Glow loyalist receives the same carry bag, the same counter engagement, the same fifteen-second farewell as the walk-in customer who signed up at the door twenty minutes earlier.

The tier lives in the database. It rarely survives the journey to the shop floor.

The Dallas couple and I paid the same ten dollars. The shuttle, to its credit, never pretended otherwise. It was a logistics vehicle with a flat fare structure and no aspiration to be anything more.

A retail brand’s Platinum member, however, has been explicitly promised something more.

The more important question — the one that stayed with me long after I had unpacked and settled into my room — is whether our stores are actually delivering it.

(I am writing “Boston Days” as a series of articles for quick reference for myself and other retail pilgrims.)

Read Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8 and Part 9 here.

Let’s rebuild the Economy – Ourselves

After a self imposed exile at home in the garb of WFH for over 150 days, I finally stepped out of home and moved to Bangalore last month to join my “real office”. I also travelled to Kushal Nagar in Coorg where our company’s Headquarters and Plant are located for a review with my Management. All through my two weeks at Bangalore, I was pleasantly surprised and motivated how we are ourselves building back lost time, money and economy. For instance, we had full attendance at office and also ensured all of us wear face masks while seated. Every alternate chair in the Meeting room is left empty (so fewer persons and therefore the meetings end early too!). Usage of hand sanitisers, and most importantly washing hands frequently is encouraged to ensure this is rather a “habit formation” in the long run. Cleanliness is Godliness, someone said long ago and remains relevant all along. 

I travelled across two major parts of Tamil Nadu last week, to Coimbatore and Madurai to meet my team members, Distributors as well as for market visits. Same protocol, another precinct. Nothing changed. The hotels have accepted the new norm, so have Guests. Food is served outside the room as per WHO protocol and the guest must take it inside their rooms themselves. Buffet is off the menu and breakfast is served in the room. Works for all of us plus the added advantage of “NIL wastage” at the buffet counter. Limited and minimal contacts with other people around works to everyone’s favour after all. 

This week, my wife and I decided to travel by road to visit a few of our favourite temples to seek the blessings of our beloved gods. We departed on Tuesday morning even as the TN Govt. opened up the doors of all religious places in the state. We were not just surprised but also impressed with the steps taken by the Government and the penultimate cooperation by devotees. We witnessed this first hand not just at one but across some of the oldest and perhaps, otherwise most populous temples. For Ex., the Srirangam temple, the world’s largest temple complex witnesses at least 30,000 visitors on a regular day. However, now is a different story with less than 1% of that number of visitors being allowed everyday. Still, the devotees maintained strict social distancing and followed norms, while at the entry inside, temperature check has been made mandatory. Well, that’s not accurate, quip many. But then, do we have a choice of shutting down everything for some more time to come? 

We travelled around 1,100 kms over 5 days and stopped by at least a dozen restaurants. Almost everywhere, customers and patrons seem to be following self-discipline which is the key to combat this virus which apparently is here to stay for some more time to come. 

What was pleasant to see was that even in the smallest of Tier 3 villages, locals understand the reason to wear a mask and the reasoning not to touch others, walk in groups or sneeze in public. The awareness created all along by the Media and the Governments is impressive although there is a surge in unruly motoring skills in city roads as well as on Highways – especially 3-4 persons on a 2-Wheeler and most of them not wearing Helmets which goes unchecked by the authorities. Well, we gain a few brownies and lose some ourselves. Sad part of humankind.

Ultimately, to bring India back to it’s foot is the duty for each of her citizens and beyond a point, I believe the Government can do very little beyond disbursing loans and doling out subsidies. While the Central and State Governments are doing their best despite so much negativity around, I personally believe it is up to each one of us to pick up the broken, leftover pieces and push the economy upwards. If not anything, this is just another form of patriotism and duty to the nation. Needless to say, we need to ensure safety precautions for ourselves as well as to our surroundings. And for me, I filled up Diesel full tank today even as I entered my home garage, ready for the next drive. I pledge to do my bit. I have Miles to go, after all.

Howdy Slowdown?

Flipkart commenced operations in India about a decade ago. For the FY 2017-18, the Annual T/o of the company was Rs. 24,000 Crores (about US $4 Billion) while Amazon India has a turnover of Rs. 12,000 Crores for the same period. Swiggy earned around Rs. 442 Crores for the previous FY and Zomato added Rs. 1,340 Crores. Industry Leader in the Furniture segment Urban Ladder reported a top line of Rs. 200 Crores for the previous year. Offline Retail Giant Future Group has an annual turnover of Rs. 30,000 Crores across various formats from Grocery to Electronics. Reliance Retail on the other hand has a combined turnover of Rs. 100,000 Crores of which 70% comes from Fuel Retailing and Jio, the data cum telecom company which is part of the retail entity. Ola, the cab hailing company clocked a turnover of Rs. 2,200 Crores while Uber India has an approx. annual turnover of little less than 1,000 Crores last fiscal. Phew.

So, why am I enlisting these turnover figures here?

Because, we are complaining of an Economic Slowdown. FMCG companies, Retailers, Automobile Manufacturers and many other consumer facing companies (and their backend suppliers) have all been complaining of a slowing growth in their businesses. As is the case most often, the Government is being blamed for the mess that we are supposedly in, right now. 

Reliance Retail & the Future Group together account for over Rs. 60,000 Crores which is almost 2% of the total estimated Retail Industry in India (about US $ 500 billion). Add Amazon & Flipkart and the overall business from new channels has increased tremendously over the years. The total pie of the Organised Retail Industry as well as the total consumption market have increased over the past decade and a half from less than 5% to nearly 12% currently. While ITC, Britannia, HUL and others have seen a slide in their sales, remember how Patanjali is raking close to Rs. 10,000 Cr in turnover and is aggressively followed by the likes of Dabur & Himalaya!

E-commerce has played a pivotal role in increasing the overall consumption market in India – selling products online and delivering at the doorstep at the most comfortable time for consumers, service offering (such as booking plumbing & carpentry services) and of course transportation including local mobility as well as ticket bookings across modes of transport. 

While Swiggy and Zomato deliver lakhs of food parcels daily, the restaurants have seen an average 15-20% of their business coming from these channels with a marginal increase in their total business as well. Hundreds of restaurants which were invisible are now able to showcase their products on the Food Delivery Apps and have eventually taken away some of the market share of popular restaurants, thereby curtailing footfalls to restaurants as well as through online orders.

With millions of rides fulfilled everyday by Ride hailing apps in India, have you ever seen an Auto Rickshaw driver starving off business? In fact, thousands of new Autos have been sold. New companies like MG Motors & Kia have set up plants and newer models are outselling older versions. Just that the outdated models like i10 and Indica don’t have any takers. Fortuners, XUV500 & Audis and Beamers aren’t selling short anymore! 

The overall consumption market hasn’t shrunk, rather newer channels and opportunities have opened up. The turnover numbers in the first paragraph are to showcase how much new business has been added over the past decade. The slowdown is more in our minds and a measured approach towards over-spending, which is anyway an inherent way of living.  

And btw, the headline has nothing to do with the so called “Economic Slowdown” but the Indian PM is addressing an event in the US this weekend and the name of the event is “Howdy Modi”, so I thought I would use it to entice my readers.