Best Friend, Worst Enemy!

Brand Equity (supplement to The Economic Times newspaper) dated 17 June 2009, listed India’s MTB – Most Trusted Brands. While the most trusted one at the top is Nokia, the Finnish mobile handset maker, followed by Colgate, Lux, Lifebuoy, Dettol, Horlicks, TATA Salt, Pepsodent, Brittania and Reliance Mobile. The list largely includes “Brands” - while some are also Stock Keeping Units at the consumer level such as Lifebuoy and Dettol, others such as Tata and Reliance are literally household names. Its little wonder that there is not a single Retailer that features among the Top 10. Not yet. The first on the list is Bata at No. 35 and Big Bazaar at No. 97. Does that mean consumers don’t trust any of the Retailers so much that no one else figures on the Top 100? Well, the MTB is based on a survey that is conducted by Nielsen (which claimes to be the largest of its kind) with a sample size of 8,160 consumers. Yes, you read it right, Eight Thousand One hundred and Sixty Consumers only. At some level, this sample looks a bit small (within the relevant universe), although the mix is apparently quite good with the way the survey is undertaken.

That Bata and Big Bazaar are among the Top 100 goes to show the importance consumers are placing on Organized Retailers. Bata, among India’s oldest Retailers has been popular over the years for their core strength – Footwear. There was a time in the 80s and early 90s when school shoes were from Bata, mostly from Bata and only from Bata (many of you who went to school during those years can relate well). Sales surged by 30-40% during the months of June & July when schools would begin and once again in Dec. and Jan. when the monsoons are over. Bata slowly increased their range to include many other products that would complement, such as socks, shoe polish cream, school bags, etc. And then came one of their branded shoes “Power”. The positioning was such that the white canvas and leather shoes were to be worn everyday where as the new brand was meant for sports and other leisure activities. As sales grew, so was popularity and over a period of time, other branded shoes were launched within the store. And the Brand was so big that at some point in time, it was a big effort to even stand inside the stores. Customer Service sufferred as buyers received lesser attention than they expected. This was the beginning of the end. And in just 10 years, urban consumers had shifted loyalties – to lesser known Indian brands and more popular international ones. At some stage, Bata was almost invisible in India until 2004-05 when they made a comeback. A great case study in Indian Retail to decipher for years to come.

BIG Bazaar, a relatively new Retail chain that’s celebrating its 8th anniverisary now is already among the top 100 list. Not surprising, given the way the company has grown. I used to work for this chain (owned by The Future Group) five years ago and it was a famous saying then, which I am sure is the same today too – every working day in the Group is equivalent to two working days elsewhere. That’s the pace at which the Company operates. Needless to say, they are the largest Retail Group in the country today and International Retailers are somewhat adapting their India strategy taking lessons from the way this group operates.

So, do consumers buy these trusted brands or do they prefer buying them at certain Retail stores? We don’t have a survey done on this, but surely that wouldn’t be the case atleast at the moment. Household shopping is divided largely into Monthly Baskets and Weekly top-ups. One may drive a bit far for the former, but for the latter purchases, it’s always the nearest Retail store. Time, is of essence here and proximity and availability are the two most important factors. And most Retail chains lose out on the second point for various reasons. It could be due to financial reasons or simply, bad merchandise planning. Whichever way, if the stock is not on the shelf more than thrice as consumers visit, its likely that they wouldn’t return the fourth time.

The way to win Trust is to offer what consumers want – something that very few Retailers practice, as in most other cases, its “take it or leave it”. And Customer Service – the way the front-end manages the store and its users will make all that difference. There are umpteen global examples where shoppers visit faraway located outlets mainly because they enjoy the place. That’s Trust. One must remember that Consumers could be either your Best Friends or Worst Enemies. Yes, enemies, because they propel the retailer’s downfall. By not visiting. And that odd boards at the end of the store which reas “Thank You, visit again” becomes redundant.

Being Thrifty and still tempting to Consume - a paradox!

While I was browsing some other article today, I stumbled upon this one on Thrift – a new way of life for Americans who were once-upon-a-time avid shoppers but not any more. The author of this Book and Blog advocates Americans to spend less – rather ask themselves “Should I spend on this or that and why?”. And the subsequent tab on my IE was about the latest Fuel Price Hike in India. I was among the millions of (grumbling) Indians who filled fuel last evening as the price of Petrol was being hiked from last midnight, although I wasn’t fortunate to get my regular supply and had to feel good with the premium fuel that I was offerred. “No more right or left, Sir, it’s only one way now” – proclaimed the proud owner/franchisee of the Fuel Station where I filled full-tank last night. He was referring to the stable Central Government that we have been blessed (or rather we have chosen, sould I say). All major newspapers and news websites today have this topic on their Headlines – on how Fuel price has been hiked and its after effects.

For sometime, may I urge your to think for a few seconds (an electronic calculator would help) the cash flows that the OMCs – the Oil Marketing Companies would have made within six hours last evening. The numbers are mind boggling. Suppose if One million vehicles filled on an average 30 liters of fuel – and were paying approx. Rs. 2 more (since the lower variant was unavailable) and were filling their tanks (Salary Day, so more cash on hand coupled with the fear of the impending price increase), we are talking of 30 million litres filled and INR 60 million raked in additionally, in just a few hours. This, is just an example, if not exaggerated. At one, the Government lost a lot of public sympathy with this rude price hike (of 10%) on petrol. Another, was that it was on Salary Day, a day that most Indian families await for 29 days (no matter how many digits their salaries are) in the month. While the general belief was disbelief – that the hike was real, people were finding it difficult to cope with this hike. Just three days ago, India’s largest bank SBI decreased Home Loan lending rate of Interest by a substantial percentage – indicating that owning homes got a bit easier for middle class people. Everyone who is anyone who understands Economics has a opinion these days on what to expect from the Budget to be presented shortly.

Given this scenario, the increase in the price of Petrol & Diesel was a paradox, if not a shock. On one side, Retailers are trying to woo consumers to consume more – not as much as their American counterparts overconsumed sometime ago, but certainly to consume more than what they are already doing. And on the other hand, the Government does its bit by increasing the most basic ingredient that decides the prices of most other products sold in this country. It is really noteworthy to decode the background – fuel hike would first affect the price of vegetables, something we consume everyday. And then, fruits and other food products including Grocery. While Unorganized Retailers and hawkers would be the most affected, Organized Retailers would face similar challenges sooner than later. Cost of Operations would go up which would shrink the outflow planned by Retailers, including special offers and promotions.

The Festival seasons starts from mid July onwards and the general tendency to shop would increase around this time. But with a 10% hike in self- and public transportation costs, the monthly household income (that didn't grow much this year due to the economic slowdown and the recession effect) would shrink to that extent and this will surely decrease consumption. The GDP of every country is largely based on the outcome of a few key industries such as Agriculture, Manufacturing, Services including Aviation and Telecom, and importantly, Retail. It would be sad to see how people would wish to consume less due to this sudden and steep Fuel price hike, which could play spoil sport over the festive period. The Automobile Industry has been on a roll for the past five months and the growth story is back, albeit in single digits. This would also be affected a bit now.

It’s confusing to see the government’s stance on this issue – of increasing consumption. Experts believe that the GDP would grow only when people consume more, which would be directly impacted by Retail. However, it remains a BIG question of how we would achieve this. One one side, it’s being thrifty about spending and on the other, trying to woo consumers – it’s a paradox, awaiting to be unravelled.

AirPlay

“Play MJ Hits today and see your sales soar five times” – I told the young boy who was managing the music section at the Landmark Outlet. It was my first visit to this location – I wonder why people call this a Mall. It isn’t, in reality. It’s a building that houses some Retail, a food court and a few cinema screens. A first of its kind mall that I have known in the recent past without an atrium or a central area – no place to “hang around” – just do business or leave! I am referring to the recently inaugurated Swagat Garuda Mall, near or rather in Jayanagar. One would remember the infamous erstwhile Swagat cinema here, a place that was popular among the young and the old and credited with showcasing among the biggest hits of yester years.

The ground floor houses a Westside Store, from where you walk up to the first floor which opens into the Landmark Outlet, welcoming you with well segregated Books from across various categories. And this floor leads you to the second floor that begins with some pefumes and gifts and deep inside is the Music section. We were trying to reach the fourth floor which has the INOX multiplex – our main reason to visit this place was to watch the latest Hindi superhit, New York, based on the traumatic effect on people in the US from various religions and backgrounds after the fateful 9/11. We still had some 20 minutes and decided to walk through the store. While Westside was looking normal with its usual collections, Landmark was a bit better. Too many merchandise and too little ventilation and airconditioning makes these outlets stuffy. Wish the project guys doubled up as salesmen too or atleast visited these places as customers, that they don’t repeat such bad planning!

As I was walking past the western/pop section (and remebering my good’ol days at Musicworld), I was remined of the Pop sensation who breathed his last a few days ago. I called for assistance and said, “Where can I find the Best of MJ India collection”. The good samaritan took me to the section, searched for the album and handed it over on my hand. Wow. I was quite surprised with that – quite rare to see, honestly, that a sales guy actually gives you what you actually wanted and that too in a jiffy. I thanked him and was looking at the other collections. However, this was what I wanted and moved towards the billing area. While some other music was playing all along, I suddenly heard “Black or White” on the speakers. The same salesguy who assisted me, was preparing his day, planning his work, saw me again. And I said, “AirPlay MJ Hits today and see your sales soar five times” and I could see a wide grin on his face, for he knew I wouldn’t be wrong. It’s not just a commercial proposition that Retailers must cash in on, certainly not. That would be cheap and may not take them long. But, it’s great service to remind customers and highlight the collection of the world’s most popular pop singer and honor him atleast with that respect, after all that he went through before he finally died. Even as I write this piece, News channels are showcasing various reports, most of them their own thoughts with some facts thrown in here or there.

After billing, we walked up to the third floor, some food outlets bunched up in a low ceiling food court, which made us to test our fast-walking skills. And then, finally headed to the fourth floor. It was a delight to see the entrance of the cinema hall! But I must admit that the overall layout of this location was not all that bad – afterall it brought more customers through the shops and the food court, increasing footfalls and probably inducing conversions. And just then remembered why we were there. I asked myself if I would have bought the music CD of the movie that we were going to watch and the answer was yes. Just that I didn’t remember to. Probably because I wasn’t reminded. What a wonderful opportunity it was to sell music CDs at the Cinema Hall or even just before one entered. Such a simple thought which am sure would have stuck the area sales executive who went to check out stocks at the Landmark Outlet, but probably missed out. If not a great grand display, atleast an Airplay would have helped. Yes, I bet.

This was the first project that I undertook as a Management Trainee straight out of B-School 8 years ago. And the results were startling. Whenever a particular artist/album was played on Airplay (that’s the common music that you hear at the retail stores), chances of that particular album’s sales going up was over five times. And there were days when we have played the same CD for over 6 hours – continuously. One such example was K3G or Kabhi Kushi Kabhie Gham, a hindi movie released in 2001 that featured the Shahenshah and the Baadshah together (that’s Amitabh Bachhan and Shah Rukh Khan). After all, nothing better than AirPlay. It not only holds customers within the store, but also creates great conversions. Just that one must remember, to play. To AirPlay. If only.