18 June, 2013

RIP Musicworld

music world

It was a bright sunny sunday, June 24th 2001 to be precise. I landed in Kolkata in the morning by train at Howrah where my former classmate picked me up at the Railway Station. The smell of freshly procured fishes welcomed me as we passed by the Howrah Bridge over the Ganges in a yellow taxi – the iconic Ambassador which still runs in the city even now. After lunch and a short nap, I walked down Russell Street towards Park Street, the most popular shopping alley in what was then known as Calcutta. At the corner was an iconic orange and purple signage aptly named “music world” – the main branding purposely in small letters to convey the casual attitude of the brand. As I entered the store, I was in for a shocking surprise. Over 8,000 sft of space allotted to music – cassettes and CDs. There were separate areas for different genres of music. At the entry was Hindi and Bollywood – the Bengalis loved hindi film music as much as they loved their own. RD Burman and Kishore Kumar, were afterall local boys who made it big in Bollywood. And so was Amitabh Bachchan who used to roam around Park Street looking for a suitable career over 50 years ago. The influence of Western Music was notable on Bengalis – From Carpentars to Led Zep, from Michael Jackson to Madonna, people here listened to all forms of music. Regional Music – Bengali language was located at the far end of the store along with some titles from other parts of the country such as Tamil, Kannada and Telugu. Rabindrasangeet, the music compositions of Nobel Laureate Rabindranath Tagore sung by various artists had a separate section. This was the largest music store in the country.  And I was going to be managing the store from the next day onwards! Whoa! I was so excited.

Life at MW as it was called was pretty cool. The store would open for business around 10am and would close by 8.30pm as per local government norms. Customers would slowly start trickling in the morning, typically housewives and retired people and a number of NRIs who were on vacation in town. College goers and those who work in offices nearby would peep in during lunch hours before or after having a delicious meal at one of the restaurants on Park Street. Evenings would be college goers and music enthusiasts. In 2001, the store used to clock a sale of Rs. One Lakh per day selling music cassettes worth Rs. 35-55 each. DVDs were slowly growing then, and Video Games were starting to become a rage among the young and old slowly. Need for Speed was the most sold video game of those days. The RPG Group which was the company that owned musicworld launched with much fanfare “Hamara CD”, a kiosk which can create a customised CD of songs from across their extensive catalogue. The concept took off well though the prohibitive price of about Rs. 350/- per CD was too much of an ask and a deterrent to growth. Eventually, it died a natural death.  There were so many album releases and launches almost every other day. It was great interacting with the guests, notably of them included Sourav Ganguly who had come for a music album launch and Diya Mirza who had come to promote her film “Rehna Hai Tere Dil Mein” (RHTDM, which was originaly made in Tamil as Minnale). Artist visits and Launches would culminate with a High Tea at the Flurys next door, one of the oldest and most respected Cakes and Pastries shop in the country. I had a great team to work with and each member knew their job so well. In fact I am still in touch with a couple of them and one of them has stayed back with the same store till date – for over 14 years!

Dada MW

Even during those days, I was of the opinion that music would become free sooner than later. And to promote music, we had to promote music players and alternate sources which could play music. Early 2000s were the time computers were beginning to become a part of our corporate lives. Thick cardboard files were replaced by Floppy Disks carrying 20 times the data and which could fit in easily in a shirt pocket. CDs were just about to be gaining popularity. MP3 was a fairly unheard of format then. I remember discussing in various internal meetings that the company should sell music players along with music Cassettes and CDs. Naturally, as a freshly passed out Management Graduate from a Business School, my pleas fell onto deaf ears. I believed that unless we promoted CD players – the huge decks and portable ones, there was no chance that we were going to sell more CDs. I had already sensed that cassettes would see their end sooner than later and the next big wave was hearing music on computers and laptops. Almost every single senior that I interacted with laughed me off. I also suggested that we entered the Mall way of retailing – Rahul Saraf, the promoter of the first organized Mall in Kolkata, The Forum approached me to discuss a proposal to set-up a MW outlet within. My proposal was beaten down by the Management saying that Calcuttans would not shop at Malls and would rather prefer local markets at Ballygunge or Explanade. MW entered Malls much later but by then, music was already available in various other formats across devices. Sadly, the business declined slowly and it was recently announced that the curtains would permanently come down by the end of June 2013.

I don’t fully agree that piracy alone is the reason for the decline of the Music Industry. It is also because the industry failed to keep up with the technological advancements. I was recently reading on Forbes India about Alok Kejriwal of Games2Win and his Indian experiences when he tried to come up with wonderful ideas in the mobile telephony space. He was the one who successfully pioneered the concept of Caller Tunes in India – one could send an SMS and get a caller tune and have it stored in their mobile phone. As he painfully explains, the mobile operators wanted to charge a premium for the service and also a lions’ share of profits from the venture rather than making the concept popular. Similarly, the Hamara CD could have been a clear winner those days. But the opportunity and greed cost the company quite a bit. Over time, music world eventually started selling non-core items such as MP3 players and the like, but it was too late by then. The kiosk outside the store on Park Street was selling cheaper chinese made MP3 players for a quarter of the price. music world also failed to collaborate with other music labels in the country to come up with alternate ways of streaming music, mainly because they owned the domestic and international rights of the extensive HMV catalogue. In fact, initially HMV owned content would get more prominence in the store than that of other labels.

A couple of years back, I approached music world to co-opt with Café Coffee Day, India’s largest coffee chain with over 1,400 outlets across the country where I was the Head of Business Development and Expansion across the country. Instead of seeing it as a way to garner more footfalls and attract more music enthusiasts into the store, the folks at the company rather tried to charge a premium for space. Obviously the deal didn’t go through. Am sure, the team tried their best to revive the falling business, but what probably lacked was innovation and new ideas, not for the lack of it but for a lack of willingness, probably. It was one of the saddest days in my life when my former colleague informed me about its closure. I always knew this day would come, but it was earlier than expected. RIP Musicworld.

22 May, 2013

Inviting patrons for a great feast

The Hotel Industry in India is facing tough times ever since the global recession occurred a couple of years ago. In my current role at Royal Enfield as Head of Business Development, I travel atleast 2-3 days every week across the country. Whenever I try to book rooms in small and big cities, the room rates just surprises me. I was trying to look for rooms in Hyderabad for stay over the next few days and was surprised to find discounted rates at 5 star hotels for as low as Rs. 5000 (USD 90). The Leela and Grand Chola – both touted as 7 star rated properties in Chennai are offering over 40% discounts on printed rates, to as low as Rs. 7,000 (USD 130). Same is the case in Delhi, Gurgaon, Mumbai, Pune and is even worse in smaller towns. I stayed in Trichy, a city in central TamilNadu which connects a number of other towns of prominence in business and culture within a 100 km radius during the first week of May 2013. On the MakeMyTrip mobile app for the Apple iPhone, I could get a double room for three adults and two kids for as low as Rs. 2,500 (USD 55). The room was quite large to hold a King size bed and two single beds. I have stayed in cities like Coimbatore, Dehra Dun, Jammu, Patna and many others for similar rates in well maintained properties. The outlook for hospitality in India as such wears a glim look and with increasing inventory and competition, not to forget the choices that customers make, the pricing is aggressive at most of the properties. This is where ancillary income to Hotels are helping them.

Cappucino

Most of the hotels have in-house restaurants, mainly to cater to resident guests. Many of them advertise these restaurants quite heavily, thereby attracting visitors through the year irrespective of peak season or otherwise for room occupancy. While this practice has been there for long, its quite evident these days with a number of hotels including some premium Hotel chains advertising in the media. What caught my attention recently  was an ad (displayed above), by ITC Hotels, one of India’s largest companies in the hospitality space for their Cappuccino Restaurant at the erstwhile Park Sheraton (in Chennai) . They have advertised buffet options with prices! Do those patrons who visit these places really care for the price? I mean – everyone does. But then, do people care what the final bill is gonna be when they visit star rated hotels and restaurants? I really doubt. Restaurant incomes are an important source of revenue for Hotels. They contribute anywhere between 7-25% of total sales depending on how well these restaurants are positioned and popularised. Some of the restaurants in these hotels are even Michelin-rated – a rating by the Vehicle Tyres powerhouse Michelin which grades eating joints across the world and shares in a report that is published annually.

Suggested Reading: Franchising

Stand-alone restaurants are doing their best too, to woo potential customers. They advertise in leading newspapers regularly to attract attention and over a period of time become destinations. In some cases, they are located within hotels and Malls and in many cases they are located on High Streets. User reviews in sites and apps such as Trip Advisor, Zomato, Burrp! etc. help them gain more traction. Chains like McDonalds, Pizza Hut, Subway and Café Coffee Day advertise across the media regularly to pull customers to their outlets and many of them even offer complimentary WiFi as a hook to retain them.

Suggested Reading: Does Free Wifi help?

With inflation leading to peak rates of food items, it is becoming impossible to middle class families to venture out eating outside. But the upper-middle class seems to be slightly more insulated, fuelling the needs of these restaurants. While premium hotels and restaurants promise great food (quality) and a wonderful ambience, consistency is key. To retain existing customers and to attract newer ones. If you are planning a visit to a nearby restaurant this weekend, flip through the pages of newspapers or mobile apps and you may be in for a surprise at a hotel nearby you! Happy Dining…

Suggested Reading: Food Inflation

13 May, 2013

Shaswat Goenka–Hearlding new frontiers at Spencers Retail

 

Shaswat Goenka

After dabbling with various sectors in the Rs 14,000-crore RP-Sanjiv Goenka group for about a year, Shashwat Goenka, 23, son of group chairman Sanjiv Goenka, has taken charge of Spencer's, the retail chain, from April 1. In an interview with Namrata Acharya & Ishita Ayan Dutt of Business Standard, he talks about his personal mandate and the road map for the Rs 1,400 crore business. Edited excerpts:

What goal have you set for Spencer's?
I assumed the role of sector head from April 1. What is most important at this point in time is profitability; that's where we are all trying to go. That will be the focus for the coming year and the year after. Spencer's is aiming to deliver Ebitda (operating earnings) breakeven at a company level in the third quarter of 2013-14 and be Ebitda-positive on a full year basis in 2014-15. That's the overarching short-term goal.

Spencer's has missed its breakeven deadline quite a few times. What makes you think you would be able to achieve it?
Well, each time we have done better. We have achieved breakeven at store-level but company level is what we want to achieve.

How do you plan to get there?
We want to increase our footprint. We will go up to two million sq ft from 900,000 sq ft currently and will expand in the north, east and south over the next four to five years.
We will achieve it over the next few years. The other important thing, obviously, would be operational efficiency.
In terms of offering, we would look at increasing international foods and regional foods. Value-added fresh is one of the areas we would like to explore.

Doesn't the fresh segment have one of the lowest margins?
We have very good margins in the food business compared to our competitors. Margins in apparel are obviously much higher but our margins in foods are good.

Any new formats for Spencer's on the anvil?
We haven't thought of any. We want to grow in hypermarkets.

Is the rationalisation process for Spencer's over?
Last year was the rationalising and consolidation process. We have exited Pune. In the past two years, we have closed 65 stores. Now, we want to start growing and in the hypermarkets.
Earlier, we had hyper, super, daily and express stores. Now, we have hyper and dailies and a few of the old express stores are still functioning.

Why did you exit Pune?
We wanted to become stronger where we are. So, we wanted to focus on the north, south and east. After we get that strong, we will revisit the west.

Why do you think the response from foreign retailers has been muted, after FDI (foreign direct investment) has been cleared?
I think people are interested. They just want to figure it all out before they come in.

Do you see foreign retailers as a threat to Spencer's?
Walmart and its likes coming in will help us. We can learn a lot from them. Back-end infrastructure will improve. There are basic infrastructure issues in India, like roads. Also, cold chains or dairy chains, for instance, are not very well developed.

A lot of options were being explored at the back-end by retailers. Any progress on that front?
We are open to FDI at the back-end but we haven't been approached by anyone.

Spencer's was exploring the IPO (public share offer) option. When is it likely?
That's something we definitely want to do but right now, the focus is on profitability.

Would you look at getting into the cash and carry format?
We have not looked at it. We want to be profitable and then explore other things.

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