Retailers and Jet Airways – Cross Learnings

I had just started flying frequently from Bangalore to Delhi for monthly meetings and the preferred choice those days was Jet Airways (9W). Their on-board service was perhaps the best in class (the only comparison was the erstwhile Indian Airlines) and a few years later, maybe Kingfisher. Even with the popularity of the red-dress stewards with mini-skirts that attracted millions of flyers (forget not those plastic Kingfisher branded earphones), the Corporate Traveller still preferred 9W. There were many reasons for this choice, despite their pricing being 7-9% higher than Kingfisher and almost 1.5 times of Indigo and Spicejet in the later years. 

The Jet Airways – Citibank co-branded Credit Card was a must have on our wallets in the later part of the Millennium. The card provided several intrinsic benefits – including Lounge access at Airports as well as shopping and dining benefits across the country. The 5 Tier membership on Jet Privilege, among India’s largest Loyalty Program was similar to the Snakes & Ladder game, that travellers had to cautiously fly a designated number of flights in a quarter to retain their Membership Tiers. And how can I forget the uncountable “upgrades” I have enjoyed on 9W from Economy to Business to even First Class! 

Move over Kingfisher, which many Corporate Travellers thought were more hype and publicity than 9W which had a very genuine care for travellers. Be it the highly curated gourmet food menu even on Economy Class, Coat hangers for Business Travellers and an overall, relaxed travel experience for toddlers to Senior Citizens, these were a few things that attracted passengers until a few years ago. Around a decade back, 9W acquired Sahara Airlines only to burn out too soon, even as the low-cost airlines were matching or lowering air fares what Sahara offered. And after the merger completed, 9W continued to be a premier airline, some even calling it elitist. It was common to see celebrities, cricketers, reputed Business Leaders and many more socially popular people on board 9W. Even without the selfie melees those days, it was nice interacting with such personalities often on board or at the 9W Lounges. 

As I write this piece, I just finished reading that SBI which is managing the debt ridden airline’s takeover has further tightened the norms for a possible suitor even as travel agent-turned India’s most respected Aviator and business tycoon Mr. Naresh Goyal resigned from the Board recently. I am able to already see similar comparisons between 9W (and to some extent Kingfisher as well) and Modern Retailers, for they both cater to similar consumer segments. I have hardly seen traditional Kirana stores go out of business, save for financial mismanagement or not keeping in tune with changing times. In some cases, the next-gen of these Kiranas despise to take over the business calling them traditional, boring and uninteresting. 

But we have seen the meteoric rise and abysmal fall of so many Retailers, Shopping Centres and Malls. If we see what’s in common with those who downed shutters or ones that don’t have the grease to keep them up – it’s all about financial prudence, business stability and focussing on the core. For example, 9W lowered its fare over time to compete with the likes of cost-efficient airlines like Go Air. Being an International Airline and also having a Government norm to fly to far off destinations including Tier 2 towns, the airline was making losses for every nautical mile it flew in some cases. Sounds similar to many of our Retailers selling at cost or lower, a few or more SKUs which they call “Loss Leaders” and what is expected to drive footfalls who will eventually end up buying high-margin products. How I wish this dream was fulfilled. 

Most recently, 9W removed complimentary meals on board for the first time in it’s illustrious history which made even the most hopeless 9W Fan and Corporate Traveller to start whining, writing a fitting Obit for the airline on social media. Instead of upping its value proposition, the airline took to removing services, akin to how Retailers cut down support staff or reduce/switch off air-conditioning in the Retail Stores and Malls to reduce operating costs. In-flight Retail, which is a proven big-billion business worldwide remains largely untapped as well.  All is not over for 9W, yet. I am quite confident that the airline will find a new suitor who will continue and also improve the brand’s legacy with passenger growth touching double digits the last few years. Also, the Government wouldn’t let another airline fail, for it impacts the image of the country at large. However, Retailers may not be that lucky. A private Retail Company is not of national importance, yet – the way Americans eulogised Walmart & Starbucks. We see store openings and closures commonly these days. Ask me about E-Commerce players losing money for every transaction – from selling mobile phones to a portion of Roti or Dosa – well, they all hope that consumers will get used to convenience. Well. 

Desi, Videsi or Woh!

I started my 30-hour 2 Credit Retail Management Elective Course at BIM – Trichy for the 40-odd sophomores who are completing their 2-Year MBA shortly. On my first session last Thursday, I was having exactly the same nervousness addressing students as was on my first session I took 15 years back at a B-School in Bangalore which was more of a one-off Guest Lecture. As with all the time, a few students asked me in the plenary session about the potential threat of Organised Indian players towards the 12 million+ Kiranas (Mom & Pop run) retail stores in India. And how the International Retailers and the fastest growing segment run by E-Commerce Retailers (despite their humongous losses) will fare in this game. 

Like in my past lectures, I invoked the story of David & Goliath and asked who really is the Goliath which elicited mixed responses. In my humble opinion, the Kiranas and small and marginal Retailers are the Goliath up and against the modern retailers. Their collective opinion-making (and vote bank) has found the flavour of the Politicians and ever since the starting of this Millennium when International Retailers heading India-wards, there has been growing unrest over Foreign Direct Investment (FDI) in Retail. The decade long UPA Government kept assuring to the small Retailers that their interests would not be compromised and the just about to conclude BJP Government has also ensured policy policing for the five years although by balancing the two power centres. While FDI in single-brand retail is allowed up to 100%, FDI in multi-brand Retail is controlled with a majority ownership by an Indian entity and no FDI in E-commerce at all, except for marketplaces. 

A growing economy like India needs FDI in many Industries and Retail is not an exception. While we keep telling ourselves that India is unique and that Indian consumers have a completely different attitude towards shopping, there is much to learn from International players, from the West, East and everywhere else in between. Having spent the last 22 years in Organised Retail, having grown with the Industry and with a notable and rich experience at Leadership levels at some of India’s home-grown top Retailers, I can say with confidence that no one is going to take away the opportunity and market share of the Kiranas. 

Metro AG, among the world’s largest Retailers and from Germany stepped in to India in 2002. The Retailer made profits in India recently after a presence of over 15 years and has assured a long term game plan for the Indian entity, which doesn’t sell to end-users rather only to Traders, Shopkeepers, Kiranas and anyone who prefers to buy in bulk. The coveted Retailer was recently called upon by DPIIT to work on a model that would help the unorganised to get organised, calling for a paper which could propose better fortunes for the marginalised retailers who mostly lack technology support for billing, reordering and consumer connect. Quite similarly, Wal-Mart which entered India in 2008 has been building large warehouse-styled Retail stores where it sells directly to Kiranas, similar to Metro. Walmart India provides a lot of information and support such as a native seller-marketplace for the Kiranas to reach their Customers, Sales associates who visit the Retailers with a Tab to get their instant orders and also arranges for delivery where possible. 

Reliance SMART (now being renamed MART) has done a similar thing while what it does differently is that it also opens its doors to end-consumers for shopping, a rule in the law book which allows home grown Retailers to do so. Being Indian companies, Reliance, D’Mart and even the Future Group have the opportunity to sell to Resellers and have created independent business units to cater to this need. The FMCG business of the Future Group is now the largest contributor across many categories at the Big Bazaar stores. Online players like UDAAN have created an e-commerce platform where small Kiranas can order products on the App which then gets supplied by wholesalers from across the India to the local store, perhaps even 1,000s of kilometres away. UDAAN connects the two and makes a small profit in the process, a much laudable initiative indeed.

So, are the Kiranas at an undue disadvantage despite all these advancements, provisions and support by Organised Retailers? Perhaps not. There’s a lot more work to be done to support the smaller retailers, beyond business interest. Ultimately, the SME Retailers are consumers for many other categories, so when they prosper, the economy also does. And Retailers increase their pie.

Travel Retail at Regional Airports

I am seated at Madurai Airport and my Spicejet to Chennai is delayed by 55 mins. It’s a swanking new terminal built a few years ago when the local heavyweight MK Alagiri, (eldest son of Late M. Karunanidhi, the former Chief Minister of Tamil Nadu) was an MP in the UPA Cabinet. Being his hometown, he pushed for this infrastructure development a decade back when the DMK was a key ally of the UPA led Congress Government between 2004 - 14. That was when Bangalore & Hyderabad came up with new greenfield airports while Mumbai and Delhi had a massive makeover – all four now being run by private partners. While the UPA Government selectively upgraded regional airports, the present Modi Government led by BJP along with NDA allies has given a further push to unlock aviation opportunities at over 40 unused airports under the ambitions UDAN – Udega Desh ka Aam Nagrik (Common man will fly). 

The Prime Minister inaugurated the Gangtok Airport recently, unveiling a host of opportunities for tourism to the Eastern hill state of Sikkim (although excessive tourism is a bane for ecology, but I will save this for another article) along with numerous airports across India taking the tally of operational airports in India to 100. A further 50 airports are yet to take off even as many airlines have wound up operations at some of these airports due to various reasons – poor patronage by passengers cited to be the most favoured response even as I reckon that it is due to careless Business management by these operators who took up routes which they knew were unviable and continued to bleed operationally without building parallel commercial opportunities other than not marketing the cost of time to the locals to fly, rather than take up a rail or bus journey. Truejet has ceased operations to Salem while Air Deccan (yes, they were resurrected by Captain Gopinath) ceased operations in the East. And many such examples.  

I had to rush to Madurai on an urgent personal work and took a day trip by Air. After my work was over, I reached the Airport four hours in advance since I had a 2-hour Video Conference with a Client. I was dreading the thought of being seated in those most uncomfortable standard airport-seating. But to my own surprise, there was an oasis – a Lounge before Security hold area. It was prohibitively expensive for Rs. 900 per pax with unlimited time one can spend plus some food and snacks on the house. They wouldn’t accept Mastercard or Visa’s Complementary Lounge options either. But my call was more important, so I chose to pay and use. Didn’t realise how I spent the three-hour period at this well maintained Lounge with polite and courteous staff. Thankfully, I was the sole occupant all along so had the entire 20 seater Lounge for myself.

Took my boarding pass from the Kiosk and walked around and upstairs to be greeted by unexcited staff who were clueless why their “shops” existed what with not a single passenger glancing inside. I noticed local delicacies – Halwa and Milk Khova from neighbouring Tirunelveli and Srivilliputhur respectively. Once inside the waiting area, there were the usual food Kiosks savouring watery coffee, dip tea and oily snacks with sugary bakery stuff. Absolute gold mine of an opportunity to cater to the 3,000 plus passengers who fly off daily from the domestic terminals. Being sensitive Tier 2 cities like Madurai, it would make sense to engage passengers with affordable F&B and Retail options. Perhaps a Levis or Nike may not work, but Indian brands with a regional appeal could do well. 

Tourism development in India is usually seen as an activity to be undertaken by a particular Department of the Government. Worldwide, I have seen a cohesive collaboration between the Public and Governmental agencies to promote tourism – from Singapore to Switzerland, Bangkok to Berlin. It’s only in India that we compartmentalise the potential opportunities. There wasn’t a single poster or a visual that speaks about Enchanting Tamil Nadu which is the spiritual and cultural capital of India. At the Departure hold, passengers and visitors are already travelling back, so instead of promoting the city, why not promote the State? We would sell more Coffee, Tea & much more at neighbouring airports too!