Inflight Retailing - Retail 2020 (Article #7)

Air Asia, the low cost airline which pioneered the concept in South East Asia two decades back has been in the news for the few days for other reasons. The company has pioneered, much to the surprise of both the Aviation and the Retail Industry, an F&B concept by the name “Santan” which apparently has a wide range of menu curated from ASEAN countries. From Vietnamese chicken rice to Thai Noodles to the most favoured local Malay food, it features many an item which is a Local delicacy. And then comes the surprise. Hold. Santan has opened its first outlet at a premium shopping Mall in Kuala Lumpur and Tony Fernandes, the maverick CEO and Founder of Air Asia aspires to open 100 such outlets in the region. While executives of the Two related industries are sharing extreme feedback – from calling Santan a bizarre experiment to one that’s refreshing and pioneering, the jury is yet to be out.

Cut to 2005. Capt. Gopinath, an Indian Pilot who had retired from the indian Air Force aspired to set up a low-cost airline minus the frills and launched a test flight from Bangalore to Bellary followed by a national presence before ultimately selling off the business to Kingfisher Airlines. During the early days of Air Deccan, the airline ran several innovative promotions to catch the fancy of public and stood true to it’s Brand Byline – Now every Indian can fly, by offering inaugural promo tickets at ₹1 per ticket plus local and statutory aviation taxes. Was a great way of Marketing but here came the surprise – in the early days, there was no seat allocation for passengers who would run toget their preferred seats, from windows to aisles and to avoid the rear facing ones adjacent to the Crew.and to make add-on revenues, Air Deccan “sold” water much to the chagrin of the flyers and general public. Indian Aviation has come a long way forward since then. 

Retailing products on the flight, rather during the Flight, popularly known globally as “Inflight Retailing” in India is in it’s infancy in India currently. While one gets to savour a wide range of RTE (Ready to Eat) Food items from Biriyanis to Bhel Puri, Dal Chawal to Poha & Upma, these are not really innovations from the airlines themselves. Café Coffee Day created an innovative ready to mix coffee powder which only required Hot Water and introduced it in the skies in 2010. Although the coffee was not a hit, it has given birth to an innovative way of tea-making in similar lines. 

Airlines out up a catalogue of products, from key chains to power banks, Bluetooth earphones to toys. But I hardly see flyers buying them for the range is so boring and nothing that’s not available on ground. Not sure of the Commercial Management Team at airlines across India do not sense this opportunity which is over USD 2 Billion worldwide or are they simply focussing on the traditional aeronautical revenue coupled with faster and improved performance on ground, for that’s where a Plane should spend the least of its time. 

Once upon a time, Retail Brands would issue Gift Vouchers to Airline passengers while Jet Privilege allowed to earn and burn bonus points at select Retail Outlets.  Not anymore. Loyalty is dead, after all and Membership is in. I am waiting for the day when Netflix and Amazon Prime would provide a one-month trial for select passengers. Mall Chains and premium Department Store chains like Shoppers Stop would, for a small fee offer a coveted Membership that entails members to avail special offers including home pick-up, personal stylist and so on. Revv and Miles in a tie-up with Airlines would offer vehicles for self-drive at Airports so users can be more efficient all day as well as leisure tourists can avail sedans and SUVs for their tourist destination. In my opinion, inflight product and services retail is in the anvil and is bound to explode in a very big way in times to come. 

Would Air Asia launch Santan in India or would Indigo launch a café? I think that’s a too far-fetched idea at the moment. Retail, and modern retail is a different ballgame altogether. Long term Retail F&B companies are still tweaking their business models in India after being in service for 2 decades. I would rather hope we see more innovations in the inflight catalogue. Like Rajinikanth-branded aircrafts which was launched by Air Asia ahead of 2017 release tamil film Kabali. 

Highway Retailing – Retail 2020 (Article #6)

I have just completed a 10-day vacation across North India. Being an avid traveler, my travel plans are usually frozen at least 2 months in advance, which includes booking of rooms, air / rail transportation as well as ground transportation including the last mile to the Hotel or Resort where we would stay. However. one thing which has always been unplanned, or rather difficult to plan is the place to eat / take a break during such trips, especially while travelling by road. On our last leg today, we drove from Jaipur to Delhi, a distance of 270 Kms which took us around 4.5 hours non-stop. Due to intense Fog in this part of India, we wanted to reach as close as possible to Gurgaon before we took a break. Thanks to constant protests across country on some pretext (currently the NRC) or the other, we decided we wouldn’t stop midway and filled our “tanks” at Jaipur during breakfast. Sadly, the weather played spoil sport and my flight was delayed by over 2.5 hours, thanks to the Fog.

To give a perspective, there are an estimated 40,000+ Fuel Stations across India. Of these, at least 90% of them are branded by PSUs including Indian Oil Corporation which has close to 40% of the outlets, followed by Bharath Petroleum, around 30% and Hindustan Petroleum, around 25%. Lastly, there are the privately-owned OMCs - Oil Marketing Companies such as Reliance, Shell and Essar which are less than 5% in number and growing faster than the PSU OMCs. During my stint at Café Coffee Day in 2009, I signed up two exclusive contracts with Shell and Essar which were riding high on the deregulation of fuel prices which meant that the OMCs could fix the price for Petrol and Diesel. Although they have maintained their prices on par with the PSUs, there are benefits they cater to the consumers beyond filling high quality fuel. For Ex., all Shell Outlets have clean rest rooms separately for Men and Women. Some of them even provide services such as Vehicle Wash and minor repairs. The erstwhile Reliance Fuel Outlets had separate Food Courts from the Fuel Station including independent ingress & egress which was extensively put to use by the company through company managed as well as Franchised / outsourced F&B operations in the name and style of A1 Plazas. 

However, the majority of Fuel stations managed by the Dealers of the 3 PSUs do not even have basic amenities such as clean rest rooms which has been a regular qualm of most highway warriors like me. There are exceptions such as the Yamuna Express highway which connects Delhi to Agra with an Eight-lane highway which has three Toll Plazas and each of them have a neighbouring resting area including large food courts housing International and regional F&B outlets. 

Café Coffee Day remains the Number One F&B brand in India which has the most number of highway Outlets as compared to any other business house in organised F&B Retail. But this trend at CCD started many years back, beginning with the coveted Bangalore – Mysore State Highway followed by many such Highways across India. Many other regional brands such as Haldirams in North India, Sukh Sagar in the West and A2B (Adyar Ananda Bhavan) and Adigas in the South have cracked the regional markets but none at a large pan-India scale. Perhaps, Indian businesses can take a leaf out of International operators in the US & Europe who have built Billion Dollar businesses around this model. 

Personal driving as well as Cab hailing for long distances have become affordable now, thanks to lower cost of owning 4-wheelers as well as many tourist locations across India. Highway Retailing is in it’s infancy in India now and much more needs to be done in times to come. 

Book Retailing - Retail 2020 (Article #5)

Who killed the Sony Walkman? Apple iPod. Who killed Kodak Films? Digital Cameras. 

There are many such presumptive answers most of us carry, mostly opinions I would say. When the iPod was launched in 2003, it was helmed as the most disruptive Music innovation of our times. For, a small device that could be kept inside the coin pocket of a Levi’s Jeans could carry over 1,600 songs in a format created exclusively and patented by Apple. This, compared to an Audio CD which could carry at most, over 300 songs and that too in low audio quality and also needed a player with electricity to play while the iPod merely needed an earphone with a battery charged in advance. No, the iconic iPod didn’t kill the Walkman. Sony failed to innovate, despite having held a leadership position for 3 decades.

Now, let me ask – who killed the Bookstores? Amazon? Flipkart? Guess my response in the previous paragraph would have clarified the position I take while answering this question. 

Book stores worldwide and in India are not just a retail outlet but an intrinsic part of the cultural and community fabric of the society. “Do not live in a city which doesn’t have a bookshop”, goes a saying. With less than 10% of Indians using English as a medium to read and communicate daily and an average literacy rate of less than 50% across India after 72 years of gaining Independence, I guess we have a long way to walk as a country. While vernacular books (and the habit of reading is reasonable), this segment of the society is not a voracious reader, thanks to our education system which believes in the habit of mugging answers and not really cultivate the pleasure of reading. I take pride in saying that the erstwhile Madras, now Chennai is perhaps the first city in India to get an organized bookstore in the name and style of “Higginbothams” which still stands an edifice for the retail business of selling books and beyond after a century and a half. With the iconic structure on Mount Road that stands an icon in the city since the 19^th Century to the less than 120 sq. ft store which opened earlier this year through the new franchisee who has taken up space at Chennai International Airport, the brand has stood the test of time spanning decades. Alongside came many hundreds of independent bookstores across the country over the past 5 decades or more. Many of them were first time Entrepreneurs who merely opened a bookshop because they didn’t get what they were looking for at other bookstores. 

Many of these bookstores have, interestingly survived not just the competition from organized book retailers over the past 25 years but also from e-commerce companies who sold books online at insane discounts, at times forgoing their business margins and most recently from E-Publishers led by none other than Amazon through Kindle Direct Publishing. With the onset of Malls around 2002 onwards, almost every one of them would have a bookstore of repute in premium areas. Brands which most Mall rats would remember including Landmark, Crosswords, Odyssey, Oxford Book Store, to name a few were a regular meeting spot to browse, read and buy books of various genres, cults and subjects. While the Tata Group bought the Landmark Retail chain for an estimated Rs. 100 Crores, Odyssey was acquired by Deccan Holdings and went on to become India’s first “retail” brand to be featured on the jersey of a cricket team during the IPL Tournament in 2009. K Raheja Group owned Crossroads, which is part of Shoppers Stop and Hypercity chain (eventually Inorbit Malls as well) commanded premium retail spaces, thanks to the bargaining power of the group. 

However, over time, these organized retail businesses became sluggish and slowed down on Sales. Visitors and shoppers to bookstores declined and ultimately many of the chains went bust, hailing a new era of depending on online booksellers like Flipkart and Amazon to order books and getting them delivered at home for reading at their convenience. Honestly, this is similar to ordering a crisp Masala Dosa from Swiggy and eating on your personal dining table, if you know what I mean. Just like fresh food consumed at a restaurant, books also have an aroma and a feel, the smell of paper that is unique to bookshops and to lending libraries. 

But then, the world had another view, an alternate view. Akin to how we felt that the iPod killed the Walkman, the world believed and still believes that E-Commerce killed the offline Bookstore business. I humbly beg to differ. There was an impact of online retailers on the over retail industry but to say that the retailers went bankrupt because of them is a skill of over imagination and an act of blaming the burgeoning technology industry for all our miseries. Having firsthand seen many of these bookstore chains as well as “Indie” bookstores as a consumer, as a Trade observer, as a Retailer, as a Retail Leasing Manager and as a Key Account Manager negotiating space inside book stores (during my stint at CCD), I can say with confidence that the Retail Industry themselves was mostly responsible for this calamity. 

During the 90s, when I would visit the basement store of Landmark bookstore in Chennai, the boys and girls knew exactly where a title was; they could recommend more titles based on the reader / consumer interest. However, over time the staff were untrained about the business and most importantly, lacked a passion for book reading and retailing, let alone a sense of camaraderie with the book lovers. This, in my very humble opinion is the sole reason for the decline and demise of the book retailing business. Customers expected the sales guys to know about the book itself, not just which shelf they were placed at. And they missed this in action. Their only choice was to move online where they got what they wanted. Not the discounts, if you know what I mean. 

Until last Saturday, this hasn’t changed. At the Chennai Airport’s Higginbothams store, I went to check if they had a title of JK Rowling which my daughter wanted for her vacation to which we were headed. The staff was puzzled even with the name of the author and showed his palm to a section where the Author’s books along with others was placed. A young girl came and told me that the book was not so great to which I replied it was for my kid. She glanced at me and perhaps said to herself that kids could get interested with “Fascinating Beasts” and not really adults. Now, these are the kind of interactions that book lovers expect at a “physical bookstore” while the over-hyped “phygital” concept can be put to use meanwhile by leveraging technology. For Ex., the staff at the airport could have taken my request and placed it with the HO immediately who would call me in a while and confirm if I needed the book for sure based on which they could have sent it by courier to my vacation location or to my home. Sadly, this wasn’t happening. The sales guy (and the company) perhaps thought they simply lost a sale – No, they are losing the business model itself.

There is a slow resurgence of bookstores once again, what I call as Ver. 3.0. This is mainly led by “Indie” bookstores who are getting passionate about the art of book selling.  But even they are not embracing change (Read: Technology) and adapting themselves. I can only wish them good luck as I am key in the OTP for the card transaction on the Amazon App. The book is expected to reach my home by the time I return from the vacation.