text: My Retail Journey: September 2009
  The American National Coffee Association's "National Coffee Drinking Trends" market research survey recently found that 82 percent of American adults drink coffee, and that those who drink coffee weekly are increasingly on the rise. The survey further reveals that the average coffee consumption in the U.S. is 3.1 cups of coffee per day. And yesterday, 29th September was celebrated as "National Coffee Day" across the US. Although it is not clear who started this and from where did this concept originate, the day is revered all over the country. Most coffee chains offer freebies on this day – the list is long, but let me give some snippets...
  At Starbucks, VIA instant coffee is introduced and the Tall cup is complimentary at select outlet
  At McDonalds, free cups of Newman's Own Coffee at select outlets
  At Panera Bread stores, but 1 and get 1 for free
  At Dunn Bros, carry the published coupon and get a Coffee for free… And they also encourage you to forward the coupon as much as possible to family and friends and bring as many visitors as possible to the Cafe!
  In India, to the best of my knowledge, there is no such thing (yet). It was the same with Valentine's Day, Mother's Day, Father's etc. a decade ago. Also, I am unsure if we will follow something like this in future – I may be wrong. Traditionally, India has been a Tea consuming country, mostly in the North of India while Coffee has been an all time favourite in the South. This is largely because the North was always the tea growing belt (Assam and Darjeeling are world famous and even have a Geographic Indication) and coffee for South (from Chikmaglur & Coorg) – so for obvious reasons such as transportation, logistics and other factors, probably people were used to consuming a certain type of beverage (like how Rice is consumed more in the South and Wheat in the North). According to rough estimates, a family of four in Urban India consumes about 1.40 kg of coffee or tea every month – that's two cups per person a day on weekdays with a higher frequency over the weekends. Ofcourse, we are talking about the traditional South Indian Filter Coffee or Tea that's made using packaged tea powder, boiling water and milk. Indian Households usually do not consume Cappuccinos or Lattes or Espressos as these equipments are neither popular nor affordable in India for the time-being.
  The Cafe culture started over a decade ago in India, in 1996 to be precise when a small coffee shop opened at the world famous Brigade Road in Bangalore. The outlet also had an internet centre - that's around the time the Internet was launched in India and it used to cost over INR 60 for an hour of browsing compared to less than One Rupee an hour today (if you are in the best monthly plans). That was the beginning. Today, there are over 2,500 Cafes across the country and growing. The innovation of the Cafe culture was brought into India by Amalgamated Bean Coffee Trading Company Limited, headquartered in Chikmaglur, a nondescript yet beautiful locale on the foothills of the Western Ghats that grows most of the coffee in India, with its Head office in Bangalore. With the trade name "Cafe Coffee Day" and various other formats, the company today operates at over 810 locations and is expected to cross the 1,000 mark by next year as per media reports.
  CCD as it is popularly known operates across the major Domestic and International Airports in India including "Bengaluru International Airport", almost all the popular Malls in the country, various Offices and Establishments, IT Parks, Movie Halls and Multiplexes, Educational Institutions, Hospitals, Highways and High Streets and is also present in Pakistan and Austria. There are half-a-dozen national players in the market including Barista Lavazza, Cafe Mocha, Costa Coffee, Coffee Bean and Tea Leaf, Gloria Jeans, Illy, etc. and several regional/city-wise operators. The distinct feature among these outlets is that they provide the products and ambience of the Coffee Shops that are in Five Star Hotels but at reasonable prices with easy access. While many follow the service concept such as in Restaurants, some also follow the "take-away" model, both of which are equally popular and welcomed by consumers. The estimated market size of the Organized Coffee Outlets is approx. INR 800 Crores (USD 1 = INR 48) and has been growing at over 35% CAGR for the past few years. Starbucks, world's largest coffee chain entered and exited India last year (due to FDI regulations) and is planning an entry soon. This makes India the fastest growing Coffee Retail market in the world.
  While there are over 2,500 outlets across the country, we are talking about a country of a Billion people – so even if you assume 1% of this population (10,000,000) would be the most relevant target segment, assume they would each visit a cafe once a month (10,000,000 visits in a group of say, two people) and each outlet would service 500 customers every day on an average, we would still need over 10,000 Outlets across the country to meet the growing demand. Ofcourse, these are mathematical calculations and the reality maybe a little different, but still, the opportunity is HUGE. The whole world acknowledges that India is the youngest country on earth with over half of the country's population under 35 years of age and this is the largest consuming class. With growing incomes and salaries, opening up of several industries, and early age of employment (Avg 22 years), coffee consumption at cafes is seeing unpredictable growth across the country. From pilgrim centres like Vaishnav Devi to exotic holiday destinations like Goa, Rajasthan and Kerala, from Kashmir to Kanyakumari (the northern and southern most cities), there are coffee shops coming up all over.
  The focus segment however remains the Teens and Tweens. Tweens, as I call them are those in their Twenties – from beginning to work until they are 29, their lifestyle and habits are changing so much and faster by the day. The two segments contribute over 70% of the customer base at the Cafes. The reasons for this segment to visit the cafes are varied – from pursuing their college studies, to hang around with friends, the first "date", and as they grow up, casual meetings and business meetings, and even serious discussions. After all, "A lot can happen over coffee!" In my case, a lot has happened. What about yours? If you are a teen or a tween or any one of those at heart, rush to the nearest cafe, and by popularity, most probably your choice would a Cafe Coffee Day. In India, we believe everyday is a coffee day. Cheers.
  It's exactly six months since I started actively writing on this blog. I would like to thank each one of you who have constantly supported me and encouraged with various ideas, suggestions and thoughts in this endeavor. I have been able to implement a few and the others would follow.
  Keep visiting my site as often as possible; to make it easier and simpler for you, I have included RSS Syndicate as well as commencing a new E-Group titled Retail Enthusiasts. The Group would act as a platform for all the group members to share best practices.
  Thank you again and look forward to being in touch.
  With a little bias, I would like to call them the BIG Four of Indian Retail (like the ones in the Auditing world such as E&Y, PwC, KPMG and Deloitte) – The Future Group, Reliance, Tata and Birla. My very close friends and associates are working in very senior positions in other Retail Organizations, but going by history, these four are expected to lead the Great Indian Retail Story that is unfolding faster than the world believes. While the Future Group came into Bangalore over six years ago, the Tatas and Reliance came over the past years. And last week, Birlas opened their first and largest (yet) Hypermarket in Bangalore. Aptly named more. MEGASTORE, it is located on the Outer Ring Road, quite equidistant from Marathalli, KR Puram and Whitefield. Approximately, over 1 million people are expected to be living in a 10 sq. km area from here (based on various studies on the internet that advocates catchment analyses) and over 100,000 households that appear to be the most relevant target segment. Within the same area, there is a Big Bazaar on Old Madras Road and Whitefield, Total Hypermarket on Sarjapur Road, and a few more expected. With a dozen malls in various level of completion in this area, it is indeed going to be one of the most watched markets in Bangalore as far as Organized Retail is concerned.
  I managed to spend some quality time at the new hyper – more from an academic and learning perspective than from the main motive – shopping. My first impression – Wow. State of the art, world class Hypers have arrived and it was nice to see consumers' acceptance too. By the way, if there is one place where the entire family visits over the weekend to while away time, to buy things that are "perceived" to be cheaper, to catch up with other relatives or to buy some grocery and household articles, then it is the modern Hypers! Yes – it was a sight to see last Saturday when everyone in the family was there – to see the new Outlet, to check out the offers that were being popularized, and to "save" – the new mantra of the modern household families.
  While it is a continuing debate on what is the ideal size of the Hypers, how many SKUs should they carry and whether specialty Hypers would work, I believe what we need is higher penetration – more outlets within a locality than fewer "Big Boxes". We already have a dozen players at a regional, national and international level within the country that are focusing on these models, so it would be possible to have more than one operator/retailer in a specific locality. And Indian consumers need a variety and seek a change quite often, so they would end up visiting different outlets over a period of time – and hence I wonder if "Hyper Store Loyalty" is anything but a big wish for the Retailers.
  When one looks at the Store front, it is very welcoming. The "Free Parking" signage is soothing and sends a positive message to shoppers. That there are no other commercial attractions or hangouts close by would mean that visitors come into the store only. As you enter, the Clubmore Loyalty desk is visible. Again, this communicates shoppers that if they are loyal, then they would be rewarded. Smart. Large trolleys are located at the entrance to ensure that most shoppers pick it up as early as possible (for obvious reasons). Just after this, the confusion begins. There are over 18 Cash counters and to enter the ground floor, one has to weed through the customers who are billing! Strange. Almost no one would do that. So, I approached the gentleman who was standing near the check-out, observing and ensuring a disciplined and smooth flow of operations and asked him how/where should I begin my journey. He showed me a travellator that's near the window and asked me to go to the first floor before I come back to the Ground. I did. I was fumbled to see that the travellator arrives at a dead end – only to be greeted by the Security Guard who is standing there clueless. And just as I pass by, I see another travellator that takes you to the next floor. As always, one couldn't find a store directory at any of these places. Usually, shoppers who haven't especially come to shop would have gone up.
  But the sincere me who was on an academic tour went into the first floor only to get caught into the crowd. Men's formals mixed with casuals and then the women's categories and well, a large "Saree" and other Indian ethnic wear followed and at the end of the floor was stainless steel, plastic and other household items! The travellator at the end of this floor takes you to the ground floor. But I wanted to see the next floor above. So, I came back to where I started and took the way upward. Again, this arrives in a "no-man's land" – so, I turn left and get into the electronics area which leads to home appliances which leads to sports equipments and ends with bicycles! One walks back all the way to take the travellator down to the next floor and then to the ground floor. Phew. I guess the planners have probably somewhere forgotten why the travellators are created/placed. They are not for moving people from one floor to another (a simple elevator would do that); rather, they are placed such that shoppers walk across areas which they wouldn't have otherwise and so to see some conversions. So, then I finally came to the ground floor. Strangely, Fruits and Vegetables along with Meat and Dairy products were at the fag end. The philosophy that they must be kept at the entrance is defeated – probably because we expect shoppers to finish buying everything until they reach this area. We expect.
  Suddenly realized that I had to pick up some stuff which my aunt had reminded the same morning, so took the list out and bought them. With just three products on hand, I walked towards the cash counters – and voila! All the counters were busy, with atleast three of four trolleys in each of them. There was no "Express Counter" according to one of the staff around, so I politely handed over all the products in his hand to bid adieu. Only to see the signage "Express Counter" at the end! Now, we all agree that most of the shoppers do not visit a hyper to buy the top-ups or the smaller articles, but what happens to those who do so? There were only two express counters and both had atleast six customers and usually, one doesn't wait for so long.
  Finally, I stepped out into the open area where I started my tour. It had taken me about 40 minutes for a full visit from start to finish. I would expect that it would be double or more if one had to shop. Decent enough time to convert as many as possible and also to increase bill values. I am not even talking about the promotions/pricing as they seemed to be attractive enough for families to shop (more than what they would have wanted to). At the entrance (or exit however you call), I didn't find the customary short-eats – Pop Corn, Sweet Corn, Chat items and some fast food. Although this is not a mainstay, it contributes quite much to the total sales of the Hyper at the end of the day. And it does bring in regular shoppers to have a quick bite. As I stood on the other side of the road, looking at this marvelous structure, I was wondering if all the hype has paid off and what a challenge it would be to sustain the operations. There are large hoardings all over the city placed at strategic locations (one near my house that's 22 km away from the store), but after all the waiting for the past months and a whole lot of effort by various team members, it was sense of disappointment for me. Of course, an average shopper would think/ interpret/ blog as much as I do, but what they look for in such outlets is not what they get – convenience. After all, Hypermarkets are not about the hyper space alone, it's also about Hyper convenience of shopping. more.- convenience, if you may allow me to say so.
  An eye for eye will make this whole world blind, said Mahatma Gandhi. Kamal Hassan, ace actor/director of Tamil Cinema recently co-produced a movie titled "Unnai Pol Oruvan" which translated in English means "Someone like you". The movie is a remake of the recent Hindi super hit movie "A Wednesday". The protagonist plays a dark role throughout the movie, only to reveal in the end that he was just reacting like a "stupid common man" scared of his environment who demands the Commissioner of Police of the city to discharge four terrorists only to kill them himself through a bomb explosion triggered through a mobile phone from a remote location. Interestingly, one of the characters is named "Karamchand" who plays the role of an "arms dealer & smuggler". Kamal Hassan, who holds the world record as a male actor having played maximum number of roles, ten to be precise in the 2008 super hit Dasavathaaram (meaning 10 roles) has conspicuously named this character so. Many would know that "Karamchand" is the middle name of the Mahatma, which goes like "Mohandas Karamchand Gandhi". When I saw this aspect on the movie, I was happy that the movie released two weeks before the Mahatma's birthday – Oct. 02nd as I thought it was an insult to use the name of the Mahatma for a smuggler and a supporter of terrorists (even though it's just a movie!). Kamal, 56, who is celebrating 50 years in Indian cinema, always had a different take on the Mahatma's approach – of non violence and abstinence. In his previous movie on a similar subject "Hey! Ram" (the last words uttered by the great soul after he was shot dead by a Hindu sympathizer who along with many others believed that the Mahatma was solely responsible for the partition of India and creating a new entity named Pakistan) the hero goes to actually kill Gandhi. But before that someone else shoots him. It's a shame that the legendary actor took this approach in his recent film where he propagates that the answer to terrorism is counter-terrorism. As actors, what they say is what they feel and hence, it is obvious to assume that this is the actors' personal belief too.
  While the whole country is getting ready to celebrate the Mahatma's birthday next week, an international brand has used (or rather abused) the Mahatma's name once again. After all, Luxury and the Mahatma do not go hand-in-hand. Gandhi, popularly known as the "Father of the nation" was a Barrister-at-law, worked abroad, returned to India and fought for India's Independence. He believed that "non-violence" was the only way to fight or protest; His "Quit India" movement against the British was the turning point in the 200 year history of India's freedom struggle and successfully ensured the country attain Independence at the stroke of the midnight on Aug. 15th, 1947. In the last part of his life, he wore only handloom products – a dhoti (wrap around) and a towel made of cotton (a natural fabric) while he and his supporters used the famous charka to loom cotton at his ashram near Sabarmati in Gujarat. He believed in simple living and intellectual thinking. While he never restricted his followers or well wishers to wear or use expensive products, he himself never used any such thing in the better part of his life.
  World's leading maker of luxury writing instruments Mont Blanc has announced the launch of the "Gandhi Limited Edition" in two collections, one that has 241 pens and the other 3,000. 241 is the number of miles that the Mahatma walked during the "Dandi march" over 24 days – he was protesting the salt regulation by the British and undertook a padayatra or a walking march from his Sabarmati Ashram to Dandi. And the other collection has 3,000 pens, the number of followers who joined him in this march. In the 241 collection, the pens are made of White Gold with 18K Gold threading and an Opel stone on the clip, which costs INR 11,39,000 (USD 23,729). The Luxury Brand promises to donate INR 50,000 (USD 1,040) for every pen sold to The Red Cross Society. In the other collection, every pen is made of Sterling Silver, Ivory lacquer and a garnet stone on the clip. While the Roller Ball is priced at INR 1,47,000 (USD 3,063), the Fountain Pen is priced at INR 1,67,000 (USD 3,480) and even has an imagery of the Mahatma on its gold-plated nib! The Brand promises to share INR 10,000 (USD 208) for Child Literacy for every pen that is sold. While half the total production would be sold all over the world, the other half is available across leading Mont Blanc boutiques in India. During a press conference in the first week of October '09, the Luxury Pen would be officially launched by the Brand.
  While I have nothing against the Brand (I am myself a connoisseur of the Noblesse Oblige Roller Ball, an awesome Meisterstuck Visiting Card Holder and a Pencil and spectacle frame in the offing), I am surprised that the over-100 year old brand which is synonymous with "High Quality Writing" has taken this approach to make inroads into India. While I wouldn't be surprised if this collection gets completely sold out in less than a year, I am yet to come to terms if this was the best approach for the Brand to reach out to the country at large. This blog is probably my first (and hopefully last) on Brand-Bashing, but I would never appreciate such an approach. While Corporate Social Responsibility is essential in today's scenario, there could have been other themes than Gandhi to get popular. Many Organizations undertake CSR for the heck of it without meaning it really. Fine. But please, for nobility's sake, spare Gandhi. Let him continue to show his smiling face on picture frames and postal stamps. And let's enjoy a public holiday every year on his birthday. My sincere apologies for this insult, dear Mahatma.
  Aditya Birla Group, one of the biggest names in India Inc. which runs the "more." chain of Retail Stores across the country is opening its first "more." hypermarket today in Bangalore. This structure, on the Outer Ring Road between KR Puram and Marathalli has been in the making for quite some time and is now ready to open its doors to its esteemed customers. The frontage which is almost 15 meters or more in length and over 10 meters in height is enough to inform people that they are "opening shortly" with the trade name going up many weeks ago, indicating their arrival – a smart move of creating curiosity and at the same time, being straight-forward about the business foray; something that many Brands are reluctant to do. Wishing them good luck on this endeavor; after all, they are entering one of the most mature and fiercely competitive markets in India that already has The Future Group's Big Bazaar, the Tata's Star Bazaar, the Landmark Group's Spar, etc. Will write a review on how the store looks like after visiting it over the weekend.
  Coming to Cattle Class – well, enough has been talked about its origin, cause, effect, vision, reason, result, etc. over the past few days. As a marketing guy, I always believed that any publicity is good publicity and that's what Twitter has got over the week. I can imagine how many people who didn't know what it was would have "googled"… errr, I mean searched on the internet. So, we know who has benefitted the most. Twitter and Google. Having said that, why should our politicians stop their austerity drive with flying economy class on air? Wouldn't it be a good idea for some of them to start shopping themselves (and get rid of their innumerous maids and helpers at home whom the Govt. pays with the taxpayers' hard earned money). And they must shop at Hypermarkets. The new wave of Organized Retailing in India.
  It's over 9 years since the Future Group ventured into the Big Box wholesale-like retail model. Not many would know that it was Saravana Stores in T.Nagar, Chennai, which was the inspiration for Mr. Kishore Biyani, Founder & CEO of the USD 2.5 Billion Future Group to take Organized Retail in India to the next level. Saravana proved that everything from groceries to household utensils to jewelry to sarees and dress materials (and some food and beverage to manage hunger and thirst while shopping) could be sold under one-roof. Yes. All under one roof! That's because we Indians love to shop that way, makes life easier. With congested roads and busier lifestyles, families prefer to shop together and for an occasion. Of course, I am referring to Gen X and behind. My favorite Gen Y and Gen Z, the Mall Rats, prefer to sit at Coffee Shops to spend some "quality" time with their friends. The teens and tweens are the future of India, so might as well let them to do so. After all, consumption always leads to growth.
  So, Hypermarkets are the "in-thing" now. With global downturn having some impact in almost all our lives, however small or big, it seems to be quite fashionable today to talk about "savings" made on shopping. Even the party-poopers are talking about the discounts that are up for grabs at their favorite Fashion outlets that sell chic and trendy clothes and accessories. From CEOs to their housekeeping boys, it is but natural that consumers are now moving towards the Hypers and accepting them as a way of living. Someone said, "Money saved is money Earned…!!!???!!!...
  So, the next step for our netas and abinetas (who are also netas) would be to shop at Hypers. No Cattle class here, atleast, no one would say that anymore. And give a comforting smile to the Aam aadmi. Hopefully, they will pull crowds to these stores, many of which are starving. If not to shop, crowds would gather atleast to have a glimpse of these famous personalities. Just that the security guards and the Operations Manager of the store would go mad. Managing the crowds, not inside but outside. Whichever way, we need more footfalls now. And I mean, Now.
  Most of us were watching closely the developments on the recent strike called for by the pilots of Jet Airways, India's most respected and the oldest private airline which recently celebrated its 12th Anniversary. Over 600 pilots reported sick – various forms of disorders from mild headaches to nausea to even diarrhea on a Tuesday morning until the impasse was broken and a final accord reached the following Saturday. As per IATA guidelines, a sick pilot (If he/she claims to be) is unfit to fly and this method was adopted by the pilots to show their protest against the sacking of some of their colleagues. The issue why the pilots were sacked was forming "National Aviation Guild", a body of pilots from the airline that would coordinate a number of activities for their members which would include liaising with the management on various issues, the Government bodies and other agencies and to provide support and relief in times of emergencies or need. Clearly, it was similar to a Union if one looks at it that way. At the face of it, it looks fine – after all, Unionism was a way of collective living!
  Naah. That's not the way the Airline Management looked at the issue. The company plans to raise funds very soon for sustaining and expanding their business and investors would be weary to put their money in a company that has a large Union voice. Apparently, there are other reasons why the Management didn't want a union set-up which continue to remain confidential. What started as a face-off emerged into the darkest times for the company and its visionary Chairman, Mr. Naresh Goyal. He was always known for his surprise decisions, but were mostly in the interest of the company – be it buying out the erstwhile Sahara Airways or sacking and immediately reinstating the next day over 2,000 crew members who were on probation or forging a strategic alliance with rival Kingfisher Airlines or cutting over 60% of its regular flights into a new avtar, Jet Konnect, a low cost no-frill airline, that has helped the company save lots of money. While commenting on this issue, he even said that he doesn't mind closing the airline but wouldn't take such steps that are not in the best mutual interest for all concerned. Rightly said, I guess.
  The result of this unsavory drama was a lot of time and money lost that cost the company Crores of rupees as operating losses (especially during the current times when the Indian aviation industry is already under serious pressure due to lack of adequate revenues). And to set things right, the airline took advertisements on major dailies to communicate to their key target segment that they are now back in action. Most of us around just wondered – would this do away the negative feelings associated with the once "most trusted" Indian airline brand? Would consumers (passengers) shy away from this airline due to this episode?
  Probably, not in India. As a race, I believe we are a set of people who move on, and quite quickly in that. Be it personal or political or social or even international issues, we do not take it to our heart and mull over for too long. Let me share an example. There was once this small retail store in a nonchalant location called Mandaveli in South Madras, which sold many household products including grocery at cheaper prices. The pricing was similar to that of the Govt. owned PDS, but the products sold were of superior quality and a new shopping experience that Madrasis (like my family and I) were not used to. And then, the Retailer grew bigger and bigger, from one city to another and from one state to another. And then the IPO and some external funding. And suddenly, it was a behemoth – by size, as well as debt burdens. Unable to pay the vendors' dues on time, employee's salaries on time and the bank's interest on time, and finally, one day, it had to shut shop. It was so closely associated with the burgeoning modern retail in India, but after six months of its closure, many consumers do not remember the retailer anymore. They had some of the best locations and are now taken over by fellow retailers or someone else for some other purposes.
  The case in address is similar and interesting from a Retail perspective. Jet was fighting fire every time in the past with a small extinguisher rather than resolving the source of its problem. There were a multitude of reasons for its employees, mainly pilot's resentment. Every time an issue came up, some key personnel from both sides would get into a room and resolve the same. And everything was normal the next morning. Until hell broke loose.
  Many of my colleagues in the Indian Retail Industry today would agree that it's the same across many retail organizations. There was a possible formation of a Union backed by a regional heavyweight in Western India a few years back. The promoter whose direct political lineage is almost nil, somehow managed this well. But this could emerge once again, sooner than later, if not in the same city, elsewhere. With Retailers demanding an Industry status and already employing a sizeable number of the population, which is expected to cover over 15% of India's population over the next seven years, this is only set to become a bigger virus sooner than later. Once again, I am not averse or against the formation of a Union or a Body – as long as it helps to achieves superior Customer Service. I have always advocated that highest standards of customer service can be/ and would be achieved only by taking care of the employees, especially those at the front-end. Many would agree, "If we don't take care of our employees, someone else will'.
  The recent Jet saga is a great anecdote for us. For something that should never happen again in India. Imagine any one of India's leading Retailer shutting shop for a few days when its employees go on strike! No customer would ever return, as they would not want to be shopping in an environment that's not conducive. We, the Retailers must be thanking M/s X, Y, Z, A, B and whoever lead the pilots to strike work (for their ulterior motives). Something that must be nipped in the bud by Retailers – you would only agree with me that no amount of advertising would help, and by the way, the banks wouldn't be lending to take such advertisements anyway.