2012: Marked in the annals of Indian retailing!

Seeing in retrospect, the year gone by, 2012, was very significant to retailing in India. FDI opened in multi-brand retailing amidst a great deal of furore from various quarters. In a turn of dramatic events, the decision to allow FDI in multi-brand retailing was voted into reality by a clear winning majority in the Parliament. Though notified clearly that states would take a call on allowing companies with FDI to operate in their territories, it is expected that soon many states may relent, giving way for the entry of multinational retailers.

As we are aware, agitations went off across the country by a section of the scared Small and Medium retailers. Whether FDI is allowed or not in a state, big domestic retailers are set to open their doors in the cities and key towns of India. I was addressing a group of Small and Medium retailers at a national level Food Forum in Mumbai and I was amazed to see their own realization that their key strengths could sustain them under any competitive circumstances. Support for Small and Medium retailers in order to motivate them and help them realize their potential was the only thing felt as required immediately. So the RETAIL INDIA TRANSFORMATION EMPOWERMENT Foundation (RITE Foundation) is being established now in India with a clear mandate to train, help upgrade or even rehabilitate Small and Medium retailers across the country besides advocating their issues and concerns wherever and whenever required.

During the middle of the year, Aditya Birla Nuvo bought a controlling stake of Future Group’s Pantaloon Retail de-merging the format business from Pantaloon Retail India Limited and that has gone into the annals of the history of modern retailing in India. Rapid expansion of Future Group over the past few years with investments in a diverse portfolio of companies resulted in mounting losses and the group had to consolidate its operations exiting from a few non-core businesses of the group. As the group quickly bounced back on track, the lesson learnt points to the fact that one should stay focused on growing one’s core businesses leveraging one’s strengths and not be rapidly experimenting in unrelated sectors, however bright their prospects of growth could be.

Last fortnight as I was walking down the busy shopping lane of Hiranandani Gardens in Powai, I came a cross a shop premise, which used to house a popular bookstore and it was being renovated aggressively. Curiosity got the better of me and I asked the security guard outside the premises what new shop was going to open. He informed me that it's none other than the new sensation of Starbucks coffee shop! The entry of Starbucks in India a couple of months ago with the opening of its first store in the Horniman Circle in South Mumbai made waves in the Indian consumer and shopping circles! The welcome sign that it sports in six languages – Marathi, Hindi, Gujarati, Tamil, French and English, points vividly to the company’s expansion plans in the near future.

As Christmas celebrations began, the Church At Powai (CAP) organized a Christmas Carnival in the open grounds in Raheja Vihar, Mumbai and in the precincts of Norita in Hiranandani Gardens, Mumbai. Carols rent the air in full throttle and the food stalls and entertainment counters were busy ringing in business.  A member of CAP that I am, I walked into the Rajeja Vihar carnival to listen to the carols but managed to land myself at the cash counter that was selling coupons in various denominations which customers could exchange for products and services. Someone recognized my retailing experience and asked me to do the cashiering there. I was continuously busy for a good three-hour stretch in the evening without a break, when even a couple of big retail professionals among a few CEOs of companies walked into the carnival too! There was every reason at the fag end of the year for me to believe that the New Year has all the promises for brighter retailing in India!

Wish you all a Very Happy and Prosperous New Year 2013 and May God Almighty bless you abundantly!

- Dr. Gibson G. Vedamani

Big-Boxers: How Big, Big could get?

For the large food retail stores like the huge Wal-Mart kinds, the challenge may remain in merchandising the humongous spreads of shelves on the shop floor appropriately when they try to establish their presence in India. The shelf space may be about 3 to 4 times more than the carpet area of the floor, depending upon the space between shelves and the height of the fixtures. True ‘big-boxers’ may find it difficult to come by enough listings to merchandise all the shelves. Food categories need to be planned well in terms of accurate considerations of space for every category, sub-category, brand and SKU mapped in a planogram. When international hypermarkets establish their business in India, the size and scale of each store may have to be shrunk to fit the country’s needs and conditions. The average size of such hypermarkets cannot be the same as we find in the USA or UK. Would they trade their DNA off as hypermarkets? Or, would they continue to have the same large size and try to meet the challenges successfully?

I call it the ‘big-boxer’ because the format may need to fight with the complete merchandising and supply system to get the store to operate in well-oiled precision without being stuck for want of replenishments on time. These big-boxers as they establish their business in India may ask the valid question whether there is a local service support available for products sourced from other locations than the one the store is located in. India is a composition of many states, which behave like different countries, but at the same time many major cities of the country house a cosmopolitan mix of people from all states and for regional products with strong local flavor may find it difficult to gain distribution pan-India. For such regional products the network of distributors may be scant and often may not have the required capabilities to replenish stocks as when needed. Truly big hypermarkets when they open their stores in various town locations may insist on merchandise supplies from the company’s local distributors and not from manufacturers directly for many products. So, ‘middlemen’ who are the distributors may still have a strong presence in the supply chain in the retail supply chain. Would these ‘big-boxers’ want to enjoy the benefit of availing maximum margins and yet insist on supplies to be made from local distributors, ignoring the incidence of high supply chain expenses and squeezed margins?

Recently a premium mall management company conceived the idea of opening a large ‘Outlet Mall’, where a mix of premium brand outlets, which could be strategic clearance outlets functioning throughout the year. On the strengths side, it was a good strategy to drive footfalls. If done well in a premium brand mix, it could even stand out as a first-of-the-kind outlet mall in India. The widest and deepest merchandise overruns exclusively retailed in premium brand ‘outlets’ in the mall may be of great interest to customers. On the flip side, it may be a challenge for brands to continuously merchandise outlet stores given the limited merchandising seasons that typical Indian retailers adopt. The risk one may foresee is that while premium brand partners may not be adequately available in number, currently to partner, many may also prefer to clear bargain merchandise from their own stores twice or even thrice a year. In course of time, premium brand partners may wean in number if they don’t find adequate quantum of merchandise to clear and mediocre brands may find space in the mall if the mix is not controlled over a period of time. The idea was instantly dropped as infeasible.

Would globally successful BIG retailers make a BIG BANG in India? After all, BIG is just relative!

- Dr. Gibson G. Vedamani

Building a Goody-Goody Image?

It is widely opined that the cause for corruption in India is its complicated system of licensing and taxation, with the government departments invariably functioning with opaque bureaucracy and discretionary powers. Often departments function with 'standard bribing norms'. Middlemen who collect the standard rates of bribes based on the land's registration value, have their document-assist offices around the offices of land registering authorities. Those buyers trying to register properties directly may have to wait for a whole day to get the job done if they are lucky and if not turned away for 'documentation errors'. The same practice is seen in many of the government offices including Regional Transport Offices. Though there are many departments in India that are seeing straightforward direct transactions having eliminated middlemen rapidly like the various passport issuing offices, we yet have some way to go with regard to a few other departments. Online single widows that are opening up facilitate adherence to transparent practices in India. Food Security Standards Authority of India (FSSAI) has promulgated the Food Security Standards Act  (FSSA) which encompasses many individual acts, rolled into a single compliance to FSSA. The online application and enrollment process for compliance by food companies and food operators has been already made simple ruling out chances for procrastination and malpractices.

Wal-Mart, in its Indian joint venture operations suspended a few managers this week in the midst of an ongoing probe into allegations of bribing officials. The US Foreign Corrupt Practices Act prohibits corporations of its origin to bribe foreign officials to gain or retain business abroad. The Indian Penal Code 171E underscores that 'whoever commits the offense of bribery shall be punished with imprisonment of either description for a term which may extend to one year, or with fine, or with both.' The section provides that, 'bribery by Treating shall be punished with fine only' and 'Treating means, that form of bribery where the gratification consists in food, drink, entertainment or provision.'

Larry Burkett in his 'Business by the Book', writes, "Many studies over the last several years have attempted to measure the honesty index of the average American, both consumers and merchants, and the results are saddening. Consistently, the most acceptable kind of fraud is practised against insurance companies. Many businessmen surveyed felt that they had the right to collect from an insurance company once they had paid into a policy for several years. They saw insurance policies as something like annuities, from which a person who pays a certain amount in has the right to draw a certain amount out."

A company that is known for its universally infamous allegations on predatory pricing, supplier issues and debatable employee and labour relations, Wal-Mart may have got one fast act together in India - perhaps to establish a 'goody-goody' image readily!

- Dr. Gibson G. Vedamani

Of DAYS and a RED Letter Day...

It’s raining discounts at Vivek’s Chennai marking the beginning of the Festival of Lights, Diwali. Vivek’s brings the gifts galore, advertising all across the media and calling customers to shop this Diwali season.  Vivek’s established the concept of the New Year’s Big Sale in Chennai more than a score years ago and the NY Sales has now become a common phenomenon in all the CDIT stores in India. As all of us are aware in the Southern States of India it’s a custom to invite the newly weds home for Diwali and shower gifts on them. The girl’s parents especially offer gifts and new attire to the newly weds and in addition, present adorable gifts as well. Sales, offers and gifts at retail help customers buy a great deal!

‘Dhanteras’ that falls on the eve of Diwali that ushers in the first day of the five-day celebrations especially in the Northern parts of India, is said to be an auspicious occasion to buy gold and customers make a beeline for gold jewellery and for gold coins. Even banks like ICICI have begun promoting their gold coins to every customer. So, every jewellery store gets its massive ‘sale’ look and some large retailers even make special sales areas to facilitate the process of consumer buying with ease on that day.

The West celebrates ‘Thanksgiving Day’ on 22nd November this year and the whole country goes on a ‘Sale’ spree. Retail stores are flooded with customers usually during the Thanksgiving Day sale that is celebrated by every store offering huge discounts. Thanksgiving also ushers in the festive mood in the United States and Turkey has become a signature dish to be had on that day at every home. Conceptualized occasions like this work well to establish a ‘mood’ both for sales and for making customers buy too!

Big Bazaar has set the sales euphoria during National Festival Holidays in India – The Republic Day and the Independence Day! We in India have diverse cultures and many festivals! So we have many more opportunities to create events for helping customers buy more and more often. Many events have been created purposefully in developed economies by the conceptualizing of a DAY to remember one or celebrate an event!

Cutting across cultures, we perhaps have to find many more national level festivals to celebrate through the offering of great sales uniformly in all the retail stores as it is done on the Thanksgiving Day in USA just to mark Sales and Turkey more than anything else!

DAYS that mark Sales and Achievements can go a long way to establish modern retailing successfully in India! While on the matter of celebration of Days for Sales, I remember another recent significant commemorative development – The TRRAIN Awards (http://www.trrain.org/supportus/page/id/39). I do hope we stand together in establishing The RED letter day in India – Retail Employees Day – to celebrate the efforts put in by our retail sales associates, when B.S.Nagesh’s TRRAIN awards are given away to the deserving achievers on 12.12.12 in Bangalore. I believe it was a grand maiden event last year in Mumbai when it was for the first time, the efforts and contributions of the level of associates were recognized. Way to go!

- Dr. Gibson G. Vedamani

The True Sense of Talent Transformation!

Many retail organizations focus on training their employees and ‘Talent Transformation’ is the current buzzword. But only a few organizations perhaps have understood the very meaning and essence of transformation. Those who are serious about developing their employees and would want to engage their people for a longer walk with the organization are committed to fostering transformational learning as part of their manpower development plan; they institutionalize learning practices that would ultimately lead to the transformation of employees.

Bata, as an organization is one that has institutionalized learning practices for its employees worldwide. The company’s programmes have stood the test of time and have helped many retail professionals grow in their careers. Even many modern retail professionals of current times would have come across retail business practices in India transferred from this legendary retailing organization. Only well-established training practices if structured in an organization and systematically marked in enunciation for various levels can result in facilitating talents for transformation. The advantage of following such practices can help employees be engaged productively in the organization. Bata has various programmes developed with utmost care, like that. “A Step Ahead” is a conceptualized weeklong training programme for the front-end sales and customer service personnel and one must have undergone this programme successfully to sit for the store manager’s selection examination. ‘Retailco’ is a conceptualized programme, that prepares a District Manager to perform well on his job. ‘Mermanco’ is a programme for merchandising executives and those aspiring to become merchandising managers or category managers should have done this course. Retail Managers are taken through the company’s most coveted programme called ‘Advanco’.

Every course is entrusted to a competent Course Leader who ensures that the programme is conducted efficiently following the course directive. People to be trained are chosen using objective measures. There is a test conducted at the end of every course and certificates issued to every successful participant. Each course has a scientific approach to it focusing on the relevant intelligences needed for each position and responsibility. The methodology too is a mix of kinesthetic, visual-spatial, verbal and naturalistic deliveries planned meticulously and in the right proportions for each programme.

The hierarchy of functional training programmes delivered by the organization is planned to take the employee from one level to the other. A time tested transformation plan that the organization has, Bata keeps updating the content and the delivery methodology in tune with the need of the contemporary times.

I decided to discuss the talent transformation methodology followed by Bata in this blog because we often see that employee development is not taken seriously in many retailing companies in India. Training tends to be only measured by the number of days a person is trained in a year! In the case of Bata, it has been institutionalized, like helping an employee pass systematically transforming from one stage to the other – say, from high school to undergraduate to postgraduate and then on to professional levels! The many ’home grown’ Country Heads of every Bata Company in the Bata Shoe Organization would bear testimony to their own transformation, having grown in the organization for years, thanks to the organization’s best initiatives!

With patchy training, retailing companies can never associate their efforts with talent transformation!

- Dr. Gibson G. Vedamani