Internalization of the right kind!

If the Director of Marketing, Research in Motion does not carry a Blackberry or if he even carries another brand of handset in addition to a Blackberry, one would say that he has not internalized the very brand he is responsible for! I intently observe the salespersons especially in apparel retail stores whether they wear their own brand of apparel for work. I have observed the Tommy Hilfiger brand stores in India and each salesperson wears the brand for work. Brand retailers often ensure that the brand is totally internalized by the persons who deal with it so that customers may know how the brand stakeholders themselves value their own brand. Now there comes a silly doubt to my mind with regard to how customers of a high-end brand would perceive the salespeople wearing the same brand customers intend to buy. For example if a customer would walk into a Cartier store to buy and if the sales personnel sport a Cartier brand of watch each, my fear goes such that the customer may feel bad that he is buying a common product that everyone in the store is wearing. My take on internalization went through some turbulence. As I am writing this, I clarified this point with the head of retailing of a premium multi-brand watch retailing company sitting across the table with him in Bangalore, he told me that in an exclusive Omega boutique he runs in Mumbai, while the salespersons wear an entry level model, the store head wears a higher profile one. He says that customers only feel happy to be associated with a brand that is internalized by everyone who deals with it, giving a very clear message that they all know the product very well while feeling proud to wear the same brand. He added that when salespersons wear the brands the store sells, they become more confident and comfortable even in their body language and interact with customers in full throttled ease. The customers would also feel that the salespersons walk their talk too.

As salespersons internalize the brand when they themselves use it, there is another question that comes to my mind – the question of how they serve customers with an attitude that could befit the brand. If the service is excellent and if it is in perfect synchronization with the image of the brand they deal with, customers are bound to be extremely comfortable buying the brand. Brands often train salespersons on selling skills and customer service. Service techniques that are learnt and delivered run the risk of running into oblivion in practice over a period of time. Service may often come from the lip and not from the heart. Service personnel are sometimes trained to deliver service to customers with a few pre-determined steps. Consequently these personnel may tend to dramatize the scene, affecting to be extending the best service to customers. If such service is not from the heart, in the process, gaps may emanate. In a scenario where service is dramatized or histrionically styled, service gaps may widen. Service personnel are often trained to do a few things as a process to deliver the expected standards of service to customers, rather than they are coached to do it at their free will. Since the service delivery process is forced upon retail sales and service personnel, their natural behaviour may be temporarily suspended. This may give rise to a situation where they may put on an air of good service persons without the well-meaning intentions of genuinely serving the customers, with the right attitudes rising from within. When affectations are worn, the genuine logical coherence of the true service process may find its links missing in the completion of the service chain. While dramatizing the service delivery process the salesperson may also tend to overdo the enactment. Such an act may go to an extent where the customer may think that the person is too courteous abnormally. Service from the heart can only come through a facilitated means of helping salespeople internalize the required service standards and not by trying to train them with a few steps for following a process. My friend said that in his high-end multi-brand watch store it is the genuine service from the heart that helps customers buy. As the store personnel wear the store’s own brand of watches, they also behave and help customers in a manner that customers truly appreciate.

Internalized service never ceases with the completion of the sales transaction, but it builds the customers’ relationship with the brand for a long period of time, if not for a lifetime. If service intentions do not emanate from the heart naturally, then service is externalized. Internalization of service standards will flow from within the person, following the good culture imbibed and practiced for excellence. This is internalization of the right kind!

Dr. Gibson G. Vedamani

Modernizing precious retailing…

A few days ago, we discussed the future of modern retailing in Chennai. The Governor of the State, the Chief guest of the humbly organized meeting, vociferously underscored the need to modernize retailing at a faster pace. The Governor was indeed right when he said that modernization of retailing is the need of the hour.  A serious question came to my mind instantaneously on whether modernization is understood by all in the right context. Modernization of retailing is all about ensuring a transformation into adopting evolved processes and practices, transparent and fair to all the stakeholders of the business – government, customers, suppliers, shareholders and employees. It is actually a journey from doing business the traditional way to adopting scientific, fair and transparent practices of retailing.

Here’s an interesting area of need for instant modernization in Chennai: The moment one thinks about travelling within Chennai by auto rickshaws, it is not an exaggeration by any means to say that shivers go down one’s spine. A young friend told me the other day that whenever there is a need for him to travel by an auto in Chennai, he mentally prepares himself beforehand for the ‘ride’. The auto rickshaws of Chennai take every traveler for a ‘royal ride’. They seldom go by the fare meter and they always tend to test the passenger’s knowledge of the route to take and then decide to take the passenger on his royal long ride or on a city darshan depending upon his familiarity with the city! If the passenger happens to be familiar with the routes, the auto guy may demand an exorbitant bulk amount, flouting rules. For almost two score years now, no government has even tried to modernize this segment – a crucial determinant for retail customers to go shopping! Mumbai is fast adopting electronic meters in its auto rickshaws and the recent RTO drive to ensure uniform meter charges has modernized Mumbai’s auto functioning thoroughly!

Here’s a sector of retailing that needs to be modernized on a war footing. For many, buying jewellery from the so-called organized jewelers except from a few corporate ones can be a nightmarish experience.  It needs special intelligence for a common man to understand the pricing structure and rationale of gold and precious jewllery. The customer needs extraordinary negotiating skills, as there is no fixed pricing policy adhered to. Turning in old gold jewellery for new invariably goes through a process of selling the old item to the retailer and buying the new one, which involves the cost of wastage and purity loss calculated by the majority of retailers by unscientific, unfair and non-transparent means. Hardly do we find retailers following the transparent practice of determining the purity of the metal using the right process of melting the old metal right at the point of purchase and under the customer’s very nose for checking its purity and offering the right value. They offer a price for buy-backs based on unproven assessment methods but melt the metal later at the back-end refining point, which often begets excess earnings to the retailers. We have also not heard of KYC norms followed in the sector by many retailers, for high-ticket transactions.

It is true that Tamil Nadu has been the forerunner in the adoption of modern retail practices, even in the farm sector. The municipalities and ‘panchayats’ in Tamil Nadu have provided a common market space for farmers to bring their produce and retail from there every day. The farmer’s market is a daily market that opens early every day morning. The farmer can come and take his space for the day at a designated small cost and sell his/her produce directly to customers from there. This market not only helps rural and town customers to get fresh farm produce every day but helps the farmers to directly sell to consumers and not to middlemen (who often squeeze their margins) thereby increase their revenues. This is modernization of the right kind!

While fulfilling the responsibility of thanking the Governor for his keynote, in the inaugural session of the meeting, a retailer gave an assurance on behalf of all retailers that the advice of the Governor would be followed dutifully. It indeed felt nice to get the assurance and the joy of the audience knew no bounds, when the retailer himself happened to represent the jewellery sector!

- Dr. Gibson G. Vedamani

Oh Meetings!

It’s commonplace for many to have come across situations where people in organizations are found to be in meetings very frequently. I have heard retailers’ vendors often complaining that key personnel in many organizations are repeatedly inaccessible as they are always caught up indoors in meetings! Someone remarked on frequent meetings in a sales intensive retail sales organization, “When do these people work if they have to be in meetings always?”

I have known a business head friend who would call for a meeting of his team members every day at the drop of a hat. His secretary had a standing advice to make big minutes of every meeting too! Hardly was there any link among the minutes of these meetings to follow up with the actions decided! These meetings would last a minimum of half a day! The added drama used to unfold, when even before he would walk into the meeting room, an assistant was there to set his laptop at the meeting table. Once he left after the meeting, the assistant would disconnect the equipment and carry it again back to his cabin! And the secretary too would follow him dutifully! Each meeting happened to be a great event! Until the team members gathered their guts to request him for time to work, the act of calling for these meetings did not cease. Years ago, we used to make fun of this friend saying that he may even convene meetings of his family members for discussing his home affairs – and minute them too! 

Team meetings often have proved to lift the morale and performance of players in the football field. We see that in the currently happening Euro 2012 matches where teams have quick meetings even on the field to decide or change strategies! It is important for a team captain or the team manager to have communication with the players. Such communication can motivate players, point out rights and wrongs and instill a good deal of confidence in such a way that it can result in winning the game ultimately. Retailing is no different and meetings are important. A daily morning meeting on the retail floors can be fruitful if done very briefly and to the point and planned well in advance. More often such floor meetings are carried out as everyone stands around in sharp focus. Worthy meetings are carried out briefly with a crisp agenda to follow-up with the action points of each responsible. Management team meetings and review meetings can happen as required within planned timeframes and then they become really enjoyable and fruitful too.  And teams do not have to meet physically for anything and everything. The use of technology for convening meetings can be leveraged to the hilt. Physical meetings may be convened only if required. The Registrar of Companies (RoC) in India has even mandated only a once in a quarter board meeting, giving enough time to ensure that more business actions are done!

John Kenneth Galbraith, the famous American economist said, “Meetings are indispensable when you don’t want to do anything!” How right he is!!

- Dr. Gibson G. Vedamani

The Baby Steps…

When I was driving down MG Road in Bangalore this morning, I remembered the BIG store of the country for kids that used to stand tall once with animated characters welcoming everyone at its doors, all the time. It was an attraction for tourists coming to the city. So lively was the atmosphere around the store that it was the cynosure of all eyes passing by. Tucked away from the busy high streets of Brigade Road and Commercial Street, this specialty store was undoubtedly a destination for kids’ shopping and attracted customers from a very wide catchment. It was often referred to as an Indian parallel to the Toys R Us store in Manhattan, New York! Though the store started off as a kids’ destination, it moved on to selling sarees as well and then went on to expand with a huge multi-brand department store a few kilometers away. The organization could not survive the large expansion initiative.

The retail industry in India has seen many such examples of quick expansion drives that threw financial plans out of gear and such businesses got into trouble. As the South based supermarket chain wanted to have more than a thousand branches at once, it got into profound trouble and the business has vanished into thin air. Any number of restructuring initiatives has not yet borne results. Wanting to be bigger and bigger, often retailing organizations may lose their focus and take their eyes off the core business. Sometimes, as we have seen in the case of the kids store referred above, one wrong decision may cost everything that has been built over years! I know of a jewellery firm that took a very large space in Chennai during its expansion phase and the organization has struggled for long to make both ends meet. Similarly the one decision taken by a successful Mumbai city based retailer to open a pretty large store in MG Road Bangalore a few years ago cost the organization dearly and it took more than five long years to pull itself back on to its growth groove.

Some companies are very quick to gather themselves as they make mistakes like the large footwear retailer in India who like phoenix rose from the ashes and its successful growth is a testimony to the fact that retailers need to be very careful as they expand! When a small business is planned to grow bigger, the exercise is compared to a baby trying to take its steps to walk first – the baby steps. Each step has to be taken carefully.

The other day I was sitting with a very successful CMD of an apparel retail business, who had his very humble beginnings. As he traced his steps – the baby steps – he said that he worked very carefully on his gross margins and aimed at more than 20% EBITDA always! Opening doors within multi-brand department stores initially, the majority of this successful retailer’s current turnover comes from his own retail stores. Way to go! And retailers have to resist the temptation of not making that ONE mistake of looking for a quick and big expansion!

Yes, it’s the baby steps that can only lead to giant leaps!   

Dr. Gibson G. Vedamani

The Data Logger

When I drove my jalopy those days, it often used to breakdown and I could set it right more frequently all by myself, than seeking the assistance of a mechanic! I identified problems by trial and error. The other day as my 4X4 stopped on a flyover in a highway, I could not do a thing, except to call for the service personnel of the dealer, who fixed the problem in no time.

Some progressive retail organizations go great guns and fix their operational problems just like that! They become profitable faster. They bestow their retail store heads with the authority to take decisions on their own and to offer even discounts and price-offs to customers on items of their choice without referring such decisions to the merchandising authorities or taking any permission from them. The call could be their own as these heads are responsible to deliver the planned gross margins of the store. In many organizations the retail store heads and the operations guys on the floors could never take such price adjustment decisions as they are always considered to be decisions that could only come from those responsible for Merchandising & Buying. The ease of operations is rendered by the responsibility to run a store profitably. The SKU may be a fast selling one or may be a laggard, the store head could exercise his authority to accelerate its sale or just to promote it.  While handling a large number of SKU’s in a store, which could even exceed a lakh in number in a department store or hypermarket, a category promotion below-the-line at the floor level decided by the store head could notch up great sales.

If store heads could not take decisions and if such decisions are left with back-end authorities, the desired objectives may not be achieved on time. The system often alerts floor people not only on the sale figures but on margins too. The manager's dashboard would show the current figures against objectives set. When I used to be on the retail floors in yesteryears, we only had sales and stock figures coming up on our screens so that we could know the velocity of sales and the rates of stock-turn of a category, sub-category, brand or SKU. Never did we have an opportunity to have a glimpse of the margins. Margins were always kept a closely guarded secret. When store heads are now given a targeted margin, they have the commitment to achieve it, by taking the right decisions. When a store head sees his current percentage of margins in each category he knows what to focus on and how to achieve the targeted margins. In the years gone by, we were happy referring pricing decisions to be taken by Buying and Merchandising authorities and taking the surprise of the revelation of the margin at the end of day! Data analytics and Business Intelligence have helped us, retailers, a great deal in the current times. Above all, the confidence that retail organizations have reposed in the retail operations personnel that they could take the right Retail decisions relating to Merchandising, has helped a great deal.

When I am on data analytics, I must mention that the new generation automobiles and even cranes have their artificial intelligence. They are supported by computer chips that have a ‘data logger’. Technical problems are identified easily by logging into the machine with the help of a computer and it could throw up details of any problem area for rectification and can also give instantaneous step-by-step guidance for fixing. Life has become so easy with even complicated machines. We only have to possess the right attitude and inclination to allow our functional guys to perform and they will, even better than anyone in the back-end or even anyone in the line up!

- Dr. Gibson G. Vedamani