RetailToday Total pages 54
JULY 2013 | VOLUME 2 | ISSUE 7 |`50
TAKING STOCK OF THE RETAIL INDUSTRY Published by ITP Publishing India
RINGING IN GOOD TIMES WITH A SERIES OF SMART MOVES, THE MOBILE STORE CEO HIMANSHU CHAKRAWARTI HAS RECHARGED THE ONCE-AILING COMPANY
Review TECHNOLOGY
PAYMENT GATEWAYS RETAILERS PREFER
E-COMMERCE
OVERCOMING OBSTACLES IN ONLINE BUSINESS
SALES & MARKETING WILL THE CONCEPT OF WHOLESALE CLUBS WORK?
What caught the fancy of retailers at ReTechCon 2013
The Retailer’s Choice If you’re buying a POS Printer, put Star at the top of your shopping list Android /Apple Mobile Solutions
POS Thermal Printers
BSC10 Series
NEW Low Cost, High Speed, Quality Printer Series With its robust design and lever-free paper loading, this printer is designed to perform in the harshest of retail and hospitality environments. Its high speed processing of receipts (up to 300mm/second) as well as dual interface make it the first choice for retailers and hospitality operators globally.
Mobile Printers Star offers mobility to POS whether fixed terminals or mobile printing solutions are used. From simple integration of iOS devices with fixed POS terminals in retail or hospitality applications to mobile printing solutions for deliveries, restaurant / café table service, event ticketing and mobile payments.
• • • • • • •
“Intelligent” Design Low cost Installation Low cost Maintenance 10cm diameter Paper Roll capacity Superior Quality Hardware & 203 dpi Output ESC/POS™ emulation with StarPRNT Intelligence & Configuration Utility Advanced Splash / Dust Proof Design
SM-T400i
• Durable, 112mm (4") iOS and Android Compatible Bluetooth Mobile Printer • 80mm/sec. print speed with 20 hours battery life, IP54 certification and back lit LCD display
SM-T300i
• Durable, 80mm (3") iOS and Android Compatible Bluetooth Mobile Printer • 75mm/sec. print speed with IP54 certification and back lit LCD display
SM-S220i
• Compact, pocket size 58mm (2"), 80mm/sec. Mobile Printer • Switches easily from Android to Apple at the touch of a button
TSP-654II BI
The world’s only iOS & Android compatible Bluetooth receipt printer able to communicate directly with Apple devices without a router and can support / trigger a cash drawer which mobile printers are unable to do.
AsuraCPRNT ™
Low cost, high quality thermal receipt printers with unique Star high speed processor and a super-fast print speed of 300mm/sec. • • • •
High Reliability: 60 million lines (MCBF) Energy Star Certified including PS60 Easy-Load, Drop-In & Print Power switch cover option for preventing accidental system disruption
TSP700II Series
The World’s first Interactive Communication Platform & Printer
High speed barcode, label, ticket & receipt printer capable of printing 250mm/sec.
The most exciting development in Point of Interaction technology has arrived !
• High speed 250mm/second output on media up to 0.15mm • Easy-to use AutoLogo™ coupon and graphic marketing tool • Splash proof cover for hospitality or harsh environments
At its heart is a powerful ARM processor that manages a 7" touch screen and 80mm printer. The AsuraCPRNT is available with optional integrated MSR, Barcode and NFC readers.
TSP800II Series High speed, wide format barcode, label, receipt & ticket printer
The AsuraCPRNT’s computing power offers the capability to display and deliver audio-visual messages on its own screen and external digital signage. The AsuraCPRNT also has the ability to drive applications and web content to other digital devices such as customers’ smart phones, merchant tablets and store kiosks.
• High speed quality output at 180mm/second • Unique 104mm print width on 112mm wide paper stock up to 0.15mm with automatic A4 to virtual A6 scalable driver
Star white or charcoal grey casing available on all three models with USB, parallel or serial interfaces and new low cost Ethernet option.
The AsuraCPRNT is a receipt, ticket and coupon printer as well as a fully programmable platform which can be used to run product advertising, retail merchandising, point-of-sale promotions and many more applications for retail and other industries. The AsuraCPRNT has been optimised to support the connection of external peripherals such as a biometric scanner, 3G /4G dongle, WiFi, camera and many others.
TSP654II Series
Quality suite of device drivers available for easy system integration – Windows TM, Linux TM, Java-POS TM, OPOS TM and Apple MAC TM etc.
Linux
TM
sales@Star-EMEA.com · www.Star-POSIndia.com
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CONTENTS 18
E-COMMERCE
24
Key things to consider when setting up online presence for a retail venture
TECHNOLOGY
30
Trends in payment solutions and the way forward
COVER STORY Find out how Himanshu Chakrawarti, CEO, The Mobile Store, managed to save the ailing business and make almost all outlets across the country profitable
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36
SALES AND MARKETING Exploring the viability of wholesale club business model in the country
50 CASE STUDY
MARKET DATA
The things that make Puma’s first-ever sustainable store in Bengaluru special
An overview of shopper behaviour in hypermarkets
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Retailers are set to implement the next level of technology in their daily business
COMMENT
Smart solution
A
dmittedly, I am a creature of habit. I usually like to shop at some of the same stores. I like the familiarity with the staff and enjoy striking conversations with them; it saves a lot of time too since they know me and help pick up things of my choice. But, lately, this is getting increasingly rare due to attrition. Moreover, the staff is always too new to know any customer WELL "UT IF A RECENT ARTICLE ) READ IS TO BE BELIEVED SMARTPHONES CAN HELP jLL THIS void. And they are doing a better job than humans. At Macro, a German cash-and-carry, customers can swipe themselves in and receive offers on things they like as they shop based on their preferences and previous purchases. What’s more, there are now gadgets that allow retailers to take card payments using smartphones. Whoever thought smartphones couldn’t get any smarter! But one man in the industry had enough foresight to know that smartphones could transform our lives. Believing on their potential, Himanshu Chakrawarti took up the role of CEO of The Mobile Store and did all that is possible to make smartphones more affordable to the masses. This step alone, along with several other measures, changed the fortunes of his company, pulling it out of the red. Now, Chakrawarti plans to take his company to the next level. And he is banking on one thing to help him get there: the smartphone. Once again, I think, he is bang on. A recent report predicts that smartphones will be more disruptive to retail than even the internet. Already, smartphone POS systems are replacing traditional tills. In fact, ecommerce expert Dan Wagner feels that the mobile POS will put tills out of business for good. And though we may not know it yet, smartphones are a retailer’s best friend. A google study found that shoppers with smartphones spend more than those without smartphones. Furthermore, a third OF THE SMARTPHONE SHOPPERS WOULD RATHER jND INFORMATION USING THEIR PHONES THAN ask a store employee: Music to the ears of retailers struggling with attritition. Now it all depends on whether Chakrawarti succeeds in catapulting smartphone sales in India - and ring in the good times not just for TMS but for the industry at large.
RetailToday -XO\ Ć 9RO Ć ,VVXH
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Visit
India Retail & Shopfittings Summit 25-26 July 2013 at Pragati Maidan, New Delhi
“Importance of Infrastructure & Technologies in Retail Sector� Siddharth Narain I +91 9971600355 I Gauri Srivastava I +91 98738 00387 conference@manchcommunications.com Green Lighting Partner
Key Exhibitors
Bulletin Amazon launches India marketplace Amazon launched, Amazon.in, its e-commerce marketplace in the country. Currently, the site is selling print books, movies, TV shows on DVDs and Blu-ray and will soon offer mobile phones and cameras. “Our vision is to become a trusted and meaningful sales channel for retailers of all sizes across India, enabling them to succeed and efficiently grow their business online,” Amit Agarwal, Amazon India’s vice president and country manager. Amazon India is strictly a marketplace where third parties can list their products to sell; Amazon isn’t selling any of its own inventory. But Amazon is offering fulfillment services to its marketplace merchants, giving sellers the option to have Amazon handle packing, delivery, returns and customer service from its fulfillment center located on the outskirts of Mumbai. This is Amazon’s 10th countryspecific Amazon marketplace.
Being Human now in Neptune Magnet Mall Being Human, the global fashion brand, launched its fourth store in Mumbai at Neptune Magnet Mall, Bhandup. Spread across 2066 sq ft, the exclusive brand outlet offers world-class fashionable clothing for men and women like shirts, t-shirts, pants, hot shorts, denims, scarves, polos, jackets, hoodies, caps, belt and wallets.
Being Human Clothing had opened its flagship store in Bandra in January this year. The fashion line currently has 10 outlets in India, including four in Mumbai. They now plan to expand their panIndia presence by setting up 14 outlets in Pune, Surat, Bangalore, Noida, Amritsar and Ludhiana, Kochi and Dehradun.
Alpha G:Corp bags awards
Alpha team proudly holding one of the awards. Management and projects at Alpha G:Corp were recently conferred with three awards at two separate awards functions— Prodipta Sen, executive director, marketing, corporate affairs & retail, Alpha G:Corp was bestowed with the ‘Marketer of the Year’, and AlphaOne, Ahmedabad was
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conferred with ‘Developer of the Year – Retail’. Alpha G:Corp was also conferred with ‘Most Admired Shopping Centre of the Year for AlphaOne, Amritsar’, in the Non Metro category at another awards function. Alpha G:Corp is recognised as one of the fastest growing real estate companies in India.
People PPZ gets new CEO Mumbai-based Pioneer Property Zone (PPZ), a holistic mall management specialist announced the appointment of Anand Sundaram as chief executive officer. Sundaram holds an MBA degree from the University of Durham and has an experience of two and half decades. Prior to joining PPZ, he was the COO of Phoenix Market City and was responsible for launching, creating and operating retail-led developments across the country. He has also worked with Inorbit Malls looking after malls portfolio and handling strategy development for new assets.
Big appointment at Beyond Squarefeet Sanjeev Kumar has been appointed the Mall Mechanic™ and centre manager at Beyond Squarefeet. According to Susil Dungarwal, chief mall mechanic, Beyond Squarefeet, the company honours the most senior members with the title of Mall Mechanic™. Kumar, who has over 12 years of experience in operations and client servicing, was earlier with MBD Neopolis. He has worked with TGI Friday’s, ADLABS, Treasure Island Mall and DLF Group. Kumar will currently be based at Aashima Mall, Bhopal, overlooking the mall’s operations and management, helping take the mall to the desired level of success.
ebay gets new marketing director ebay India, India’s leading e-commerce marketplace, has Alok Agarwal as director of marketing. Agarwal’s expertise lies in building brands and marketing thought leadership and ebay is looking at him to help make eBay India the defacto destination for online shopping in the country and driving engagement with consumers across platforms.
july 2013 | Retail Today
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BULLETIN
Chennai Retail Summit exploring new dimensions
Chief guest Dr K Rosaiah, governor of Tamil Nadu, addressing last year's Chennai Retail Summit. /RGANISED BY 2ETAIL !SSOCIATION OF )NDIA 2!) THE SECOND EDITION OF #HENNAI 2ETAIL 3UMMIT WILL TAKE PLACE ON *ULY AT (YATT 2EGENCY #HENNAI 4HE 3UMMIT WILL EXPLORE
FOUR DIMENSIONS WHICH ARE DRIVING CHANGE IN THE REGIONeS RETAIL MARKET 0RESENTATIONS AND PANEL DISCUSSIONS WILL DISCUSS HOW MULTI CHANNEL IS HELPING RETAILERS
CREATE VIRTUAL SCALE AND WHAT ARE THE NEW DEVELOPMENTS IN MARKETING TO CONSUMERS 4HE @MALLIjCATION OF THE #HENNAI MARKET AND ITS IMPACT ON OTHER MICRO MARKETS
IS ANOTHER ASPECT THAT WILL BE DISCUSSED AT LENGTH AND THE SUMMIT WILL LOOK AT .EXT 'EN /WNERSHIP l (OW THE /WNER $RIVEN /WNER -ANAGED /$/- RETAILER IS SHAPING HIS BUSINESS f#HENNAI TO ITS CREDIT SOME OF THE GREAT BRANDS OF RETAIL INCLUDING NAMES LIKE .ALLIS '24 6IVEKS AND MANY OTHERS "EING THE CITY THAT CAN BOAST OF MANY PROjTABLE PROFESSIONAL RETAILERS SOME ESTABLISHED FOR MORE THAN YEARS THE LESSONS TO LEARN AND THE INTERACTIONS ARE POISED TO BE IN DEPTH 4HE OWNERS OF RETAIL BUSINESSES ARE OFTEN SEEN ON THE kOORS INTERACTING WITH CUSTOMERS AND THIS MAKES THEM SPECIAL t SAYS +UMAR 2AJAGOPALAN #%/ 2!)
OPENINGS & EXPANSIONS Zara opens store at Ambience mall :ARA HAS OPENED ITS jRST STORE IN 'URGAON AT !MBIENCE MALL LAST MONTH 3PREAD OVER SQUARE FEET ACROSS TWO kOORS ITS TOTAL NUMBER OF STORES IN THE COUNTRY IS NOW 4HE STORE HAS TAKEN THE SPACE EARLIER OCCUPIED BY $EBENHAMS IN THE MALL 4HE BRAND IS PRESENT IN COUNTRIES WITH A NETWORK OF STORES
YoYo Noodle to debut by diwali
8BMUFS ,OPMM MBVODIFT JUT kSTU TIPXSPPN 7ALTER +NOLL A 'ERMAN LUXURY FURNITURE BRAND TOGETHER WITH $ - "UILDING 0RODUCTS A DISTRIBUTOR OF BUILDING INTERIOR PRODUCTS WHO DELIVERS BRANDS IN THE INDUSTRY FROM ACROSS THE GLOBE LAUNCHED ITS jRST STORE IN THE COUNTRY IN -UMBAI RECENTLY 3PREAD ACROSS AN AREA OF SQUARE FEET WITH A DISPLAY OF SOME OF ITS EXCLUSIVE PRODUCTS THE COMPANY IS FOCUSING IS ON CROSS CULTURE TARGET GROUPS f7E WISH TO STRENGTHEN OUR PRESENCE IN !SIA AND )NDIA IS A IMPORTANT MARKET FOR 7ALTER +NOLL FROM THE !SIAN AND GLOBAL PERSPECTIVE 'ROWING AFkUENCE EXPOSURE TO INTERNATIONAL BRANDS AND APPRECIATION OF GOOD DESIGN AND QUALITY ARE TRANSFORMING THE FURNITURE INDUSTRY )NDIANS HAVE CREATED A CERTAIN STANDARD OF LIFESTYLE AND WE ARE TRYING TO SERVE THIS LIFESTYLE THROUGH OUR OFFERINGS t SAYS -ARKUS "ENZ #%/ l 7ALTER +NOLL
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9O9O .OODLE %NGLAND BASED #HINESE FOOD CHAIN PLANS TO INVEST MILLION POUNDS OVER 2S CRORE OVER THE NEXT jVE YEARS TO OPEN AS MANY AS OUTLETS IN THE COUNTRY 4HE jRST OUTLET IS EXPECTED TO BE LAUNCHED BY $IWALI IN -UMBAI 4HE COMPANY HAS PARTNERED WITH CITY BASED /NE .ETWORK #ONSULTING FOR ITS ENTRY UNDER e9O9O .OODLE )NDIAe BRAND !CCORDING TO REPORTS THE COMPANY IS ALSO CONSIDERING SETTING UP ITS OWN UNIT TO MANUFACTURE PACKAGING AND MERCHANDISE ITEMS
Ferns N Petals' hatrick in Raipur &ERNS . 0ETALS &.0 HAS LAUNCHED ITS THIRD FLORAL BOUTIQUE IN '% ROAD 2AIPUR FURTHER STRENGTHENING ITS PRESENCE IN #HHATTISGARH 4HE BOUTIQUE IS SPREAD OVER AN AREA OF SQUARE FEET 5NDERSTANDING THE ASPIRATIONS OF CUSTOMERS IN EMERGING MARKETS THE COMPANY HOPES TO PROVIDE A SUPERIOR SHOPPING EXPERIENCE AND CHANGE THE WAY FLOWERS AND GIFTS ARE BOUGHT #URRENTLY DELIVERING ACROSS CITIES AND TOWNS ACROSS )NDIA AND AROUND COUNTRIES WORLDWIDE THE COMPANY AIMS TO DOUBLE ITS RETAIL PRESENCE WITHIN TWO YEARS AND REACH OUT TO MORE COUNTRIES
BULLETIN
EVENT PREVIEW: INDIA RETAIL & SHOPFITTINGS SHOW
>>>
Fit-outs and more Come July 25 and Pragati Maidan, New Delhi will witness a threeday event—India Retail & ShopFittings Show—where retailers, shopkeepers, showroom owners and managers, brand experts, store designers, interior designers and architects will meet to discuss and share new trends and technologies in retail store fitting and fixtures. Organised by Manch Communications, the event is expected to have over 100 exhibitors and offer more than 150 solutions. Some of the participating com-
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panies include Philips, Datalogic, Gunnebo Security, ZICOM, Checkpoint Systems, Bajaj Lighting, CAS Weighing and ADI-Global, who will be displaying their products. “The market for consumer goods is on the rise; so is the need for high technology retail stores in India. The objective of India Retail & ShopFittings Show is to give industry stakeholders a forum to come together and take this sector ahead in coming times,” says Kiran Mittal, managing director of Manch
Communications. The event also comprises a two-day conference based on the theme ‘Importance of Infrastructure & Technologies in Retail Sector’. It will cover topics such as creating a perfect buying environment to elevate customer retail experience, importance of understanding of work-flow, consumer behaviour and functional aesthetics in creating effective store designs, lighting as the most essential element in overall look and feel of a showroom and maximising retail store space
to maximise profits. It will also address issues such as rising importance of an efficient Point of Sale (POS) system in retail sector and the importance of anti-theft security systems for retail sectors where merchandise is readily accessible to the shopper. In a constantly evolving retail environment, it is important to have a well planned and smartly designed store. The event will enable retailers to adopt new and innovative technologies and increase business with the help of attractive store designs.
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BULLETIN
PROJECT WATCH
>>>
0ACIjC -ALL $EHRADHUN 0ACIjC $EVELOPMENT #ORPORATION ,IMITEDeS 0$#, THIRD MALL IN $EHRADHUN WILL OPEN ON )NDEPENDENCE $AY 3PREAD ACROSS A LANDSCAPE OF ALMOST SQUARE FEET 0ACIjC -ALL $EHRADHUN PROMISES A WHOLE NEW SHOPPING EXPERIENCE IN 5TTARAKHAND 0ACIjC -ALL $EHRADUN IS SLATED TO HAVE OVER STORES WITH A MIX OF BOTH NATIONAL AND INTERNATIONAL BRANDS 0ACIjC $EVELOPMENT #ORPORATION ,IMITED HAS DEVELOPED THE LIKES OF 0ACIjC -ALL 4AGORE 'ARDENS AND 0ACIjC -ALL 'HAZIABAD 4HE DESIGN AND STRUCTURE OF 0ACIjC $EHRADHUN IS LARGE AND COMFORTABLE FOR LEISURE ACTIVITIES IN THE ATRIUMS 4HE SYSTEMATICALLY PLANNED AND SCIENTIjCALLY DESIGNED MALL IS LOCATED AT ONE OF THE EASILY ACCESSIBLE PLACE OF 2AJPUR 2OAD IN $EHRADHUN
Name of mall: Pacific Location: Dehradun Address: Rajpur Road, Dehradhun Date of opening: August 15, 2013 Unique positioning: One-Stop destination where you are guaranteed happiness on every visit Catchment profile: Dehradhun Percentage break-up of brands: Foreign-51 per cent; National-49 per cent Space Allocated for retail categories: Fashion & Lifestyle-63 per cent, Food & Grocery-13 per cent, Leisure & Entertainment-24 per cent and Food Service (restaurants/ food court)-13 per cent
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Developed by: Pacific Development Corporation Ltd Project consultant: In-House Maintained & operated by: Pioneer Property Zone Exterior architect: Bentel Associates Interior architect: Bentel Associates Lighting by: In-House Lifts & elevators by: -ITSUBISHI Landscaping by: Bentel Associates Parking management by: Secure Parking No. of elevators & lifts in mall: 4 No. of entry & exit points: 2 Total built up area: 2,30,410 sq. ft
Total GLA, retail area: 1,70,976 sq. ft No. of floors: 4 Total no. of stores: 95 Name of anchor stores: ,IFESTYLE -AX Pantaloon and PVR Prominent foreign brands: Tommy Hilfiger, Calvin Klein, French Connection, *ACK *ONES 5#" 6ERO -ODA /.,9 AND 4 - ,EWIN Prominent national brands: Louis Philippe, Van Heusen, Allen Solly, "LACKBERRY 7 *ASHN AND "EING (UMAN Name of multiplex: PVR - 5 screens 35,000 sq.ft Type of parking space: Basement
Photograph: Bajirao Pawar
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ringing in good times
July 2013 | Retail Today
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COVER STORY
WITH A SERIES OF SMART MOVES, THE MOBILE STORE CEO HIMANSHU CHAKRAWARTI HAS RECHARGED THE ONCE-AILING COMPANY BY SHIV JOSHI Retail Today | JULY 2013
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COVER STORY
T
he reason millions of Indians can today afford to buy expensive high-end smartphones on EMI on credit card is largely because of one man: Himanshu Chakrawarti. It is one of the jRST THINGS HE DID AFTER TAKING OVER AS the CEO of The Mobile Store (TMS), an Essar group venture, two years ago. "EING THE jRST SUCH INITIATIVE IN MOBILE retail segment, it naturally became a game changer, instantly increasing sale of smartphones at TMS. In fact, soon after, almost a third of the smartphones transactions happened through this route, and consumers started increasing their purchase budget. “The idea was to make smartphones more accessible to consumers,� says Chakrawarti. It was when Chakrawarti was still working with Landmark, the bookstore chained owned by the Tata Group as the CEO, that he jGURED OUT THAT IN the next few years, technology innovations around the world would be on digital devices
like smartphones. Landmark had just started retailing smartphones. So, when the opportunity to work with the largest mobile phone retailer in the country was presented to him, he grabbed it with both hands. Chakrawarti still feels strongly about the growth potential of smartphones and feels that their pricing is arresting their retail potential despite their popularity in India. The handsets available in India are priced in dollar terms, the same as they are anywhere in the world. There is no Indian pricing. But Indian salaries are much lower. For example, the iphone4 costs around Rs25,000, which is still a month’s salary for many people in India. But to the audience in the US, it costs all of 400 dollars; which comes to about 1/5th their salaries or less. “Indians therefore jND IT TOUGH TO BUY 3O my advice to Apple was don’t create more desire, it’s already there; make products reachable,� he explained. Apple took his advice and made iphones available on EMI. Within months, iPhone sales in India shot up three times! Not just Apple but other brands like Samsung and Nokia too have come to trust
Chakrawarti’s business acumen and keen understanding of consumer behaviour and regularly consult him for ideas. After all, it is thanks to him that TMS is today their largest revenue generator for smartphones and the man responsible for pulling out the TMS business from the red to black.
W
hen Chakrawarti joined, TMS had been around for four years and already had about 800-plus outlets. “The challenge since the inception has been not in terms of scale and size; that has been big. Like many other retailers, it has been ON THE PROjTABILITY FRONT t HE SAID !ND THAT WAS HIS jRST MANDATE 4O GET there fairly quickly, he banked on smartphones, a category that was just emergent at that point of time. So Chakrawarti and his team focussed all their time, money and efforts on smartphones. In fact, it is to enable smartphones that he introduced the EMI scheme. In addition, they also focussed on attachment products like data cards, warranties, accessories and quickly became leaders in this category. Simultaneously, Chakrawarti also turned his attention to streamlining inventory management. “We went around building the inventory process to optimise the INVENTORY AVAILABLE AND MADE SIGNIjCANT gains. Ours is a business with tight cash kOWS AND AN EFjCIENT INVENTORY RELEASES cash, which can be used for growth,� he explained. #HAKRAWARTI jGURED THAT THE PROBLEM
OURS IS A BUSINESS WITH TIGHT CASH FLOWS AND AN EFFICIENT INVENTORY RELEASES CASH, WHICH CAN BE USED FOR GROWTH."
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COVER STORY
with inventory is the belief that product people/sales people know best how much to order for a store since they are the ones actually selling the product. He reasoned that when asked to project daywise expenses for the next 15 days, people don’t have an accuracy of more than 15-20 per cent on their own expenses. “So where is the question of a person at the store being able to get that right for 800 stores?� he asks. To change that, he brought an algorithm in place and automated the inventory process. f4HAT S ALL CONjGURED AND WE REMOVED the human element, except when we are DOING A SPECIjC PROMOTION OR WHEN THERE are certain special occasions such as the durga puja or diwali, when a spike in demand is expected. Otherwise, we don’t touch the algorithm,� says Chakrawarti.
Apple took Chakrawarti's advise to make products reachable and made iphones available on EMI. Within months, iPhone sales in India shot up three times! Not just Apple but other brands like Samsung and Nokia too have come to trust Chakrawarti’s business acumen and keen understanding of consumer behaviour and regularly consult him for ideas.
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ext, he changed the process which is based on the fallacy that stocks should be available in abundant quantities at customer-facing locations, suggesting that stock sitting at the store is far more productive than the stock that is sitting in the warehouse. Chakrawarti insists that it isn’t true. He explained how it actually works: a store doesn’t lose a customer till it has one unit of a particular model. And the customer isn’t concerned whether a store has one or 50 units, he just needs his one unit. If that customer buys the unit, the store needs one more unit for the next customer. So he ensured that there is a steady stream of replenishment to the store, eliminating the need to hold up inventory there. The
TECHNOLOGY@TMS
Himanshu Chakrawarti informs that technology is involved in every little thing TMS does—right from basic things like MIS and reportage to dissemination of training to people. TMS has created a system to get feedback from the stores. Chakrawarti also has his blog, which is there on the desktops of every store. “We have used technology at the basic levels to all the current and future projects. The insurance of products that we issue, to activating SIM cards and common pool for recharge. We cannot substitute the technology with people because of the sheer size of our organisation,� he said. An interesting application of technology helped improve replenishment time in transport vehicles. All TMS EFMJWFSZ WFIJDMFT BSF kUUFE XJUI (14 FOBCMJOH USBDLJOH UIFN JO SFBM UJNF &BDI WFIJDMF IBT UP MFBWF UIF TUPSF JO B TQFDJkFE QFSJPE JG JU TUBZT UIFSF GPS MPOHFS UIBO UIBU UJNF UIFSF JT BO JNNFEJBUF BMFSU 4JODF (14 XBT JOTUBMMFE UIFSF IBT CFFO TJHOJkDBOU JNQSPWFNFOU JO UIF SFQMFOJTINFOU UJNFT 5.4 MBSHFMZ XPSLT PO +%" BOE 4"1 GPS kOBODJBM NPEVMF *U BMTP IBT JUT JO IPVTF UFBN XPSLJOH PO NBOZ PUIFS UIJOHT PO JUT PXO "CPVU QFS DFOU PG 5.4 DBQFY HPFT UPXBSET UFDIOPMPHZ
formula he applies for that is simple: the amount of stock required at a store is based on the replenishment time. Adopting this has ensured that his stores never go out of stock. And to manage the backend, he has APPLIED THE PRINCIPLES OF SIMPLE kUID mechanics: Now all TMS stocks are held at a central distribution centre (DC) and products are distributed to stores as per demand and at regular intervals. %ARLIER THE SUPPLY kOW WAS DIRECTLY from the vendor to the stores. Now, all stores are replenished by the DC. So the stores are connected to the DC, who in turn has a relationship with the vendors. “Today there is nobody in the country
or very few in the world whose invenTORY IS AS EFjCIENT AS OURS 7E TURN OUR inventory 21 times a year,� he says with restrained pride. The new system didn’t just improve CASHkOWS BUT ALSO HELPED 4-3 COMpletely eliminate risk of obsolescence, which is a constant in this business. However, lean inventory meant that THE REPLENISHMENT HAS TO BE EFjCIENT and happens in time. To ensure this, the supply chain teams have the key responsibility to ensure the best turnaround time, from the DCs to the stores. Chakrawarti set SLAs for that and employed technology to make that happen, enabling an impressive 97.4 per cent compliance on the SLAs. Retail Today | JULY 2013
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COVER STORY
I
n keeping with the current changing focus on the customer, the CEO also attempted to improve customer experience at the store. Under his leadership, TMS INTRODUCED AN EFjCIENT CUSTOMER FEEDBACK mechanism in place. For instance, when people buy phones from TMS, they immediately receive an SMS asking them TO RATE 4-3 ON A SCALE OF ZERO TO jVE WITH jVE BEING THE BEST #USTOMER GIVING A rating below three receives a call from TMS asking him for the reasons. Chakrawarti admits that even though the customer experience is not still as good as he’d like it to be, TMS has come a long way from where it was. One initiative that could drastically improve this is expanding the in-store all-live smartphone experience. It was on the advice of brands like Samsung and Nokia that Chakrawarti has now introduced such an experience at stores called Lounge in Pune. Going forward, TMS will launch more Lounge stores. The last thing that he did was to raTIONALISE THE STORE NETWORK f7E CLOSED about 400 stores; it wasn’t a pleasant task but had to be done,� he said. )N THE jRST ROUND 4-3 CLOSED ALL THE stores, independent of geography, that couldn’t be turned around, even after GIVING SUFjCIENT TIME 4HE SECOND ROUND was that of geographical exclusion. From being present in 165 cities, TMS deliberately brought the number down to less than 90, effectively exiting 75 cities. Most of them were faraway locations that were unmanageable. Now, TMS has taken the franchise route to those areas and has 80-odd franchises. To ensure that its franchises do well, TMS trains them and audits them like it does for its own STORES 4HE PROCESSES ARE WELL DEjNED ensuring the customer a seamless experience. Even the inventory algorithm doesn’t differentiate between franchises and TMS stores. Finally, the attitude and these big steps along with several small ones paid off; today, almost all 800-odd TMS STORES ARE PROjTABLE OR CLOSE TO BREAKeven. Encouraged by the outcomes of the streamlining exercise, TMS applied FOR AN )3/ CERTIjCATION AND received it last month, achieving another jRST IN RETAIL 4O GET THAT EVERY BUSINESS process has been structured, discussed, debated, put in the process boil, deployed
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JULY 2013 | Retail Today
AND AUDITED f7E NEEDED TO HAVE A mechanism for alignment of everybody in the organisation so we deployed balance score card because it aligns people so that they are working towards common objectives and everybody understands the linkages of what to do and how it AFFECTS THE ORGANISATION 7E SAID THAT to enable people to do this, we need to have strong processes; an 800-store strong chain cannot do without solid systems and processes."
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nder his seemingly cool demeanour is a restless man who wants to keep pushing the envelope and breaking new ground. “I am a retailer, I am clear that growth in terms of revenue is important. But growth in terms of number of stores is also relevant because if you don’t grow your business, over a period of time, you don’t create enough opportunities for team members to grow. But to grow your business the only route is PROjTABILITY t HE SAID Having set the TMS business on the PROjTABLE PATH #HAKRAWARTI IS NOW EXploring growth through a new business channel. Last year, TMS launched The Mobile Depot, a B2B cash and carry format for mobile phones and accessories. Typically, these will be located in the wholesale electronic markets of areas such as Karol Bagh in Delhi. Over time, Chakrawarti hopes to have more Mobile Depots across the country.
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ut that's not all. Chakrawarti aims to MAKE 4-3 ONE OF THE MOST PROjTable retailer in two years time. And he is doing all he can to make it happen — from working on differentiation in terms of products and accessories to creating a hassle-free buying experience for the CUSTOMER TO ENSURING EFjCIENT POST purchase follow-ups. His aim for the short-term? “From the customer side, I want exponential GROWTH IN SMARTPHONES 7E ARE LEADERS IN this area, but I want to take this further. Everything that we do will be focussed around how to enable that exponential growth. Two-and-half-years back, we innovated by launching the EMI on credit card. Now, the EMI on credit card service is saturated. So now we need to move on to the next step.�
TMS introduced an efficient customer feedback mechanism in place. For instance, when people buy phones from TMS, they immediately receive an SMS asking them to rate TMS on a scale of zero to five. A customer giving a rating below three receives a call from TMS asking him for reasons.
COVER STORY
Chakrawarti aims to make TMS one of the most profitable retailer in two years time. And he is doing all he can to make it happen — from working on differentiation in terms of products and accessories to creating a hassle-free buying experience for the customer to ensuring efficient post-purchase follow-ups. Retail Today | JULY 2013
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Web solutions How to optimise your online presence BY SAPNA KHANNA
H
aving an online presence even for SMEs has become the norm since many years now. But the underlying expectation that internet is meant to serve a higher purpose even in )NDIA HAS jNALLY BEGUN TO SURMISE 7ITH e-commerce portals like Jabong, Flipkart and Myntra beginning to do decent busiNESS THE STAGE IS jNALLY SET FOR BRANDS AND OFkINE BUSINESS TO NOT JUST HAVE A presence online but to also take their business there. Many have entered the VIRTUAL DOMAIN TO GIVE IT A SHOT AND jGure out as they go along, how and how
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much really would the online presence work to push up their fortunes. But it's still a period of trial and experimentation. And most businesses ARE STILL STRUGGLING TO jND THE PERFECT solutions to their web issues. The challenges are still there. Says Akhil Duggar Jain, creative director of the apparel brand Madame, “A perfect interface that is easy to use by the customer is a must. Moreover, ensuring the customer's safety in terms of his data integrity has always been the biggest challenge and a constant watch and upgradation is always necessary.�
The internet is a competitive marKETPLACE WHERE ONLY SOME IDEAS ENJOY long-term success, feels Jayesh Desai, co-founder and vice-president (product and design) of Ivory Tag, a premium western accessories brand including HANDBAGS AND FASHION JEWELLERY Entering a market where your potential consumers still prefer to sample items in person, requires identifying a viable niche and good product positionING f7ITH )VORY 4AG WE ARE LOOKING AT TARGETING A SPECIjC ACCESSORY MARKET and product range unlike websites that provide an entire array of products.
E-COMMERCE
Therefore, we face certain issues such AS ATTAINING TRAFjC ON OUR WEBSITE which particularly concentrates only on accessories as a whole instead of being a website where consumer could shop for garments and shoes.� Monte Carlo Fashions started its e-commerce operations a year back. 0ANKAJ +UMAR VICE PRESIDENT E#OMmerce, Monte Carlo, echoes the concerns that while online retail is growing in India, single brand online stores like theirs must worry about how to drive THE TRAFjC TO THEIR DOMAIN 3UCH STORES constantly need to put in efforts to encash on their brand equity, customer loyalty, and come up to the expectations of the online customer, who still prefers the traditional touch-and-feel way of shopping. New Delhi based Karol Bagh Saree House (KBSH), being in the apparel segment espe-
cially Indian ethnicwear, overcame some of the challenges such as touch and feel personalised purchase by ensuring that the purchasing experience was smooth with easy to choose sizes and size guide and descriptive products to help the CUSTOMER f7E ENSURE THAT THE CUSTOMER gains a complete shopping experience by providing them tools like easy navigation, simple checkout, elegant design, super fast site with high-end servers for an enhanced browsing experience, endless product catalogue scroll ensuring higher visibility for products that sit toward the end of the catalogue, high end and alluring fashion shoots, super zoom and more,� says Sanya Dhir, brand director of KBSH. However, KBSH has its own set of CHALLENGES f7HILE DEVELOPING AN E commerce platform we did face numerous challenges. The industry is nascent, as a result searching for right partners WAS A MAJOR CHALLENGE IN ITSELF "ESIDES a lot of players have been dominating the market with discount strategies as a key attraction.�
7
hile the exclusive e-commerce websites that are multi-brand in FORMAT AND HAVE NO OFkINE BUSINESSES to distract them may have put their logistics and operations in order, physical stores that are looking to augment their business through online presence are still struggling to consolidate both sides of their operations, online and OFkINE 3PEEDING UP THE LOGISTICS IS STILL A MAJOR CHALLENGE FOR MOST OF THEM EVEN though they may overcome setting up online warehouse at strategic locations. “In India, Cash on Delivery model still SEEMS TO BE A JOKE WITH THE CUSTOMER WHEREIN A FEW OF THEM JUST BLOCK ORDERS for fun or what they say 'trying to see how it works',� says Duggar. According to Desai, delivery someTIMES BECOMES A MAJOR ISSUE FOR AN
online company. Since there is third party involvement in the delivery process, to maintain a constant tab on THE SAME IS DIFjCULT &URTHER THERE IS A danger of the product getting damaged in transit during the delivery process. To return and exchange the product in this case becomes a prolonged and hectic process for the team. Even as engaging SEO and Google search advertisements is helping attract ONLINE TRAFjC AND TO SOME EXTENT ENGAGEments online through social network pages to reach out to target consumers, the revenue generation is miniscule as AGAINST WHAT IT NEEDS TO BE TO BE A PROjTable venture. Retailers are still craving for customised solutions to boost their online businesses. Their online goal, as they understand, is to create regular engagement with their customers. A few qualities that have helped KBSH to drive consistent sales online are added experiences like product customisation, affordable product, good product display, easy navigation and a complete shopping experience , for example, KBSH offers complimentary fall and petticoat with every purchase. Also on offer are stitched blouses offering convenience to the customer. “If one needs to wear a saree, you have all things at one place for you,� she adds.
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ot everyone is in that happy spot though. Besides, an online store may measure up as successful for an SME in the backdrop of its expectation from it but for many other big and small brands, it may still be either TOO SMALL A PROjT OR TOO BIG A BURDEN on their resources depending on the size of their business. In all this, the online retail solution providing company NowFloats brings in the unique perspective that most brands and SMEs have so far missed out, based on the fact that online presence, if used
Retail Today | JULY 2013
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E-COMMERCE
EFFECTIVELY CAN BE A HUGELY SIGNIjCANT TOOL TO BOOST ACTUAL OFkINE BUSINESS radically, while pushing up your visibility and engagement with customer. Besides not every SME have either the resources or the capability to afford more than a static online portal, which may hardly serve the intended purpose. NowFloats works to create value of a business’ website, and keeping the engagement alive between the retailer and his customer. NowFloats philosophy is to offer the simplest way to get a retailer's channel online. Ronak Kumar Samantray, cofounder and chief software architect, NowFloats says, “India works on the ROPO mode – research online and PURCHASE OFkINE &URTHER RESEARCH DATA CONjRMS THAT MOST SEARCH BY THE CONsumer is local in nature; Google search published a result that local search is increasing year to year by 140 per cent in India, and that is huge.� So NowFloats MADE IT THEIR BUSINESS TO MAKE OFkINE retail channels discoverable and highly visible to search engines.
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ost searches by consumers reach a dead end on the internet when they are trying to locate stores in the VICINITY TO BUY A SPECIjC PRODUCT 4HE search may lead them to the brand’s
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FOR AN ONLINE STORE, EVERYTHING WORKS ON SMS. THE STORE MANAGER CAN POST REGULAR UPDATES IN JUST ONE LINE WITHOUT WORRYING ABOUT SYNTAX� RONAK KUMAR SAMANTRAY, NOWFLOATS
website but when one is looking to buy A SPECIjC PRODUCT IN A SPECIjC LOCALITY THEY SELDOM jND USABLE RESULTS 7HEN you sign up with the solution provider, every store in the brand chain comes online with an individual online identity, and they help you to attract local search TRAFjC TO EVERY ONLINE IDENTITY 4HE PLAN works for any SME and single store RETAILER JUST AS WELL “Once your store comes online, everything works on SMS. The store manager CAN POST REGULAR UPDATES IN JUST ONE LINE about a product available, an offer or discount without worrying about syntax, and the same gets posted online. The smart interface makes it all too easy,� he explains. Furthermore, the automated processing of the keywords that get posted on THE PAGE ARE ALL TOO HIGH PROjLE TO BE missed by Google search engine. The
more you post on your website, the more visible and relevant it becomes to buyers. There is more on offer. Online queries lead consumers to the site as well as the manager’s mobile phone. They can be replied to directly via SMS. Plus, with the consumer’s contact details and purchasing patterns highlighted by the service provider, the database continues to grow and be serviced automatically. Regular clients too can subscribe for updates with an SMS. It’s the easiest way of achieving automated site optiMISATION AND THE BOOST TO THE OFkINE business is imminent. Quite literally, for retail businesses, the internet is a maze of opportunities. And ALL ONE NEEDS TO DO TO TO SUCCEED IS jND the right path. And as any retailer would tell you that's only possible with help of a right partner.
Don’t have a website? Get a NowFloats website that ensures business discovery when you message regularly via SMS, app or website. Have a website! NowFloats works like a booster to your existing site, ensuring your online store appears in more search results and also increases web footfalls. Get a 30-day free trial in under 13 minutes: Simply SMS “FLOAT” to 56767878. Or else call us on (0)9160004303 or visit nowfloats.com.
TECHNOLOGY
Cash: no longer
King
With new alternative payment solutions, retailers are moving away from cash BY JANEES REGHELINI
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f recent reports are anything to go by, cash is no longer king! The latest in a string of reports have it that consumers in Britain used cash 10 per cent less than what they did otherwise in 2012. This clearly marks the rise in alternative payments such as credit/debit card, internet payments and mobile payments. And UK is no exception. On-going trend in others parts of the world, including India, also
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suggest much the same. Although India has a long way to go before it becomes like Brazil where cash is the alternative payment, increasingly consumers are looking out for faster, easier and secure modes of payments. Subsequently, retailers have been gearing up to cater to this demand by experimenting with innovative payment mechanisms, an example being Near Field Communication (NFC) mobile payments.
With organised retail expanding, especially in tier-II and tier-III cities, there has been a strong penetration of card payments, especially debit cards, which is only going to increase further, according to reports. Today the average value of each transaction is high and this is expected to reduce, with smaller retailers accepting card for smaller value purchases. “Although it will be a while before cards are accepted for the every-
TECHNOLOGY
day kirana purchases such as bread and BUTTER WE ARE DEjNITELY MOVING TOWARDS the right path,� says Nitish Asthana, executive director, First Data, a payment solution provider. Also with banks issuing debit cards automatically when opening accounts, its usage in transactions is bound to increase with time. According to Asim Dalal, MD, The Bombay Store, the use of credit cards in their transactions has moved from 40 per cent to around 60 per cent in ONLY ABOUT jVE YEARS f4HIS MIGHT NOT BE SIGNIjCANT IN PERCENTAGE TERMS BUT last year’s data also indicates that many
customers have moved to debit card as a mode of payment in the recent years,� he says. In India, there are around 300-million-plus debit card users, while the credit card user base is comparatively smaller at approximately 18 million. Asthana believes debit will fuel the next round of growth in electronic payments as it is much easier to avail it than a credit card. $EBIT CARDS ARE BENEjCIAL FOR RETAILERS too because in terms of the overall merchant pricing, the regulatory brought it down for debit cards to 0.75 per cent for transactions less than Rs2,000 and 1 per cent for transactions greater than Rs2,000. “The merchant incurs this cost but this is the cost to get more customers to walk in,� explains Asthana. Ultimately, electronic payments should enhance a retailer’s business because when it is about buying larger value goods, customers usually prefer to use cards. In organised retail, if a retailer doesn’t accept cards, then he could risk losing the customer. To avoid this, a retailer can choose from the usual point of sale (POS) systems to even a mobile POS today. A mobile POS enables even a small retailer to accept cards because it is easier on the pocket when compared to the usual POS systems. The mobile POS links in with the retailer’s mobile phone through a dongle connected to it, bringing down the cost of card acceptance. Asthana expects mobile POS to drive the growth of acceptance beyond the current six lakh POS that exists to give a strong solution for the smaller merchants. Agreeing with Asthana, Dewang Neralla, director and CEO, Atom Technologies (another payment solution provider) predicts mobile POS to evolve even further. “Retailers are experimenting with mobile apps, for example Tesco is trying it out in Korea, but the key thing is that conversion is happening out there and payment devices are going to change.�
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nother mobile payment mode that is being experimented with currently is NFC, through which a smartphone can interact with other similar devices and also other passive physical objects by establishing radio communication by keeping both devices near each other, about less than an inch usually. It is also known as tapand-go payment mechanism. However, it is yet to be adopted on a mass scale. Last month, Yebhi.com launched thirty virtual stores inside CafĂŠ Coffee Day using NFC tags and QR codes. Innovations in mobile payments are rising with the price of the handset becoming affordable to more consumers. Ranjit Satyanath, technology head at Shoppers Stop, says, “Mobile payment solutions are starting to get implemented especially in B2C businesses like utility companies. Typically, these solutions are being offered by startups riding on the infrastructure of some of the larger players with banks front-ending the start-up. But right now solutions are being implemented more as proof of concept than as a mainstream solution.â€? Payment through mobiles where in bank and the mobile service provider tie-up with the retailers for accepting a code received as an SMS to complete the transaction is another type of innovation that is being tried out. “A leading mobile service provider company has been promoting this payment method for quite some time now. Charge cards are another innovation which is yet to gain currency. All these methods provide security and convenience for the transactions,’ explains Dalal. Talking about convenience, payment solutions in the online medium has been slowly evolving. Retailers experimented with cheques on delivery and then moved on to cash on delivery (COD), which is still largely preferred. Although there is space for cash on delivery but increasingly card payment Retail Today | JULY 2013
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TECHNOLOGY
GLOBAL TRENDS Around the world, retailers have been embracing news ways in payment mechanisms. Chirag Bhuva, director,DSS, VistaPrint India shares a few. 1. Credit card company American Express has partnered with Twitter allowing cardholders to purchase items by simply typing in a hashtag #. When a twitter users sees an item they want to purchase they will need to type a special #. For example – Amex is offering $25 gift card for $15, users can post hashtag #BuyAmexgiftcard25. User will then have to check his/her mention tab for replies from @Amexsync QPTUJOH B DPOkSNBUJPO IBTIUBH 6TFS XJMM HFU NJOVUFT UP UXFFU DPOkSNBUJPO QPTU XIJDI JUFN XJMM CF TIJQQFE UP UIF billing address with a charge on users Amex card. Companies have been using social media for reaching out to customers IPXFWFS UIJT XJMM CF UIF kSTU UJNF B TPDJBM NFEJB TJUF JT VTFE BT a mode of making payment. 2. Paypal is working on creating a seamless payment solution where customers do not have to remember passwords for transacting. Global payment industry is looking to move away from passwords and introduce variety of solutions using mobile (voice recognition, key strokes analysis and kOHFS QSJOU JEFOUJkDBUJPO 1BZ1BM BOE -FOPWP T '*%0 BMMJBODF 'BTU *EFOUJUZ 0OMJOF XJMM DIBOHF UIF XBZ TFDVSJUZ DIFDLT BSF carried out globally. 3. US-based speech technology company has already developed WPJDF SFDPHOJUJPO BQQ DBMMFE A/*/" $VTUPNFS DBO PQFO UIF app and say “pay my mobile bill� and NINA will verify their identity through the sound of their voice and pay the bill. 4. In the past, we have already seen integration of physical and digital shopping services by allowing consumers to scan QR codes from posters on a subway station and purchasing those products using mobile wallet post, which retail companies deliver the product at the registered billing address of consumer. Given the pace at which digital content and mobile devices are growing, many new opportunities for e-commerce and m-commerce are opening up and there has never been a better time to shop online or over the phone.
will be popular even on the internet. “I think retailers have a role to play in terms of building the right incentives for the customers to do a Card on deLIVERY 9OU WILL STILL jND PEOPLE PREFER cash because of tax reasons. From a convenience point of view, we are trying to create awareness and ensure the value to the merchant is rising,� says Asthana. Card on delivery is better for retailers as well, when considering the hassles and security issues around handling cash. In mature markets, other alternative
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Retailers are experimenting with NFC as a payment option for customers. payments such as couponing and even loyalty payments are seizing retailers’ attention. Here too, we have seen retailers use strong individual loyalty programmes to enable customers but once coalition loyalty programmes come in the picture, things will change dramatically for payment solutions. Asthana says, “Earlier, loyalty used to be restricted to credit card and airlines, today it has moved to debit cards and bank accounts. What we do is that we power the loyalty solution, which means that the loyalty card gets accepted across a range of outlets for earning points and across a range of outlets for redeeming points instantaneously.� Couponing and loyalty is powerful but only if it is all-pervasive, says Asthana.
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hen it comes to payment solutions, some of the key concerns retailers have is how to integrate the internet and brick-and-mortar payment mechanism. It is crucial to create experiences for customers that can be easily transcended from one medium to another. This integration needs to
go beyond payment solution to supply chain management level, says Neralla of Atom Technologies. Attempting to create varied experiences such as single click check outs, EMI engines and discount engines, Neralla suggests retailers look at making their check-out process much faster. “All the pain areas for customers should be ironed out. We are seeing that retailers are moving from a normal electronic data capture (EDC) to basically integrating their EDC along with their point of sale, so that the check out time will be faster,� he says. Creating consistent payment experience in all mediums should be the objective for all retailers, Neralla adds. The future in this area looks bright with immense potential. With a lot more smaller retailers considering electronic payments, there will be evolution in terms of devices and internet payment mechanisms. At the end of the day, retailers need to drive at creating consumer experiences with payment mechanisms which will further propel business growth.
TECHNOLOGY
Welcome tomorrow Retailers are ready to use technology of the future "9 4%!- 24
T
hat technology is a critical aspect of today's businesses is a foregone conclusion. Just like in other businesses, it is today the backbone of a retail enterprise. Having had a late start as far as modern retail is concerned, compared to developed markets, Indian modern retail is all ready to move to the next level. "Indians have a way of leapfrogging technology. And retail has been no exception," Anand J Mehta, director, 2ETAIL !SIA 0ACIjC -OTOROLA 3OLUTIONS 3INGAPORE 0TE ,TD !NAND WAS ONE OF the speakers at the Retail Technology Conclave 2013 (ReTechCon) organised by the Retail Association of India (RAI).
T
he shift is clearly visible from this year's ReTechCon agenda itself. While at the last year's events, retailers and CTOs were still discussing technology at the operational level, this year the entire focus is on using technology for increasing customer experience. 'Integrated', 'seamless' and were buzzwords doing the rounds. In HIS PRESENTATION 3ANKET !KERKAR -$ -ICROSOFT #ORPORATION )NDIA 0VT ,TD proved how the future was already here. Retail is moving from mass to personal, augmented by technology. While last year retailers were still talking about the need for multichannel presence, now the focus is on being
where customers are present. It's now about differentiated experience...from standard to standout. "Technology is a foundation in making customer experience personal, seamless and integrated," Akerkar said.
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iving the audience an example of how technology could help imPROVE CUSTOMER EXPERIENCE 3ANDEEP $HAR #%/ 4ESCO (3# SHARED A SMALL AV on the retailer's latest project in 3OUTH +OREA 5SING VIRTUAL REALITY Tesco has launched Tesco Homeplus, virtual stores at subway stations, enabling commuters to shop while they wait for their trains. They just have Retail Today | JULY 2013
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TECHNOLOGY
The State of Retail e-Marketing in India: Insights from the India Retail e-Marketing Study 2013 report released by RAI Technology Committee. to use their smart phones to scan the products and add to their online cart. By the time the consumers get home, their products are delivered. That acCORDING TO $HAR IS TRUE MULTI CHANNEL retail. "Multi-channel is not just using different platforms but integrating different platforms to deliver a seamless experience to the shopper."
A
Panel discussion on Aligning IT with Business.
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nother example of using different platforms to give a seamless experience is the option that allows customers to virtually try out clothes they select without having to actually try them on. Though it sounds quite futuristic, the technology has ALREADY ARRIVED IN )NDIA 3O THE ENTIRE FOCUS OF TECHNOLOGY IS jRMLY jXED on the consumer. And that calls for other customer facing areas to being technology-enabled too. Which means retailers need to address payment solutions and loyalty programmes among
TECHNOLOGY
PERFECT PLATFORM ReTechCon 2013 is considered one of the biggest technology platforms for the industry. However, though all the big players are present, the platform is not just for the biggies. Small players get their place too. This year, RAI had partnered with NASSCOM to give small technology companies exposure. Under the programme, IP4BIZ, Nasscom offers a platform for indigenous software companies to find patrons. As part of the programme, NASSCOM selected 40 companies with enterprise ready products after a rigorous selection process validated by a jury comprising of CIOs and leading academic thought leaders. The ReTechCon 2013 technology committee further shortlisted the entries to select 12 companies best suited to showcase products at ReTechCon 2013.
Panel discussion on 'Being social': social media in retail.
3
*OBVHVSBUJPO PG 4# 4NBSU f*% CBEHFf XIJDI IFMQT *ODSFBTF .PCJMF 8PSLGPSDF &GkDJFODZ OTHERS f2ETAILERS NEED TO jND SOLUTION to counter billing delays by turning it AROUND TO A PROjTABLE EXPERIENCE t EXPLAINED 5ZWAL +UMAR #HATTERJEE 60 and head IT, Mahindra Retail in a related panel discussion at the event. Amit "HATIA HEAD RETAILS SOLUTIONS .%# )NDIA narrated a case study, where PVR was able to cater to 500 customers in the 15 minute interval by introducing billing and payment solution. Check-outs too are getting better, thanks to the new
queue busting solutions such as self check-out kiosks. In addition to these, retailers also need to turn their attention using the developments in smartphones to their advantage, if they want to offer a truly seamless experience. Retailers now know that mobile apps need to be a digital twin of the physical store. “Mobile apps becomes a retailer’s salesman and needs to be complimentary to the existing business,� Mehta said.
ocial media is another powerful tool that retailers need to leverage even more, although robust strategy needs to be in place first. According to the panelists in a session at the event, retailers need to be serious about this medium. “How quickly one responds to complaints and how open you are about your policies will help you have a better credibility among CUSTOMERS t SAID +ASHYAP 6ADAPALLI CMO and head new business, Pepperfry.com. At the same time, it is important to DEjNE WHAT YOU DO AND NEED TO BRING alive the brand promises. “We do a number of customer engagement initiatives such as photography competition to also know the customer well and help him or her buy, which is our brand PROMISE t SAID $EEPSHIKA 3URENDRAN HEAD MARKETING )NjNITI 2ETAIL Today, it is no longer about simply being able to reach the customer; it is now about being able to reach out to them and communicate. And technology is the critical link that will help retailers to connect with consumers anyplace, anytime. Having realised this, retailers are truly riding the technology wave to not just engage with customers but also empower their staff and evolve to the next level. Retail Today | JULY 2013
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CASE STUDY
The green PUMA Recycled building materials, eco-friendly design and a bicycle generator FOR POWER † 05-! S kAGSHIP STORE IN "ENGALURU IS A STUDY IN SUSTAINABILITY BY SHIV JOSHI
I
n the Indiranagar area of Bengaluru houses a rare phenomenon, a green PUMA, the PUMA SustainABLE 3TORE†THE COMPANY S jRST such store in the world. Launched in August last year, the 5,000 square feet store, incorporates the elements of sustainability through innovative design, mechanical and electrical installations, and material selection. “In keeping with our vision of being the most desirable and sustainable Sport lifestyle brand, PUMA is happy to take this giant step forward for the retail industry. The building is a true design marvel, and incorporates a host of innovative features to make it a one-of-akind store,� said Rajiv Mehta, managing director, PUMA South Asia. Conceived by PUMA India in collaboration with the PUMA EEMEA (Eastern Europe, Middle East & Africa) Regional /FjCE THE STORE HAS TWO LEVELS THE lower levels that function as a retail AREA AND THE UPPER kOOR AND TERRACE that are ‘The PUMA Social Club’ cafe and bar.
To begin with, the store has been built using eco-friendly and locally sourced materials. The porotherm blocks used to construct the shell of the building have been made using silt from the lakes in Kunigal. Being the only source of water for villages in Kunigal, the lakes are desilted every year to increase the water table. The silt removed is then thrown off as waste and it is this that PUMA has used in the PUMA Sustainable Store. Steel used in the building has been recycled from old DVD players, bicycles AND TIFjN BOXES
%VEN THE FURNITURE AND jXTURES IN THE store are recycled wood. The walls have been painted with low VOC paints—ones that use water as the base and not petroleum-based solvents. .EXT COMES STORE DESIGN 4HE CLOSED and open surfaces of the building have been designed for optimal heat insulation and daylight usage. In fact, 90 per cent of the interior spaces receive direct natural light, minimising the need for arTIjCIAL LIGHTING 7HATEVER ARTIjCIAL LIGHTS have been installed in the store is energy EFjCIENT THEY CONSUME FEWER WATTS OF
THE BUILDING IS A TRUE DESIGN MARVEL, AND INCORPORATES A HOST OF INNOVATIVE FEATURES TO MAKE IT A ONE-OF-A-KIND STORE.� RAJIV MEHTA, MANAGING DIRECTOR, PUMA SOUTH ASIA Retail Today | JULY 2013
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CASE STUDY
WHAT ELSE IS GREEN? In February this year, PUMA launched InCycle, the brand’s first closed-loop collection of footwear, apparel and accessories that are entirely biodegradable or recyclable. The products have earned the “Cradle to Cradle CertifiedCM Basic� certification. The InCycle range includes PUMA’s Basket Tee, which is fully compostable through industrial composting. PUMA’s Shopper is a bag constructed with minimal materials, all of which can be reused. The upper of the PUMA Basket lifestyle sneaker is made from a mix of organic cotton and linen, while the sole is composed of biodegradable plastic APINATbioŠ. This is a new material that can be shredded into its component materials and composted into natural humus that goes back into the ecosystem. The PUMA Track Jacket and the PUMA Backpack, use homogenous materials to ensure they are fully recyclable at the end of their lifespan. The PUMA Backpack is made of polypropylene, which can be broken down to the original substance and used again to make new backpacks. The recyclable PUMA Track Jacket is made from recycled polyester derived from used PET bottles. The Track Jacket’s zipper is made from recycled polyester, as well. To aid in collecting products for recycling, PUMA has launched the “Bring Me Back� programme globally within PUMA stores and PUMA outlets. It has also installed in-store recycling bins, where customers can return used shoes, clothing and accessories of any brand. The “Bring Me Back� programme is run in cooperation with global recycling company I:CO. It is designed to give consumers a convenient means of recycling products and lessening their environmental impact.
power for the same lumen output. &URTHERMORE THE jRST AND SECOND kOOR VOLUME IS RECESSED GENERATING A stack-effect for natural cooling. The effect is optimised through other features such as highly insulated building shell, %ARTH !IR 4UNNEL AND ROOF EXTRACTORS 4HE Earth Air Tunnel is often used to cool air in hot and dry climates. The system is based on a simple fact that the temperature a few feet below the ground is much lesser than the ambient temperature during hot season and slightly more during the cold season. Making a tunnel underground and passing air through it before circulating it in the living space, renders it cooler when it’s hot outside and warmer when it’s cold outside. This
The store has 'Bring Me Back' bins where people can drop in their used clothes, which PUMA then recycles.
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JULY 2013 | Retail Today
has helped PUMA Sustainable Store ACHIEVE !# FREE COOLING 2OOF EXTRACTORS further help keep the place cool. They WORK BY EXTRACTING THE HOT AIR IN A ROOM which tends to rise upward leaving the cool air at the bottom. The stores has Solar PV cells installed, which provide 10,384 kwh units of energy a year to help power the store’s energy requirements. Furthermore, the store maintains the internal temperature at 24 degrees celsius, which is comfortable enough and helps conserve energy. The roof garden further insulates the building from direct heat and the plants keep the temperature lower at all times. To optimise the effect, the roof also has special insulation foam, which minimis-
CASE STUDY
The PUMA has bicycle generators installed that help part of the electricity used to power the store. es heat gains by reducing conduction. All these processes not just help keep the store naturally cool, but also translate INTO SIGNIjCANT SAVINGS IN ENERGY BILL 4O further cut down power consumption, the store has occupancy sensors that sense if the room is occupied, and if it isn’t, turn off the lights on their own. The launch event of the store too was as carbon-neutral an affair as the building itself– all the energy consumed during the party being produced by customers and invitees through pedal power. One has to pedal on a specially created bicycle generator which is attached to a dynamo. Pedalling generates energy which is then fed into the main power source. In this way, power can be created and stored in a battery bank thereby eliminating reliance on tradiTIONAL POWER SOURCES f7E THOUGHT THAT having a carbon-neutral launch where the guests generated power would be a good initiative in keeping with the sustainable theme of the store,� says Mehta. 4HE BIKES ARE NOW PERMANENT jXTURES
WHY BENGALURU In May 2010, PUMA India team won the first prize at the Global PPR Innovation & Sustainable Development Awards for its ambitious project to build an energy efficient eco-designed store in India. As a result, India was chosen as the destination for the first sustainable store for PPR and PUMA globally. Bengaluru is where PUMA is headquartered in India and it was logical that this landmark structure be situated here.
outside the store. “Shoppers and visitors can possibly power up a few of the store lights or charge their phones while they shop,� he informs. Installing sustainable or eco-friendly systems is one thing and maintaining them is quite another. So how does PUMA ensure that the store continues to be sustainable? “Given that the construction, material and design of the store is sustainable from the get go,
it is easy to ensure the store remains SUSTAINABLE 7E DO PLAN ON INTRODUCING more Solar PV Panels in time and make routine changes to the interiors to ensure that we are using sustainable materials. The merchandise at the store continues to have a selection of organic cotton, recyclable and biodegradable material and fair trade cotton. So these measures ensure that we remain sustainable with OUR STORE t EXPLAINED -EHTA (AVING LAUNCHED SUCH A jRST 05-! says it will not rest on its laurels and hopes to open more 100 per cent sustainable stores both in India and around the globe. Also, on the cards is applying for ,%%$ 0LATINUM CERTIjCATION &RANZ +OCH CEO of PUMA, informs that establishing a sustainable PUMA Store underlines the company’s commitment to reduce CO2 emissions, energy, water and waste in 05-! OFjCES STORES WAREHOUSES AND direct supplier factories by 2015. Clearly, PUMA is committed to take environment consciousness in retail to a whole new level. Retail Today | JULY 2013
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SALES & MARKETING
New is old Proven fundamentals like discounts and rewards are the foundation of successful new marketing technologies BY CAROLINE PAPADATOS AND SIMON KEOGH
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al-Mart founder Sam Walton used to gauge a store’s success BY kYING HIS PLANE OVER ITS PARKING LOT ! PLETHORA OF CARS MEANT BUSINESS WAS GOOD TOO MANY EMPTY SLOTS PROMPTED THE LATE ENTREPRENEUR TO jND OUT WHAT WAS WRONG EVEN GOING SO FAR AS TO LAND ON THE ASPHALT TO INVESTIGATE 4RACKING AND CHANGING CONSUMER BEHAVIOUR IS NOT NEW "UT TODAY IT INVOLVES MORE EFjCIENT TECHNOLOGIES THAN 3AM 7ALTON S AIRPLANE 4ECHNOLOGY S @SHINY NEW TOYS ARE CERTAINLY ATTRACTING LOTS OF ATTENTION AS LOYALTY PROGRAMME MANAGERS EXPERIMENT WITH SOCIAL MEDIA ONLINE DISCOUNT GROUPS MOBILE MARKETING AND OTHER DIGITAL FORMATS 4HE REALITY IS THAT THESE NEW PLATFORMS PERFORM BEST WHEN WE REMEMBER THE BASICS OF TRADITIONAL MARKETING CONCEPTS )N OTHER WORDS AN .&# EQUIPPED SMARTPHONE MAY BE AN EXCITING NEW TOOL FOR ENGAGING CUSTOMERS BUT THAT CONNECTION ONLY WORKS IF GUIDED BY CLASSIC TACTICS LIKE DATA COLLECTION APPLICATION OF INSIGHTS COUPONS AND DISCOUNTS AND TARGETED MESSAGING 7ITH THAT IN MIND HERE ARE jVE TECHNOLOGY INNOVATIONS PAIRED WITH CLASSIC MARKETING TECHNIQUES
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JULY 2013 | Retail Today
1
#ONTACTLESS PAYMENT† THE MOBILE WALLET†IS THE HOTTEST NEW SMART PHONE TECHNOLOGY )T IS ONE IN WHICH TECHNOLOGY AND jNANCIAL SERVICES COMPANIES ARE HOTLY COMPETING FOR @OWNERSHIP OF THE ONE ON ONE SMART PHONE SHOPPING EXPERIENCE "UT ITS FUTURE IS STILL BEING DETERMINED 4HE PORTABILITY OF SMART PHONES MEANS THAT RETAILERS CAN OFFER CONTACTLESS PAYMENT PLUS COUPONS AND OTHER PERKS ON THE SAME DEVICE 5NLIKE OLD SCHOOL E MAIL COUPONS MOBILE OFFERS CAN BE MADE IN REAL TIME WHILE CUSTOMERS SHOP ! MOBILE WALLET IS CONVENIENT IN THAT IT PROCESSES CASH FREE PAYMENTS !T THE SAME TIME IT INCORPORATES MANY @OLD MARKETING TOOLS IN A SINGLE HAND HELD DEVICE &UNCTIONS INCLUDE MANAGING LOYALTY PROGRAMME ACCOUNT INFORMATION POINT BALANCES SPECIAL OFFERS PRICE CHECKS AND SOCIAL NETWORK INFORMATION -ERCHANTS CAN ALSO COMMUNICATE WITH CUSTOMERS PRE AND POST SALE -OBILE WALLET S GEO LOCATION CAPABILITIES LET STORES CONNECT WITH SHOPPERS BASED ON WHERE THEY ARE AND WHERE THEY HAVE BEEN 4HE DRAWBACK IS THAT THESE MOBILE WALLET APPS OPERATE ON MYRIAD PLATFORMS AND HAVE NO UNIVERSAL STANDARDS 3OME ARE
DESIGNED FOR ONE MERCHANT AND OR CARD OTHERS CAN HOLD MANY DIFFERENT CARDS AND MEMBERSHIP ACCOUNTS 4HEY CAN ALSO BE MERCHANT AGNOSTIC RELYING ON PARTNERSHIPS WITH CARD ISSUERS !CCORDING TO A &EBRUARY REPORT FROM *I7IRE ONLY PER CENT OF SMART PHONE OWNERS REPORTED USING A MOBILE PAYMENT SYSTEM IN 4HIS IS EXPECTED TO CHANGE WHEN A STANDARD PLATFORM EMERGES
2
-ANY SMART PHONE TECHNOLOGIES ARE CLOSELY ALIGNED WITH SOCIAL MEDIA WITH MORE THAN PER CENT OF CONSUMERS ACCESSING &ACEBOOK VIA MOBILE PHONES 4HOSE NUMBERS KEEP GROWING !CCORDING TO A ,OYALTY/NE RESEARCH SOCIAL MEDIA ACTIVITY TRULY DRIVES BRAND ENGAGEMENT 3OCIAL MEDIA USERS SHOP MORE AND SPEND MORE 4HEY ALSO TELL MARKETERS A GOOD DEAL ABOUT THEMSELVES 3OCIAL MEDIA INFORMATION CAN AUGMENT THE TRADITIONAL MARKETING PRACTICE OF GATHERING CUSTOMER DATA AND MINING IT FOR INSIGHTS THAT DRIVE SHOPPER BEHAVIOUR 4RADITIONALLY THIS HAS BEEN DONE VIA 0/3 SYSTEMS AND MARKET RESEARCH "UT MORE COMPANIES ARE USING A REAL TIME INTERACTIVE ALTERNATIVE CALLED SOCIAL CUSTOMER EXPERIENCE MANAGEMENT #%- 4HIS NEW TECHNOLOGY CAPTURES SOLICITED
SALES & MARKETING
AND UNSOLICITED DATA ON CONSUMER BEHAVIOUR INTENT AND SENTIMENT BY USING SOCIAL MEDIA TEXTING AND MOBILE )NTERNET POWERED FEEDBACK APPLICATIONS ON AN INSTANTANEOUS ONGOING BASIS 'AMES AND REWARDS ENCOURAGE CONSUMER PARTICIPATION 3OCIAL MEDIA MONITORING IS A GROWING SUBSET OF THE #%- MARKET l %MPATHICA ESTIMATED IT AT BILLION BY AND PROJECTED ANNUAL GROWTH OF PER CENT COMPOUND ANNUAL GROWTH OVER THE NEXT jVE YEARS
3
$ESPITE THE ADVANTAGES OF SMART PHONES THEY CAN SOMETIMES HURT BUSINESS DUE TO SHOWROOMING -ANY RETAILERS ARE GRAPPLING WITH CONSUMERS VISITING STORES TO LEARN ABOUT PRODUCTS AND THEN USING THEIR SMART PHONES TO jND THE BEST ONLINE PRICE FOR THE ACTUAL PURCHASE "EST "UY AND 7AL -ART HAVE BOTH IMPLEMENTED COUNTER STRATEGIES THAT USE THE @OLD NOTION OF BUILDING A COMPELLING VALUE PROPOSITION TO ATTRACT CUSTOMERS )NITIATIVES LEVERAGE THE FACT THAT SHOWROOMING CUSTOMERS ARE ALREADY IN THE STORE AND HAVE DECIDED TO BUY SOMETHING "EST "UY S APPROACH IS TO OFFER FREE HOME DELIVERY ON OUT OF STOCK MERCHANDISE AND ON A PER CASE BASIS IS MATCHING THE PRICES OF !MAZON COM AND OTHER E TAILERS "EST "UY S SHOWROOMING CUSTOMERS HAVE BEEN TAKING ADVANTAGE OF ITS KNOWLEDGEABLE NON COMMISSIONED ASSOCIATES AND ITS DISPLAYS OF CUTTING EDGE CONSUMER TECHNOLOGIES 4HE RETAILER S GOAL IS TO CONVERT THAT INTERACTION INTO AN IN STORE SALE "EST "UY SAID PER CENT OF PEOPLE VISITING STORES CURRENTLY MAKE PURCHASES 7AL -ART S SCENARIO IS A BIT DIFFERENT 5NTIL !MAZON AND OTHER AGGRESSIVELY PRICED E TAILERS ARRIVED FEW RETAILERS COULD COMPETE WITH 7AL -ART S ROCK BOTTOM PRICES .OW 7AL -ART IS TESTING A SAME DAY DELIVERY SERVICE IN SELECT MARKETS FOR CUSTOMERS WHO BUY POPULAR ITEMS ONLINE DURING THE HOLIDAYS 4HE STORES FULjL ORDERS
4
,IKE @OLD LOYALTY PROGRAMMES LOCATION BASED PLATFORMS CAN TRACK PURCHASES AND REWARD CUSTOMERS WITH OFFERS AND DISCOUNTS 7HAT IS @NEW@ IS THAT GEO TARGETING COMPLEMENTS THE SHOP-
PING EXPERIENCE BY CREATING INDIVIDUAL CUSTOMER ENGAGEMENTS IN REAL TIME 7ITH PLATFORMS LIKE 3HOPKICK CUSTOMERS RECEIVE POINTS FOR RESEARCHING AN ITEM AT HOME WHEN ENTERING THE STORE FOR VISITING CERTAIN DEPARTMENTS AND FOR SCANNING PARTICULAR PRODUCTS ,IKE A POINT OF SALE SYSTEM 3HOPKICK LETS PARTICIPATING RETAILERS COLLECT DATA ON WHAT SHOPPERS PURCHASE "UT SINCE 3HOPKICK TRACKS OTHER BEHAVIOURS AS WELL IT ALSO INDICATES WHAT PEOPLE DID NOT BUY 0LUS IT TRACKS WHICH DEPARTMENTS CONSUMERS VISITED jRST LAST OR IN BETWEEN†AND THOSE THEY AVOIDED (ISTORICALLY MANY OF THESE ACTIVITIES COULD ONLY BE TRACKED BY HEAT MAPPING OR VIDEO BOTH OF WHICH REQUIRE EQUIPMENT INSTALLATIONS !MERICAN %AGLE HAS SAID THAT 3HOPKICK CUSTOMERS BUY TWICE AS MUCH AS NON 3HOPKICK CUSTOMERS
5
2ETAIL PARTNERSHIPS ARE AN OLD MARKETING STRATEGY THAT NOW INCORPORATES NEW TECHNOLOGICAL BENEjTS 4RADITIONAL PARTNERSHIPS MAY CONSIST OF A RESTAURANT WITHOUT A LIQUOR LICENSE THAT TEAMS UP WITH A LIQUOR STORE TO STAGE A @BRING YOUR OWN BOTTLE PROMOTION /R A SUPERMARKET MAY OFFER FREE MOVIE TICKETS TO CUSTOMERS SPENDING A CERTAIN AMOUNT "OTH PARTIES BENEjT FROM COMPLIMENTARY SALES AND EXPOSURE "Y ADDING A REWARDS ELEMENT COMPANIES CAN GATHER CUSTOMER DATA AND MAKE PARTNERSHIPS MORE COMPLEX PINPOINTED AND FAR REACHING 4HESE RELATIONSHIPS ARE GAINING POPULARITY BETWEEN RETAILERS AND CREDIT CARD COMPANIES (ISTORICALLY CREDIT CARD COMPANIES HAVE DELIVERED MASS OFFERS 4HEY DID NOT BENEjT FROM THE WELL OF DATA THEY COLLECTED ON SHOPPING PATTERNS BUT NEW PARTNERSHIPS CAN CHANGE THAT 3OME CARD COMPANIES LIKE #HASE HAVE PARTNERED WITH MULTIPLE RETAILERS 4HIS ALONG WITH INSTANT EASY TO REDEEM POINT SYSTEMS STRENGTHENS THE PROGRAM 5NDER #HASE S 5LTIMATE 2EWARDS INITIATIVE WITH !MAZON COM EACH POINTS EQUALS 4ECHNOLOGY ALLOWS CUSTOMERS TO LINK THEIR #HASE CARD AND !MAZON ACCOUNT SO THAT THEY CAN PAY FOR !MAZON PURCHASES WITH POINTS #ITI UNDER ITS 4HANK9OU PROGRAM HAS TEAMED UP WITH !MAZON AS WELL AS 3ONY -EMBERS CAN EVEN DONATE TO THE !MERICAN 2ED #ROSS
AND POOL POINTS FOR GROUP REDEMPTION !MERICAN %XPRESS WHICH HAS HAD REWARDS PROGRAMS FOR SOME TIME NOW OFFERS -OBILE 'IFT #ARD 0OINTS CAN BE REDEEMED IN REAL TIME TO A SMART PHONE OR TABLET 4HEY ARE CONVERTED INTO fMONEY t ALLOWING SHOPPERS TO INSTANTLY PAY IN STORE OR ONLINE WITH THAT CARD !MERICAN %XPRESS IS PARTNERING WITH "ANANA 2EPUBLIC /LD .AVY 4HE 'AP 0"TEEN 0OTTERY "ARN 7EST %LM AND 7ILLIAMS 3ONOMA )N CREATING PARTNERSHIPS THESE COMPANIES ARE NOT JUST TALLYING SHOPPER PARTICIPATION NUMBERS 4HEY ARE ANALYSING CUSTOMER SPECIjC TRANSACTION DATA TO LEARN MORE ABOUT THE HABITS AND DEMOGRAPHICS OF PRIORITY SHOPPERS #HASE FOR EXAMPLE KNOWS ITS CLIENTS ARE FREQUENT !MAZON SHOPPERS )T PLANS TO MONITOR REDEMPTION TO LEARN HOW SHOPPERS USE POINTS AND EVALUATE THAT DATA
N
O MATTER WHAT THE MIX OF OLD AND NEW COMPANIES MUST ANALYSE THE POTENTIAL RETURN ON INVESTMENT &OR EXAMPLE (ERSHEY OFFERED AN APP THAT MIXED POWDERED CHOCOLATE WITH MILK WITH A SHAKE OF A SMART PHONE 7HILE THIS WAS A FUN PARTY TOY DID THE SHINY OBJECT CREATE A MEANINGFUL CUSTOMER EXPERIENCE AND MARKET THE BRAND .OT ONLY MUST RETAILERS CREATE A WINNING RETURN ON INVESTMENT BUT THEY MUST TARGET THE RIGHT CONSUMERS /THERWISE MASS CAMPAIGNS WASTE MONEY AND CAN INkICT eOFFER FATIGUE WHEN SHOPPERS BECOME DESENSITISED FROM TOO MANY COMMUNICATIONS 5LTIMATELY SOCIAL AND MOBILE PLATFORMS MAY BE EXCITING BUT REMEMBER ALL THAT GLITTERS MAY NOT BE GOLD #OMBINE GLITTERY NEW TECHNOLOGY WITH TRADITIONAL METHODOLOGY FOR CARAT RESULTS
Caroline Papadatos is senior vice president, International, at LoyaltyOne. Simon Keogh is director of digital marketing for the AIR MILES Reward Program. Retail Today | JULY 2013
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SALES & MARKETING
A whole new deal Will the new wholesale club model be able to cater to the bulk of unique Indian demands? BY SHIV JOSHI
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few days back my interest was piqued by an email I received about Savemax, a large format value retailer. The brand claims to have brought the wholesale club format to India and plans to make it big here. This is quite interesting since not many retailers around the world offer this format. It’s a high volume, high investment game, and not everyone can manage to pull it off. The format is more popular in North America with Costco, being the largest membership wholesale club chain in the United States. Costco is also the second largest retailer in the US and the seventh largest retailer in the world. Other retailers offering this format are BJ’s Wholesale Club and Sam’s Club, owned by Wal-mart (why am I not surprised?). A wholesale club model works on two things: volume and an assured clientele. Usually, retailers in this business offer a membership to customers for a fee, much like in the cash and carry format. The
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stores themselves are typically very large, spreading over 40,000 square feet (that’s why the format is also known as the warehouse club format) and have huge aisle and space-out racks. For instance, the aisle size of the wholesale club store of Savemax, which is about 40,000 square feet, is almost double that of a hypermarket of the same size. Moreover, a warehouse club offers limited choice; although it has a wide variety of product categories, there are only a select brands for any given product category. For instance, Costco sells only two brands of diapers: a house brand and one other popular brand and only one size packets. Similarly, Savemax offers only three brands of rice, one of which is its own brand. Hence, the total number of SKUs at Savemax is around 5,000, roughly about one-third that offered by other stores. "What we do is we don’t stock too many brands. Within each sub-category we will have either the top two or three brands
ONLY 9OU WOULD jND EITHER THE FASTEST moving good or the largest selling,� informs Aman Mittal, general manager, Savemax . He adds that each SKU, each product is chosen after a detailed analysis of that sub-category at a spoke level. And this is where wholesale clubs differ from other large format stores; the latter offer an array of brands and sizes in the same product category.
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ut in an era where choice is power, is limited product selection a good idea? Apparently, it is. “Many people think that the limited stock is a disadvantage. On the contrary, it is turning out to be a win-win for the customer, for the principal from who we buy and for us. Since there are lesser SKUs, each product gets enough customer attention. This way the inventory is not getting stuck. Brands are happy getting larger space and capturing more eye balls," says Mittal. For Savemax, the inventory is not stuck
SALES & MARKETING
MONEY MATTERS r 4BWFNBY JT QMBOOJOH UP JOWFTU BCPVU 3T DSPSF JO UIF GJSTU UISFF ZFBST XIJDI JT CFJOH JOUFSOBMMZ GVOEFE CZ UIF QBSFOU DPNQBOZ #43, *U QMBOT UP CVZ QSPQFSUJFT JO UJFS ** DJUJFT XIFSF UIF DPTU PG QSPDVSJOH UIF QSPQFSUJFT JT MPXFS UIBO DPTU PG SFOUBMT 8IFSFWFS UIF JOUFSFTU DPTU JT MPXFS UIBO UIF SFOUBMT 4BWFNBY XJMM CVZ BOE XIFSF JU EPFTO U JU XJMM SFOU 5IF QMBO JT UP CF QSFTFOU JO B NJY PG UJFS * BOE UJFS ** DJUJFT CVU XJMM QBSUJDVMBSMZ GPDVT PO UIF OPSUI BOE UIF XFTU JO UIF GJSTU UXP ZFBST r 5IF QFS TUPSF DBQFY GPS 4BWFNBY JT BQQSPYJNBUFMZ 3T DSPSF JG JU CVZT JUT PXO MBOE UP CVJME B TUPSF BOE 3T DSPSF JG JU MFBTFT B QSPQFSUZ *U JT MPPLJOH BU B SFUBJM UVSOPWFS PG BCPVU 3T DSPSF UIJT GJOBODJBM ZFBS r "MTP UIF DPNQBOZ JT MPPLJOH BU PQFSBUJPOBM CSFBLFWFO CZ B TUPSF JO KVTU FJHIU UP OJOF NPOUIT 5IF JOWFTUNFOU SFDPWFS TIPVME TUBSU IBQQFO XJUIJO UIJT QFSJPE *U QMBOT UP EP UIJT CZ CVJMEJOH JO FGGJDJFODJFT JOUP UIF EBJMZ PQFSBUJPOT TP UIBU VOOFDFTTBSZ FYQFOTFT BSF DVSUBJMFE BOE CZ JODSFBTJOH UPQ MJOF CZ GPDVTJOH PO JODSFBTJOH BWFSBHF CJMM WBMVFT
important source of revenue for wholesale clubs like BJs and Sam's Club. The monies COVER THE CASH kOWS “As of now we have not introduced membership programme. The essence of this model certainly shall not be that of a low cost capital format," informs Mittal. Savemax is still studying the various possibilities for this programme and has desisted offering one as the company's initial research showed the dissonance and confusion a customer has with various loyalty/membership programmes in the country. So it is only after due thought that Savemax will look forward to INTRODUCING THE SAME IN THE NEXT jNANCIAL YEAR SO AS TO MAXIMISE BENEjTS FOR THE consumer. Mittal informed that it will have a direct impact on the marketing strategy as well.
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and hence obviously topline is better. An average bill value at the store is about Rs1,200, "which is much better than any other retailer today,� says Mittal. Limited choice also gives warehouse clubs additional leverage with suppliers as there is great value in being the only choice. Warehouse clubs pass this value on to consumers; Costco is famous for never marking up prices more than 14 per cent.
F
urthermore, wholesale clubs entice customers to buy a minimum packet size. For instance, socks are available in a pack of a dozen instead of a pack of two or three pairs. And this makes the purchase economical, both for the retailer and for the customers. “Since customers are buying in large quantities, so you spend more on the packet but you save more per item,� says Bisen. In fact, in the US, brands supplying to wholesale clubs customise their
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offerings for them; they make products which are extra size and package them differently. And they are only available at that particular wholesale club. There are a lot of things that Savemax is doing that are in sync with a typical wholesale model. However, Vaibhav Singhal, founder and director of Savemax, informs that they have tweaked the original model to suit the Indian market. “We have studied the wholesale club model prevalent abroad. But what we have essentially done is taken the essence of the traditional wholesale market and presented it in an organised retail format. But we offer a shopping experience that is better than mandi but with mandi-like prices,� says Vaibhav. One way in which Savemax’s model differs fundamentally from the original wholesale club model is that Savemax is open for all—and not just for members. Interestingly, membership fees are an
nother, variation from the true wholesale club model is the store size, which as mentioned earlier is considerably smaller than the typical warehouse clubs. But the company plans to have a minimum of 40,000 square feet stores in future. In fact, Savemax will buy land wherever possible for its future stores. A further alteration of the original retail FORMAT IS THAT 3AVEMAX HAS REDEjNED THE 'bulk' size for all its SKUs. So, for instance if a pack of diapers at Sam's Club is 100 units, one at Savemax would be about 50 units. “We actually went ahead and DEjNED @BULK FOR EACH SUB CATEGORY FROM an Indian point of view. So while wholesale club is an inspiration, the actually model has been designed by us. This is a DEjNITELY NEW MODEL IN )NDIA (AVING SAID that, wholesale retailing was always there in India,� Singhal explains. While the essence of ensuring wholeSALE BENEjTS REMAINED THE SAME THE DEjNITION OF MERCHANDISE MIX HAD TO BE REDEjNED TO SUIT THE )NDIAN MARKETS Savemax studied each sub category to DEjNE WHAT THE RIGHT MIX WOULD BE FOR A particular category for Indian consumers. With prizes lower than hypermarkets but the store size about the same, Savemax claims to be on the route to BEING A PROjTABLE OUTLET BY THE END OF THIS jSCAL FESTIVE SEASON f4HE ESSENCE IS BY BUILDING EFjCIENCIES INTO THE DAY TO DAY functioning of the outlet, which helps us
SALES & MARKETING
As of now, Savemax is open to all and not just for members unlike other wholesale clubs. save on unwanted expenses. Further, we FOCUS HEAVILY ON MAXIMISING BENEjTS FOR consumer so as to have a better top line, which helps us mitigate the low margin concerns,� informs Mittal. One of the steps Savemax takes to MAXIMISE EFjCIENCIES IS THAT IT HAS A 100 percent Direct Store Delivery model to keep a healthy Stock Turnover Ratio. Instead of working with a redistribution centre or a warehouse, it gets the brands it stocks to supply material directly to its stores. This helps manage the number of deliveries per vendor per month and make the supply chain viable for both the vendor and Savemax. The supply for perishable items such as F&B, dairy, eggs and bread is on a daily basis much like that for a kirana.
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urrently, Savemax has three stores in Delhi, two of which are smaller, as they were opened as pilot stores and the third is the wholesale club and plans to focus only on north India as OF NOW AS IT WANTS TO jRST PERFECT THE model before venturing out. The plan is to have 15 wholesale club outlets in north India by March 2016. Although Savemax has diluted the original concept to suit itself, it brings us to a moot question: will such a model
work in India? “On paper, the model looks DEjNITELY ATTRACTIVE FOR )NDIA !ND PEOPLE might not even mind buying more but there is a convenience element attached to it,â€? says Bisen. For instance, bulk purchases need a good support system; so people need to HAVE CARS THEY SHOULD jND IT CONVENIENT to reach the store, they should have that kind of money to invest for a future need at a present date and they should have enough storage space at home because they will not consume it all at one go. Ă?)F YOU APPLY THESE jLTERS AND OPEN up in such areas that will pass, this is a very attractive proposition. However, if it’s a middle class area, where the salaries are low and people prefer small SKUs or like to buy in pouches on a need basis, the stores will not work,â€? opines Bisen. However, Ajay Agarwal of Klisma, a retailer with an experience of several decades begs to differ. He feels that the wholesale-club model will only work in middle-class or low-income localities as it they who are constantly looking for better bargains and live in joint families so require higher quantities. f4HE AFkUENT ARE LOOKING FOR A BETTER customer experience and convenience, not bargains. Besides, most of them get
their househelp to do the grocery and other shopping,� he says.
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ccording to Bisen, if eventually, Savemax is attempting a Costco-type of model, then there is an opportunity, but it has to be looked at from a catchment to catchment basis. It is clear then whether the model will be successful will depend mainly on the catchment. Assuming that Savemax manages to draw the crowds and becomes successful in selling this format in India, will it be successful enough to inspire other retailers to follow suit? “Of course, retailers will adopt the model. But they will come up with their own versions much like Savemax,� says Agarwal. However, Bisen doesn't think so. "If anyone asks me whether soon we will have other retailers rushing to open wholesale clubs and will there be a proliferation of wholesale clubs in the country? My answer is there is reason that not only few retailers around the world are into this format; it’s a very niche model," he says. Clearly, experts don't see eye-to-eye on several aspects related to the success of the wholesale club model in India. But they do agree that the key to its success lies in getting the catchment right. Let’s see if Savemax manages to nail that. Retail Today | JULY 2013
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SALES & MARKETING
PLAYING IT UP 3FUBJMFST BDSPTT UIF HMPCF BSF JODSFBTJOHMZ UPZJOH XJUI HBNJkDBUJPO BY RICHARD WALLACE
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ou might have heard of @GAMIjCATION l IT S BECOMING AN INDUSTRY BUZZWORD AS CONSUMER GOODS COMPANIES USE IT TO ENGAGE WITH SHOPPERS REWARD LOYALTY AND GAIN A COMPETITIVE EDGE 7E EXPLAIN HOW IT S DEVELOPING AND HOW IT COULD HELP KEEP YOUR BUSINESSES AGILE )N SIMPLE TERMS GAMIjCATION MEANS APPLYING THE PRINCIPLES OF VIDEO OR COMPUTER GAMES TO OTHER CONTEXTS 4HERE S A LOT OF HYPE ABOUT ENGAGING WITH THE @-ILLENNIAL GENERATION THOSE BORN IN THE EIGHTIES AND NINETIES WHO ARE VERY TECH SAVVY "UT GAMIjCATION ARGUABLY TRANSCENDS MANY AGE GROUPS @YOUNGER ADULTS WHO CAN REMEMBER GROWING UP AROUND THE .INTENDO PLAYING 3IM#ITY OR EVEN JUST GOING TO AN AMUSEMENT ARCADE ON HOLIDAY HAVE ALL BEEN LURED IN BY GAMING !S WELL AS APPEALING TO A DIVERSE RANGE OF PEOPLE THE PRINCIPLES OF GAMING CAN WORK IN DIFFERENT AREAS OF PEOPLE S LIVES SO THERE S SCOPE FOR THOSE TECHNIQUES TO BE USED BY A WHOLE HOST OF DIFFERENT INDUSTRIES AND FUNCTIONS #ONSUMER BUSINESS MARKETERS ARE PAYING PARTICULAR ATTENTION TO THE OPPORTUNITIES THAT THE EMERGING DIGITAL ENVIRONMENT GIVES MANUFACTURERS AND RETAILERS TO BUILD BOTH THEIR BRAND AND THEIR SALES BY ENGAGING SHOPPERS MORE EFFECTIVELY "UT GAMIjCATION IS NOT WITHOUT ITS CHALLENGES IN FACT OUR RESEARCH SHOWS THAT ONLY PER CENT OF MANUFACTURING BUSINESSES HAVE A STRATEGY THAT CO ORDINATES MARKETING AND SALES FOR LONG TERM GROWTH
3
O WHAT ARE THE BUILDING BLOCKS FOR GAMIjCATION 7ITH MANY BUSINESSES STILL GETTING TO GRIPS WITH JOINT SALES AND MARKETING ACTIVITIES UNDERSTANDING HOW GAMING PRINCIPLES CAN BE APPLIED TO COMMERCIAL INITIATIVES
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JULY 2013 | Retail Today
SALES & MARKETING
THOSE WHO HAVE TRIED IT In 2008, DKNY became the first retailer to experiment with social games. The retailer had partnered with digital paper doll game Stardoll to engage consumers. In 2011, Nike launched an interactive game to promote its winter wear in which players had to assist the athlete in “beating the cold" through a series of actions and win prizes. Shopper with highest scores between December 9 and 15 was eligible to win a trip for two to meet a world-class Nike athlete.
OFFERS AN OPPORTUNITY TO GET AHEAD OF YOUR COMPETITORS 7E HAVE BEEN SPEAKING TO STRATEGIC DESIGN CONSULTANCY AND "ADGEVILLE A START UP COMPANY THAT HAS DEVELOPED A TECHNOLOGY PLATFORM TO ENABLE GAMIjCATION SOLUTIONS FOR BUSINESSES AND HELP THEM TO UNDERSTAND HOW THE GAMING CONCEPTS ARE BECOMING A COMMERCIAL REALITY 4AKING A STEP BACK A NUMBER OF ESSENTIAL ELEMENTS MAKE GAMES SUCCESSFUL DESIRE INCENTIVE ACHIEVEMENT REWARD FEEDBACK AND MASTERY 4HESE BUILDING BLOCKS ENCOURAGE USERS TO PLAY MORE GET MORE INVOLVED EXPEND MORE EFFORT AND STRIVE FOR REWARD AND ARE EASILY TRANSLATED TO BUYING AND EXPERIENC-
ING CONSUMER GOODS "UILDING LOYALTY AND ADVOCACY IS A PRIORITY FOR MANY BUSINESSES OPERATING IN A CONSUMER GOODS INDUSTRY THAT IS EXPERIENCING UNPRECEDENTED AND HIGHLY CHALLENGING TRADING CONDITIONS REkECTING ON THE OPPORTUNITY HERE 3COTT 3CHNAARS OF "ADGEVILLE NOTED THAT @IN THE NEXT MONTHS NOT HAVING A SOCIAL LOYALTY STRATEGY BUILT AROUND GAMIjCATION WILL BE LIKE NOT HAVING A &ACEBOOK ,IKE BUTTON TODAY eS (EAD OF /NLINE !NDREW (EARN GOES ON TO SAY Ð#REATING ON BRAND SOLUTIONS THAT SOLVE FUNDAMENTAL BUSINESS PROBLEMS SUCH AS INCREASING SALES RETAINING LOYALTY AND HARNESSING SOCIAL INTERACTIONS IN A MANNER THAT IS BOTH ENGAGING AND FUN FOR CUSTOMERS MUST BE AN OBVIOUS DECISION Ð 3TRONG WORDS BUT AT )'$ WE BELIEVE THAT PLAYING BY YESTERDAY S RULES IS NOT AN OPTION AND BUSINESSES WILL BE FORCED TO BE MORE AGILE IN THE YEARS AHEAD TO DRIVE SUSTAINABLE GROWTH 7HILE GAMIjCATION PRINCIPLES HAVE BEEN APPLIED TO MEDIA AND jTNESS INDUSTRIES WITH SUCCESS CHECK OUT .IKE S &UEL"AND IF YOU RE NOT CONVINCED IT S STILL IN THE EARLY STAGES FOR CONSUMER GOODS $ANONE IS ONE BUSINESS THAT HAS EMBRACED THE @ACQUIRE ENGAGE RETAIN GAMIjCATION MANTRA WORKING WITH "ADGEVILLE 7ANTING TO jND CONVERSE WITH AND REWARD ITS MOST
(BNJkDBUJPO PGGFST BO PQQPSUVOJUZ GPS CSBOET UP FOHBHF XJUI UIFJS DPOTVNFST
LOYAL CUSTOMERS VIRTUALLY AWAY FROM THE STORE $ANONE CAME UP WITH WAYS TO TRIGGER GAMING BEHAVIOURS IN AN ONLINE LOYALTY PROGRAMME 3CANNING PURCHASED PRODUCTS WITH A SMARTPHONE REWARDS USERS WITH POINTS AND VIRTUAL ACHIEVEMENTS INCLUDING DISCOUNTS AND SPECIAL PRIZES FROM KITCHEN APPLIANCES TO HOLIDAYS 4HE GAME NOT ONLY ENCOURAGED PEOPLE TO ENGAGE BUT ALSO TO @ADVOCATE THE BRAND WITH USERS SHARING THEIR ACHIEVEMENTS ON &ACEBOOK IMMEDIATELY REACHING OUT TO HUNDREDS OF FRIENDS AND MANY THOUSANDS IN THEIR CONTACTS WIDER NETWORK 4HE AIM IS TO MOVE THE SHOPPING EXPERIENCE BEYOND THE STORE FOR VALUED CUSTOMERS BUILDING BRAND INTERACTION ON THE WEB AND ULTIMATELY DRIVING SALES FOR KEY PRODUCTS
7
HAT DO WE THINK 7E KNOW SHOPPERS ARE FACING CHALLENGES AND OUR INDUSTRY IS TRYING HARD TO KEEP UP WITH THEM AND PROVIDE SOLUTIONS THAT MAKE LIFE EASIER 4HE BASIC PRINCIPLES OF GAMIjCATION ARE SIMPLE AND OFFER AN OPPORTUNITY FOR BRANDS TO ENGAGE AND DRIVE SHOPPERS TO BE AMBASSADORS FOR THEM (ERE AT )'$ WE REALLY ENJOY GETTING OUT AND MEETING BUSINESSES THAT ARE ADOPTING AGILE THINKING TRYING TO ANTICIPATE THE SHOPPER AND UNDERSTAND THE fNEW NORMALt OF THEIR DAILY LIVES 4HE CONSUMER GOODS INDUSTRY IS ONLY JUST BEGINNING TO GAIN COMMERCIAL SUCCESS FROM GAMIjCATION AND WE KNOW THAT JOINING UP SALES AND MARKETING TO HARNESS THE POWER OF DIGITAL TECHNOLOGY CAN BE CHALLENGING BUT UNDERSTANDING THE PRINCIPLES OF fACQUIRE l ENGAGE l RETAINt HAS THE POTENTIAL TO DELIVER TANGIBLE RETURNS 5LTIMATELY WE KNOW COMPANIES LEARN BY DOING NOT WATCHING SO WE WOULD BE DELIGHTED TO HEAR HOW YOU ARE EXPERIMENTING TO DIGITALLY ENGAGE WITH SHOPPERS AND GROW YOUR BUSINESS l GET IN TOUCHÏ Richard Wallace is business analyst with IGD, a consultancy for the global consumer goods industry. Retail Today | JULY 2013
47
SALES & MARKETING
Loyalty: the next level Moving beyond two early stages of points and rewards, the industry is ready for an advanced version of loyalty BY SHIV JOSHI
L
oyalty as we knew it is dead. These were the opening remarks of Vikas Choudhury, India COO & CFO of the loyalty service provider AIMIA Inc, at the panel discussion on loyalty titled ‘Supersizing Customer Loyalty’ at ReTechCon 2013 held last month in Mumbai. Choudhury had correctly summed up the state of affairs of loyalty programmes in India. As modern retail in the country matures, its various aspects are evolving too, chief of them being technology and loyalty. The early form of loyalty in India was quite crude. It involved enticing customers to collect soft drink caps or stickers that could be then exchanged for attractive gifts. The caps/stickers were the ‘points’ of an early era. The later phase
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JULY 2013 | Retail Today
was the actual accumulation of points on membership cards of certain retailers and redeeming them for rewards. But these were largely transactional. Today’s programmes are far more sophisticated and revolve around customer engagement. “Loyalty is a lot about pre-purchase and post-purchase,” says Choudhury. The idea is that the customer has to be thinking about the brand even when he is not interacting with it. While pre-purchase would involve means to get the customer to interact with the retailer, post-purchase is continuing the interaction. A good example of this is the Nike FuelBands that help track what you are doing all through the day. You can then upload your activity log on the website and compare it with others and so on. This ensures that you are thinking
about Nike every single day. “That is the power of loyalty going forward,” says Choudhury.
R
etailers are now looking at loyalty programmes differently. They are not just looking at gathering data, but also analysing the data for valuable insights that can help them make business decisions. “It’s not just the card but what it does for you. Running a loyalty programme is a small cost for a retailer, but what he gets in return is data that is worth millions of rupees,” says Vinay Bhatia, customer care associate and vice-president, marketing and loyalty at Shoppers Stop. The retailer’s loyalty programme, First Citizen, is the oldest retail loyalty programme in the country. With three
SALES & MARKETING
million members, the programme has been running successfully for 18 years and contributes to 75 per cent of the retailer’s sales. And it is directly linked to business: the loyalty team has a target to generate Rs100 crore of incremental sale using data and analytics.
A
nother retailer who has moved beyond points and rewards and is making the most of the data gathered through its loyalty programme is Westside. Like Shoppers Stop, Westside too uses the data to make important business decisions. In fact, being a private label retailer who designs, produces and sells its own products, Westside is ABLE TO INkUENCE THE PRODUCT USING THE feedback it gets from customers. “The loyalty programme has two parallel objectives: to know the customer at the customer level. And at that level, like other retailers, we also use RFM and other segmentation tools to understand our customers. But the interesting piece is how to leverage the data to make important business decisions and strategy,� explains Uma Talreja, head marketing, Westside at Trent Limited. Westside regularly uses the data to tweak its products. In fact, it has also used the data to launch a whole new range of clothing. “That’s the difference between today’s programme and merely running a rewards programme. In fact, this is a way of being loyal towards your customer by understanding his needs and catering to them,� says Talreja, alluding at the maturity level of loyalty programmes over the years.
T
echnology plays a key role in the process; social media is a great tool that retailers are leveraging to engage with CUSTOMERS 3HOPPERS 3TOP DOES A jNE job of using the information gleaned from facebook to know things about its customers that are not mentioned in the loyalty programme such as a promotion, birth of a baby. Since these are important occasions where customers shop, it then sends personalised and relevant communication to the consumers in a mode most preferred by them. “Using data effectively and monetising that data and using social media to your advantage are clearly the new
trends that one sees in this field,� says Bhatia. There are several loyalty models that have worked globally. And programmes vary from coalitions to partnerships and alliances to pure proprietary programmes; they all work at different times in different markets. However, Choudhury feels that India is going to be a fairly mixed bag; there will be sets of people who want to be part of a coalition and see value in pooling their points together amongst brands that see relevance with each other. Future Group is one such retailer that is going the multi-partner coalition way. Despite having many formats under its umbrella, the retail giant has got a multi-party loyalty partner on board to help harness the synergies of all its various formats. “While everything is moving towards an inclusive world, why get into an exclusive programme? We wanted to be inclusive and didn’t have an issue whether the customer burns his points with us or someone else. Being largest retailer in the country in value retail, we are also using the programme to get incremental revenues from customers earning points with different partners
THREE THEMES THAT DOMINATE THE CURRENT VERSION OF LOYALTY 1. Data is the new oil. Wal-mart handles over one million transactions every hour; 48 hours of video gets uploaded on youtube every minute. That is the data we handle every single day. If you do not do something with your data, somebody else will. 2. Size does matter. 180 billion $ of points are issued annually in the G-20, a value close to the GDP of Ireland. That’s how big loyalty is. 3. It’s now about interactions and not just transactions. When loyalty started it was all about how much you bought; purely transactional. Today, more than 60 per cent of loyalty is about interactions. Facilitating meaningful engagement with customers can greatly augment enterprise value. — Vikas Choudhury, AIMIA
Vikas Choudhury, COO & CFO India, AIMIA Inc. on the coalition and burning them with us,� explains Madan Mohapatra, chief of marketing at Future Group. However, having tasted coalition programme earlier with Lifestyle, the Landmark group has opted to run its own coalition programme with the various formats as partners. “Our group has many retail formats and we take care of almost 70-75 per cent of a consumer’s shopping needs. So why go for an external coalition partner? Besides, doing it ourselves gives us a far better control on the consumers and the engagement,� says Devarajan Iyer, vice president, marketing, Lifestyle.
S
o now we see the next version of loyalty in India with different models and innovative uses. Choudhury says loyalty 2.0 is about leveraging technology to deliver relevance. And this can be achieved by weaving in SoLoMo (Social, Local and Mobile) into the strategy. Social is about dialogue and sharing your experiences with your network, local is about being part of your customers’ everyday lives, and mobile is the communication channel that’s personal and omnipresent. So go ahead and sow these seeds with your customers and see how your tree blossoms and bears fruit. Looking at how we tend to leapfrog the learning curve in India, it is a matter of time before technology-enabled best practices in loyalty manageMENT kOURISH HERE Retail Today | JULY 2013
49
MARKET DATA
HYPER FOCUS
TNS shares insights into how shoppers behave at hypermarkets
T
o better understand the Indian Hypermarket shoppers and how they go about their shopping, we need to take a deep dive into the shopper’s demographics, what life stages they come from, THE INkUENCE OF LIFE STAGE ON SHOPPING BEHAVIOURS and the shopper’s interaction with nine key categories in the hypermarket. TNS along with Oglivy Action and IIMA conducted a study at hypermarkets in 2011, with the intention of understanding shopper behaviour across nine categories (biscuits, chips/snacks, breakfast cereals, chocolates, malt drinks, carbonated beverages, toilet soaps, hair care & oral care) in a hypermarket. The study was conducted across Mumbai, Delhi & Bengaluru and six hypermarkets—Big Bazaar & Hypercity.
Ă‚ Who's your shopper? A typical hypermarket shopper (premium and general hypermarkets included) in metros is a 32 year old, belonging to THE 3%# ! WORKING AS AN OFjCER EXECUTIVE AND HAS A MONTHLY household income of Rs57,000. Surprisingly, the probability of this shopper being male or female is nearly 50:50. Of course, there would be some differences between the demographics that visit premium hypermarkets vis-a-vis those who visit general hypermarkets. For instance, a higher proportion of SEC B/C/D shoppers would visit the latter; while a greater proportion of SEC As would visit the former. Additionally, a greater proportion of shoppers, who visit premium hypermarkets are SENIOR TO MID LEVEL OFjCERS EXECUTIVES PER CENT COMPARED to the general hypermarkets (30 per cent). The impact of this demographic differentiation (SEC & Occupation) is also seen
SEC 6
12
14 22
80 66
Big Bazaar
SEC A
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JULY 2013 | Retail Today
HyperCITY
SEC B
SEC C/D
on the average monthly household income (MHI) of the shoppers; with shoppers at premium Hypermarkets having an average MHI of Rs63, 750, while shoppers at general hypermarkets have an average MHI of Rs53, 753. However, minor differences Gender apart, it is critical to note that shoppers from all kinds of SECs and genders visit all hypermarket types for their shopping needs. Overall, during 49% this study, we interacted with 51% hypermarket shoppers from a wide range of life stages, these included: The student: Between the age OF AND TWO OF jVE TIMES Male female this person will visit a hypermarket with his/her friend. The new householder: Between the age of 22 and 29, nearly 40 per cent of these shoppers, who visit general hypermarKETS BELONG TO 3%# " # $ CLASSIjCATIONS The mature householder: Between the age of 30 and 45 years old, this shopper usually spends the most compared to the others. The veteran Householder: Between the age of 45 and 55+, these shoppers tend to plan more meticulously compared to the others. And while the differences in shopping behaviour weren’t bi-polar between these life stages, the gradual evolution in planned behaviour from the student to the veteran householder was interesting.
MARKET DATA
Ă‚ The evolution of planned behaviour
Store familiarity
Shoppers visit their local hypermarket at least three times a month; most shoppers are 14% also quite familiar with the store layout; which basically means they have a mental map inside their heads telling them exactly 86% WHERE THEY CAN jND WHAT THEY are looking for. Also, most shoppers are loyal to the same brand. familiarity with store/ 4HESE jNDINGS SUGGEST ease of spotting that in hypermarkets shoppers shop on auto-pilot mode, EJGkDVMU UP kOE which indicates that on most occasions, hypermarket shoppers probably plans his/ her category purchase prior coming to the store. In fact, it was found that a whopping 82 per cent of all hypermarket shoppers plan their category purchase before coming to the store. Further to this, 61 per cent of all shoppers not only knew which brand they wanted to buy, but the style variant as well, while 29 per cent had a repertoire of brands and variants in their mind before visiting the store. The interesting part is that, while the overall levels of planning were quite high, variations in the level of planning by the life stages indicate a certain evolution of planned behaviour taking place as the shopper matures.
Planning by life stages 24
20
15
76
80
85
Students
New
Mature
11
90
6
2
23
23
16
14
17
27
30
37
31
32
New
Mature
veteran
23
40
21 4
26 1 3 31
Students
House holders householders householders
Alone
spouse/partner
Childrem/sibling
Other family member
Friends
Other
4HIS FURTHER SUPPORTS THE jNDINGS THAT A MAJORITY OF SHOPpers, who visit hypermarkets, were on ‘Big shop’ missions, an occasion which involves shopping for the long haul (well at least for a week!) hence, require higher levels of planning.
Mission by Life stage 4 10
3 9
25
23
61
64
4
7 20
69
6
2
19
72
veteran
House holders householders householders
Planned
Accompaniment by Life stage
impulse
One can also gauge the shopper’s level of planning by identifying what shopping mission s/he is on. A shopping mission refers to the shopping task a shopper is trying to complete in one trip. Shoppers display very different behaviours depending upon the particular mission they are on. In general, there are four types of missions that the shopper might be on: 1. ‘Big shop’, which is typically a weekly or monthly trip to buy a large number of items. @)N BETWEEN A TOP UP OR jLL IN TRIP TO BUY A FEW ITEMS THAT are required. @-EAL 0LAN SHOPPING FOR A SPECIjC MEAL 4. ‘Quick stop’ for 1-2 items. As stated earlier, shoppers visit the Hypermarket approximately 3 times a week and usually with a family member or a friend (69% of all shoppers are accompanied by someone else), this makes visiting the hypermarket more of an occasion.
Students
New
Mature
veteran
House holders householders householders
Big shop
In between
Meal plan
quick stop
Once again, as we move up the life stages, the number of shoppers on ‘Big shop’ missions gradually increases. A deep DIVE INTO SPECIjC PRODUCT CATEGORIES ALSO INDICATED THAT certain categories (Breakfast cereals, Biscuits, Malt drinks, soaps & Hair care) attract a higher proportion of ‘Big shop’ missions among mature shoppers. With hypermarkets gaining prominence in metros, the consumer is putting in a greater effort to have a more organised shopping experience, which is many ways is a lot more calculated than shopping at the local kirana. This also means that they are expecting similar levels of organisation and appeal from the hypermarket, so that shopping becomes easier AND MORE EFjCIENT Retail Today | JULY 2013
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MARKET DATA
Categories shopped
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Ă‚ Category Dynamics
45 38
36 27
Oral care
Hair care
Carbonated beverage
Breakfast cereal
Choolates
Chips/snacks
Soaps
Biscuits
29
23
Health beverage
30
30
Of the nine key categories (branded packaged goods) in focus, there were certain product categories (biscuits and soaps) that clearly landed up in more shopping baskets, than the others. And while these key categories do not encompass all the categories available in the hypermarket, they stand as good representatives of some fast moving packaged goods that are sold there. Correlations across these categories indicated that the greatest relationship between categories was seen among the non-food categories of soap and hair care across missions, especially during ‘Quick stop’ impulse based missions. Categories such as this that are anyway not placed too far apart and are purchased on similar missions have a greater probability of being picked up together. Hence, cross selling or combined category promotions are more likely to connect with the usage occasions of the shopper.
Ă‚ Conversions Category conversions for key categories Buiscuits 49% 19 30 100 MFD 35%
8 22 100
Purchase
Chips/Snacks Chocolates 48% 12 28% 7 26 25 100 100 HairCare 36% 14 40 100
Soap 43% 17 39 100
Attention
Carbonated Bew 43% 8 20 100 OralCare 49% 19 39 100
5SBGkD
There are two important factors that go into the conversion OF A CATEGORY SHOPPER INTO A CATEGORY BUYER THE jRST BEING the level of category relevance as an essential commodity (soap and oral care), and the second is the role that the brand/category plays in easing the shoppers search and selection process. The second factor is where brand managers and retailers can work together to improve shopper to buyer conversion ratios. Currently, even fast moving categories like biscuits and soaps have a category conversion of less than 50 per cent. Evidently, there is more room for improvement in the realm of category conversions. Many brand manufacturers have already caught onto this and often create new shelf designs as a means of establishing their category expertise and driving partnership with retailers. However, as mentioned earlier, to drive category growth, the new shelf must improve ease of shopping, which in turn will reduce lost sales. Since hypermarket shoppers come from all sorts of socio-economic backgrounds, ages, income brackets and comprise an equal proportion of both genders, it ultimately means that the hypermarket is a fantastic platform for brand marketers to expand their brand reach to a wide range of shopper types. Understanding the
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JULY 2013 | Retail Today
various shopper segments, which trip they shop on, which missions for what category usage occasions offer most potential, both for retailer and brand to drive growth. While glancing at the category conversion proportions, it was learnt that there is a fair amount of room for improveMENT AT THE SHELF AS WELL !S IDENTIjED EARLIER SHOPPERS generally plan their purchases quite elaborately. And what is known is that most decisions about the category are made BEFORE EVEN REACHING THE SHELF OR ELSE SHOPPERS JUST KNOW what they need based on their experience. In fact, more time is spent navigating than engaging with products, since thousands of products are irrelevant to the shopper. Therefore, it becomes even more important to organise the shelf to improve ease of shopping and there is much scope to reduce category confusion and other wasted searching time within the category. 4HIS CAN BE DONE BY IMPROVING EASE OF SHOPPING BY REkECTing the shoppers search process. When in search mode, SHOPPERS FOCUS ON WHAT THEY WANT TO BUY AND jLTER OUT ANYTHING THAT IS NOT RELEVANT TO THEIR TASK 4HIS MAKES IT DIFjCULT TO INkUENCE BEHAVIOUR IN RELATION TO BRAND CONSIDERATION If shopper marketing activities are to succeed, it is essential to move shoppers from search to selection mode as quickly as possible. Less search time allows shoppers to use their time more productively and so more time is spent browsing and engaging with the category. This facilitates up-selling and cross-selling as well as brand consideration. This way of going about this ensures that the shelf is being organised FOR THE DECIDED SHOPPER MAJORITY SHOPPERS PURCHASE THE same brand regularly). Now to make a connection in-store, communication should focus on relevant shoppers as well as messages (that are carefully targeted). By relevant shoppers, we mean shoppers who are ‘Open’ and haven’t made up their mind. For this ‘call to action’ (CTM) messages can be improved, and in order to make the right connection, CTM messages should target ‘Open’ shoppers and focus on messages which motivates them. Information and images courtesy: TNS India
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