MxMIndia

Category: SERVICES | RETAIL

  • Kishore Biyani is determined to turn debt-free even if it means selling a chunk of his prized businesses

    Retail ka Raja’s road to be debt-free

     

     

    By Kala Vijayraghavan

     

    It took 25 phone calls, 50 text messages, a couple of emails and plenty of persuasion over three weeks before Mr Kishore Biyani, 49, India’s largest retailer finally agreed to meet. Two reasons, both related, could explain his uncharacteristic reluctance.

     

    The interview was on an uncomfortable subject, Mr Biyani’s battle with debt, Rs 4,352 crore to be precise. But then, Mr Biyani was never the one to duck tough questions. The second reason therefore is more plausible. Mr Biyani was busy; he was negotiating deals to carve out his empire, meeting global retailers, talking to investment bankers, planning foreign direct investment (FDI) compliance with corporate lawyers…the works.

     

    In short, he was doing what every other retail CEO perplexed by the current environment is now doing. He was also nursing a fever. Finally, meet he did…not during the week at his office in Vikhroli, an eastern suburb of Mumbai, but on a Saturday morning at his home in south Mumbai and rather reluctantly.

     

    Mr Biyani was to have boarded a flight to Paris on Tuesday night, but the fever kept him back. Had he gone, he might well have signed a unique deal with French retailer Carrefour. Mr Biyani is non-committal, but sources say that 17-18 cash-guzzling Big Bazaar outlets may be converted into a Carrefour franchise. There won’t be any equity infusion, so FDI norms are complied with. Big Bazaar is a hypermarket chain, the group’s flagship format and also one of his pet projects. And Mr Biyani is willing to give away parts of it…in return for some cash.

     

    Mr Biyani has changed. Some of his trademark chutzpah has given way to wisdom and caution. But his resolve to build a sprawling consumption business hasn’t weakened. Earlier he wanted to do this alone; now, he is open to multiple partners. “The business environment is challenging and different. And I have to take a more mature approach to business,” he says. “When we started the retail business, the environment was different. And I was younger to take those risks.”

     

    King-size Risks

     

    Mr Biyani wouldn’t be what he is today, the maharaja of Indian retail, if he hadn’t taken those risks. But at the same time, he also wouldn’t have the problems he is facing today if he hadn’t taken those very risks. That’s not the only irony Biyani is living today. In the past, he raised funds aggressively to grow his empire. Now, his biggest challenge is to raise money: to save his empire. Consolidate is the word he prefers to use, not save.

     

    Says Mr Thomas Varghese, CEO, Aditya Birla Retail: “Retail is cash-guzzling and it needs deep pockets to scale up. That’s the nature of the beast. Also, funding of the business can only be viable though equity and not debt.” Sources add that Mr Biyani opened too many fronts, book retailing, electronics, sports, salons, apparel. Debt was unavoidable because he was constantly experimenting with new formats that would make money.

     

    Top executives who work closely with Mr Biyani every day say he has decided to take the debt bull by it horns. He wants to raise Rs 5,000 crore in the next 12-18 months to make Pantaloon Retail, the flagship company that owns most of his retail business, debt free. Can he?

     

    Not so long ago, Mr Biyani was a rockstar in the stock markets. Pantaloon Retail went public in 1992, one year before Infosys. In the past 19 years, it has delivered an annual return of 25%. Investors cheered his rapid growth.

     

    Pantaloon Retail now occupies over 15.2 million sq ft space in multiple retail businesses. It runs 59 Pantaloon department stores, 42 Ezone electronics stores, over 200 hypermarkets under Big Bazaar and Food Bazaar and over 214 KB’s FairPrice stores.

     

    It operates 10 formats including Central (seamless malls), Brand Factory (discount fashion) and Ethnicity (ethnic wear). Mr Biyani also got into the financial services business to fund the purchases happening at his stores; he set up a foods business to help stockpile the shelves in his stores; set up venture funds to invest in his suppliers and even floated media companies.

     

    Notes Mr Biyani: “In most countries, retailers can focus on retailing alone. But when we started to grow, we realised the lack of an industry ecosystem around retail and realised the need to create one. That meant setting up the entire logistics and supply chain networks.

     

    That meant training thousands of people. That meant setting up technology and back-end processes to handle millions of transactions. And it also meant building enablers, stronger brands, consumer finance, media etc, that could spur consumption.”

     

    In short, he bet big… real big, on India’s consumption story.

     

     

    No Choice, But to Grow

     

    And, why not? The economy was booming, salaries were rising and consumers wanted to spend, investors were willing to give him great valuations, banks were lending cheap and real estate was easy to come by. It was rock ‘n’ roll. “In this journey, since we were often the first, we made the maximum number of mistakes; we also learnt the most,” says Mr Biyani. “And today, we know each business threadbare.”

     

    Sure, the feisty, home-grown entrepreneur was hungry for growth. But it is also equally true that he had no choice but to grow. Ever so often, there would be a buzz on retail FDI. Mr Biyani had to prepare for it. Retail is all about size; the bigger the better. Mr Biyani had to become a Godzilla if had to have any chance of fighting the likes of Walmart who would come in some day. Even if he didn’t want the fight, he still needed scale to position himself for a sweet buyout.

     

    And so Pantaloon Retail grew spectacularly fast. But debt fuelled it. It now clocks Rs 12,366 crore in revenues, about Rs 10,000 crore more than what it made five years ago. Its borrowings have also increased from Rs 700 crore to Rs 4,350 crore.

     

    Here is a good way to look at Pantaloon’s growth, in the past five years, the company had to borrow Rs 1 to generate every Rs 3 of annual revenues. This was okay when the economy was growing and debt was cheap. But the economy slowed down and inflation went up, forcing the Reserve Bank of India to raise policy rates 12 times since March 2010.

     

    “The retail business is modular and its expansion can be halted or grown depending on the environment, cash flows, and interest rates. We will grow accordingly and take decisions which are conducive in the given environment,” says Mr Biyani, his new found caution very much in evidence. Pantaloon Retail earns Rs 1,203 crore as operating profit, but more than half of it goes towards paying interest charges, leaving it with only Rs 142 crore in net profit after accounting for depreciation and taxes.

     

    Dash Bigger Than Cash

     

    Industry sources say Mr Biyani was reckless in expanding faster than what the cash flows supported, and not slowing down enough even when he had the chance to do so. “All big players including Reliance focused on restructuring and improving operating efficiencies during the slowdown but Biyani was chasing valuations and growth,” says the CEO of a rival company who did not want to be identified.

     

    “Pantaloon’s debt level is uncomfortable,” says Mr Arun Kejriwal, director, Kejriwal Research and Investment Services. “Also, the management has not shown any concrete plan to reduce debts.” Mr Kejriwal says same-store sales have not grown exceptionally, suggesting that the issue with debt, if not resolved, may create problems in future. “It’s imperative for Pantaloon to retire debt,” says Mr Gautam Duggad, a research analyst with Prabhudas Liladhar, a Mumbai-based brokerage. “Although Pantaloon’s gearing is not alarming, its absolute debt is quite sizeable.”

     

    All this has made investors jittery. Since April this year, the stock has lost 30% in value, while the BSE Sensex has dropped only 14%. “We are conscious of what the world is thinking about us and we are always discussing ways of cutting  debt,” says Mr Shailesh Haribhakti, independent director at Pantaloon Retail. “We are very responsive to the concerns raised.”

     

    At Home With Less Control

     

    At his tastefully done-up residence, Mr Biyani is clear about what he needs to do. There is no emotion, regret or hesitation as he spells out his next steps. He is preparing to take some tough calls, including giving up control of some of his prized possessions.

     

    Mr Biyani is willing to share ownership in Big Bazaar, Ezone, KB’s Fairprice, and Home Town, all successful formats he has pioneered. “All these years, we have grown the business by ourselves. Now the time has come to get partners. It’s now time to consolidate and let somebody else run the business [shared ownership],” he says. That’s what has brought Mr Biyani to where he is now, in the middle of stitching together half a dozen deals with financial ingenuity to ensure all FDI norms are complied with.

     

    He has just signed a deal to give 49% stake in the Future Group’s foods sourcing and manufacturing entity to Lawson Inc, Japan’s second-largest convenience store chain. The move will relieve Pantaloon Retail of the burden of funding the aggressive growth plans of the food business. He is in talks with an Indian company to sell equity in Ezone. And then, there is the likely deal with Carrefour.

     

    Mr Biyani also has plenty of non-core businesses: consumer finance, insurance, textile mills, logistics and JVs in mobile retailing and office supplies, Future Capital Holdings (FCH), life and non-life insurance businesses under a partnership with Generali. The Future Group hopes to raise Rs 2,500-4,000 crore by selling equity in these.

     

    An Edelweiss report values FCH, and its e-commerce, supply chain, real estate and insurance ventures around Rs 3,000-4,000 crore. “Any such tie-up would bring funds in the company and would help deleverage its balance sheet,” says Ms Sangeeta Tripathi, senior analyst at Sharekhan.

     

    ‘Picked My Horses Now’

     

    Industry sources say exiting many of these businesses is a good idea. “Walmart is known for its austerity and Gucci for its lavish luxury,” says a senior industry CEO pointing out that the Future group wanted to be both. It can’t.

     

    “If I were Kishore Biyani, I would totally back the top two horses and ensure that I become so powerful that I would create far more value,” says Mr BS Nagesh, founder, Trust for Retailers and Retail Associates of India, a not-for-profit organisation that trains front-end staff in retail. Nagesh is also the vice-chairman of Shoppers Stop, but these are his personal views.

     

    Biyani is thinking along similar lines. He now plans to concentrate on just four large formats, Pantaloons, Central, Big Bazaar and Food Bazaar, limiting itself mostly to food, fashion, home and general merchandise. “In rich countries, retailers are among the largest businesses, wealth creators and employers. We’ll expand prudently and wait patiently for our turn,” he says. “People are right that we should back a few big businesses and scale it up big time. We have picked our horses now.”

     

     

    (Additional reporting by Kausik Datta)

     

     

    Source:The Economic Times

    Copyright © 2011, Bennett, Coleman & Co. Ltd. All Rights Reserved

  • Formula 1 offers an excellent networking opportunity for corporate as large corporate cough up upto Rs 1 crore for special boxes

    Networking UnLtd @ F1: Tag Heuer, Mercedes, UB, etc book corporate boxes

    By Meenakshi Verma Ambwani & Ravi Teja Sharma

     

    The jury may be out on whether it will be the biggest international sporting event ever to come to India, but not many dispute that the upcoming Formula One race will offer the best corporate schmoozing platform the country has ever seen.

    India’s first ever Grand Prix race may be some days away, but the race among corporate groups, celebrities and other assorted moneybags for vantage spots has begun.

    “Only a few sports – golf and the tennis grand slams – give a business networking opportunity to companies at this scale,” says Mr Indranil Das Blah, chief operating officer at Kwan, a sports and talent management firm.

    Others say that the very nature of the sport – a heady cocktail of speed, technology and human skill spread over three days – makes it best suited for networking.

    “It is a three-day thing unlike a four-hour cricket game, which gives corporate executives a unique opportunity to network,” says Mr Ashish Hemrajani, chief of Bigtree Entertainment, which runs the official ticketing partner Bookmyshow.

    Executives at the Swiss luxury watch brand TAG Heuer have booked corporate boxes to host top clients and to showcase their best ware. Tag is not alone. Top global banks and a raft of companies, including Mercedes Benz, Gulf Oil, NIIT, UB Group, Airtel, JK Group, Venky’s, Essar and Punj Lloyd, are some of the others to have booked boxes, each of which can seat 30 people, to host their top executives and business guests.

    “We have been associated with motor sports for a long time globally. Now that it is coming to India, we have booked corporate boxes to entertain our customers and associates from India and abroad as part of our brand building as well as relationship building exercise,” says Mr Ravi Chawla, president-lubes at Gulf Oil.

    Jaypee Sports International, the company behind the Indian circuit taking place at Greater Noida from October 28-30, says all the 55 corporate boxes, each with a price tag ranging between 75 lakh and 1 crore, have been sold. The corporate boxes come with the choicest hospitality, catered by the country’s top five-star hotels.

    While for corporates, there are these special boxes, for the wealthy and the cognoscenti, there’s the luxury Formula One Paddock Club, which has been described as the “inner sanctum” of the F1, patronised by some of the world’s top businessmen, bankers and celebrities, indulging in the best gourmet food, wine and luxury money can buy.

    This description is not without reason. Entry into Paddock Club does not come cheap. At $5,460 ( 2.68 lakh) per person, it’s easily the heftiest price tag for watching a sport, at least in India. Pitched as a super premium experience, Paddock Club patrons will get a real close view of the race pits, walk into the pit lanes and be privy to the strategy meetings of the teams and engage in conversation with the teams’ drivers and management.

    “It is the kind of hospitality experience that India has never seen before,” promises Mr Suvrangsu Mukherjee, managing director Indian subcontinent at Total Sports Asia, one of the two firms authorised to sell Paddock Club tickets for the Indian F1 race.

    Executives at Total Sports Asia and SOTC Sports, the other company authorised to sell tickets for the Paddock Club, say they are getting bookings from local and international companies. For a price, companies can even set up branded suites with privilege viewing and dining enclosures at the Club.

    The Paddock Club’s ticketing and hospitality arrangements is controlled by F1’s in-house company Allsport Management and all its revenues go to Bernie Ecclestone, the founder and top boss of F1. Visitors to the Club in other races have included Hollywood stars such as Michael Douglas, Brad Pitt and Nicholas Cage, music legends Eric Clapton and Sir Cliff Richard, filmmakers George Lucas and Quentin Tarantino, model Liz Hurley and singer Danni Minogue. This time around, international singing sensation Lady Gaga, who is performing at the FI and stars such as Shah Rukh Khan and Hrithik Roshan are expected to be present at the race.

    Big Corporate honchos like Airtel chief Mr Sunil Bharti Mittal and Vodafone global CEO Mr Vittorio Colao will be attending the race.

    At the after-race parties being organised by Mr Arjun Rampal, corporates are booking tables that start from 4 lakh up to 10 lakh. These parties will feature stars Messrs Shah Rukh Khan, Farhan Akhtar and Hritik Roshan and a host of other celebrities.

    Says Mr Tikka Shatrujit Singh, chief Asia representative for French luxury house LVMH: “It (F1) will be a big opportunity for the global elite to network with the young tycoons of India and policymakers.”

    “For companies, it will be an opportunity to showcase what they do and to entertain their big clients and guests,” said Mr Singh, who plans to be at the race.

     

    Source:The Economic Times

    Copyright © 2011, Bennett, Coleman & Co. Ltd. All Rights Reserved

  • Retailers like Future Group, Lifestyle, Godrej, MegaMart, Fabindia are offering 0% EMI to attract customers

    Retail giants offer 0% EMI to woo clients

    By Writankar Mukherjee, Atmadip Ray & Pramugdha Mamgain

     

    Retailers are countering the economic slowdown by offering interest-free equated monthly instalment (EMI) schemes, which they say are not only helping them pull customers into stores but also encouraging shoppers to buy higher value products.

     

    Such EMI-based sales promotions have staged a big comeback at a time near double-digit inflation has put a heavy strain on household budgets, making people defer non-urgent and big-ticket purchases even on credit because of hardening interest rates.

     

    But transactions carrying zero percent financing have grown more than 50% over the past year, say retailers and bankers.

     

    From apparel sellers such as Arvind Brand’s MegaMart and Fabindia to multi-product retailers such as Future Group, Lifestyle and Godrej, firms reckon that zero-interest EMI options are the most effective discounts they can offer.

     

    While retailers end up bearing the interest for the duration of the credit extended, they see it as an acceptable cost of keeping the sales register ticking during the downturn.

     

    “EMI schemes are removing inhibitions and inducing consumers to splurge on big-ticket items,” says Mr Himanshu Chakrawarti, chief executive of Essar Group’s Mobile Store, the country’s largest mobile phone retailer. He says consumers going for six-month EMIs are buying handsets priced twice than they had initially planned and those going for nine-month to 12-month schemes are tripling their size of transaction.

     

    Almost a third of the high-end mobile phones, such as the iPhone and the latest models of Blackberry and Android-based phones, sold at the Mobile Store are paid for through instalments. The company, which rolled out EMI schemes at its 1,200 stores across the country over the past couple of months, recently became India’s largest seller of BlackBerry smartphones.

     

    Instant approval of loans and minimal documentation help speed up EMI-based transactions, says Mr Parag Rao, senior executive VP, HDFC Bank. He says the bank has seen a more than 100% spurt in this loan category over the past year with an average transaction of 30,000. “Since the amounts are much smaller compared to home or car loan, the EMIs don’t pinch much,” he says.

     

    Consumer durables and jewellery sellers were the first to offer such sales schemes, but now retailers across product categories are betting on interest-free instalment schemes. For consumers, this spells the return of consumer financing schemes, which had dried up during the global meltdown in 2008 and 2009 when banks turned away from most unsecured lending schemes.

     

    But the return of such schemes is becoming a major motivator at a time when studies are showing consumers are searching for the best deals and discounts like never before. A latest study by NM Incite, a Nielsen-McKinsey Company, shows that conversations about deals and discounts account for 50% of all conversations in social media forums this Diwali.

     

    “Deals are becoming the primary motivators to consider purchases. This more than anything will decide which brands will win a greater share of wallet this season,” says Mr Adrian Terron, Head, NM Incite India.

     

    From apparel and mobile phone sellers to furniture and computer stores, retailers across the board are reporting a jump of 10% in sales on average driven by deals like EMI schemes. They say the average bill size has also grown simultaneously by 10% to 15%.

     

    EMI-based sales have doubled for consumer electronics during this festive season, retailers say. In the case of products such as LCD and LED televisions, nearly 15%-17% of all purchases are being made through such schemes, says Mr Devang Mody, business head (sales finance) at Bajaj Finserv Lending.

     

    The lender has tied up with manufacturers such as LG, Samsung, Sony and Panasonic and durable retailers including Croma, Vijay Sales and Reliance. It expects the festive season to generate EMI-based sales worth 750 crore.

     

    For jewellery retailers, hit by the double whammy of inflation and appreciating gold prices, interest-free instalment schemes have become a veritable lifeline.

     

    Furniture retailers, staring at halving of growth to 10%, are finding a much-needed growth driver in zero-interest EMI schemes. “With inflation kicking in and discretionary spending capability of households going down, EMI schemes will become more relevant as these facilitate consumer instant gratification while paying in easy instalments later,” says Lifestyle International managing director Mr Kabir Lumba.

     

    Future Group’s Home Town is similarly offering products on interest-free EMIs, as is Style Spa, which joined the bandwagon a fortnight ago. Fabindia launched an EMI scheme this month on purchases of 50,000 and above, which covers apparel and other products. “We intend to tap the burgeoning professional class through this scheme,” the company spokeswoman said.

     

    Analysts say retailers stand to gain even as they absorb the interest component when they offer zero-percent EMI schemes. “While such schemes may impact their margins, the interest gets accounted as a cost they need to bear to generate sales,” says Mr Devangshu Dutta, CEO of retail consultancy Third Eyesight.

     

    Source:The Economic Times

    Copyright © 2011, Bennett, Coleman & Co. Ltd. All Rights Reserved

  • The mood seems a bit muted this year what with inflation and a general economic uncertainty. It’s not that purchases are not being made but the general consensus on the mood is that people are cautious before spending.

    Tight strings on wallet this Diwali (text & videos)

    By Tuhina Anand

    With inputs from Shruti Pushkarna in New Delhi (text and videos) and Insiyah Rangwala in Mumbai

    Looks like the sparks this Diwali could be less bright as for people who traditionally would see big business during the festive season be it shops selling consumer durables, gadgets and gizmos and of course jewellery are not too optimistic on the sales. The mood seems a bit muted this year what with inflation and a general  economic uncertainty. Its not that purchases are not being made but the general consensus on the mood is that people are cautious before spending.

    For shops selling consumer durables, Diwali has been a money spinner but things seem to have changed in the last 2-3 years. Mohan Singh, Branch Manager, Next Retail Ltd in Delhi in a conversation does share that sales are down as compared to last year. But he is hoping on Dhanteras purchase to make up for this slow start. He said, “Last year there was a huge demand for microwaves, washing machines and TVs but this year except for LCDs, there isn’t much demand for other products in this category. In fact I would term it as black Diwali.

    HR Giria of Girias, which is a multi-city chain of consumer durables showrooms dubs that even if the sale would be encouraging this year it would only be `marginally better’. In the meanwhile Girias is leaving no stone unturned to woo customers with both offers in shop as well as extensive advertising in print to reach to large number of customers.

    While the mood may be sombre but one thing is clear that when its comes to making purchases this Diwali, its LCDs and LED’s that is `hot’ item. Samsung, Sony and LG are the preffered brands and the 32inch seems to the most popular buy. In fact in some shops like Vijay Sales, the floor manager informs us that these panels comprise almost 50 percent of their sales.

    Small appliances like hand blenders, toasters and rice cookers are popular picks for gifting purposes. Also the shift is now on gadgets especially tablets, MP3 and smart phones and digital cameras when it comes to gifting. One does not need to be disappointed as there are also shops who have seen increase on sales this year especially in terms of gadgets like Manpreet Singh, Manager, Hari Om Electronics informs that as compared to last year gadget purchases have gone up, and says it has increased by 30 per cent.

    Most of the shops have easy availability of credits to help shoppers purchase more. Some of these have also tied up with banks like ICICI, HDFC, Amex, Citibank to encourages customers to spend more.  The average spends could be anywhere between Rs 25000-35000. Also most retailers have scratch card or other such offers mostly given by the company itself to give something more to the consumers.

    And if one is discussing Diwali purchase one has to look at gold and silver purchases this Diwali as jewellery or coins is a major part of Diwali shopping. With spiralling gold and silver rates, these purchases have become far more dearer. In fact, a jeweller in Mumbai rues the fact that this year the sales have gone up only by 150 percent whereas in the past it used to increase to 450 percent. In fact, 10 per cent of his income would come from Diwali.

    Mohit Gupta, Vice President, PP Jewellers Pvt Ltd, said, “Sales have definitely gone down this year because of the soaring gold rates. Gold and silver coins are the most popular purchases, they are seen as investment. For gifting, because of high gold rates, this year people are going in for more light weight jewelery like ear rings and small pendants. Every year we see a growth of at least 20 to 30 percent but this year there isn’t any such indication so far. We are expecting a lot of purchases on Dhanteras.”

    Even though in the last few days the price of gold and silver have gone down but the increase in prices throughout this year will be a major deterrent for buyers. In fact, World Gold Council is advertising heavily on the fact that how gold is a good investment option. So the general mood is that the market is stagnant this year or the sales will be less than last year. Even in purchases people are going for small items. As a local jeweller in Bangalore informs that last year during diwali they had sold around 350-400 silver coins and will be stocking the same this year. Currently, a 5gm silver coin will cost around Rs 260 and 1 gm of Gold is approximately Rs 2600 (prices will fluctuate according to daily rates).

    Harish Goel, Owner, Goel Jewellers sums up the mood, “Sales are very low this festive season thanks to the gold prices. There are hardly any purchases from the middle classes so to say, even from higher classes, purchases are owing more to weddings rather than Diwali. Gold and silver coins like every year are preferred items. Last year the average spend per customer was somewhere around 50000 but this year it isn’t even half that amount.”

    These retailers are pinning their hopes on Dhanteras and let’s hope that they finally have their cash registers ringing on the auspices day.

    Also on Dhanteras, people buy steel items. Talking to Sumit Jain, Owner, Gift Gallery, he said, “Crockery is always an all time favourite. Like every year, this time too crockery items are popular gifting choices. Both china and glassware are popular gifting choices but we are seeing a big dip in sales. The market is not buzzing with consumers as it does every Diwali. Dhanteras is one day we are looking forward to but those are mostly steel purchases.”

     


    WHITE GOODS 

    On market trends in the last few years 

    Baldev Ahuja, Manager, Aarvee Sales (electronics showroom)- Market is down…four years back the market used to be buzzing but now because everything is getting expensive people are spending less on these items.

    		 [youtube width=”400″ height=”250″]http://www.youtube.com/watch?v=_IVkk-gpGkM[/youtube]
    On the most popular product this Diwali (LED) Saquib, Sales Executive, Audio Voice India Pvt Ltd- LEDs are more popular than LCDs because the prices have gone down. Also LEDs are better in quality as compared to LCDs.

    Baldev Ahuja, Manager, Aarvee Sales- People are more attracted towards LEDs this year because of the dip in prices.

    		 [youtube width=”400″ height=”250″]http://www.youtube.com/watch?v=B-TZcccS90M[/youtube]
    On the preferred gift items Saquib, Sales Executive, Audio Voice India Pvt Ltd – People this year are opting for more gadgets rather than home appliances, they go in for phones, ipods etc more as compared to LCDs [youtube width=”400″ height=”250″]http://www.youtube.com/watch?v=RKXr2hGOggc[/youtube]
    JEWELLERY 

    On most popular purchases this Diwali 

    Neeraj, Owner, Rama Krishna Jewellers- Gold coins are very popular this year, we have coins in all denominations; people are buying and investing more in coins this year.

    		 [youtube width=”400″ height=”250″]http://www.youtube.com/watch?v=d2k-84Twu78[/youtube]
    On how gold rates have affected sales this Diwali Lajpat Anand, Owner, Luxmi Jewellers- Lot of difference in the market this year…only people who have to buy for weddings etc are buying and even they have cut down on their budgets; as for other purchases, people’s budgets have been messed up because of increasing gold prices.

    Rahul, Manager, Rajesh Gems & Jewels- Big difference between this Diwali and last year is the gold rate that has gone up but it hasn’t really deterred people from buying gold during this Diwali…our sales have gone up as compared to last year.

    		 [youtube width=”400″ height=”250″]http://www.youtube.com/watch?v=rvPwnxqv6Pk[/youtube]

     

    CUSTOMER VOXPOP   Mrs Shukla, Housewife- As per the trend, prices go up every year, so obviously this year also it has gone up…but what can we do, we have to buy stuff for our own use and for gifting purposes.

    Nidhi, Working Professional- As compared to last year…we spend the same, Diwali is one special festival, so no cutting in costs, Its Diwali!

    		 [youtube width=”400″ height=”250″]http://www.youtube.com/watch?v=UmBk-uhlOl8[/youtube]



  • A Harvard Business School professor leads research on how and why the Taj hotels staff were willing to give up their lives when they had the option to flee in the 26/11 seige

    26/11 Mumbai attack: HR practices converted ordinary Taj employees into heroes

    By Saumya Bhattacharya

     

    In the weeks that followed 26/11 – the day on which rampaging terrorists killed some 150 people at 10 locations in South Mumbai, including 11 employees of the Taj Mahal Palace hotel – Mr Ratan Tata made visits to some of the bereaved families. The chief of the Tata group, which owns the Taj via group company Indian Hotels, met a woman who pointed to the garlanded figure of her late husband and said: “My children never realised their father was a hero.” It took Mr Tata by surprise, as he expected to encounter anger and sorrow.

     

    The above anecdote is narrated by Mr Rohit Deshpande, professor at Harvard Business School (HBS), who was interviewing Tata for a five-part video case study on crisis management at the Taj during 26/11. Mr Deshpande started to teach the course at Harvard from October 2010. His students, especially non-Indians, were transfixed by the topic and were incredulous why employees were willing to give up their lives when they had the option to flee.

     

    The student reaction prodded Mr Deshpande, along with Ms Anjali Raina, executive director at HBS India Research Centre in Mumbai to delve deeper into the HR practices of the organisation. The uncommon valour of those who worked at the Taj convinced the duo to research the human resource (HR) practices of the organisation. After all, here was an extremely rare case of employees placing the safety of guests over their own well-being; and in the process some of them sacrificed their lives.

     

    “We wondered whether the HR best practices made them do this and decided to dig deeper into the HR processes,” said Mr Deshpande, while Ms Raina added that: “It was intriguing to unpack the Taj approach to HR and speculate on the linkages between the hotel’s HR policies and practices and the customer service experience.”

     

    The research of Mr Deshpande and Ms Raina spanned more than a year. They began by asking for manuals, wondering if there was training given to these employees for an incident like this one. There was none.

     

    An intrigued Mr Deshpande started to research the HR practices of the company and found three pillars of practices that explained the courage and actions of employees: A recruitment system that hires for character and not for grades; training programmes that not just mentor employees but also empower them to take decisions; and a reward programme that recognises employees on a real-time basis.

     

    “I teach both MBA and executive programmes. In my experience, these practices have been unique,” Mr Deshpande said. Just one aspect- that of recruiting from small towns and recruiting for attitude rather than grades – was unheard of, he added.

     

    This research is interspersed with tales of employee heroism – a 20-something banquet manager helping guests escape; telephone operators staying at their posts and alerting guests to stay indoors; and staff forming a human shield to protect guests at the time of evacuation.

     

    One executive chef at the hotel told the researchers that other groups have tried to hire him, but he refused to go. Reason: There is a connection with the guests.

     

    Generations have come to the Sea Lounge for matchmaking and weddings are celebrated in the Crystal Room; and waiters have been serving people for generations, the researchers were told.

     

    “(At a time when) we are hearing so many stories of human frailty, mismanagement, moral turpitude, the Taj research is about ordinary people who became heroes. It’s about leadership from everywhere, especially leadership from below,” said Mr Deshpande.

     

    The research will be published in HBR’s December 2011 issue. The context for the students and organisations is to learn about HR practices that have been put together on unique criteria, said Mr Deshpande.

     

    The culture of employee-empowerment has been ingrained in the Taj workforce for some time now. For instance, the researchers found similar displays of gallantry at the at the Taj properties in Maldives at the time of tsunami in December 2004. “I realised that just like the character of a human being is the sum of choices made over the years, the culture of an organisation is the sum of values, policies and practices consciously fostered over the years,” said Mr Raina.

     

    Source:The Economic Times

    Copyright © 2011, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

     

  • A comparison of potential gainers and losers in the government’s move to open up retail for FDI reveals that 122 million consumers set to gain while only 40 million traders could get affected

    Stark stats: 40 mn traders may gain, 122 mn consumers could lose if retail FDI is trashed

    By Smriti Seth

     

    The consumer is not king, apparently. The hullabaloo over easing foreign investment norms in multi-brand retail is centered on the notional loss to a fraction of traders in the country and the consumer has been passed over.

    A comparison of potential gainers and losers in the government’s move to open up the country’s $450 billion (over Rs 20 lakh crore) retail segment to foreign direct investment (FDI) reveals that while a section of 40 million traders are likely to be affected by competition from organised modern retail, about 122 million consumers stand to benefit from it.

    Some experts say FDI debate underplays the importance of consumers in an economy.

    “We must not forget that consumers are the most important part of our economy today. They will also be the biggest gainers from FDI in retail, thereby benefiting the entire country,” said Mr Akash Gupt, executive director at PWC.

    The government on Thursday allowed 51% FDI in multi-brand retail, but restricted it to cities with population in excess of one million. It also raised FDI in single brand to 100%. As per the 2011 census, consumers in the 53 most populated cities of the country add up to over 122 million. In contrast, the numbers of people connected with retailing in the country is about 40 million, according to several estimates.

    In big cities, the number of people working in the retail sector is likely to be lot less.

    Buyers are expected to benefit the most from the increased competition in the retail industry in terms of prices and quality. “Competition will push prices down and improve quality of products,” Mr Gupt said.

    Despite the apparent benefit to consumers, some political parties and state chief ministers have come out strongly against the government move. Eleven states have said they will not allow supermarket chains to set up shop. On Monday, the parliament was adjourned because of the uproar.

    The opposition could restrict access for foreign retailers such as Walmart and Tesco to only about 25 big cities.

    Experts debunk the entire notion of FDI-funded modern retail causing a widespread loss of jobs in the unorganised sector, or the ‘kirana’ segment.

    “Since foreign retailers are only being allowed in large cities, it should not have an impact on employment, most of which comes from smaller cities,” said Mr Mathew Joseph, co-author of the report ‘Impact of Organized Retailing on the Unorganized Sector’ published by ICRIER, a think tank.

    “It might have some effect on profitability of small retailers in the beginning, but they will have enough time to brace themselves for entry of foreign players and will recoup quickly”, the report says.

    There are other stakeholders as well who stand to benefit.

    As per the FDI policy approved by the cabinet, the foreign retail outlets have to necessarily source 30% of their raw materials from Indian micro and small enterprises.

    The policy mandates a minimum of $100 million worth of investments, of which at least 50% has to be in back-end infrastructure, most of which will be in rural areas that will fuel employment growth there.

    “Employment opportunities will be created from the need for front-end retail staff; improved supply chains will generate more jobs and sourcing goods from small industries will help in job creation as well,” said Mr Paresh Parekh, partner, retail and consumer product sector, Ernst and Young.

     

    Source:The Economic Times

    Copyright © 2011, Bennett, Coleman & Co. Ltd. All Rights Reserved

  • Organised retail cushions against Inflation with larger stores cheaper any where between 10-35% in different cities

    Kiranas key to service breadth of Indian consumers, says Kishore Biyani. But big, organized bazaars are cheaper

    By Sarah Jacob & Sagar Malviya

     

    Ram Agarwal, a kirana store owner at Kolkata’s Salt Lake area, every fortnight walks up to competition in the locality-in his case Big Bazaar and Spencer’s Retail outlets-to spy on their product prices. Without surprise, lower prices greet him at every visit.

     

    “The kind of deals these retailers provide in some products is impossible to match,” says Mr Agarwal, who has been running his shop, Radhe Shyam, for 24 years now. But he does match the retail goliaths when it comes to small pack sizes, which makes up the core of his sales basket.

     

    Mr Agarwal knows what opposition parties seem to ignore while opposing the government decision to allow 51% foreign investment in food and grocery retail-that modern retail helps consumers save their precious pennies amidst relentless rise in prices all around. The Economic Times visited popular kirana stores across Kolkata, Gurgaon, Delhi, Mumbai, Bengaluru, Hyderabad and Chennai to compare their prices of day-to-day items with big retail chains in their cities. Modern retail won hands down.

     

    In branded items such as detergents, wheat flour and edible oil, modern trade prices were 4-20% lower than general trade, which primarily sold them on MRP. And in unbranded staples such as sugar and onions, larger stores were cheaper anywhere between 10-35% in different cities. Take the case of onion.

     

    In Bengaluru, Aishwarya department store sells it for Rs 20 per kg, while Aditya Birla Retail’s More on the same road charges Rs 16.90. In Chennai, Star Bazaar, a hypermarket chain run by Tata’s Trent in a franchise agreement with UK’s Tesco, sells onion at Rs 18.50/kg, but at Jyothi kirana at T Nagar it costs Rs 24. The reason for this, say big retailers, is that they are able to cut through various levels of middlemen while sourcing. Also, these chains can bargain for lower prices with manufacturers because of their large purchase orders and pass on the savings to the consumer.

     

    “Modern retail generates up to 10% of the sales for consumer goods companies and can source products at lower prices,” says Mr Kishore Biyani, chairman, Future Group. He says that a big retail outlet, on an average, stocks up to 60,000 stock keeping units across categories, while kiranas store up to 4,000 SKUs.

     

    Does this mean modern retail will ultimately drive mom-and-pop stores out of business? No. Mr Biyani feels that kiranas are essential to service the breadth of Indian consumers. Analysts agree that consumers need both the formats, to always have an option to choose between the convenience of a neighbourhood store and value deals of a big retailer. They say consumers will always prefer aroundthe-corner kiranas for low-volume purchases.

     

    “Kiranas deal with consumer goods brands in low volumes. Since these firms do not share good margins, kiranas make it up by charging the MRP without discount,” says Mr Anand Ramanathan, associate director at management consultancy KPMG. Organised retailers, however, have to make it worth the consumer’s while to drive out, brave traffic and parking hassles and shopping queues. This is where their unique selling point of low prices comes in.

     

    “To draw consumers, retailers squeeze suppliers and ensure efficiency in categories that drive footfalls. They balance it out by enjoying higher margins in categories where impulse buying is high,” says Mr Ramanathan.

     

    As the table suggests, organised chains retail at lower prices even at a time when food inflation hovers at 9%. “It is all about offering consumers a hedge against rising costs,” says Aditya Birla Retail CEO Mr Thomas Varghese.

     

    For its Bengaluru stores, More sources half the produce directly from farmers and the remainder from traditional mandis or markets. “When the cost of procurement increases, kiranas raise prices. But we take a hit on margins and put pressure on the procurement channel instead,” says Mr Varghese.

     

    Experts say big retailers’ ability to offer lower prices will increase when international retailers open hundreds of stores and build backend infrastructure. “FDI in retail can, to some extent, compress the huge difference between the farm or factory gate prices and consumer prices in India, benefiting both producers and final consumers,” says Mr KT Chacko, director at IIFT.

     

    (With inputs from Writankar Mukherjee, Ratna Bhushan, Madhvi Sally, Jayashree Bhosale, Sangeetha Kandavel, Deepika Amirapu and PK Krishnakumar)

     

     

    Source:The Economic Times
    Copyright © 2011, Bennett, Coleman & Co. Ltd. All Rights Reserved

  • Corporates like Bharti Airtel, Infosys, Wipro and Microland help staff turn entrepreneurs

    Now, the likes of Airtel, Infosys and Wipro help you turn entrepreneur

    By Peerzada Abrar

     

    When Sanjay Mittal, an employee at Bharti Airtel, decided to take the entrepreneurial plunge this year, his employer was happy to provide him infrastructure, mentoring, funding and even a year’s salary. Bolstered thus, Mr Mittal (not related to Bharti Airtel founder mr Sunil Bharti Mittal) launched UCIT Managed Services, a company that manages video and audio web-conferencing services. His company now employs 35 and Mr Mittal resigned his job as senior vice-president at the telecom company this year.

     

    “I was surprised when Airtel offered me this kind of partnership,” said Mr Mittal, 44, an alumnus of Delhi College of Engineering and Punjab University. Airtel let Mittal pursue his passion, as the company recognised his contribution of starting this type of unified communication business from scratch, while working at the firm.

     

    Bharti Airtel, which has 238 million customers globally and revenues of over 65,315 crore for FY2011-2012, owns no stake in the start-up, but Mr Mittal says his company has a mandate to grow the audio and video web services business and manage the complete infrastructure for Airtel.

     

    He is also in talks with Airtel’s rival telecom operators to provide the service. Six other Airtel employees have also launched their own start-ups, with assistance from their employer, since it came up with a policy seven months ago to nurture entrepreneurial ability among employees. A board comprising Airtel senior management identifies, funds and guides potential business ideas from employees, who want to leave the company and start on their own.

     

    Apart from this, programmes such as Sparkplug help employees turn their ideas into businesses inside the firm. Other programmes like Zing Labaratory and Start Up Weekend are open for outside entrepreneurs to turn their business ideas into reality.

     

    According to Mr K Srinivas, president for the consumer business at Bharti Airtel, the initiative’s aim is to encourage business plans from within or outside the organisation to create new product ideas. It is particularly important now as Airtel ventures out to data services and applications. “This is not going to happen only through Airtel’s efforts. Building entrepreneurial spirit is vital,” said Mr Srinivas.

     

    Observers said that such corporate ‘intrapreneurship’ initiatives could become hothouses of innovation. “Take Google, for instance. Gmail, Google News and Adsense resulted from its Innovation Time Off programme, in which employees are able to devote 20% of their work day to independent endeavours,” said Mr Krishna Tanuku, executive director at Wadhwani Centre for Entrepreneurship Development at the Indian School of Business.

     

    INSIDER ENTREPRENEURS

    While Mr Mittal left the Airtel fold, another employee, Mr Moloy Kumar Mukherjee, came up with an idea that was turned into a business by a senior team within the telecom company. The product iFasal, which was developed within Airtel, provides real-time access to the prices of crops, seeds, pesticides, weather information and farming advisory to farmers.

     

    The subscription-based service has spread across states such as Rajasthan, Haryana, Uttaranchal and Jharkhand. Mr Mukherjee, who hails from a farming family, thought about the idea when he saw small farmers suffering supply-chain losses and being exploited by middle-men. “This is because they don’t get the information at the right time,” said Mr Mukherjee.

     

    OTHER EARLY ADOPTERS

    Other organisations, including IT firms such as Infosys, Wipro and Microland, have also started initiatives to drive innovation.

     

    “This entrepreneurial culture allows employees to think big and bring new ideas to the table,” said Mr Vishnu Bhat, vice-president and global head for cloud computing at Infosys, India’s second-largest software exporter.

     

    Wipro, India’s third-biggest software exporter, has opened up various technology challenges at the firm, which involves open invitation for ideas to solve critical problems. “This itself is driving the innovation culture and the entrepreneurial shift in the organisation,” said Mr Anurag Srivastava, chief technology officer and senior vice president for Wipro’s global IT business.

     

    The intrapreneurs helped Wipro develop a platform made for the Indian garment industry, which will bring down operational costs and help compete effectively with rivals from Bangladesh and China.

     

    Mr Srivastava said if the business plans of employees do not succeed, they are still valued highly in the organisation because of the risk they have taken.

     

    Mid-tier firms, like Bangalore-based IT infrastructure services provider Microland, are also following a similar path. In Microland, an executive team headed by chairman and managing director Mr Pradeep Kar selects ideas from employees. VM Kumar, chief marketing officer at Microland, said customers these days do not pay for the resources like manpower and infrastructure. They carry out transactions based on the business outcome. “For that, we have to innovate, which needs an entrepreneurial mind-set,” said Mr Kumar.

     

    VENTURE CAPITAL MODEL

    Corporate entrepreneurship has been successfully adopted by some of the world’s largest technology corporations such as Intel, Microsoft and IBM. US-based Cognizant Technology Solutions Corp has started an innovation initiative called Cognizant Capital in India. It follows a venture capital model within the company, where it incubates innovative business ideas suggested by employees. The main objective of the model is to create new types of IP-based service offerings that are complementary to their business model.

     

    There is an internal board that screens business plans and allocates funds in a staged model patterned after Silicon Valley venture capital firms, said Mr Sukumar Rajagopal, SVP and Global Head of Innovation at Cognizant.

     

    “Innovation in the current context is increasingly important because customers are going through structural shifts in their business,” said Mr Rajagopal.

     

    CHALLENGES

    Mr Jagdish Kini, former CEO and executive director of Bharti Airtel’s mobile phone operations in India, feels though these are good initiatives to boost the ecosystem, large Indian firms should consider entrepreneurs as partners. “A professional approach is required. They should not portray they are providing some kind of help,” said Mr Kini.

     

    An entrepreneur, who did not wish to be named, was collaborating with Airtel to provide value-added services for entry-level mobile users. However, he said, he had to close down the start-up due to differences with the management at the telecom major. A spokesman for Airtel said that they are trying their best to grow the ecosystem, but it is not necessary that every business scales up and becomes successful.

     

    ZING LABORATORY

    Airtel has now also built a ‘Zing Laboratory’ that helps outside developers and entrepreneurs to test, experiment and simulate various mobile technologies revolving around the 3G platform. Started last year, around 21 entrepreneurs and developers have set up applications that they tested prior to the actual deployment of the solutions in the market.

     

    Last month, Airtel also announced the ‘Start Up Weekend 2011’ in association with SingTel Innov8, a corporate venture capital arm of telecom major SingTel Group. This competition invited individuals to participate and share their new start-up ideas.

     

    Jobs Bolega, a voice-based social network for blue-collar workers, won the competition. The team will join the SingTel Innov8 2012 boot camp in Singapore and get seed funding as well to make their ideas a reality. Tanuku of ISB believes corporate entrepreneurship, which is still at a nascent stage in Indian companies, needs faster adoption.

     

    “A few years ago, if you would do what you’ve always done, you’ll get what you’ve always got. But now it is not possible to even keep what you have unless you drive innovation by having entrepreneurial culture inside the firm.”

     

    Source:The Economic Times

    Copyright © 2011, Bennett, Coleman & Co. Ltd. All Rights Reserved

  • Middle India market for FMCGs will exceed US $ 20 billion by 2018, says Nielsen study

    Middle India market for FMCGs will exceed US $ 20 bn by 2018 : Nielsen

    By Ratna Bhushan

     

    The FMCG market of about 400 smaller Indian towns with populations of 1 – 10 lakh, is expected to surpass US $ 20 billion by 2018 and 80 billion US $ by 2026, a new study by insights and analytics firm Nielsen said.

     

    Currently, the 400 smaller towns represent approximately US $ 6 billion.”Although big Indian metros remain the staple for FMCG marketers and rural India is proving to be critical for volumes in the long run, the next wave of the Indian urban demand revolution may be found in these 400 smaller towns with a population of 1 – 10 lakh,” said Ranjeet Laungani, Executive Director, Nielsen. “It’s time for marketers to take notice”, he added.

     

    Nielsen’s study shows that out of the total US $ 28 billion in FMCG sales last year, products worth about US $ 6 Billion were consumed in these smaller towns. This number makes up more than 20% of overall FMCG sales, and 30% of the urban FMCG sales. Since 2002, the FMCG sector grew 3.5 times in these smaller towns of 1-10 lakh population, compared to 3.2 times at the all-India level.

     

    “The demand revolution has percolated down to middle India and these towns will behave like the metros of tomorrow,” said Laungani. “Middle India leads the pack across urban and rural segments for FMCG value growth rates.

     

    Out of 81 FMCG categories tracked by Nielsen, 49 product categories across personal care, over-the-counter drugs, household care, and food outgrew the all-India rate. Over 30 categories saw growth rates faster than 1.15 times the all-India rate. FMCG companies which anticipated this kind of growth and invested in these areas a few years ago, are likely seeing a positive return on their efforts,” says Laungani.

     

    Source:The Economic Times

    Copyright © 2011, Bennett, Coleman & Co. Ltd. All Rights Reserved

  • This strategy is not only giving smaller brands a pan-India presence, but also helping them reap dividends

    Small regional brands get modern retail push

    By Sagar Malviya

     

    Small and regional brands are tying up with retail giants to push their merchandise, as middle-class Indians shift from mom-and-pop stores to the comfort and variety of modern retail.

     

    The latest to join the bandwagon is ayurvedic products maker Baidyanath Ayurved Bhawan. The 95-year-old company has tied-up with Future Supply Chain Solutions, the logistics arm of retail giant Future Group to widen its consumer base and boost its position in the health products segment where it competes with Dabur and Emami. The Kolkata-based company will use Future Supply Chain’s network to sell its ayurvedic medicines, tonics, hair oils and toothpastes in more than 2,000 outlets in the country.

     

    Future Supply Chain serves several large retailers besides the parent group’s Big Bazaar.

     

    “More than just sales, modern trade gives a very high visibility that’s important to us. Also, it’s an easy way to break into newer markets without investing substantially in distribution,” said Ameve Sharma, president of the over 350-crore Baidyanath.

     

    This strategy is not only giving smaller brands a pan-India presence, but also helping them reap dividends. Within a year, the share of organised retail in total sales of brands such as Wagh Bakri tea, Super-Max shaving products, Nilon’s pickles, Dukes biscuits, NR Group’s Ripples fragrances has risen from near zero to about 15%.

     

    “Due to consumers moving and settling across geographies within the country, we are able to support small and regional brands get national footprint and also where relevant communities stay,” said Devendra Chawla, president of FMCG and food at Future Group. “For several small vendor partners, setting up distribution networks can mean lot of resources and costs. Modern trade is the quickest route to market in relevant markets,” he added.

     

    The move is also partly driven by the need to be where the competition is. “You have to be where your competitors are,” said Ravi Chandra, general manager, sales and marketing at Super-Max Personal Care, which earned 2% of sales from modern trade from just 0.2% a year earlier. “We have heightened our focus on modern trade as our product portfolio matched the target consumers of these stores,” Mr Chandra added.

     

    Nilon’s, the country’s largest pickle brand that was available in some 100 stores two years ago, is now available in 400 stores.

     

    “We were hardly present earlier in Mumbai and Tamil Nadu. We realise that the future in big cities is through large outlets,” said Nilon CEO Rajheev Agrawal. The company has seen sales from modern retail rise from 7% to 15%. Future Supply Chains, which works with 20 such clients, has added half of its clients over the past one year.

     

    “No distributor has an all-India presence, and that’s where we come in. We also take care of shelf and merchandise management,” saidAnshuman Singh,MDand CEO of Future Supply.

     

    However, firms say that jump-starting sales has its own problems. The margin for modern trade is higher than that of general trade, and small brands end up paying about 10% more than their bigger counterparts. But they are not complaining. “The fallout of margins is basically on the return on investments calculations and large stores are increasingly giving higher throughput,” said Mr Chandra.

     

    Also, these firms are getting into premium products, which need the platform of modern trade. For instance, Baidyanath is entering soaps and shampoos while Wagh Bakri Tea is focusing on tea bags and instant tea.

     

    This trade route has another plus: when a retailer expands, it carries the product with it. “Retailers have almost doubled their stores. This means more sales of our products,” said Anik Mukherjea, chief business creator (fragrances) in NR group, the Mysore-based maker of Cycle Agarbattis and Ripples.

     

    Source: The Economic Times

    Copyright © 2011, Bennett, Coleman & Co. Ltd. All Rights Reserved

  • Once a hit marketing tool, flash mob may lose its sheen due to frequent use

    Flash mobs may lose sheen if overdone

    By Neha Dewan

     

    There was nothing unusual about the busy weekend evening at Ambience Mall, Gurgaon, in the second week of December. Christmas was just round the corner, and the mall was thronged by scores of shoppers eyeing bargain deals.

     

    It changed at 6 pm when suddenly a large group of people gathered and broke into a dance that lasted a few minutes and ended with the signature Nokia tune. It was one of the flash mobs that the Finnish mobile phone maker organised simultaneously across six cities to mark the launch of its Lumia smartphone.

     

    It took most onlookers by surprise, but many shoppers have seen other such song and dance in recent times.

     

    Flash mob-when a group of people suddenly assemble in a public place to perform a dance or any other short entertainment act and then disperse quickly-is perhaps the hottest marketing buzz in the country, but analysts warn it will lose its sheen because marketers are overdoing it.

     

    Often used for the purpose of entertainment or to spread awareness about a social cause, flash mob has its modern day origin in 2003 when it was first held in a retail store in Manhattan, the US.

     

    However, in India the flash mob kicked off in big way last November when 23-year-old Shonan Kothari led a 200-people crowd to dance to the tunes of ‘Rang de Basanti’ at Chhatrapati Shivaji Terminus railway station in Mumbai. The event was a grand success, getting several views on YouTube.

     

    Since then, there have been a string of flash mobs organised by brands, TV channels, NGOs across leading malls in Delhi, Mumbai and Bangalore to promote shows, create awareness and generate buzz. And here lies the danger-killing the hen that lays golden eggs.

     

    Moreover, in some cases, brands end up advertising before the show, either through social media or through word-of-mouth, which dilutes their spontaneity.

     

    Too much, too soon? Maybe, that’s why brand experts sound a word of caution against using flash mob frequently.

     

    And this is what made Arjun Sharma from deciding against having a flash mob last year. “We thought it would be predictable to do it again in 2011,” says the director of Select Citywalk Mall in South Delhi, who organized a flash mob in 2010. However, Mr Sharma does plan to organise another one-most likely on Valentine’s Day in February.

     

    “It’s a fabulous way of community building as it leaves an image in the minds of the consumer.”

     

    Perhaps that explains the need of many brands to get associated with this ‘surprise’ quotient. Santosh Desai, CEO of Future Brands, calls it a classic case of ‘interactive advertising’. “There is much talk about creating experiences for the consumer. And this acts as the perfect medium to give them that.”

     

    Ashley Lobo’s Danceworx, which organised a flash mob on the Christmas weekend at DLF Promenade mall in the capital, now gets at least 4-5 queries a month for such shows. But Heemanshu Sharma, choreographer at Dancework, says flash mobs should be limited. “I think flash mobs can be far more productive if used less. Otherwise, they tend to become very predictable,” says Mr Sharma.

     

    Source:The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • The outlook for the organised retail sector in India is gloomy as the economy is slowing down following a period in which monetary policy was tightened, according to a global study by Deloitte Touche Tohmatsu.

    Deloitte study says outlook for Indian retail sector gloomy

    By Writankar Mukherjee

     

    The outlook for the organised retail sector in India is gloomy as the economy is slowing down following a period in which monetary policy was tightened to fight inflation, according to a global study by Deloitte Touche Tohmatsu.

     

    The study, christened 2012 Global Powers of Retailing, says although the monetary tightening resulted in slower economic growth, it did not bring the inflation down. And because of this, policy makers are faced with the conundrum of slow growth with persistent inflation, it says.

     

    “Indian retail sector offers significant potential for growth of modern trade but given the recent policy flip flop related to FDI in multi-brand retail, both global retailers as well as existing Indian organised sector retailers appear to have adopted a cautious ‘wait and watch’ approach before committing fresh investments,” says Mr Rajan Divekar, senior director of Deloitte India.

     

    Mr Divekar says Indian retailers are also customising and fine tuning their business models across retail formats to ensure there is a balance between store expansion and profitability. “The recent liberalisation permitting 100% in single brand retail is a welcome sign especially for select luxury and niche retailers,” he says.

     

    The Deloitte report says retailers have learned to succeed in emerging markets like China and India as they significantly customise both their market models and product offerings to meet local needs and preferences.

     

    It says foreign investment in multi brand retail will have a positive impact on India’s economic growth. The move could lead to a rationalisation of the supply chain, greater supply chain efficiency, and greater effective spending power for consumers.

     

    The study says some retailers may find some silver linings in this otherwise cloudy environment. One positive effect of slower global growth will be the continued dampening of commodity prices. “For retailers, this means some improvement on the cost side of the ledger while retail price inflation in some economies presents an opportunity for improved profit margins, even in the context of slow top-line growth,” says Mr Divekar.

     

    According to the Deloitte report, the world’s 250 largest retailers recorded sales growth in excess of 5% in fiscal 2010 The figures mark a substantial improvement as compared to 2009, when the group of the top global retailers recorded anaemic growth of just 1.2%. The growth took place despite the end of fiscal stimulus in the US, the crisis in the Eurozone, and tighter monetary policy in key emerging markets like India.

     

    Source:The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved