Off the Shelf: The Retail & CPG Blog

What's in a name, so said the good old barb. Turns out a whole lot, if you want to hawk your wares in the market.

Ever wondered why most of the product lines from the stables of almost every major manufacturer, do not ever carry their parent company's name.

Walls, Slim Fast, Knorr, Lipton, Surf, Dove, AXA, and Vaseline, all are from Unilever, but it will be hard to find Unilever's name on these products. Similarly Braun, Gillette, Duracell, Downy and Gain are from P&G, but still none of them have their manufacturer's name associated with them. Toyota will never want the world to know the Lexus is its brand, and Saturn will always be the niche car, not the people car, unlike it's parent company, GM.

The reason is not hard to decipher.

Manufacturer's brand name has a certain image, and if individual products are associated with manufacturer name, then it will be difficult for brand to break away from manufacturer's image, which is usually manufacturer's original niche.

 E.g. if P&G is branded with Duracell, it might dilute Duracell brand. After all P&G's brand image is primarily associated with home goods. So end users might associate "P&G Duracell ", as a secondary digression of P&G, diluting "Duracell" brand in the process. So "Duracell" is better left alone, to fend for itself, in which it has excelled. After all Duracell, as a standalone brand, is the power cell.

The manufacturer name might cannibalize the brand, if associated too much with particular products. Tomorrow if Unilever wants to introduce another product, all it needs to do is to position it alone. And the new product need not be in traditional niche area of Unilever.

Manufacturers will want their labels to be brand in themselves, so that they can have a diversified and strong portfolio, often very much outside the original niche image of the manufacturer. The products line should not piggyback, on the manufacturer's name, as it goes against the rudimentary ethos of brand building.

Brand names have to be associated with the not so tangible image that wafts through consumers mind. All the marketing and the ad money is spent to ensure that brand captures a image, that is disassociated from the manufacturer's name.

When the product line is in its infancy, it needs every hand holding that is required, by riding on the manufacturer's name. But once the the product comes of age, it is usually high time, to let it go on it's own.

This is the reason why Bajaj has decided to remove the name Bajaj from its line of bikes in India. Bajaj definitely wants Pulsar to concoct a image of a masculine bike from this point onwards, far away from the effeminate effect of the name "Bajaj", that was so far emblazoned on it. So in a way Bajaj is trying to reposition the bike , this time on its own name.

Name matters after all. "Bajaj Pulsar" is very much different from "Pulsar".

Posted by Punit Maheshwari at 4:54 AM | Permalink | Comments (0) | TrackBacks (0)

There is so much online buzzing going around today.

Twitter, Face book, Digg, Delicious, My Space; everyone seems to be out there with full arsenal. Now all of a sudden, all the denizens of this planet (at least ones who have internet and a computer) have got voice that they can beam through endlessly over the net. And most importantly people are listening to each other.

So forget about any social site; any major retailer, who is selling online, has comments section associated with most of its products, where people can actually write their real world experiences. This has become the de facto standard by which end users form their opinion about a certain product or service, and it takes a little amount of time for any bad print to get amplified by certain notches and become the talk of the town.

Bad news indeed travels fast. It's all the more bad, if that bad news is indeed a canard, but by the time the realization dawns, the damage has already been done. And God forbid, if this negative bit of publicity has a shard of truth to it, then at least for some time, one has to bear the brunt of vox populi.

 

Hence it is imperative for any organization, to listen to social quips. Almost all the major organizations, are online on Face book, Twitter (Infosys is live telecasting its quarterly result on twitter tomorrow), and are indeed trying to form an opinion, based on what is talked about them.

 

Starbucks has a site which is totally devoted to listening to new ideas from its customers, and they do a darn good job of listening to its customers and implementing their ideas (MyStarbucksIdea.com).

Dell, pioneer in laptop customization, has its own site to do idea storming, and they take their feed from online chatter as well.

 

Nestle has recently been on the opposite side, wherein Greenpeace activists questioned their palm oil's supplier sustainability credentials (Today any company worth its salt has to have the green banner on its sleeve, and sustainability is the new mantra that has to be recited, sometimes as a marketing panacea).

Nestle quickly dropped the tainted supplier. But by then the damage had been done, and all Nestle could do was to douse the smoldering fire, that had gutted its image.

 

How does this impact any retailer?

·         First, demand sensing has a whole new variable in the equation, the social chatter. All the planned demand might pent out in a jiffy, if people forsake any brand, because of negative publicity, which consumers are doing with alarming alacrity. CEO's dashboard will suddenly be full of reds, if demand for a given product evaporates almost overnight.

·         Secondly, the organization will have to scout for a new downstream supplier, throwing a spanner in well oiled machinery of downstream replenishment of raw materials. Now Nestle has to search for a new supplier of palm oil, which can whet its huge appetite of palm oil, that too in such a short period of time, without interrupting its normal operations. It has to be very cautious now, as they don't want the lighting to strike twice.

·         Thirdly, a brand once decimated is very difficult to recover and resuscitate. Toyota is a good example where it will take some time for the end users to repose their faith. And it all started when issues about Toyota's vehicles reached a crescendo on online quibbling. Toyota facing such a massive wrath of the drivers for the first time, could not get its act together at the right time, and had to pay the penalty by closing down its production lines for a week. If they had listened to the online bunkum when it had still not gained a critical mass, it would have saved Toyota from this ignominy.

 

A stitch in time saves nine. Better listen, bootstrap and act, before people come knocking at your door. Have your eyes and ears strapped online. This might save your company a pile of cash.

Posted by Punit Maheshwari at 7:36 PM | Permalink | Comments (0) | TrackBacks (0)

This is the era of pay per use. Consume all you can, seems to be falling out of flavor. Pay per use minutes in cell phones, pay per plate in restaurants, pay per hour in rental car, pay per mile for car insurance, pay per use in cloud computing and now per use rest rooms in no frills European airlines:)
This is a logical evolution of consumption's renumeration. Why pay in bulk, when the usage is limited and piecemeal.

So everyone is serenading cloud computing. Not only it is pay as you use, but even secondary premises of cloud computing are very enticing to business; no upfront cost and risk transfer as a risk mitigation strategy. The responsibility of maintaining the cloud is with 3rd party, hence there are no upfront costs and maintenance of cloud is again within the purview 3rd part cloud provider. If the clouds bursts, the SLAs will be drenched, invoking penalty clauses. But the most compelling reason why so many companies are flocking to cloud, from my perspective, the selling USP of cloud, is the cost of operation of cloud, which is a direct function of how much you use and for how long do you want to use. If you are using one server you pay for one, if two you pay for two. So no more bulk cost.

If the enterprises are saving money, by introducing cloud, my idea is why not extrapolate it all the way to end users. I.e. the money saved by enterprises, should percolate down to end users, again on the basis of per use, if I use less of a cloud, I should also get incentive, either as discount on consumption of services, or as cash incentive.

Let me elaborate, by elucidating on another aspect, cross subsidization, in the context of online banking.

In every walk of life we observe cross subsidization. A la carte menus subsidize buffet, night shows subsidize matinees, business class subsidizes economy, and cash payment subsidizes credit card.

Now marry the two, cloud and cross subsidization.
Heavy users of online services are in a way subsidized by less frequent users. Now the ball game should change. Now that the companies are going for individual menu, why not pass on the savings downstream to end consumers as well. Since companies would be crimping money, why not propose that if you log on to a bank site daily (which in turn requires heavier resource consumption), you will shelve more bucks compared to someone who is very occasional visitor (let's say monthly, which will consume less number of resources, and hence  less usage of cloud).
I understand that in today's world, no one charges for online banking. But there is no free lunch. Someone is footing the bill for online version of bank, which happens to be the bank customers. Just by doing more online banking, clients are eliminating need of more brick and mortar resources, which means money saved for bank, a portion of which goes to rack up the online bank. So if I go online to a bank site, once a month, I am entitled for a more share of my savings (which I did when I didn't step into a bank building), as compared to one who is logging on daily (hence putting more cloud to use, and hence more money).

 In fact the same concept has already been incorporated to a very good extent by banks. Now most of the banks charge you, if you have more than 3 teller's transaction in a month. So why should not I get some discount (i.e. passing on my savings to myself), if I am so less a visitor to my online bank.

 
This question becomes very pertinent in today's world. The more you use, the more you pay and vice versa. This is also deemed as non linear pricing model, as cloud is not a function of fixed time (FP), or a fixed number of resources (T&M). It has coherence with the amount of usage, broken down till the last nibble.
If I am supporting my bank's cloud, by draining it less often, I want my incentives. In fact this trucks well with another go to word "Green". The less I use cloud, the lesser it drains, the lesser it is used, the lesser number of resources (e.g. power, server, AC) are used to support the cloud. The less drag on mother earth.

This is real GREEN, the green of nature, gelling seamlessly with the green of the dollar bill. This is music to my ears.
I want the granularity of cloud to percolate down to the end user.

Posted by Punit Maheshwari at 12:52 PM | Permalink | Comments (0) | TrackBacks (0)

The latest buzz word in Retail Enterprise systems is Digital Signal Repository, DSR. Is this another passing fad or is it worth the investment in time, money and resources.

Let’s step back a bit, and exhume the reasons for the genesis of yet another acronym, and yet another technology, that is making rounds in the hallowed portal of enterprise systems.

The ultimate panacea for all the ills that ail the retail industry is data; integrated, analyzed, normalized for offsetting any spikes, and harmonized across various systems, that work both in silos and tandem. Data that has the precision of neurosurgeon, but a mere collation of data from various systems, is not mined/layered and often does not lend itself for razor sharp analysis.

Data in Retail is required for various reasons:
• Better forecast, which in turn drive better ramp up/slow down of upstream demand from vendors
• Maintaining an optimum inventory level, not too large to cost me money, for not having a fast enough turn around cash conversion, not too small for leading to stock out
• Batter category management, better pricing malleability, better promotions and markdowns, better incentives for customers, better loyalty programs
• Maintaining a healthy top line and bottom line, and ensuring a good return to all stake holders
The more fine grained the data, up to each item (SKU) in inventory/shelf, the better.

Data is funneled from various resources:
• The most real time and minute form of data is point of sale (POS) systems, which update store inventory, deal with vendors for replenishment of stocks and is the fountainhead for the raw data for customer buying patterns.
• Data fed from shelf movements. Infy’s own 360 Shopping tool is one good example of this data collection.
• Data fed from DCs and warehouses. This is done using normal scanning or RFIDs at a more zoomed in level.
• Data from outside providers, who track market trends and record for data for industry in general.

Key characteristics of this data cleansing exercise are:
• It is data mining exercise, on top of the entire enterprise database.
• It is a big Master data management exercise that needs expertise to collect, analyze and produce results,
• It needs proper alignment of data to fit in the normalized grids.
• It should have interfaces to all external and internal data.

Handling all this deluge of data to see a trend through it is Herculean task. This is where DSR kicks in, with ready to wear solutions. It is a product that has been prepared, cut to tailor made length, in recognition of demand for data sensing, by doyens of data mining experts such as Oracle and Terradata. DSR is available as an extension of your existing ERP package, as standalone package, both at the retailer’s premises or as SaaS.

Is DSR the last word in Retail IT. And is it worth it.
My take on this question is yes. In today’s fast paced, highly competitive environment, where each dime counts, the value for DSR might be recouped in a matter of months.
After all when the customer’s tastes are fickle, loyalty is a passé, new products/varieties/services are name of the game, old products are interned without any one even blinking, and wallets are thin, if I can have an Oracle tell me my next blockbuster product, I would not mind paying for the Oracle. Alexander paid obeisance at Delphi. So will I.

 

Posted by Punit Maheshwari at 7:55 PM | Permalink | Comments (0) | TrackBacks (0)

We are witnessing an inflection point in history, where for the first time; major retailers on both sides of Atlantic are hugging green revolution. The jury is already out how much this is going to impact consumer’s buying behaviors/patterns and how much effective it is going to be, to curb global warming and destruction to the ecosystem. A lot of big box retailers are pushing for printing the carbon footprint on all the products that they carry in their stores.

Why carbon labeling is difficult:My perspective is that this initiative is just a cog in the wheel and it will supplement, not supplant, consumer awareness about the way they consume products and how government regulates various facets of goods production, storage, transportation and all the way till they are consumed. In retails taxonomy, this will be deemed as cradle to grave intervention.
In today’s complex global supply chain, it is very difficult to make out the carbon footprint of the constituents that make up the whole. The sum of the parts is almost larger than the whole in this context.
Carbon labeling is not as easy as putting nutrition labels on food products or putting labels on produce/package foods about their provenance. The latter two are scientific facts and all the suppliers need to do is to put them on the products.
Carbon labeling is a moving target.  Each product will have a constantly changing carbon footprint.
Typically a store carries in excess of 100,000 SKUs. Nutrition labeling is just for food, minuscule percentage of SKUs. We are indeed looking at a major exercise, logistically, operationally, and financially.
Same products will have different carbon footprints, depending on if they are packaged in small or bigger volumes. Rule of thumb is small package is bigger drain on resources, hence bigger carbon footprint.
 

Carbon labeling subsumes a whole gamut of activities, right before the product is even produced, and well after the product has reached the end consumer’s home.
 

Carbon footprint even before goods are produced:
Carbon labeling will have to take into consideration what the social/economic impact of the factory is, where the goods are being produced and how it’s workers live, as they will contribute to the carbon footprint for all the products manufactured in that factory/unit.
It will be important to consider how the power that the factory consumes is produced ( coal powered electricity will have a higher footprint than a nuclear one, at the same time, if the disposal of the nuclear waste is not proper than it will take the carbon footprint of that factory through the roof). It will be important to consider how the people that work in  the factory live, how they cook( natural gas vs. wooden twigs vs. electric stove ), how the folks have been impacted by various government decisions( e.g. if they belong to a migratory population, then their carbon footprint is bound to be higher than a stationary population). And all this will in turn contribute to carbon labeling of goods produced by them.

Carbon footprint during storage/distribution:
The goods that are in stores that are near to the main distribution centers will have a lesser carbon label as they will travel less, consume less fuel for their transportation/storage.

Carbon footprint once goods are in end user’s home/office:
After the products leave stores and land in consumer’s home, carbon foot print will keep on ticking. E.g. frozen foods will have to be kept frozen and the more number of days they are in freezer more is the energy consumed, and more is the wear and tear of the refrigerator. So this will impact their carbon label. It will also matter how much the refrigerator has been stocked, as too little air flow in a congested fridge, is bound to increase the energy consumption.
Carbon footprint of number of products is dependent to a very large extent upon the final usage and consumption pattern. E.g. the carbon footprint of computer is dependent on how long the computer is used through the course of the day, how well it is serviced during it’s normal usage and how it is disposed off after the end of its active lifecycle.
Similarly a normal detergent’s carbon footprint ids dependent upon, whether it is used in front loading washing machine vs. top load washing machine, water temperature at which it is used. These are the factors that are almost impossible to decipher as they pertain to future consumption pattern.
A DVD player’s carbon footprint will be decided by how much it is hooked to power during its life.
 

Fatigue Factor:
Carbon labeling is not only going to be difficult, but also it might turn out to be just a number, unless bolstered by consumer awareness and government initiatives. Also if all the steps including mobilization of consumer awareness are not mobilized right now, carbon labeling runs the risk of fatigue factor and consumers might not give the required attention to it.
 A case in point is the home energy usage meter, which the government has conceded, that it has not served its objective of encouraging people to save power, though initially it had created a lot of buzz. Reason is simple to unearth, people knew that they are consuming more electricity, but they were not elucidated on how to best operate their TVs, washing machines, ACs and computers to save power. So this once promising device was relegated as just another number crunching device.

Conclusion:
The practice of putting carbon label has its heart in the right place, but it has to be well supplemented by proper education of the consumers of what they can do to reduce the footprint of goods they purchase and services they consume. It has to be augmented by proper government efforts to ensure that all the environmentally good practices are implemented and social impact on the footprint is minimal. Caron labeling is a tentative indicator of the ecological impact of the various products. It is an exercise to initiate end users knowledge about environment and has to be wedged by another set of initiatives for it to achieve its intended purpose.

Posted by Punit Maheshwari at 3:54 AM | Permalink | Comments (0) | TrackBacks (0)

Mobile apps are the latest fad in the techno savvy world today. Search for mobile apps in any search engine, and you will be surprised by the sheer number of search results. Development of mobile apps is almost like a cottage industry today and everyone wants to hitch on to the bandwagon that Steve Jobs pioneered.

But few industries had a tectonic shift with the advent of smart phones as Retail industry, as this industry is so much intertwined with the end user and now to the end user’s logical alter ego, the ubiquitous mobile phone.

 

So why Retail industry is the avant-garde of the mobile app revolution, and what makes it so alluring to the retailers of all hue, gravitate towards mobile apps. Turns out very many reasons are responsible for this trend.

First and foremost, mobile apps are the new age cameras, incognito. With mobile phones you can snap an ever increasing clear image in a matter of seconds, any time, any place. So it was always a matter of next stretch of imagination that mobile phones would double up as sales folks in brick and mortar stores. Need a dress that you just saw a lady wearing in downtown metro. Just train you mobile camera to that dress (ensure that lady does not stare down at you), bingo your desired dress has been transmuted in digital bits and has been sent to all designated retailers in the nearby vicinity. And you will start receiving quotes along with other relevant choices on your mobile phone pretty soon. You have a whole army of sales folks in brick and mortar stores, at your command, to satiate your latest design inspiration. This is new age catalog marketing (that had helped Sears catapult itself, sometime in the past). The only difference is that you have endless catalogs walking live in all sort of places, and you have not spent a dime on it. Also it is not only CSR, who will help in order fulfillment, but also the entire army in sales stores.

In any real world store, the same phone will turn into a scanner, providing you the cheapest and the best possible option. So the phone becomes really dreary and quixotic, in the sense that it can drive prospective clients out of your stores, by providing them real world search results, in case you are a tad costlier than the store next door. This same scanner will help customers pull into stores, once they realize that the nice looking Armani suit, isn’t actually all that costly and it will snug in nicely, both onto themselves and onto their wallet.

Once in store, the mobile phone can turn into a midget commission junction, providing mobile coupons, base on your shopping pattern and which can be redeemed at the POS, by flicking open the mobile screen and scanning it. This will help retailer not only save millions in paper and post, but also help them turn precious dollars precisely into the exact discerning client’s mobile. A parent will get coupons when “Back to school” season is in full swing, but a teenager won’t ever be bothered by the same coupon.

This is also one of the features of Infosys’s own, ShoppingCard 360 product, i.e. context sensitive mobile marketing.

This will also ensure that right eyeballs actually go through your latest promotion and coupons, rather than throwing away coupons in the trash bin, by the dozen, right at the movement when they land in mail. Precise, clear and effective marketing. An overflowing trash bin, full of just arrived coupons, right next to the post, will be a thing of past.

Done with your shopping cart, mobile app will help you to make payment. There are many apps in the market that help the end user to make payment. Though skepticism is very much prevalent today about the safety of such transactions, but these transactions are going to reshape the payment ecosystem, the way credit cards did almost a decade back. This form is transaction is going to be extremely popular with small value products like magazines, paper and small toys. This will end up saving big transaction fees that credit card companies charge for each transaction. It is almost certain that in the near future, mobile phone payment will turn credit cards into antiquated, “had been” stuff.

Retail industry encompasses all the facets, end user interfacing, real dynamisms, sensitivity to number of footfalls and wafer thin margins operations. Mobile apps are all set to save dollars on marketing, lease, number of in store sales personnel and fees charged on each payment transaction.

Posted by Punit Maheshwari at 5:13 PM | Permalink | Comments (0) | TrackBacks (0)