Are Brick and Mortar companies facing extinction?
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Off the Shelf provides a platform for Retailers and Consumer Packaged Goods companies to discuss and gain insights on the pressing problems, trends and solutions.
November 7, 2011
June 2, 2011
Don't be fooled, it isn't thunder. Staying put would be a blunder
April 15, 2011
The Devil wears Prada but God wears Gucci!!
"Do you wanna know what comes between me and my Calvins?
Nothing."--this iconic line by a certain teenager named Brooke Shields catapulted her into instant fame and, in a way underlined the influence of brands in defining our social fabric.
A gentle breeze swept across my face as I entered the DLF Emporio Mall in New Delhi. For one moment it felt like I was in another world- someplace like Milan's Via Monte Napoleone, London's Bond Street, or the venerable Fifth Avenue in New York... a smorgasbord of everything fashionable and haute! Emporio is India's answer to other International fashion capitals-- concierge service, 5-star ambience, presence of revered brands like Dior, Gucci, Armani and Louis Vuitton and a shopping experience that is purely world class. Having said that, Emporio Mall is targeting only the creamy layer of people in the Wealth pyramid, but it serves as a shining example of the good things happening with Indian Luxury retailing at present.
Every brand has a story to tell... and the aura of exclusivity coupled with high income elasticity of demand takes care of the economics for premium goods. Gone are the days when the typical well-heeled Indian had to travel overseas to buy their favorite designer labels or ask their non-resident friends to grab the stuffs from Duty-Free stores. Almost all major Indian metros are now warming up to premium and ultra premium retail experience although retail space still remains a prime concern. Due to prohibitive real estate prices, many of the premium labels are increasingly looking at operating from luxury malls than from 5-star hotels.
Key Challenges:
1. Lack of dedicated retail Space; fashion high street
2. Expensive real estate; which significantly hits the bottom-line
3. Increasing the client base; target the high income population
4. Improve service offering
5. Establishing 'Luxury' as a need among Indian customers
6. Focus on affordable luxury for Indian customers
The Great Indian Retail story has been told, retold and foretold... and still we have a divided house full of enthused supporters and voracious detractors. Are we ready for the big jump or is India not yet ready for the bigger stakes of premium luxury retailing? As Bob Dylan once famously crooned--- The Times They Are A-changin' and if we look around closely we can see certain subtle changes which auger well for the luxury goods retailing in India.
By 2009/10 India became home to around 126,700 millionaires, these high-income households present a huge customer base for the luxury labels. The Indian luxury retail market is growing currently at a CAGR of 25% meaning that consumers of luxury goods are warming up to luxury brands in a big way. According to BusinessWorld magazine's The Marketing Whitebook 2010-11, five neighborhoods in Mumbai and Delhi and one in Punjab account for 65 percent of potential luxury customers in India. Higher disposable income, propensity to buy, and a demand driven market are all pointing towards a huge potential for luxury goods and services in the days to come. The Indian economic growth story is complementing the Great Indian Retail story and together we are in for an exciting time.
As I gathered my thoughts, the aroma from the café in the central atrium of Emporio mall wafted towards me. I saw a lady nibbling on what looked like a Low Carb Catalina Salad; well known faces that I have seen only on television and magazine covers walked past effortlessly. The pace was unhurried, languid, as if shopping was always meant to be a sensory experience. This is the new India... yet so unlike India!
January 20, 2011
Promoting Health and Wellness for Indian Consumers
India is now a rapidly growing retail market with organized retail at 6- 7 % of the annual $ 400 bn pie and growing significantly every year. While the Indian Government grapples with the idea of allowing large global retailers to set up shop and sell directly to end consumers, Indian Retailers should focus on offering benefits beyond price and convenience to retain leadership and the loyalty of the growing consumer base.
India’s middle class market is estimated to be over 300 Mn strong and incomes and lifestyle of young Indians are changing. Indians are becoming more health conscious in the larger cities evidenced by the mushrooming of gyms and fitness centers. Indian retailers can seize this trend and promote health and wellness by guiding consumers to choose and shop for healthier products or substitutes among the plethora of competing brands and items. This not only positions the retailer as a sensitive and responsible entity in the eyes of the consumer but also promotes overall well-being of the population.
Packaged food items that are present on retail shelves carry ingredients information as well as nutrients information. Most Indian consumers do not have the knowledge to interpret this information and apply them in their daily diets. While a large number of food brands might be packaged and priced attractively they may not be scoring well in nutrition. Retailers can interpret the ingredients and nutrients information effectively and suitably advise consumers on their purchase decisions.
One case example where this has been successfully introduced is at Hannaford Bros, a large retail chain in the US. The retailer developed a scoring methodology and attributed star ratings to their different food items by interpreting the ingredients and nutrients information present on the case packs. This was seen as a great value addition by the consumers and general population alike.
It’s also obvious that such endeavors have to actively use technology as an enabler to operationalize and successfully implement. Retailers should use such case examples as a guiding engine to effectively compete in what I perceive would be a highly competitive war for the share of the Indian consumer wallet in the next decade.
December 31, 2010
Ever wondered why one size fits too many?
Variations in actual physical dimensions across diverse apparel brands for the same labeled size is nothing new. That's the case more often than not! There is rarely uniformity in actual physical dimensions for the same labeled size apparel across brands. However, what have become more often, are variations in fit and actual physical sizes for a given tagged size even for the same brand. And here I am not talking about local or lesser known brands but leading apparel and sportswear brands.
One reason for such a discrepancy can be that the merchandise may be ticketed incorrectly, for instance a ticket for smaller size may be attached to bigger sized merchandise or vice versa. This can be easily remedied by making necessary corrections to the ticketing and labeling processes. However, another reason for this size inconsistency, which is faulty production, is far more troublesome. Unlike other product types, consistent fit and size are essential for apparel items. In fact these very aspects can differentiate a particular apparel brand from another. With varying actual sizes even for the same brand merchandise, consumers can't rely on the size labels alone and have to take many trails every time they buy apparel items, even when they are of same make and kind! This doesn't present a nice shopping experience to in-store shoppers. Also, given the focus of apparel companies to grow online this issue presents a serious challenge to the industry. Unlike in stores, where you can take trials and select the merchandise which fits you well, online shopping doesn't offer you such a convenience. If consumers are not sure that a particular size will have the same fixed physical dimensions then it's going to discourage them from making a purchase online and offset retailers' online expansion plans.
Shortened apparel life cycle and reduced time to market can lead to product inconsistencies and production related issues. Adoption of IT can help in providing big enough window for merchandise production by correctly reading the right demand and market signals. However, this too, may not always suffice given how fast trends and market dynamics change in fashion and apparel industry. More important is to invest further in skills and training of shop floor workers and to strengthen the quality control processes of manufacturers. It appears that maintaining consistency in sizes, an unquestioning expectation in apparel industry, can also become a differentiating factor in today's marketplace.
June 3, 2010
A 380 vs. B 787, a similar debate for retailers
In the 2004-2005 with the price of crude at 70-80 USD per barrel a raging debate was on as what is the future of commercial aircrafts. Is it the mega jumbo A380 by Airbus that can transport 600 + passengers from one hub to another hub or a fuel efficient nimble jet such as Boeing's 787(built with materials used for spacecrafts) that could fly point to point transporting smaller set of passengers cheaper? Two of the largest aircraft manufacturers were betting on two diametrically opposite strategies. A similar clash is on in the retail world as we speak.
Continue reading "A 380 vs. B 787, a similar debate for retailers" »
March 25, 2010
India focus: The market's there, but where are the premium apparel retailers?
Recently, I visited India for a vacation, after about 2 years of being away. The pace of change in India never fails to amaze. Back in my hometown (Indore), many streets are virtually unrecognizable. Malls and stores have opened up all over. People are out to buy with a vengeance. The economy remains strong and growing. One can say that the rich have significant disposable income, and are looking for innovative ways to dispose of it!!
Retailers are cashing in, ..or should be if they aren’t already. For apparel retail, I did see several new domestic apparel brands and a few US / international ones too including a handful of premium apparel brands. Yet, several of the US based luxury brands are conspicuous by their absence. Yes, I get it that India is an emerging economy and US/ Europe based luxury and apparel companies are in a wait-and-watch-mode, but I felt money is being left on the table..literally. There is a significant unmet demand for premium international brands.
A lot of the rich folks in India are a brand conscious lot and also clearly differentiate domestic and international brands. Many buy “imported” merchandise – ranging from apparel, the latest electronics, alcohol, etc – during their trips abroad. Some will even coax and cajole their friends and relatives travelling abroad to get their favorite merchandise. Yet, the number of such transactions is limited by the impracticality. In today's flat world, most are already very familiar with the international brands and the image they convey.
So, I am thinking: “What’s up? Where are the premium apparel retailers?” In a series of blogs, I intend to bring up various dimensions of this issue.
Hope to get your thoughts and inputs.
February 8, 2010
Carbon Labeling - Will it give results?
Late last year, New York Times reported that labels listing carbon emission associated with certain produce products have started appearing in the grocery stores and restaurants in Sweden. This is a direct result of the study done by the Nutrition Department at the Swedish National Food Administration which established new food guidelines with equal weight for climate and health. The study has brought out many surprising facts about the greenhouse gas released by the different produce items during the growth.
Continue reading "Carbon Labeling - Will it give results?" »
February 2, 2010
"Enough already!" - Too much variety, too much data but not enough insight for Category and IT executives
One of my Infosys colleagues, Madhu Janardan, blogged right before the Holidays last November about how consumers are suffering from “item variety overload” when confronted with 24 varieties of mustard, Heartburn pills that are either fast-acting or long-lasting (wouldn’t you want both?) and the like. Now besides being an expert in Grocery Retail, my friend Madhu is an excellent cook, so he knows his way around a Grocery aisle and knows the pain of which he writes. But Madhu and consumers aren’t the only ones that may suffer from “item variety overload.” Grocery category managers and IT executives are straining under the weight of all the data that this “variety” is causing.
December 30, 2009
Are US apparel retailers biased towards "larger" consumers?
A lot of shopping in my household is done post Christmas. Walk into any retail store and you see signs of "Clearance", "Sale" for all the merchandise left over from Christmas.
The size's available though are always in the L, XL, XXL category. Hardly any S; may be a few M's. I am sure this is especially frustrating for someone whose entire family falls into the Petite or Small/ Medium size range.
As for the "larger" consumers, I am sure you are happy with the deals you are getting!!
Continue reading "Are US apparel retailers biased towards "larger" consumers?" »
December 18, 2009
Enhance Customer Loyalty at the Final moment of truth
In this age of discerning and value chasing shoppers, Customer Loyalties can change in a single moment and gaining or retaining loyalty is a marketing warfare. Store is the final frontier where products are given equal opportunities to see, evaluate and choose the brand. Brands can be made or broken in these last few minutes of life span a shopper will give to your brand. It is then highly imperative for the brands to make best use of these last few minutes and ensure that the customers stay loyal. Here are 3 basic strategies, Retailers and CPG companies can look at to enhance customer loyalty.
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November 17, 2009
JDA i2 acquisition: 3 point view
When a consolidation happens in any industry, the market takes the news in awe. The market reacts swiftly initially with lot of news-spread, followed by strong analysis, view points and the market settles down accepting the new order and moves on. I’m sure the same will happen with the JDA i2 acquisition. JDA historically has been a great aggregator and have done acquisitions at strategic moments in its growth phase. Acquisition of Intactix, E3 and Manugistics all helped JDA solidify its position in the market, expand its footprint and establish itself as the leader.
November 9, 2009
Private labels, National brands and the Suppliers...
Hello,
On my previous blog, “Can Private label and national brand co-exist?” <<http://www.infosysblogs.com/retail-cpg/2009/09/>> I received many queries like: what I think will drive growth, how companies will cope-up with the volatility and what role will supplier play in the game. I will pen down some of my thoughts on this.
Last week WSJ reported: “Li & Fung Apparel Deal Boosts U.S. Expansion” <<http://online.wsj.com/article/SB10001424052748703816204574483211164417496.html? >>. Last quarter, we heard the clothing designers and manufacturers who together created and supplied to the women’s wear brand Principal (now partially leveraged, partially bought by Debenhams), coming together to form epiqfashion.com.
Continue reading "Private labels, National brands and the Suppliers..." »
October 16, 2009
How the recession has been good for us
October 12, 2009
Enterprise 2.0 for Retailers
October 8, 2009
What Retailers can learn from Elmo, Barney and Dora
I have a 7 year old and a 4 year old; who like most of the children their age love their television time. Seems like you can almost predict the age of a child by the TV shows that they like. You can also figure out the age of the kids by the tunes their parents can hum!!
The TV show "graduation" path seems to go from Baby Einstein to Elmo to Barney to Dora/ Diego to Caillou......will map the rest of it as my kids grow.
Seems to me that Retailers can pick up a few tips from these shows on customer segmentation and lifestyle driven merchandising.
Continue reading "What Retailers can learn from Elmo, Barney and Dora" »
October 5, 2009
Why can't "Google Adwords" be used in the brick & mortar world?
This blog post is inspired in part by Rahul's blog on "Can the grocery store provide an Amazon experience?". Set me thinking; seems like there are quite a few concepts that can be leveraged from the online world to provide consumers with a better shopping experience and in some cases make some money for the retailer as well.
This post is about the possibility of using a "Google Adwords" kind of concept to target consumers at a retail store at the "moment of truth"
Continue reading "Why can't "Google Adwords" be used in the brick & mortar world?" »
September 30, 2009
Advertising through Games & Social Commerce
For the last few weeks, I have been very much occupied during my weekends in trying to build my Farm and my Mafia gang. Before you start wondering about my spare time activities, let me reassure you that I’m actually referring to two of the hottest games on Facebook from a company called Zynga. The games being referred to here are “FarmVille” & “Mafia Wars”.
This led to the question - Would games from Retailers or CPG companies be an effective tool for social marketing and gathering customer feedback on new products & initiatives?
Continue reading "Advertising through Games & Social Commerce" »
September 25, 2009
Tagged!! A new approach to demand forecasting and assortment planning in Fashion Apparel
The fashion apparel industry has a unique problem - designing and forecasting the demand for their latest collections and lines. The designers naturally base their designs on their inspirations and new innovative concepts. Which means that the seasonal lines and their associated characteristics could vary dramatically each season. While creativity drives designers, at the same time it is important to create lines, styles and collections that connect with the consumers and sell fast. One of the problem is that many of these collections /lines are increasingly required to connect with an increasingly broad audience with growing importance of the international markets, and expansion of target segments. How do designers stay in touch with the changing consumer?
Merchandisers and planners also need to figure out exactly how much they might end up selling of each line. The typical demand forecasting tools used by many consumer goods companies, including those apparel retailers with relatively standard products, don’t work so well for truly creative design houses. For instance, last season’s yacht themed summer collection might have sold out fast but the demand pattern might be very different for this year’s Hamptons-themed summer collection. How do merchandisers forecast demand accurately?
I think part of the solution is by using Web 2.0 concepts like “tagging” and then using predictive modeling using tags.
September 23, 2009
Mobile Marketing 2.0 – Branded vs. Syndicated Applications, what do you think will stick?
September 17, 2009
Can Private label and national brand co-exist?
We will remember last year as a very difficult year for the global economy and for retailers around the world. Many big retailers like Circuit City, Mervin, Linen n Things, Fortunoff etc filed for bankruptcy. Credit crunch and consumer distress has put off the plans of other retailers to grow.
Indeed, the times have been tough though we are seeing signs of recovery or having hit the bottom, there is a lesson for us. Economic stress is transforming retail business in many senses. Inefficiencies in the processes, systems and the organizations have been weeded out. On one side, the CPG companies and national brands are building capabilities for increase in market share. On the other side, the retailers are focusing on growing private label business at the cost of national labels. What is the future of this tussle and what factors will determine the survival of either one?
Continue reading "Can Private label and national brand co-exist?" »
September 16, 2009
As we grow poorer we become more mobile-savvy!
1. Restaurants will see a dip in sales as consumers prefer eating in
2. Grocery coupon usage and redemption will increase as consumers look for deals to maximize the value of their grocery shopping trips
3. Retailers will cut back store expansion and focus on less expensive channels like online for marketing and sales
4. Brands will reduce their advertising spend significantly (most estimates predict an unprecedented 5-9% drop this year in ad-spending)
But the more intriguing and unexpected trend is how consumers are becoming more internet and mobile-savvy and how retail and consumer product companies are reacting and keeping pace with the consumer.
Continue reading "As we grow poorer we become more mobile-savvy!" »
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