Retailing - Getting it right from customers perspective!

Looking at the normal value chain of activities, retail is actually a very complex business to be in. Both manufacturers and consumers, which lie at either ends of the value chain, enjoy a great level of discretion when it comes to decision making. Manufactures to a great extent have the freedom to choose or alter their target customers, change product formulations and most importantly, have margins under their control. Consumers on the other hand are the czar of their own wish. They can choose which products, which brands, what quality, what price and from which points (retailers) to buy.

Stuck between them are the bewildered retailers having little choice available from either side. They have to stock the goods which customers want to buy (even if they offer low margins where other higher margin options are available) else they fail to build patronage amongst them. In most cases they have to stock what existing set of manufacturers produce (even if that is not something their customers are exactly looking for).

Add to this the increasing competition both from existing domestic players and the likely entry of global giants, lives of retailers is in anguish.

A lot has been written and researched on what they should do in order to sustain the wrath of competition and maintain profitability. But what all has been done till now, is limited to what retailers should do with whatever limited resources they have. This school of thought though is wise on judgement and suggestions, but fails to undertake the customers’ perspective. Retailers often state that they understand their customers and they conduct researches to know what they are actually looking for, but most of them fail to act upon it.

All the research and understanding remains on one side and retailers act for short term profits losing sight over what is required in long run to survive i.e. customer advocacy.

Let us try to see the situation from a little different angle and see what goes around in a customers’ mind when it comes to choosing and patronising a retailer and also see what the implications for retailers are.

Customers always look for experience and choose a retailer who can provide the experience they truly desire. They never buy only a product but along with it all the attributes in terms of service, store image and other related intangibles which form an attractive whole. In some cases the whole is something which the customers never know or even fail to express, but they become happy when they get it.

Retailers can concentrate on creating such an experience by touching all five senses of customers. Attract their vision with state of the art display & decoration, mesmerize them with the music they love, win them with cosy feel & comfort they fall for, enthral them with pleasing aroma and let them taste the excitement you have created for them. Do it all and they are madly yours.

Customers normally see or consider shopping as a way of self expression. They evolve in their life with new habits, changing tastes, advancing lifestyles, emerging aspirations and thus their expectations from shopping as an act and retailers evolve too.

With all this, it becomes imperative for retailers to stay relevant to them. Customers are never going to go to retailers and tell them the changes they expect, it will always have to be the retailers to keep the track of the change in customers lives.

To face this challenge, retailers will have to continuously research & understand the ‘changing customer’ and operationalise this understanding by incorporating required changes in their store positioning & imagery, store personality, store emotions and relationships it wants to build with customers.

Another interesting thing about customers is that it is very difficult to please but very easy to annoy them. This is to an extent that even a little undesired or unpleasing act done by retailer will ruin years of efforts and investment put into building a happy customer.

It is important for retailers to understand that customers are no kids and they hate being told a new story every other day. They expect consistency of experience every time they visit a store. Imagine a retail store which has long positioned itself as a low price retailer with average level of services (RVP). Customers learnt and imbibed this RVP with their interactions and experiences with the store. One fine day, the retailer changes its positioning to a quality store with above average prices. Customers will feel a bit disheartened but will try to adjust with the new positioning due to their long & satisfying relationship with the store. Sometime later, the retailer again changes its positioning to a high quality high price retailer, but this time customers are not likely to adjust, they may unpatronize the store or in worst case spread a bad word of mouth about the store.

It has implications for a retailer in the context that it should very thoughtfully devise a positioning strategy and stick to it until some mammoth factors forces it to change. The retailer will have to strike a fine & delicate balance between staying relevant by changing and resisting the temptation to change its positioning often to prevent disdain amongst customers.

I stated earlier that customers are not kids and hate being told newer stories, but there is one more side to it which says that customers are just like kids and expect parenting behaviour from their retailers. It has been observed that in a rush to attract more & more new customers, retailers fail to maintain relationship with their existing customers.

In a country like ours where online shopping has not gained much wide acceptance and physical shopping at stores is still an inseparable part of daily life; customers can be understood as very emotional beings who shop with less of reasons and more of heart. They establish a sense of bonding with the places they shop and expect similar involvement from the retailers. In such an environment chasing new customers and giving little regard to the existing ones is like parents starting to love the new born baby and forgetting the whereabouts of their earlier kid. It does not seem to be much acceptable and retailers must understand that existing customers are the biggest asset they have created and belittling them for new ones is a sure shot strategy for a business failure.

All said than done, understanding customers was and always will be a complex process and retailers will have to think like customers, if they want to stay in business.

Strategies- Combinations are IN!

Mahindra & Mahindra (M&M)...(Shift from Acquisition-to-Product development based  expansion strategy)

The news states that on 4^th, July,2012 M&M’s automobile division has inaugurated an Rs 100 crore R&D centre in Pune for its two-wheeler segment. M&M has now presence in every type of automobile segment ranging from two-wheeler, cars to air-planes.

 But its foray and expansion into two-wheeler industry is worth noting. M&M has adopted two expansion strategies in a row to tap this segment and establish itself as a competitive player in an already hyper competitive two-wheeler industry.

Strategy 1- (Merger and acquisition) M&M acquired Kinetic brand of scooters to gain quick entry in to the two-wheeler business. It helped the company to quickly establish itself and gain customer base leveraging on already successful products of Kinetic. After establishing itself initially, now the company has made a shift in expansion strategy and has turned inside for growth impetus/momentum.

Strategy 2- (Product Expansion) As stated in the news article also, the company is now heavily investing in its own research and development capacity to undertake ‘disruptive innovation’ and roll out clutter breaking products in the market.

This depicts that it is not necessary for a company to stick to any one type of expansion strategy. Instead it a wise for companies to thoroughly analyse its environment, its competitive standing, resources & capabilities, to choose a strategy or a combination of them in order to make inroads towards the top. And M&M is a perfect example of this; it has proven this phenomenon with the huge success it has got in SUV segment of cars. (There too it followed the same two strategies of acquisition and later product development).

Co-Creation...A strategic alternative to acquisitions and vertical/horizontal strategies

For companies who wish to control a larger part of their value chain or wish to eliminate uncertainty or reduce dependence on value chain partners (suppliers, distributors), vertical or horizontal integration is the best way available.

But such kind of integration either through takeover or acquisition involves lot of costs and risks. I was wondering if there is any other less costly/risky alternative to it and I came across a research article published in a leading economic newspaper about co-creation. Co-creation is the process wherein you involve your stakeholders like customers, suppliers, distributors and even other unrelated firms in the very act of developing products and delivering them.

After reading more about co-creation and the processes which it follows, I believe it is the best alternative to risky & costly strategies like vertical integration through acquisition of supply chain partners. In co-creation you bring various supply chain partners on a common platform and give them the responsibility to create an ecosystem, the ultimate aim of which is to deliver maximum value to customers at minimum possible cost. When every partner feels the ownership and a stake in the ecosystem, he contributes to it for his/her own benefit and thus the costs involved in establishing control system vanishes.

Another major advantage of co-creation as a strategy to better manage the entire supply chain is that you expand the canvas of creativity. You as an organization need not restrict your endeavours to those core competencies which you own; you can easily and effectively acquire additional competencies by simply co-creating or co-building them with right organizations.

A perfect example of it would be development of TATA Nano. The company involved all stakeholders’ right from suppliers, customers, employees and distributors in the process of co-creating a breakthrough product and this resulted in a huge success which we admire.

Although there is not a one co-creation model which suits all, but one thing is for sure that it is the best alternative to traditional strategies of acquisitions/takeovers and is the only way we can build enterprises of tomorrow.

Well next time you think of gaining new competencies or more control over your supply chain, don’t think about mergers and acquisitions. You have a smarter way of doing it.      Co-create it.

Strategic Intent (The Indian way...)

Having read examples of western organizations going out of their way and stretching their resources to accomplish big, I was wondering if there are any Indian organizations too which fit to the ‘Strategic Intent’ philosophy. Then I came across a news article (19, July, 2012) talking about Dainik Bhaskar (Daily Hindi Newspaper) having tied up with HBR (Harvard Business Review) and Time magazine for content sharing.


 After studying about the group in detail I found what I was looking for. Dainik Bhaskar Group is certainly an Indian organization who has reached a position which was beyond the scope of its available resources in earlier days.


 - Building layers of competitive advantage: It started and revolutionised Hindi newspaper industry by offering newspaper at lowest price of just Rs 1 per day. Later when other competitors followed the suit, it launched 14 regional versions to build a national brand and differentiated itself. Competitors again imitated its strategy, but this time DB launched itself in regional languages throughout the country. Definitely a perfect example of building layers of competitive advantage


 - Searching for loose bricks: When DB launched, publishing industry was highly fragmented in nature and many local players existed. It found this loose brick as an opportunity and promoted itself as a national brand. Operating on national scale and serving many regions simultaneously, gave DB advantage in content gathering and also economies of scale which it leveraged to cut input costs of materials like paper, ink etc.


 - Changing the terms of engagement: DB did not choose to operate like existing players, rather it chose to launch itself with a bang. Where existing players charged their subscribers on per day basis and made collections on monthly basis, DB for the first time in India launched yearly subscription plan at heavy discount and also for the first time in offered free gifts with these subscriptions. This new way of engaging with customers proved successful and DB gained huge readership base in very less time.


 - Competing through collaboration: This is a recent step which DB has taken, it has collaborated with HBR and Time magazine for content sharing for its Sunday edition. This step will give it an unprecedented differentiated positioning of a’ modern Hindi newspaper’ and an additional competitive advantage.

Borderless World

BORDERLESS WORLD: A MYTH OR REALITY

Our earth was made by the almighty ‘a place of equal opportunity for all humankind to inhibit’, but the emergences of diverse civilizations in different parts of the world lead to creation of manmade borders. In the name of protectionism, superiority, cultural differences, resource endowments and various other factors, the world got divided by territorial borders which confined cultural exchanges, trade, knowledge sharing, and human mobility within the fenced region, i.e. country.

But with emanation of various factors like information and technology, and communication, borders are playing a far diminishing role now as compared to the rather restrained earlier decades, and a new borderless economic, political, and social world order is taking shape; where the trend implies the dominance of economic factors over other now-less consequential factors like political, social and cultural.

Globalisation indeed has lead to creation of a world where the economic decisions are made without reference to national borders, where the financial capital, the production activities and even the workers move seeking better opportunities elsewhere in the world as they could in their own country . Here the impact of globalization can be studied in two phases– one that saw the entry of foreign companies into the developing countries, and second phase began with the companies of the developing countries heading to the developed ones. Both the situations created a business environment where the political boundaries of the nations have become irrelevant and the trade could be carried out with ease across the nations.

Political and geographical boundaries are diluting in their importance with the introduction of the technologically-aided global trade of goods and services. With the European Union, NAFTA, Canada-US and other free trade agreements setting flourishing examples with more such to follow, a wave of innovation based flawless international trade is leading the world towards an economic integration where tariffs, quotas and preferences are no more a hindrance.

Marketplace too is becoming common and global. Geographical constraints are no more stopping producers to sell & consumers to buy in far away parts of the world. Idea-based products are moving across the borders from financial services, data processing, and medical information to goods, materials and media. Various MNCs (Multi National Corporations) are spearheading this movement across borders and are aiding use of homogeneous products and services to all populace across the world. Now you need not necessarily be an American to enjoy the Subway culture or a Japanese to be the first to use a latest gadget.

Needless to mention the contribution of internet in creating a more common electronic marketplace, at present 1,966,514,816 people or 28.7% of world population makes use of internet on quotidian basis. And growing at a pace of 444% per decade (approx.), it holds great potential towards further strengthening the global integrated marketplace. With social networking in place, people across the world are closer like never before. Be it standing for common causes, raising funds for social uses, sharing of information and personal views, cultural exchanges, internet has blurred geographical boundaries and the whole world is just a click away.

A new era of sharing of technological know-how and technology transfers across borders is bridging the gap between the developed and the developing countries. It is shaping a new kind of global economy where the use of technology for growth and prosperity is not limited to powerful few but is available to all interested. It is the use of technology only which has made possible advancements in the field of academics and knowledge sharing, where a research made in Europe on tropical diseases is easily and conveniently available for people in Srilanka to cure widespread endemics, or where the systems established in US to prevent manmade disasters and manage natural disasters can be successfully replicated in Brazil with minimal difficulty.

Causes of common concern are forcing countries to forget borders and are making them to work unanimously towards solutions. Some of the instances of this are the convening of countries to assuage the concern of global warming and climate change, and raising a common voice for a weapon-less world through disarmament movement on a global scale. A more noble thought of building a prosperous world for all is overpowering trivial regional & country specific concerns.

Businesses too are exploiting this overwhelming opportunity to no less extent. Activities and functions like human resource management, data management, consultancy, production, acquisition of raw materials and capital goods are being outsourced to various parts of the world, seeking cost reduction and quality enhancement to attain competitive advantage. How does borders matter if you consume a product in America which was manufactured in China with raw materials sourced from Taiwan, researched & developed in Germany, marketed by a company registered in Australia and whose ownership can again be traced back to America? The trend depicts that we are slowly becoming the citizens, producers, consumers, spectators, and broadcasters of a real ‘global borderless world’.

But this is only the half of the story and it cannot be completed if we ignore taking concern of few ground realities. Some of them are easily perceptible, and others camouflaged behind the rather rosy picture of consumption led economic growth.

Hard fact, but the integration of the world has so far been more or less on economic front. Hardly any trend setting a big example in social, political or cultural arena exists which somehow underscore the borderless world phenomenon. Forget about ousting of borders with other nations, there are societies and cultures like in Afghanistan and Iraq which have zero tolerance for many of their own sub-cultures within their respective borders.

No less perceptible is the widening gap between the developed and the underdeveloped parts of the world. There are countries where regions enclosed in their borders are termed as poor and form a considerable part of the global population but still contribute only few percentage points to the global economy. Here we find ourselves between the two worlds, one side of the border constituting the increasingly global economy and the other comprising of institutions and countries which have not yet caught up with the pace. This kind of division by borders of economic restraint and backwardness is even formidable as it leads to unfortunate marginalization of weaker regions.

In the second phase of globalization, the concept of borderless world is receiving setbacks as the developed nations are formulating very strict laws and regulations restricting the entry of the labour force from the developing countries. This setback is further compounded by the protectionist economic policies being followed by USA and its European allies in the post-recession period.

Coming to more real terms, how come the world is borderless when in many cases ‘border disputes’ are the only reasons for countries to come to lethal warfare against each other? The Siachen conflict ongoing since 1984, Cambodian-Thai standoff, Indo-Pakistan war, Indo-Bangladesh war, Sino-Indian skirmish, more recent 2008 Djiboutian–Eritrean border conflict and many more, these battles over undefined borders repeatedly bring down to the earth the aspirations of a united borderless world.

Also, for the world to be a borderless entity, it requires common political or governing agency in place which is accepted by all. But the major systems of `communism, democracy and dictatorship followed presently by different groups and countries in the world, are so contrasting to each other that bringing harmony among them or choosing one from them for all seems no close to reality.

Various other small but significant issues lie. There are countries giving asylum to people or groups of people who are declared as threat by some other country. And there are countries constructing dams over rivers to harness maximum benefit meanwhile endangering rights of the country next in line of the river flow. This all creates intense inter-personal relations between countries, and add to the reasons which make seem the phenomenon of ‘borderless world’ a myth at the present and in the near future.

But as the larger scenario depicts, time is not far away when borders will play an almost negligible role. The time when the difference between developed and underdeveloped world will come to an end, where as a blessing of economic integration all regions of the world will enjoy homogeneous living standards, where global laws will decide on how individual regional governments will behave, where the concern of a global citizenry will be of utmost importance. A time when different religions will develop tolerance and respect for each other, and a common good will take over diplomacy between nations.

And this will occur not for the reason that human conscience will develop and humanity will prevail as the only concern, but for the reason that human being is a selfish creature; and by that time, it will be realised that living harmoniously as a part of the larger whole rather than the divided few, will benefit no one but human only.

It's our duty...

Nature endows its resources equally to all who take birth on this planet, like a mother it feeds all its children with unbiased love and care.

But despite of its efforts, there are many who are still deprived of a safe, healthy and fulfilling life. Some got hit by a natural disaster leaving them wanting for the basic necessities of a happy life, some are unfortunate to take birth in tribal or poor areas of the civilization, some got stranded by their family members forced to stay in orphanages & old age homes, those who are living a destitute life because they belong to the so called lower sections of society, not to forget the victims of national wars & communal terrorism, and many more of our brothers & sisters seized from living a prosperous life.

To some sort of satisfaction there are organizations, who undertake activities to aggrandize the interests of poor, safeguard the natural environment, endeavour community development, contribute towards basic social services and alleviate suffering of the lamented lot of the society. These are the Non Governmental Organization’s (NGO) who undertake the task of recuperating the lives of people.

They work untiringly towards this noble cause, but depend upon society i.e. you and me for the basic resources required to serve it. But as the present scenario puts it, the present resource requirement (monetary funding, human resource, public support) overrules the available pool. Can we let this resource crunch become a reason of the NGO’s failure in accomplishing this distinguished undertaking? Certainly Not! Here is where, we the youth of our nation can step in, it calls for us to voluntarily assume responsibility and start making efforts to help such organizations in building a fair camaraderie.

Let’s not just take one or few initiatives but start a movement, a wave where we all join hands and make it happen. Let us not make it a habit but our culture to do well for our fellow beings. And let us come out of ‘why me, there are others who will do it’ attitude.
We need to imbibe the culture of societal contribution in our daily lives to such an extent, that being humble & generous become our very nature and character itself. There are lot many simple yet effective ways in which we the youth can contribute, I would like to mention some:

• First would be the easiest one(trust me with that) of making monetary contributions to the reliable NGO’s working for societal causes, be it hospitals, schools, orphanages, old age homes, wild life conservation, social peace & harmony, environmental protection, or any one you find relevant. Just make it a habit to donate a small proportion of your monthly earning towards them.

• Start devoting time to the service of these organizations. offer free consultancy to orphanages & old age homes on weekends if you are a doctor, teach in community schools if you are a teacher or an educated professional, help manage NGO’s funds if you are a practising CA or an accountant, help them getting clearances for various projects from govt. If you are a legal advisor, guide them in structuring & becoming self sufficient in terms of fund raising if you are a financial consultant. Whoever you are, whatsoever your profession is, no doubt you can contribute.

• We can always contribute our management skills and help these organizations organize various fund raising events like marathons, fairs, donation camps, awareness programs, various art shows and any innovative way which could be helpful. All it will take is a little effort & time of ours.

• We need to join hands and start collectively lobbying against the government to get various acts & regulations passed, make essential timely alterations in them to safeguard the interest of environment and society(hope that our tapes won’t get leaked in media).

• Let us use internet, social media to create awareness for various issues & causes, make it a fab to discuss them in routine talks, create forums to debate & discuss them, create social games around them, convert them in to case studies & organize competitions to seek creative solutions, and what not!!(Sky is the limit on internet).

• Big corporate and MNC’s have well structured CSR(Corporate social responsibility) departments in line, but what about small & medium scale enterprises who are still untouched(or partly touched). Make groups, plan and meet these small businesses to educate them about benefits of and ways of undertaking CSR, entice them to take initiatives, offer them help, encourage them to make monetary contributions to NGO’s. No doubt this will work.

• There are so many temples and other religious trusts sitting over piles of unused money(don’t know why) in our country, imagine how much additional earnings can be generated if these funds are parked in interest bearing securities, and how much of help it will be of if this money is made available to the disposal of NGO’s.

We can meet the trustees of these associations and educate them of how their money can be invested & the interest there of can be used for societal benefit (while their invest remains safe).

• There is a very well justified fear in minds of donors while donating money, of whether their money will reach the real needy or not. And why not when so many cases of fraudulent fund raising or loots keep on flashing, the donor will fear.

We need a unique solution to this issue; many of us are IT professionals so we can start an E-Portal which acts as an intermediary between the donors and genuine needy people, NGO’s. While a team or dedicated staff tracks down and ensures that each NGO listed on the portal is a genuine one. We can also make it mandatory for the recipients to provide summary of the usage of received funds, this will generate confidence in donors as they can see where their money got used.

Let’s crack down with these and many many more ways and make this world a happy place for the underprivileged too, for then only we could hold the courage look into their eyes.......

Need for Groundwork..

Lalit Modi (IPL), Suresh Kalmadi (Common Wealth Games), Ashok Chavan (Real Estate Politics & Military establishment), Ramchandran Nair(Housing finance), A Raja (2G spectrum allocation-Telecom), these are the names pervading all corners of the media. No wonder why India stands pathetically low on rankings when it comes to righteousness and relative ease of doing business.
Revelations like these shows on what scale, and how badly governance in India is circumvented by the wires of corruption and lack of surveillance. Had our policies and procedures been stringent and comprehensive, these scams wouldn’t have been unearthed by media but the respective monitoring authorities.

Media has done a very commendable job by investigating and exposing these sporadic mighty misdoings taking place in various organizations. But can we rely only on media to keep an eye over matters relating to corporate governance and others? No! We cannot! Media lacks the required power and authority and as a matter of fact, it is not the job of media to do so. Its job starts when the concerned authorities catch such clandestine illegal activities and bring it to the knowledge of media, so that media can further showcase it to the stakeholders (public).

The scams which reach the eye of media are the ones substantial in scale, but what about those small ones permeating all public, private departments? The ones which keep harassing you and me on quotidian basis.

All said but nothing done. Call for better governance has kept voicing from time to time but only to die in newspaper articles, media reports and government files.

It is the time to take newer initiatives towards better governance on the grass root level, the ones which reach out, which are result oriented, which turns around the way we and our resources are managed. As reference and with my understanding, these are some of the ways in which these initiatives can be taken:

· Whenever some scam gets exposed, the very first outburst of public is towards the elite political leaders. And this is all right because they are responsible for the delivery of justice to people. But before blaming any one we should ask ourselves a question, did we made a thoughtful and well considered decision while choosing our local representatives who further go on to collectively choose the elite ones for the top of hierarchy? We blame MPs for non-performance but forget that the real person concerned with execution of public works in our area is the MLA, whom we never give careful thought while electing.

So it calls for the public to choose the right person for the chair at the bottom of the pyramid, because it is the base only which supports the top.

· You must have noticed big holes on the altogether newly constructed roads in your area, which left you wondering that why didn’t they complete the piping works before constructing the new road itself? Small issue like this and many others make a strong mark on the already starving exchequer.

It calls for a very simple solution, let us create a state level ‘coordination authority’ having offices and operations in all districts, whose sole task will be to consult all concerned departments before any infrastructure development project is initiated. This will not only lead to removal of wastage from the system but will fasten the pace of infrastructure development.

· Have you ever thought, why the people who are concerned with cleaning of roads (the sweepers), the people responsible for the upkeep of street lights, never turn up to show their faces? You will be surprised to know that in many instances there exist no recruited person for the same, they exist only on papers. This is where subcontracting turns to be a menace. Public authorities subcontract these tasks to private contractors who put fake numbers (financials, human resource) to bid and take away the contracts.

This call for a revamp in policies and procedures, there should be cap on the type & amount of work which can be subcontracted (work involving small investments should be handled by authorities themselves while only the big ones involving sizeable investments should be considered for subcontracting).

· Why is the case that for a single work, public is supposed to move to various different departments to get numerous different kinds of documents. A procedure of work based on ‘all departments-single document’ should be religiously followed. This will put the burden of documentation on the authorities and will bring accountability in to the system, because in case of discrepancies an ‘all department-single document’ can be reversely verified with ease.

· The reconstruction of polity after the independence was no more than an extension of colonial arrangements we lived under for several decades, where we have got used to the dictatorship and the emphasis is never to get organised and grouped.

But the situation demands for us to come together and create self help groups or watchdogs, and create responsibility and accountability in local corruption ridden governance. And the existence of aids like RTI will definitely provide enhanced empowerment to the grouped n organized citizens.

Such many more close-to-ground steps and initiatives will have to be undertaken for establishment of responsible and effective governance in our country.

Someone well said it that only good governance is required for an economy to grow because all other issues can be solved easily under the aegis of proper governance.