Monday, July 16, 2012
FDI in retail
Small is beautiful and Big is
cheaper
By Harish Bijoor
Q: What is the real impact of FDI in retail, and when do we see it all
happen?
-Kumar K Rajapalayam, Hyderabad
A: Kumar, this question is as
contemporary as it comes. FDI in retail has just been announced. This is really
a policy intent drawn out and announced as a go-ahead document. Retail in many
ways is a “State” subject, and its implementation will depend a lot on what the
individual states with their individual political agenda will allow or not.
The road-map for retail in India
has however been laid out clearly in this policy announcement. 51% FDI in
Multi-brand retail and a 100% FDI (up from the current 51%) in Single-brand
retail. This move was first conceptualized 16 years ago, hotted up as a point
of debate three years ago, and has today culminated in a decision that simply says
“get going guys”!
I am really impressed at the fact
that the UPA government took courage to sanction a go-ahead through a Cabinet
decision, despite the fact that elections in Uttar Pradesh are round the
corner, and despite the fact that UPA-allies have opposed the move. This is a
bold move. A move that accelerates the process of liberalization that started
trundling on in India 1984 onwards.
This move is good for the farmer
and the consumer. The farmer will hopefully have access to a better supply-chain
mechanism that gets him to channelize his produce of grain and fruit and
vegetables to the big city markets without wastage, and the consumer gets a
better variety, a bigger choice of options to shop at, and hopefully better
prices. The fact is that bigger chains are able to offer cheaper prices,
cheaper by as much as 3-7% over current prices offered by smaller retailers.
Scale counts. While small is beautiful, big is cheaper.
I am equally excited by the
riders put into the policy. One particular point of excitement is the fact that
investments need to be channelized for the benefit of local industry. The fact
that retailers will need to source 30% of their requirements from SME’s, is a
good one. This boosts the sagging SME manufacturing sector. And I hope this
really translates into business for real and existing small scale manufacturing
units rather than new ones created just to fill in the blanks of this policy.
The minimum investment of 100
Million USD is another good move. This ensures businesses with serious
long-term intent entering the space with adequate back-end infrastructural
investments.
I do believe this policy
threatens and impinges the 14.6 million small mom and pop retail outlets in
India. This policy for sure brings about a kind of Retail Darwinism in the
country, where only the fittest will survive and the others will fall by the
wayside. This will happen first in the 42 big one million plus population towns
of India. And at a later stage, expect this retail revolution to go deeper into
the hinterland.
Small retail intermediaries are
bound to be hit by this decision, as the effort to make the supply chain leaner
results in the small links in the chain snapping to make way for the bigger
links to facilitate cost-efficient deliveries.
Kumar, expect to see the real
fruits of this policy decision to touch our lives three years hence. Retail
investments are low gestation investments in many ways and take time to
fructify and deliver.
Q: With a young Cyrus Mistry anointed to head the Tata group, will the
Tata group look and feel younger in its profile?
-Rahul P Kolihara, Mumbai
A: Rahul, that’s a loaded
question in itself. What makes you think that the Tata Group is “older” in its
profile? Look at the profile of the large number of people who work for Tata
Consultancy Services, and you will be jolted by the young and the aggressively
young.
That apart, if you mean the Tata
Group looks older in profile, and will Cyrus Mistry get it looking younger, I
do believe all this will take time. This sure is a big move. Cyrus Mistry is
likely to be all of 44 when he takes charge of the House of Tatas. That sure is
an infusion of young blood. To put it in perspective, Cyrus Mistry and Rahul
Gandhi are well nigh of the same age bracket. One is attempting to head this
country, and another is anointed to head one of the country’s biggest business
empires.
The age of leadership in India is
and has to progressively go downwards in its push. The forties is today the age
of dynamic and alive leadership. Just wait as you see the thirties capture this
slot, later than sooner.
And what does age bring to the
party? A certain degree of dynamism. A certain willingness to take risks. A
certain bravado that will have groups make mistakes and learn, rather than
depend on sure-shot approaches that are really not so sure-shot anymore in any
case. And that again is a paradigm in itself. May or may not be true.
Age is again what you make of it.
If you peep into the House of Tatas you will see that some of the boldest and
bravest decisions were made by people who were not so young after all. RK
Krishna Kumar of the Tatas led the Tetley acquisition brigade when he was not
exactly a sprightly forty. Look around the Tata Sons Board and you have names
that have done it all aggressively thus far, despite the age counter not being
on their side. Age is therefore in many ways a number. Age is also a paradigm.
A paradigm of our making.
The author is a brand-strategy
specialist & CEO, Harish Bijoor Consults Inc.
Email: harishbijoor@hotmail.com
Labels: ADVERTISING, CEO, City brands, Crisis-branding, India
Wednesday, October 28, 2009
Digital Branding
Digital Interactivity
By Harish Bijoor
Q: Why is digital media in such good focus today? And what is new here?
-Jyothi Virwani, Mumbai
A: Jyothi, the visual appeal of digital mediums cannot be matched by any other medium. Immediacy is hot. In the sense that the medium is closest to the point of purchase, or on way to purchase. It is an excellent reminder medium as well.
Further, it is also a medium that can build two-way interactivity.
What’s new?
Today, we have technology available where a digital signage can actually not only transmit lovely visuals and offers, but can also read who is watching it at a moment of time and dish out specific advertising. For instance if the sensor detects a woman in the mid fifties watching the medium, the product that can be shown to her digitally will be something relevant to her rather than items of irrelevance.
The medium can be used to research out consumers and consumer reactions even. Therefore the applications are many. Privacy issues remain though, and therefore such interactive digital signages need to have up-front communication aimed at viewers that is totally transparent.
The most recent and the most exciting development in the digital signage media is this. I have indicated the true-blue value-add possibility of interactive signages. Here, as you watch the signage, the signage watches you as well. Its complex algorithm will assess your sex, your age, your social class by way of dressing, your attitudinal stance by way of how you sport your hair, etc. In turn, it will dish out advertising that is specific to you and not umbrella advertising that is more often than not irrelevant, irritating and myopic.
Q: When a crisis hits a company, what is the process of communication that needs to fall into place? What if I had an Enron or a Satyam happening in my company?
-Vasanth Panigrahi, Hyderabad
A: Vasanth, God forbid! Let’s just hope we don’t have too many of these happening.
Just in case, it does though, the process needs to be quick. It needs to involve those who are close to the top. Close to the real center of information. Once quickness has been established as a norm here, it is important to use every neutral tool and vehicle to advantage. A neutral tool would be capturing everything that is written on the crisis and presenting it on a common platform for all to see. This will swathe the entire effort with credibility, and will not be seen to be a Goebbelian method of PR activity.
Once this credibility has been achieved, communication needs to get interactive. It needs to answer every question that is raised. Such questions can come from Opinion leaders, the media, employees, and the lay public even. Every constituent needs to be respected and given an answer that is right, and an answer that could be cruel in its impact even. People want the truth. Never hide it. Say it the way it is. Once said, truth has a way of settling down in the psyche of the individual. Do not molly-coddle hard fact. Do not clothe hard fact. Just give it out naked!
Set up an independent Ombudsman to assess the role of this crisis communication team even. Listen to the Ombudsman. And let this crisis-communication auditor come from a neutral source. This will be a rich process then.
Q: Indian retail has just about matured. What do you see to be the important factors that will contribute to its success further?
-Joseph H Hoover, Trichy
A: Joe, I am not sure I agree with you. Indian retail is not yet mature. It is at its most immature adolescence as of now.
Immediately however, Indian retail needs to adjust its mentality for Indian conditions. We need to be multiple-formatted. Every chain needs to have multiple formats and must not rely on niche formats such as the mega super-marts. In the early days, such a focus on single-formats will work, as the low hanging fruit of the ready-made consumer in urban markets is plucked. But things will dry up soon. Smaller format outfits need to be a reality for every chain sooner or later. Non air-conditioned retail is something that cannot be missed.
A partnership of big retail with small must not be missed as an opportunity. Imagine if an Aditya Birla Retail contracted 2, 00,000 existing small kiranas to partner in their retail spread. Every one of these small kiranas would get the benefit of an organized front-face in terms of branding and of course the benefits of mass sourcing. For the retail brand, this would mean a quick 2, 00, 000 outlets that sport the brand name of the company. Also, this would mean 2, 00,000 business people in small retail continue their livelihoods. They would bring passion and a deep understanding of the local market for the big retailer. Every outlet could be co-branded. More-Ghanshyam Stores and a More-Shetty Stores!
Indian retail inroad can be made by the big player only on a win-win format of big and small. And not to the exclusive benefit of the big alone!
My prediction is that in the next six years, the face of Indian retail will look very different from what we see today. Today's big ones might just vanish altogether. Bubbles burst, you see!
Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc.
Email: harishbijoor@hotmail.com
By Harish Bijoor
Q: Why is digital media in such good focus today? And what is new here?
-Jyothi Virwani, Mumbai
A: Jyothi, the visual appeal of digital mediums cannot be matched by any other medium. Immediacy is hot. In the sense that the medium is closest to the point of purchase, or on way to purchase. It is an excellent reminder medium as well.
Further, it is also a medium that can build two-way interactivity.
What’s new?
Today, we have technology available where a digital signage can actually not only transmit lovely visuals and offers, but can also read who is watching it at a moment of time and dish out specific advertising. For instance if the sensor detects a woman in the mid fifties watching the medium, the product that can be shown to her digitally will be something relevant to her rather than items of irrelevance.
The medium can be used to research out consumers and consumer reactions even. Therefore the applications are many. Privacy issues remain though, and therefore such interactive digital signages need to have up-front communication aimed at viewers that is totally transparent.
The most recent and the most exciting development in the digital signage media is this. I have indicated the true-blue value-add possibility of interactive signages. Here, as you watch the signage, the signage watches you as well. Its complex algorithm will assess your sex, your age, your social class by way of dressing, your attitudinal stance by way of how you sport your hair, etc. In turn, it will dish out advertising that is specific to you and not umbrella advertising that is more often than not irrelevant, irritating and myopic.
Q: When a crisis hits a company, what is the process of communication that needs to fall into place? What if I had an Enron or a Satyam happening in my company?
-Vasanth Panigrahi, Hyderabad
A: Vasanth, God forbid! Let’s just hope we don’t have too many of these happening.
Just in case, it does though, the process needs to be quick. It needs to involve those who are close to the top. Close to the real center of information. Once quickness has been established as a norm here, it is important to use every neutral tool and vehicle to advantage. A neutral tool would be capturing everything that is written on the crisis and presenting it on a common platform for all to see. This will swathe the entire effort with credibility, and will not be seen to be a Goebbelian method of PR activity.
Once this credibility has been achieved, communication needs to get interactive. It needs to answer every question that is raised. Such questions can come from Opinion leaders, the media, employees, and the lay public even. Every constituent needs to be respected and given an answer that is right, and an answer that could be cruel in its impact even. People want the truth. Never hide it. Say it the way it is. Once said, truth has a way of settling down in the psyche of the individual. Do not molly-coddle hard fact. Do not clothe hard fact. Just give it out naked!
Set up an independent Ombudsman to assess the role of this crisis communication team even. Listen to the Ombudsman. And let this crisis-communication auditor come from a neutral source. This will be a rich process then.
Q: Indian retail has just about matured. What do you see to be the important factors that will contribute to its success further?
-Joseph H Hoover, Trichy
A: Joe, I am not sure I agree with you. Indian retail is not yet mature. It is at its most immature adolescence as of now.
Immediately however, Indian retail needs to adjust its mentality for Indian conditions. We need to be multiple-formatted. Every chain needs to have multiple formats and must not rely on niche formats such as the mega super-marts. In the early days, such a focus on single-formats will work, as the low hanging fruit of the ready-made consumer in urban markets is plucked. But things will dry up soon. Smaller format outfits need to be a reality for every chain sooner or later. Non air-conditioned retail is something that cannot be missed.
A partnership of big retail with small must not be missed as an opportunity. Imagine if an Aditya Birla Retail contracted 2, 00,000 existing small kiranas to partner in their retail spread. Every one of these small kiranas would get the benefit of an organized front-face in terms of branding and of course the benefits of mass sourcing. For the retail brand, this would mean a quick 2, 00, 000 outlets that sport the brand name of the company. Also, this would mean 2, 00,000 business people in small retail continue their livelihoods. They would bring passion and a deep understanding of the local market for the big retailer. Every outlet could be co-branded. More-Ghanshyam Stores and a More-Shetty Stores!
Indian retail inroad can be made by the big player only on a win-win format of big and small. And not to the exclusive benefit of the big alone!
My prediction is that in the next six years, the face of Indian retail will look very different from what we see today. Today's big ones might just vanish altogether. Bubbles burst, you see!
Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc.
Email: harishbijoor@hotmail.com
Labels: Crisis-branding, Digital media, Indian retail
