AskHarishBijoor

The Rag Trade

By Harish Bijoor

Q: I come from the textile industry. What went wrong with us? Today we are largely captive cloth-makers and exporters with wafer thin margins.

-Raghu Siyal, Mumbai

A: Raghu, many things really.  The world is changing today. Companies need to investigate and re-invent themselves. Gone are the days when the competence of manufacturing was one, and the competence of retail and marketing was another. Today, companies are seamlessly integrating the two to derive better values from what they manufacture. Manufacturing and spinning companies are therefore today aspiring to own and run their own brands as well in the retail market. Organized retail is set to boom in the future. Everyone therefore wants to take a piece of the possible pie. The advantage for companies that intend to do this is the advantage of being in the thick of marketing action. This action can create better values for what was hitherto a commodity, or what was hitherto an OEM offering.

It is important for companies in the textile industry to understand one basic fact. The new business of retail cannot be run with old managers of manufacturing. The mindset, the competence and the abilities to run these two business segments are totally different. At times, even diametrically opposed. Most companies made the first big mistake of appointing their in-grown managers to manage the retail business vertical. Retail is a different ball-game altogether. The competence of retail is about consumer-facing competence. This competence is normally not ensconced in managers who are back-end and manufacturing and trading oriented.

That mistake apart, most of these companies are very conservative in the way they allocate budgets for front-end activity. The branding mindset is missing in most cases, and what was dominant was the trading mindset. This is a disaster.

Q: Branding a State is taking center-stage attention today with Gujarat, Karnataka, West Bengal and more.  What’s the point here? How does it benefit? And what’s wrong with WB?

-Gargi Jain, Kolkata

 

A: Gargi, my definition of a brand is a simple one. The brand is a thought. A thought that lives in people's minds.

Let’s take Brand West Bengal. Brand West Bengal lives in people’s minds. And these people live in two locales: people who live in WB and those who live outside it. It is important to appreciate that the brand image of WB is therefore intrinsic and extrinsic. It is also important to understand that the extrinsic brand image of WB is very important to invite investments from India and overseas.

The Indian market with our several states is a competitive one. Every State vies with another to attract investments to it. Investments mean jobs, and jobs mean a robust consumer environment. WB needs to gets its act together on the count of its extrinsic brand image.

It is important to erase memories of a Nano. It is important to establish a new and vibrant brand image for WB that shows that it is investor friendly. And this means not only single-window clearances, but this also means that the business mindset needs to rule over the political mindset. This means that he WB government needs to take bold decisions on the front of creating an exciting environment to attract investments in the State.

The CM is the real brand-ambassador of a State. ‘Mamata-di’ needs to manage and wear this hat with elan. Mamata has a very positive and matter-of-fact image outside of WB. This means that people look at her as a person who calls a spade a spade. This is a very good attribute that business people like. Mamata needs to direct this to the positive benefit of the State at large. WB can most certainly compete with Gujarat, Bihar, Karnataka and more! And that’s the reason why the State needs aggressive branding.

Q: What’s the overall investment mindset on India as far as the foreign investor is concerned?

-Tim Rolins, New Delhi

A: Tim, India is an idea whose time has come.

Foreign investors find India an exciting destination to invest in at the moment in the core sectors that relate to food, beverage and entertainment, fundamentally because India is a nation of numbers.

We host the second largest numbers of bellies and bladders among other body parts. This means that India is a nation of 1.2 billion stomachs that eats up 3.6 billion meals every day. This is an exciting food opportunity. This also means that 1.2 billion bladders demand bladder fluids of every kind. This is an exciting beverage opportunity. Add to it the latent entertainment needs of the nation at large. We are a nation that is bored and looking for entertainment options all the while. This is an exciting media opportunity.

On the whole, foreign investors find India an excellent investment opportunity that relates to the arena of "needs and wants" marketing, as opposed or "desires and aspirations" marketing. For desires and aspirations marketing, China is an excellent destination, and not India.

Eating with your eyes

By Harish Bijoor

Q: India has a deep heritage of jewellery. Yet, it has not been able to generate a true-blue global brand as yet. Why? What will it take?

-Swapnil M Mehta, Mumbai

A: Swapnil, the reason is a simple one. The jeweller of India has always been one who has viewed his market with a very narrow view. His market has essentially been one that has been defined by geography. This geography has been one that has been restricted to the region where he started his business. The Indian jeweller has been a conservative jeweler. He has defined his brand, his personal core-competence and the ambit of his jewellery business in a rather narrow format, rather than a broad-spectrum format, which International brands use as a starting template.

India will produce excellent brands in the space of jewellery, only when the horizons of the jeweller expand. Even today, the best brands of Indian jewellery are home-names that feel rather shy to test overseas waters. Even if they do, they prefer the B2B route rather than the aggressive B2C route.

India produces some of the best jewels in the world as of today. Current design competence is excellent, with in-house home-bred names. Add to it the ancient Indian heritage in the space of jewellery, where jewellery-lineage goes back into centuries. All this must add up to an equation of at least a few International brands that compete in every market there is to compete. This is not so today. There is a spirit of shy reluctance in jewellery space today. We need to let go of this conservative mindset.

I do believe the first few International brands will be created by corporate names rather than region and city based jewellery businesses. This is unfair really to the fact that the jewellery business of India is really one that has been created, sustained and grown by city-based jewelers who work with passion in this space. The corporate names will overtake them all just because of one reason: the spirit to brand and the spirit to spend the right amount of money on branding, quite ahead of the curve of delivery.

When I look at current corporate names, Tanishq from Tatas show a lot of promise. I do believe we need more Corporate brand sin this space. Is Reliance listening? Is the Aditya Birla group listening as well?

Q: How important is personal branding in a corporate set up? How does one go about creating it?

-Dhanu Mishra, Delhi.

A: Dhanu, I personally do not believe in personal branding. I do believe branding is a natural process when it comes to human beings in a corporate set-up. My advice to those looking for a personal branding tip: DON'T.

Be who you are and enjoy being just that. No point in thrusting upon yourselves a persona or a set of traits that do not belong to you. Never borrow styles and habits. Be original, and I think you are doing great on your personal branding then.

 Be completely original and sincere in show-casing who you are. Dedicate yourself to understanding who you really are. Portray your original persona without any charades and make-up. You will do well and thrive. In an era when everyone is behaving like everyone else, if you are original and just YOU, you will thrive. You will be a refreshing change in a clonal corporate environment.

Good branding, when it is genuine and represents the true persona behind the branding, helps. Anything else does not!

Q: A lot of food is being shown on television. Why?

P Visalakshi, Vijayawada

A: Visalakshi, I am sure you are not complaining. A lot of people are today hooked onto food shows on television.

The basic truth is that food is totally intrinsic to our being and living. Something as intrinsic as food therefore requires the requisite amount of television time and space. TRP’s of such programs are showing up the fact that food can be exciting for all. En and women included. Master Chef Australia possibly has an equal gender skew in terms of viewership. And that’s today’s reality.

If I am to trace how all this happened, it would go thus.

In the beginning food was food. It was basic and it was all about what grew around us. And exotic food was everything that did not grow too close to us. And seasonal food was everything that came in and went out of season, quite like the Indian mango, which makes the Indian summer bearable and awaited eagerly.

And then food became more than food. It became something that got processed, packaged and aggressively branded. This came through super-market counters. And then food morphed to become a service from a product it was. In came restaurants of every kind. And now, food is not food and not a service. It has gone beyond. Food is something that you view on a channel that is dedicated to it.

Many of us eat more with our eyes than with our mouths. It is this socio-physical reality that is spurring food channels forward. A big chunk of people who watch these channels are of an older age profile. The point is simple. If you cannot eat it all anymore due to health reasons, salivate and watch it being made and eaten. This might sound bizarre, but I strongly believe a lot of people eat more with their eyes than their mouths. Touche!

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.

Q: Nokia is still topping brand charts in India despite its completely low growth and loss of market shares. How?

-Seenu Venkatesan, Mumbai

A: Seenu, the reason why Nokia does get repeatedly listed in the top ten is simply because of what I call the "ubiquity effect". Please do note that the largest numbers of mobile handsets in use as of now in India is quite likely to be the Nokia handset in the middle and upper-end segment. Add to it the fact that the mobile phone is a 24 X 7 device that people do not switch off even when they sleep. Mobile phones live closer to people than their own wives and husbands do.

This ubiquity gives a halo effect to the brand that is used by most. Many swear by their mobile phones. Many can't stay away from them. Many touch them a lot more than they touch their spouses. And a lot more intimately even. This proximity adds to the halo effect of the hand-phone brand. And Nokia is a benefactor, as of now. Give it five years more for the Samsung effect to set in. Samsung is the next big guy lurking round the corner.

Q: How do coffee Café chains globally ensure consistency in terms of delivery? And what is the learning for me to take?

-Rohinton P Malla, Mumbai

 


A: Rohinton, the issue is all about scale. Once scale develops, you can look at central sourcing. And central sourcing is all about consistency offerings. Starbucks and Dunkin Donuts globally believe in the mechanics, efficiency and delivery of central sourcing. Their systems are totally integrated to technology and what it can deliver in terms of back-end efficiency.

What is it that you can learn from the business model of Starbucks or Dunkin Donuts then?

From Starbucks, Indian companies can learn the power of a brand and the power of consistency delivery, the power of pulsating with the consumer mind, mood and movement. From Dunkin Donuts, the best thing to learn is the fact that the consumer has little time to sit and dawdle in the future. On-the-go coffee is a format whose time will come in the future. Prepare for it aggressively and morph your sit-down models to talk the language of stand-up and on-the-go coffees as well.

It is important to remember that every Cafe market has a glass ceiling. This glass ceiling is all about saturation in terms of numbers, boredom with ubiquity, lack of differentiation, the consumer in a state of recession, and a continuous lack of value-for-money propositions. Most Western markets have reached this level over the last three decades. India to that extent is still a nascent Cafe market and this is a market that will grow. Café Coffee Day, the market leader has shown us that success can be made to happen.