Gross National Happiness (GNH)

Today I read with great relish an article in the Mint Lounge about Bhutan. I had toyed with an idea of a holiday there. In this article about the country by Namita Bhandare (particularly well written), I read that Bhutan has concept of Gross National Happiness (GNH), which has an interesting set of 4 indices (I quote from the article) - "Sustainable economy, Culture, Environment and Good governance, and the nine domains of well being (including health,health living standard,community vitality and psychological well being, amongst others)".
Interesting.
This got me to ponder of how little we think of the softer issues in our daily work. I am not a great proponent of work life balance, since I don't practise that well, but it will always auger well for a company to focus genuinely on the "happiness factor" in consumers and employees. Lets look at some unseen factors that could lead to GPH (Gross Personal Happiness).
In retail it is always only Price, Availability, and Service. Even though these are so cliched and well trodden, few actually will score well on all counts together.
In 1997 when I got into retailing and there was no Indian template then of successful grocery retailing, (not that there is any infallible one now), I always, as Operations head, looked at moments of truth as a good guidance to the completion of a  holistic shopping experience.The most effective loyalty driver will always be the overall happiness after shopping, when you get home.
To this end in a small way I started the STUC programme (Show That You Care), many old Foodwolders will remember. It was simply this:
I found that in retailing which has self help and with a cashier to negotiate at the end of the trip, the Last impression is the Lasting impression.
 So how do we make the last impression a pleasant one? Getting the staff  to do these three things consistently was such a problem- 1) Eye contact with the consumer. 2) Smile&Greet. 3) say Thank you, please come again! (and the particular way of taking the money and handing over the bill and change)
So I made this a Drill. For 1 year we ran a mock STUC everyday, in all stores, during the morning briefing and change over shift, where every staff member did this as a drill loudly wishing and greeting, and doing the actual smile greet and taking and handing over the money. In a few months it happened automatically. It became part of the training modules. Newer staff who came in, even without much effort learnt from the "gurukul" of the store. Mystery shopper scores were instituted and awards and rewards were given. And I dare say that was at time, and even by today's standards the best additive ingredient to the GPH. Consumers began to enjoy the smile (didn't realise how difficult it is to make a person smile). This is just a small example in a larger initiative.
For the employee, what can make for better GPH? Only salary? Well that seems to be the trend in think nowadays. But I can assure you for young employees, it the always the 4th or 5th. I believe the more important ones are Security (physical and professional), Learning opportunity (enhances market worth), Dignity( treat me concern) and the Salary (my net take home). I could write a lot about this but just a small example is the Toilets in the store. The argument always came up about separate Consumer toilets from that of Employees. I have said they should be the same (location permitting). What is good for consumers is good for employees, and visa versa.
Indian public toilets have over the past decade has improved dramatically, and I believe when we begin to attach more concern to smaller seemingly insignificant elements that make for very huge lift in GPH, we can say that there is concern and directionally society is moving in the right path. May sound silly that I use the Public toilets as a case in point , but that is only incidental the the major idea.
The quicker we as Individuals, as Families, colonies, companies, and a nation, realise the importance of GPH, like Bhutan has, the easier will it to become law abiding responsible citizens. Let Charity begin at home.

Never Ask a Centipede How it Walks!

Senti the centepede was happy with life, feeding on debir and dead organic matter. Till one day the wise owl asked it a question. The following is their conversation.

Owl: Hi Senti how are you today?
Senti: Oh Owli. I am very well indeed, thank you.How are you doing?
Owl: I am not very well. I have been consumed by a puzzle, that I have been trying to figure out. I am not able to make rational sense using the laws of physics or engineering.

Senti: what may that be, wise one that worries you? You know everything about the world. There is nothing you dont know. We use you as our counsel.

Senti quickly move up the branch, all 100 legs working together in perfect alignment to get closer to the owl, who looked on with fascination.
Owl peered at Senti and said "I am puzzled about you"
"Me?" asked Senti
Owl: I am wondering how your 100 legs work, so perfectly, so synchronised? How do you manage it Senti, without ever tripping over yourself?
Senti: I, I ,I,...actually I never thought about it..(peering down at his hairy legs)
Senti was puzzled as well. He never make any effort to walk, all 100 legs moved in an amazing coordinated rythm. They flowed without effort. Senti even started feeling proud of his body part that he had never thought about at great depth.Senti began to think how the 100 legs move.
As if by a trigger Senti found some difficulty in walking now. Some of his legs were stuck, some intertwined. He was amazed again, he could not walk anymore. He could not figure out why. He looked up to see Owl flying away, chuckling.
Retail, folks is something like this. In an earlier article I had called it the Ecosystem. It is. Many a time we are unable to explain our successes in retail and our failures, in fact the latter may be easier than the former. Successful retailers try to replicate factors of success, without asking why. Is this good? Well, who would quarrel with success?
Retailing has millions of moving parts, that have to work in unison. In no other industry is the aspect of human coordination so well exemplified than in retailing.
But an analytical mind is always good, and necessary. But it may be inevitable that we cant explain everything that leads to success or failure.

God Speaks on Vegetable Prices

Man called God to complain about the prices of vegetables. The conversation was as follows

Man: God ? U there? Oh Hi ! What up with these vegetable prices? We are in crisis buddy. Noah did so much to keep the flock together, can't your department of agriculture keep the prices down?

God: Is that so? Where do you live?
Man: what diff does it make? OK, I live in free India in a great populated city with 12 million brethren. And you know vegetables have become more so expensive that we in our house share one carrot amongst 4 ! just Imagine.
God: Well, that is not what your brother in the village is saying. he says he is getting a better price and is happy. What do you do?
Man: BPO
God: whats that? Below POverty?
Man: Laughs forget it you wont understand, it is ahead of your times.

God: I understand and don't understand. Have you seen what you waste? Rs50,000 Cr worth of stuff each year? Let me show you some pictures of a whole Sale Market in your city. This is just 4 bags of radish that your hard working brethren farmers has cultivated and sent to this city of yours hoping someone will take care of his baby and sell it and send him the money after sale. Little does he know that his trusted agent has thrown into the dust bin. 

I see such huge wastage that I have now started living in the villages. Man are listening? Hello

Man:.........

God: Oh he logged off, or the call must have dropped- yep now a days the "attoot network" is also dropping calls...Man, oh man. when will you grow up?

Seriously. And jokes aside this must be the real truth. the city squanders, and wastes. There is no regulatory authority in the wholesale markets, to maintain handling standards and cleanliness. The dealers and agents are themselves not conscientious of the need to be careful with produce. They are not self-driven to better standards. I have seen bigger markets in Thailand and Malaysia. They are worth emulating. They are also in Asia. 

The Govt is easy target for criticism. But does anyone have to tell these agents and shop keepers to handle produce more carefully and keep their premises clean?

I am afraid this thing about "hum Aise he hain"( we are like this only) is the most dangerous way to think. I suggest we don't make a virtue of a vice. If we waste we must pay. That we are doing now. Wake Up Sid  and smell the beans ! 

     

Which Tomato will win?

Can a Lowly Tomato make you win the battle of retail? If it is sounding silly, let me explain, there is nothing silly about it.

Look at the two Photographs. These are tomatoes from two  different stores in Chennai. One is a successful exclusive Fruits and Vegetables store (sells Rs100lakhs worth of produce a month from 3000 sft ! Is that successful enough?), and the other from a large Hyper market. Which one is likely to win the consumer's heart? The one on the right was Rs. 2 more expensive than the one on the left.

The one on the left though is less red is also a different variety, but is also bruised and cut. There is no doubt that the one on the right is the winner. 

This speciality store is not cheap, but wins on quality and range. 

Every retailer has to understand the right mix of Price and Quality. 
I have seen retailing in India for over a decade now and I think the consumer is now maturing to pay for Value other than paying for Price.  This is indeed good news for everyone - FMCG companies, and retailers alike, and of course farmers. Conversely, it is a wake up call - Wake Up you price mongers, here comes the time to be counted for the lip service that you have always rendered. Price reduction will no more have the same elasticity it had earlier. Consumer will pay as per value (Price x Attribute). The ones who are truly good in Relevant-Quality must rejoice, for they have lived through the difficult times; their time has arrived.
In retrospect, Modern trade must change what they are now. What in grocery terms have they done all these years that is different from the kirans? The main difference has been only 2 things - larger choice (transferring power from FMCG companies to the consumer to cast the vote on the brands), and air conditioned shopping. There has been little or no approach to Solutions for the consumer like supermarkets have provided abroad. Super markets and FMCG companies in India are very weak in the category level thinking. Let us take an example - bakery. What solutions have they provided for bakery? No supermarket carries a full range of breads and buns at reasonable prices. They have not taken the trouble to create categories - instead have continually dug deeper and deeper in the same Red-Ocean, by competing for a share of the milk bread market! There is no mind set to create a Blue-ocean in bakery. Meat and Fruits and vegetables are similar.
Retail competition just simply steal consumers from each other, and don't create new consumers! There may have come a time now when Blue Ocean can be created by not lowering differentiation when price is lowered!
Oh! What are you saying? Can a super market create consumers?  Well now even Life seems to have been created, then why not new consumer?
 Yes they can. Next blog!

Who are You ?

The Topic sounds almost insulting.
I speak in the realm of retail but this topic is equally relevant to any product or service. It is not new, but it is given little attention, or rather as much attention as may be needed. Let me cut to the chase.
It is POSITIONING I am referring to.
Wikipedia has a good note on this topic
http://en.wikipedia.org/wiki/Positioning_(marketing)
Having been around in the retail scene for a while, I have seen attempts at serious Modern Trade Retailing in grocery by large Indian corporates. In all cases I have seen that senior leadership have lacked clarity of thought about "what are you", and  what  they want the retail outlet to be. Positioning is the most significant one pager that the senior leadership must "literally write", laminate, and distribute to anyone who has anything to do with decision making in the company. This clarifies at a high level the identity of the retail outlet.

To write the Positioning statement needs Clarity on the following necessarily in this order:

1. Vision of the Promoter. Lets not fool ourselves. It is the one who spends who calls the shots! I may choose for some or any reason, that I want to be a Gourmet Food retailer (high end value added foods), or someone else decides that they find Mass retailing to be the market they want to play in. It also gives a peek into the mind of the promoters of their risk appetite and expectation of the horizon of investment pay back. Having an endless tranche of cash flow also does not guarantee success in Indian retailing. Learn from Sam Walton and the subsequent CEOs after him in 1996. He never ever since he started nor to this day had any confusion of "who are you", he is the ultimate mass retailer - Pile high let Fly.
2. Who are we talking to?  Clarity from 1. above then begs the question - "if I know what I want, then who is my target Audience?" A mass low price retailer setting up average quality merchandise in Causeway Mumbai, or Malabar hill, or Vasant Vihar in Delhi or Boat Club road in Chennai, is in the wrong place with the wrong concept.
3. What do we sell to them? Clarity from 2. above forces category managers to understand and look for merchandise that suits the price, quality, and range requirements of the target Consumer. Need i say more? Well i need to say a lot more. I am not sure how many senior category heads in this county will pass the test of writing a category plan. Do they understand what CDT means, Mind Mapping, Assortment and Promotion efficacy? If they don't pass this test then they are the captain of the Titanic!
4. How do I serve them? Clarity from 2. and 3. above will tell you what kind of outlet will be suitable for the consumer - glitzy, funky or functional? What kind of outlet might sell Disney products of MTV memorabilia, and what kind onions? I had seen a gourmet outlet in HongKong called Great - with truly high end food (the only gourmet worth its definition, to some extent Jaisons in Singapore).
5. What else do I need to know? Clarity from 3. above raises many new questions- how do i get products to them- supply chain, promotions philosophy, visual merchandising, etc.

Positioning, as you can see, is the core to everything. Even for individuals at the age of 47 it is not too late to try to rediscover your calling and competence (corrected after Ninad's comment, below). But Early in life we must understand we must study and work for gaining Competence, and Capability. And this comes only from direct hands on experience. What is your Positioning? Write down the things you are good at, and that can make a difference to the people around you or to the company you work in. Don't be a John Doe! 

Can a Retail Store Influence the Country

It is disconcerting sometimes when one sees the low level of restraint and sense of responsibility that is exhibited by Indian public figures, be it the Captain of the Indian cricket team or the Minister of Environment making snide remarks at a matter of national importance and sensitivity, or the leader of one party calling some other party leader a "dog".

Have we ever heard a Chinese leader make a statement that leaves the nation embarrassed? I am not so well read but I think not.

Of what use is personal freedom if individuals cannot exercise judgement and restrain in private and public life? Of what gain is education if it does not teach forbearance and patience towards weak and impatience to get work done and not the other way around?

When will we be seen, individually and collectively as a people who pride in following the law and rules if not for the sake of pride, at least from fear of punishment? But then who are we to fear if we drive on the wrong side of the road, or litter the street?

This has always bothered me when I have dealt with store managers. We leave stores of 2000 to 100,000 sft to a store manager in his/her late 20s. The store is a like Country by itself - has a boundary to protect, goods to guard, staff to motivate and train to follow the rules of the store, serve the consumers, make profits and manage the stocks and costs. There is but that much the company can do to train them, but a lot of the foundation of his (using the male gender only for convenience - read her as well) action is built on the innate personal beliefs and values. What we personally believe is also highly influenced by our national beliefs and that of the community that we live in.

The store manager is influenced by many layers of influencers

1. level 1- parents and family
2. level 2- immediate community (society) - friends, neighbours, and colony
3. level 3- company- how they train, and practise the values
4. level 4 - political- news papers and channels - what politicians say and do

A Store is very much like a sailing ship. that is why mariners are considered very resourceful people - no one to turn to other than to they themselves for any help on high seas. A store in this sense is much less isolated but equally self contained. So a store manager must be well rounded not only in the processes of the store, but also in the values that the company wants the manager to imbibe. It is very possible for a Company to instil values that are different and better than some of the values that the store manager sees around him. For example, punctuality, and hard work. The company can inculcate standards that are different from what the store manager sees from some government employees around him- may be even the way his father of mother who may be government opine about certain issues or work.

The point is, the Retail store can be the unit that changes values in society and not only the other way around. Hence, if organised retail employs 1 million people, can influence as many households and four fold the number of people.
Let me therefore, entreat all companies to begin the reverse Influence, much like the "jago re" campaign of Tatatea. 
So lets remember what J F Kennedy said. Think what you can do for the country and not the other way around. JaiHo, JaiHind !

Price War: Strategy of the Dying Over the Dead

In the Classic of H G wells, ”War of the Worlds” he says the wars are the Victory of the dying over the dead. Nothing can more effectively describe Price wars either.


Price wars happen between competitors under the following circumstances

1. The market is not growing and there are already well entrenched players or there are new entrants into an industry and there is pressure to gain share. Too many eye-ball to eye-ball situations.

2. The market is potentially big but the price is a barrier to enhanced consumption, and therefore competitors try to grab share by placating consumers and there is a spiralling downward direction of prices.

3. The competition is “stupid”, does not know any other way of grabbing market share and thinks price reduction, which is the easiest implementation strategy, can solve all the problems. That is why Michael Porter, says that it is better to have clever than stupid competitors.

Those companies who don’t understand the consumer’s real assessment of Value are the ones who start the downward spiral. This begs the question, what then really is Value? I will do the next blog in more detail, but it will suffice here to say this..

Value is Price + Consumer Experience of Attributes

Attributes is the functional benefits that the consumer can expect to get from as promised by the manufacturer of the product or service.

Companies must realise that Price reduction has the most dramatic impact on profitability, and therefore it is preferable to attempt to make the consumer see the attribute value of the product (and we are assuming that the product really has intrinsic attribute vale). When the consumer sees the value in attributes of the product, it insulates the product against the downward spiral of price.

Price decisions are the most important in a company. In FMCG companies and product companies, this is taken seriously, and the highest level of management takes the pricing decisions and it is also because price changes are not so frequent.

However, in retail in India at least, pricing decisions are left to very inexperienced junior merchandisers of the company. The pricing decisions are so many and so frequent, that it gets delegated. The method of pricing decision control is often margin % review that the CEOs do and this is clearly inadequate. Pricing control using margin management is always too little too late because price changes distort the value presentation to the consumer. Margin % can be managed by compensating errors- increase price of A by 20% and decrease B by 40% - is compensating margins, and if A is the top seller then it is possible that the final margin is still the same. But the price reduction changes the “pricing experience” of the consumer, and in the short term will result in changes in quantity sales and loyalty of the consumer. It could seriously damage the “positioning” of the retail format in the mind space of the consumer

So retailers of the Country, don’t let a Fresher wet behind the ears, steer the ship into the ground. Let the ERP systems build in escalations, and authorisation, merchandisers must be trained well enough to grow into pricing experts.

Which is More Difficult to Sell - Fruits or Shirts?

Is this a question to ask? Is it relevant to anyone?

Yes it is a good question to ask, and often the answer is one or the other. But I have mine.

It is more difficult selling shirts. I can tell you why.

Retailing is about anticipation.

Anticipation of what the consumer wants next to make her happy, (happier) and how much, where and at how much. Is that simple enough? Well any retailer who has  thousands of transactions everyday will tell you that Anticipation is the most difficult part of the business.

Anticipating the needs of the consumer for Fruits and Vegetables is not that difficult. Seasonally there are certain ranges that are available across the country, and over years consumers have ethnically developed cooking habits and dishes that suit such availability. For instance white pumpkin is very popular in Tamil nadu, not so in Mumbai, where dudhia is more preferred. The difficult part of the business is the perishability of the produce. This is a matter of skill. The lead time to decide the quantity is short, say 16 hours, but then the loss you make on wrong judgement is just one day's stock. The consumer also is used to variations in produce in the market. So F&V is able to garner an image of "expertise" for the retailer if it is done well. It is not an easy business at all but compared to shirts (read apparel), it may seem a shade easier.

Apparel has long lead time of 6 to 12 months, preferences are "fuzzy logic", residing in the innermost recesses of the consumer's mind, and there are regional and ethnic preferences in apparel as well. Sizes vary hugely - Punjab versus Kerala, for example - average sizes are vastly different.

Hence to guess the right range (colour and design) is difficult, but because it is fuzzy logic, designers are able to influence the consumer more easily in moving from pleated to unpleated pants, from normal to low waist, etc. More easy convincing a Mumbai consumer to consume white pumpkin if dudhia is not available.

Wrong decisions in apparel are far more expensive than in F&V, considering that apparel holds 12 to 20 weeks of stocks at anytime.

Apparel is a far more difficult a category to sell than F&V. Do it you will know it.

1411 What is So Significant about this Number? If You Don't Know, Now is the Time to Get to Know !

News

China wakes up, calls for protection of tigers


China sentences tiger killer to 12 years in jail: report

 

I am going to write this blog in Red, because the matter to address is serious and today, like all days to follow will be important for the character of India and a shame that we will suffer if this number declines.

This is the number of tigers that remain.
I have always grown up with cats at home as a child and teenager and understand their behaviour very well. They are seemingly aloof, but personally loving, they are very clean and neat, dignified, find their own food and don’t beg. They have healthy habits - basking in the sun, have a clean body, alert and playful.


I know many who do not like cats and some who hate them.


I have made it a point not to hate those who hate cats, because I say "god forgive them for they know not"!


But when it comes to the tigers, that are cats after all, are equally loveable from a distance, admirable, and wondrous in their ways. All they ask is to leave them alone. If tigers are gone, so will all forest, deer will devour all there is to be eaten. Tiger also guards the forest, denying easy access.


The only living animal the tiger could not understand and conquer is MAN. Man kills for pleasure and illegitimate money.


I recommend Life Imprisonment for poachers, without parole. China has begun it. What are we waiting for?


I am too far removed to physically or legally or legislatively impact the Tigers directly. But I am going to start a mail campaign o the PM of India just asking him to personally take charge of this.


God bless the animals, 1411 of them. We will live at peace if we can see them grow, but if they decline, and vanish, I would say that I have failed at least in this one act in this birth.

How Big is the Kitchen?

Have you ever considered this?


When you go to a restaurant to have a meal, and get a good one, at an acceptable price, well served by pleasant waiters, have you ever thought, “I wonder how big the kitchen is?”
Well, unlikely.
When you go to an ATM to draw money, and you get the cash, and return home, have you said, “let me thank the IT head of the ATM bank, for enabling the cash withdrawal?”.
Unlikely.
Well in the service industry, all support services get relegated to the background, commoditized, taken for granted, and is a silent provider.

However, if the meal on the table had too much salt, and tasted unpalatable, you would surely ask, “hey can you call the chef?”, “what kinda kitchen do you run?”

Retail supply chain is about the same. You may have the best warehouse, fastest trucks, the most efficient people, but unless you can get the 6 R's (Right -Product, time, price, place, quantity, quality), correct every time, the consumer will want to see your kitchen!
Well this has a lot of implications.
Going forward supply chain equations are going to change.
As chairman of ECR India (Efficient Customer Response), I had initiated a Common warehousing project with TCI. Where FMCG suppliers could have common warehousing and hence save a lot of cost. But the pilot failed because the top FMCG companies in India were not prepared to share their plans with common logistics provider. This was since over 50 years, FMCG companies, have built their competitive advantage through distribution reach.

The next 24 months will change it all. Logistics and supply chain in India is going to change because of 2 reasons - GST (Common tax code will allow free movement of goods across the country) and the Golden Quadrilateral. There will emerge experts in this area who will consolidate the volumes and commoditize the Supply chain. FMCG companies will have the (uncomfortable) opportunity to concentrate on Product development (which is woeful at this point), and Understanding the Consumer.

Retailers and FMCG companies will have to accept the emergence of a new entity in the chain, the supply chain service provider. Who is this?
The Supply chain service provider will do the following

• Have fewer warehouses than the current retailers
• Have warehouses built with lesser cost and hence will have higher ROIs and hence have to opportunity to provide A grade service at lower cost
• Have better strategic locations along the golden quadrilateral
• Have larger and faster trucks, paying lesser permit fees
• Have the state of the art software in warehouse management systems
• Will consolidate volumes across all sorts of commodities, and hence have optimized return logistics.

Hence retailers and FMCG will have to rely on other ways of driving competitive advantages.
OTIF (On Time In Full) will be taken for granted and no one will ask to see the Kitchen !

The Amazon Forest Eco-System and Indian Modern Retailing - What is Common?

What would happen if there were no wild cats in the Sundarbans or the Serengeti? Nothing would survive, because the deer would have eaten out all the grass and vegetation.

And,


Rainforests form a complex ecosystem that is the home to millions of species of both plants and animals. Rainforests cover less than 7% of the Earth’s land surface. However, they are the natural habitat of more than 50% of all the species of living organisms known to mankind. Scientists would expect millions more to exist especially in the rainforests. The Amazon Forest, as a typical rainforest, is no exception. One tree in the Amazon Forest might contain more species of ants than the entire United Kingdom.(source: Wikipedia)

The nature of the rain ecosystem is the following
1. Interdependence
2. Co-existence
3. Non-redundancy (nothing ever stays in the rain forest ecosystem that should not be there. Would we find polar bears in the rain forest?)
4. Ruthless Regeneration (the forest is ruthless to the weak and mild. Only the strongest and smartest can survive. Do you find maimed tigers, or blind lizards in the forest?)
5. It is fragile but evolving.
6. Evolution - It does only what is collectively needed. The direction of evolution is always only that of the collective need. (Deer will not fatten because the tiger wants more meat!)

Look around yourselves, and you will see an ecosystem everywhere. When jobs are lost, fewer drivers are employed. When real estate goes into recessions, fewer masons earn their daily wages, less spend on apparel, and clothing factories lay off workers, and so on.

Hence the realisation that the Eco-System is what we live in, is important in everything we do; affected by our thinking, words and deeds. We are dependent on others and other ecosystems, and hence we are but a speck in the galaxy of independent decision making that have dependent impact points elsewhere.

I have come to see a great meaning and sense in looking at everything that we do as in an ecosystem, and believe that we will make better meaningful decisions in our personal and official lives if we are cognisant and respectful of the fact that we are part of an intertwined fabric; it will humble us and make us better decision makers, if not better people. (I am getting carried away here).

But what has all this got to do with Retailing? Well, if the ecosystem is best exemplified anywhere, it is in modern retailing. And this is where Indian Retail companies are struggling to make sense of modern trade.

The big deficit in thinking is the inability to tie-up the following into one smooth  process flow.

Promoter’s Vision of what he wants the company to be (the biggest problem is here), Long terms financial goals, positioning of the format, deliverables at the store level, assortments that will enable delivery the KPIs, category management to understand category and consumer behaviour, setting the service standard levels ( this flows from the positioning statement), building collaborative vendor relations, store Cluster management, assortment localisation, master data integrity, planogramming, replenishment triggers, store execution and operational excellence.

All this MUST be built into one ecosystem without conflicts and contradictions, and I can tell you from personal experience this can be and has done in the past.
This topic is too vast and poorly understood by many retailers. The inability to see that all the above  as one vortex of interrelated systems, leads to top management taking ad hoc and knee jerk decision that pulls the ecosystem from one side to another. Top management sits in decision making into narrow aspect areas, and deliberate to death small issues which have great ramifications across the supply chain.

Let me give you an example. Small stores are in many ways more difficult to manage than big ones because the supply chain has a very narrow margin percentage of error, in timing, and quantity, since 3000sft stores lack spare storage. If you decide to not have Top-TOPs, (this is the extra top shelf used as the storage space on top of every shelf), you deny a 3k store of almost 300 sft of extra storage space. This reduces the assortment that the store can carry, no space to keep extra promotion quantity, new product display areas, and mark down stocks.

Every decision must be taken with the full blue print of the ecosystem in front. Top management must possess a 360 degree capability to understand all aspects to the business and must take decision with a cool head and humility. It is important to remember that the nature of the ecosystem of Vision-Processes-IT Systems-People Competence-Execution capability must be built taking the 6 points as cues which the forest ecosystem provides.

This topic is too vast for further description. Any way as they say in Hindi “just a gesture is enough for the wise” But for the others.....? Amen!

What Keeps the Consumers Coming Back to the Store?

Well, the easier question to answer is to ask "what keeps them away from the store?” Honestly there is very little understanding amongst retailers about the exact reason why consumers stay with a store and why they leave it. Dip stick studies and research has shown that there is little agreement on what the causes are. This is true because, reasons will change from country to country, and profile of consumers.
I can talk in the Indian context, and let me hazard a guess, (hazard is the right word since opinions that are not data driven always have Nay Sayers, even data is never conclusive).

It is my understanding that different categories have different drivers to sales
Basically, there are two relationships that determine what the drivers of sales is-
(1) the Involvement of the mind (read –“thinking” or “mind-set”) and
(2) the frequency of purchase
There is an inverse relationship between the two - Frequency and Involvement.

The Drivers of sales for each category varies, for example
Grocery - High Frequency, Low Involvement - Drivers are - Quality, Location, Price (in that order)
Jewellery - Low Frequency, High involvement - Drivers are - Trust, Price.
Electronics - Low Frequency, High involvement - Drivers are - Price, After Sales Service, Trust, Location.

It can be seen, therefore, that the success factors of each category is quite different. The mistake that some retailers make is in not understanding and applying the basics of Category Management, and trying to apply the success criteria for one category onto another.
A good example is the electronics category. There are many chains today who are majors. But the service levels are very different in each one of them. Some are price-fighters; whilst others believe that they want to play in the Price+Service+Experience segment. Clearly even in Electronics there cannot be uniformity of approach across - to sell an Electric Iron does not require a great amount of assisted selling, but a Cell phone and Video Game takes more (a) time (b) skilled salesmanship to close a deal.
Grocery on the other hand sells on presentation. If it is available then it sells if the quality is right and price is competitive.

So what keeps Consumers coming back? My take.

• Present each category in the store in a manner that accounts for its own success factors. For example, don’t be stingy in putting skilled and trained people in the apparel and furniture section, whereas the dry grocery needs less help in shopping, but the wet grocery (fruits and vegetables) needs assisted selling. Respect the Involvement x Frequency matrix of each category.
• Every category has goods that require special handling- tomatoes, to suits, to cameras. Train and train the staff till they drop!
• The word “marketing-mix” is rarely used in retailing; it should be. It is the sum total of everything that the consumer wants from each category, including the smiling staff.

Hence retailing is about “managing unity in diversity”. The one who understands that wins the consumer; and keeps them coming back. And those who drive their retailing business mainly using their P&L, will forever wonder what they did wrong!

The Problem with Efficiency

The Problem with efficiency is to figure out as to what it is that we need to make efficient.
What is it that we are trying to make efficient? In an ongoing concern there are multiple interconnections and interdependent processes that lead to the final result. It may not be wrong to comment that if all segments of the company try to achieve "its own", "maximum" efficiency the final result may not be efficiency to the final consumer, and then, therefore, to the shareholder. I would be wary of those who shed copious tears in the cause of "consumer centricity" and equate all round efficiency to be the deliverer of happiness.


I quote from one of the most important books ever written for running companies. Re-engineering The Corporation by Michael Hammer and James Champy. I bought this in 1998, a few months after I had joined Food World Supermarkets, in Chennai, and didn’t realise that this book would greatly impact what I would think and do there after. I would still recommend it to any one even for a reading again.

In the first chapter the second point is worth quoting in this context

"Often the efficiency of a company's parts comes at the expense of the efficient whole".

Whilst there are other gems in the book in terms of ideas, this for me changed for ever the way I looked at the problem.

Let me quote an example from my retail life. Being in-charge of supply chain as well,  I was visiting Indore, and reviewing the performance of each store. One store 3000sft at the bottom of the performance rank was a store, standing alone in a town 80 km away. The sale of Fruits and Vegetables was the lowest. I knew this might be the reason for its under-performance. Why? The head office managers had many theories, to offer. So after hearing it all I called the Store manager on the speaker phone. I asked him, "young man why is your store doing so badly". He said without a seconds delay, "Sir I am low on F&V", Why I asked. He said the load arrives every day at 3pm! How can the produce be fresh then? I looked at the transport manager who was shifting in his chair, as he told me that he was delaying the dispatch so that he can club some other loads as well to lower the transportation cost. It was clear. I mandated a trial. Send at any cost of transportation, produce to the store, to reach at 7am.

This trial at the end of 3 months saw that the bills at store increased 4 times, sales had jumped and losses we hugely reduced. The store was removed from the list of stores to shut down. But what happened to the transportation cost? Well 2 things - the quantity increased and so cost lowered, and two-the rupee gains in stores was more than the increase in transportation cost.

To create a virtuous cycle of retail one must invest in the sales at the front end, albeit sensibly, at higher back-end costs. This is not a rule but directional. The Sum is greater than the sum of its parts. Any takers?

Death of Jallianwala Bagh

April 13, 1919, the Jallianwalla Bagh Massacre, ranks amongst the highest events that galvanised India towards being unified. I, like all Indians have grown up feeling goose pimples when the horrific story is narrated about this site. Over 300 people died and 1500 injured. This event then is followed by the heroics of Bhagat Singh, Satguru and Sukhdev, and remains a part of history that has become the pinup story of the freedom movement.


With this imagery in mind, this week I visited the Bagh - 6.5-acre (26,000 m2) garden site of the massacre, located in the vicinity of Golden Temple complex in Amritsar. The path to the garden was narrow as I had imagined and recreated in the movie "Gandhi". Thereafter it was a shocker…

I expected the same mood inside as one experienced in the Holocaust Museum in Washington that moves you out of our convenient zone of comfort.

The entire Bagh has been turned into a park. Yes agreed it was always a park, a “Bagh”, but this is no more just another park. In the centre of the park is a 20 feet tall structure that looks like the menhir of Obelix. Around it fountains that are dry and dysfunctional. The park is dusty and drab. The lawns are patchy and muddy.


Is this the place that effectively stirred the world into action against the tyranny of Brigadier General Dyer? Where are all the tell-tale pieces of the incident?
There are about 3 pieces - 2 walls and a well. Behind these walls, probably sharing the same common walls are shops or offices. If you don’t believe me then have a look at this photograph.

The wall on the left is the bullet ridden one. The one on the right is now replaced by the walls of an office with aluminum frame and windows over looking the park. See the overgrown weedy lawns at this point.

The original bullet ridden walls are open to rain and hail, and are slowly but surely disintegrating and falling part. The well is covered by a concrete roof and does not allow a proper view. There is but a one line writeup of this well, on a stone piece at ankle level.



It is said, “One who does not learn from History is condemned to repeat it”. This is one way of remembering history. This Bagh is not an exception in what we end up doing to our glorious or forgettable past - drive tigers to extinction, monuments to ruins, and rivers to sewers. Why is the Louvre, over 900 years old, still in pristine condition? And every piece of history in Italy?
It was heart rendering and sad. What I saw was the death of Jallianwalla Bagh.

But wait. Just 500 meters away is the golden temple, older. It was such a wonderful experience, the sanctity, holiness, organisation, and cleanliness. It was soul stirring. Why? Why do we keep our heritage in ruins and places of worship (not all) in better shape? Could it be our innate nature of being inward looking, where we tend to keep our homes clean but streets dirty? I can’t say.

This piece is out of place in this Retailing blog, but I see it everywhere. This callousness stands the danger of creeping into the innate character of our workmanship. A certain lack of pride in doing work that shows excellent craftsmanship. It has for ever been held against me that I try for too much perfection, but it is a crime I would willingly confess to and bear without remorse.

Consumerism and Enoughism

In my previous Blog on The Right and Might of Choice on 10th Oct 2009, I had left it open for good thought, as to what the relationship there is between Consumerism and Enoughism. Consumerism is a concept that is 100 years old and Enoughism 1 years old. I strongly reject this concept of Enoughism that John Naish is propagating.

But it might be good to define what consumerism really is. It is not negative in its literal definition.
     “Consumerism is the equation of personal happiness with consumption” (Source: Wikipedia- not that this is authoritative- it just seemed right). The word was first used by Thorstein Bunde Veblen (1857-1929).
The latest thinking is called “ENOUGHISM”- coined by John Naish in 2008. Definition,. "there is a point where consumers possess everything they need and buying more, makes their life worse off”

Consumerism is but a statement of fact that people purchase for their happiness, but Enoughism is a value judgement that transgresses into personal right to be unhappy! I believe that it is difficult for someone else to say what is enough or excess for anyone.

An average shopping bill of Rs3000 will contain 60 to 70 articles. Then why do grocery store carries 8000 to 40,000 articles? This is in recognition that every shopper is different and derives varying levels of satisfaction from their shopping baskets. It is in the area of transgression of ones personal freedom, when someone else other than you yourself, begins to dictate the limits of what is “enough”. Every shopper exhibits a habit that is a translation of sum total of their psychographic profile. It is difficult to determine why one person likes pink and another maroon! Is that not what makes this world colourful and fun?

To me John Naish is stepping on the hallowed zone of personal choices, and right to choose and reject, with his exposition of Enoughism. I can’t deny that personally; I do think there is reason to introspect on the boundaries of “how much is enough”. But the operative word is “personally”, and not prescriptively.
I think Enoughism theory lacks balance and pragmatism. I would put it in a different perspective.

There is always the eternal conflict and debate about the “frugality within” with the “expansive living, without (read external)”. I want to balance this out into 4 sequential non-conflicting buckets of premises.

One - Kama (desire). When we are born, we will have desires, to exist and live (eat , cloth, study, create, etc). No living being can be without wants, not even an ascetic.

Two - Artha (money). If we have desires, we must work to satisfy those wants. Only the “burden on earth” consume without producing. It the life of the wasted who consume without producing. Every human has the obligation to produce for the common good as much as, or more than what they consume.

Three - Nyaya (law). Anyone who works must work within the framework of the law. Ethically and lawfully. Harmonious co-existence is only possible everyone follows the law of the land.

Four - Moksha (self-actualisation). When we have worked hard and productively, gained material wealth and riches, we must be prompted to ask “how much is enough?” There is no limit to amassing wealth unless we have a guiding principle that is beyond the realms of materiality. Moksha pushes us to seek the “sanctuary” within us where there is no use of material wealth, where happiness abounds for free. It is simply a state of mind and in another sphere a reality of some kind. Still there are few takers. Those who have been “there” or visit there often talk of the bliss that is free, and that for which there is no limit. It is unconditional and unfettered. It is in the realms of philosophy (not religion).

So these four together provide for a framework of where there is no conflict or contradiction, where the inner can co-exist with the external. Consumerism and Enoughism explained away. But it is ones personal choice to say how much is Enough.

One of the lives that one might live to admire in this context is that of Warren Buffet; his frugal living that co-exists with his running one of the most successful commercial corporations. He donated, to Bill Gates foundation princely sums of money, for charity, but continues to create wealth for his company and shareholders, whilst he lives his frugal life. Something to admire and emulate.

In retailing terms the dilemma that always confronts Category managers is "how much range is enough"? They are torn between giving the widest range to the consumer, and managing productivity on shelf. Many retailers treat “widest” as a strategic differentiator, and that is also because large retailers tend to return unsold goods to the vendors. But for fledgling retailers this may not be an option.
 Less is sometimes more. But who is the retailer to decide? They must simply provide what the consumer wants, and eventually to balance shareholder's value, get to the best fit. Category managers always walk this tight rope between "enough" and "more".  Having been a category manager for over 10 years, I empathise with them.

The Right and Might of Choice

Consumerism, though I have used the word many times, I have  not examined its real meaning and I thought this is as good a time as any to do it.

But a prelude first. 11 years ago, in the small town Thirupur, Tamil Nadu - the Manchester of India, from where clothing spills out into the world, I was in charge of opening a 3000sft store. Nothing warms a retailer's heart as much as seeing people in the store. I stood like a satisfied father outside a maternity ward, the wife inside with a bonnie baby, a store trading briskly! Just then an elderly lady, traditional she seemed by her attire and rich by her diamond solitaires, stepped out of a Benz. 2 helpers in tow.
Lady walks into the store and hails a store supervisor by a wave of her hand and when he arrives, she hands over a scroll of a shopping list to him and stays her ground. Supervisor, new to his task, also stares back not knowing what to do. Obviously, the Lady was convinced that the supervisor must go and fetch the articles in the shopping list, whilst she waited. Now I see it!
Self-help shopping had arrived in town, or so it seemed. I stepped in to help, and taking the shopping list from the now relieved supervisor, and looking down at it, I saw a neatly written list in Tamil. I can’t read Tamil. I asked her “mami, what is this item?” pointing to the first on the list, “can’t read Tamil?” she asked, (sounded as if “then why are you here?”), “sorry, mami I can’t”. She said “that is tooth paste”. “Which brand ?” I asked, and again puzzled, she turns her two palms upwards and says “Colgate” ! I thought I almost heard “Colgate, obviously”. It was time to act.
I grabbed a trolley and told her that I would take her to the bay where there was toothpaste. Hesitantly, though she followed me to the mid-section of the store, and I showed her the 3 x 3ft sections of tooth pastes and brushes. She started at the bays and softly with a smile on her face asked me “India produces so many tooth pastes? What is that?”, “Meswak the herbal toothpaste” I said. And she in the next 2 hours shopped 9 trolleys-full (not all toothpaste of course), for Rs9000. She had the time of her life !

5 of us wheeled her trolleys to the check out counter and we were 4th in the queue. This irritated her. She was restless; she did not want to wait for 15 minutes after shopping for 2 hours. She reached out into her bag and gave me wads of cash, and rattled off her address and told me to deliver this home, and bring back the extra cash. And I happily did.

I was wiser. Self- Help shopping changes everything :
• the power in shopping shifted from the Large FMCG companies to the consumer for the first time in self-help stores. These companies for 50 long years had held market share not so much only from the quality of innovation in the products, as from the distribution reach, and strength of brands built in yesteryears from Doordarshan as the single ATL medium for up to well into the 1970s.

• the consumer, in s elf-help store, sees the options available, optimizes spends between not only brands but also pack sizes, which play a huge role in the success of a category.

• consequently, smaller and also the innovative entrepreneurs have an equal chance in a self-help shopping environment.

I have always been a proponent of providing choices to the consumer. Good economics and commercial prudence on the part of the retailer will work to keep the assortment relevant to the consumers' needs. (Let me not imply that Assortment management is as easy as this, it is not)
I now pop the question - what is consumerism? Is it good or bad?

I see the word used in all cases, as a negative .But it might be good to define what consumerism really is. It is not negative in its literal definition.
“Consumerism is the equation of personal happiness with consumption” (Source: Wikipedia- not that this is authoritative- it just seemed right). The word was first used by Thorstein Bunde Veblen (1857-1929).

Let me end with the latest in the negative angle in this line of thinking- It is called “ENOUGHISM”- coined by John Naish in 2008. Definition,”..there is a point where consumers possess everything they need and buying more, makes their life worse off”
I will discuss that in my next blog.
Meanwhile enjoy this YouTube extract on Enoughism.
http://www.youtube.com/watch?v=pe5yFYryYLI

By Circumstances of Our Birth ?

I have once again been convinced, after over 13 years in Organised Retailing in India, that retailing as a career will humble anyone who feels he/she can know all there is to know in this field. Every day is a day to cherish, and wonder at the combinations of pieces that fall together. It is a celestial game of chess! Such is the respect with which I approach my work.

Yet a few weeks ago I had another humbling experience.
It is common in retail companies for senior personnel to “walk the stores” and during such visits, they tend to take high ground and preach to the store associates and managers of all that they are doing wrong. It is part of the training that improves store standards when done in detail and in mentoring manner.

The reality in retailing is that all decisions that happen at the back-end of the supply chain only two people ever get to bear its consequences. The Store Manager and the Manager of the distribution centre. They are the ones who handle vendors and consumers face to face, numerous times everyday. Often the companies, at large, fail to realize this.

One such visit to a store in North Karnataka, I will not ever forget. I make it a practice during such visit to spend one-on-one with one of the staff members and ask them about their lives and work atmosphere. I first called a staff meeting and shared with them their below par performance, in terms of sales and shrinkage. Particularly their low sales of Fruits & Vegetables. For 30 minutes as a group we discussed and they know that retail companies tend to inevitably shut down perennially poor performing stores. I then called on a girl associate who participated well in the discussions to share her views with me.

She told me that her father had died when she was young and that her mother was a maid servant and worked in 4 houses in a day from 6 am to 11 pm everyday. She had the determination to pass matriculation exam from the local school. She said that the work she did at the retail outlet was life changing, in that she worked eight hours, in a decent work place, got her provident fund, and medical care, something her family could never even aspire to get. She spoke fluent Hindi and passable English. She said Abhisekh Bachchan was her favorite actor and Rahul Dravid the best cricketer. She spoke briefly about how we can improve the store performance. The conversation ended with a few light remarks, I walked back into the store spend an hour walking the bays and then planned to exit, when the same girl came to me asking to speak to me in private.

She said, “sir, we all will work very hard and honestly, please don’t close down this store, or I too will become a maid servant like my mother”. I could see a streak of tear in her eyes. My heart went weak. I shook her hand and told her that I would work hard to see that this store would not close.
I carry that comment deep in my heart. At the head office I shared that with my colleagues. This leads me to think- why is she there and me here? Is it not just the circumstances of our birth?

It convinces me that senior executives at any decision making levels must remember this at all times that decisions they take have a ramifying whiplash that affect the lives of those who depend on those directions. Do we not see in meetings where personal interest overtakes the best-fit direction? How can we be self-effacing in our decision making? This is what I guess Jim Collins calls the Level 5 leadership- building enduring greatness through a paradoxical blend of personal humility and professional will. How can we keep our self interest aside when we make these direction changing decisions solely focused on three entities in an executives life that he/she works for, without whose long term success they themselves cannot prosper - the consumer, employees and shareholders?
How can we save little girls from going back to becoming a maid servant from where they are today? Let not the circumstances of our birth blind us from our responsibilities to those who have not been so fortunate.

Can Indian Retail Transform India?

This question....someone asked me, I guess, because I have been long in the business of retailing. But not being wise enough, I could not answer readily. But i continued to think deeply, and still do.

As long as I can remember, I have wondered if this can happen. India is too diverse for just one thing to transform it. But anything is a start. Transformation is too big a word I guess; "make a difference" is better.

Why not then start with the largest section of the country, the rural, 75% of this nation lives there? I have spent time, a little time, with the farmers in rural India to know how they struggle from crop to crop whether, it is aqua culture, horticulture or Agriculture


I have seen that they have very basic and uncomplicated needs. I refer to those farmers who are the vast majority, holding 1 to 4 acres of land.

They need:
1) Guaranteed off-take of whatever they produce.
2) Recover their cost of production-which in most cases as they articulate
    it covers seed, manure, pesticides, labour, and sustenance.
3) Guaranteed payment in a reasonable time frame.

How can things get better? Where is the scope?
Well consider this to your surprise - Tomatoes sell at Rs. 29 on the pavement in Salt Lake in Kolkata, the farm gate price around Bangalore is Rs. 3 ! How much intelligence is required to make a difference to the farmer and the consumer at the same time...separated by 2k Km? Not much! But the will? And competence? And How? And Who?

Are we waiting for a Gandhi to arrive to tell us that it is possible or for someone else to say "yes we can" ?
Some, ONE retailer 4 years ago articulated that he would fly aircrafts from one end of the country to the other to arbitrage the costs and price to the benefit of the consumer and producer and everyone said ... "here he goes again, let see how he fails...".

Well I have always hoped that I could be part of that "difference making" to albeit a few. That would be an achievement. I just returned from visiting a part of Maharashtra, and met a farmer his name is Anil, who produces Coriander, brought 80 kg on his bike. On being asked, he said all he needs is the 3 things I have stated above. Here is his Photograph.

There is no dearth of technology or for that matter money, in the system. What the big picture lacks is extensive selling outlets that will reach his coriander in a fresh condition, with minimum wastage, directly to the consumer. We don't have to get emotional about the farmer; there are enough people with much time on their hands to do that. We have to get practical and Pragmatic.