Once upon a time the business of world was war. The focus has since been shifted. Now economies are competing for consumers. Man has decided to enjoy the fruits of the labour of previous generations. Old order is giving way to a new order- 'serve Consumer for a profit'. Of many things that go into making this a reality, Organised Retail surely occupies a very high spot.
Miracle of Retail is attributable to the ‘pull’ it has on customers. Twenty years back in India , a small group of entrepreneurs were trying to find foot holds in television business. Most of them were carrying VHS tapes in their briefcases to hand them over to prospective sponsors with a request to view at leisure and tagged a request ‘let me know what you think of it?’ One of them, Harish Thawani, went on to establish an office-cum-screening facility where senior executives of large corporations would visit and view the screening of television programmes available for sponsorship. ‘Selections’ were now being done in an environment conducive for business. In other words he created a ‘pull’ situation and consequently his business boomed. The leadership he established this way went on to become the foundation of multimillion Media Empire ‘NIMBUS’.
In its more than a century old history, Organized Retail has proved that it is the ultimate 'clearing house' of 'demand-n-supply', mother of the concept of ‘marketing’ and more. Take a look at the following snap shots:
* Tiffany, which has been around for over 160 years, is among the best known of all the great American brands. Tiffany is more than a retailer; it is an American icon that has worked its way into movies and songs. The company's flagship location on Fifth Avenue inNew York City has become a tourist attraction.
* Ron Jon Surf Shop is known worldwide for its extensive selection of active lifestyles apparel, board sports equipment, and dive apparatus. Their 52000 square-feet Coco Beach Florida store is open 24 hours a day - 365 days a year - just like the beach itself.
* Recreation Equipment Incorporated-REI, is one of the largest outdoor specialty retailer operating more than 50 stores. Its flag ship store in Seattle is an exciting shopping experience. It has a huge 65-feet high, free standing climbing rock; mountain bike trails; and 'rain rooms' for customers to test their equipment at the time of purchase.
* Japanese '7 Eleven' stores scan each customer's basket and data gets transmitted to corporate HQ which in turn makes it available to all the 8200 stores and countless vendors. Orders for fast-food and fresh-food supplies are placed three times each day. Magazines are ordered once a day. Processed food is ordered once in two days while each store receives deliveries ten times a day.
* In USA , Fred Lazarus Jr., the founder of the Lazarus departmental stores, promoted the idea of fixing Thanksgiving on the fourth weekend of month November. The idea behind this move was to expand the Christmas shopping season. In the year 1941, Congress adopted his proposal.
* In 1997, Maxine Clark opened doors of 'Build-A-Bear Workshop'. Now children could walk in and make a Teddy of their choice themselves. There are Master Bear Builders present to make it an enjoyable and memorable experience. With in five years the idea grew into a 100 store chain with annual sales of US$200 million.
These examples show the diversified ways in which this business functions worldwide and these are not all the examples. Let us now examine how close we have reached in creating Indian Retail Miracle that every one hopes is just around the corner. It is considered opinion of this writer that the threats and weaknesses need to be highlighted for in handling of those lie the biggest of the opportunities sought by Organized Retail.
Before we do that, we must appreciate that Indian Consumer is still learning to deal with Organized Retail and it shows in the fact that as much as 94% (or so) of India’s Retail sales still comes from unorganized sector, what is popularly called mom-n-pop Stores. The pioneers of the industry are doing a fine job of ‘bringing-up the consumers’. Their ratios are significantly higher than that those of their neighbors in the same mall. And this is not just because they are ‘Anchor Tenants’. It is because they are paying attention to a wide spread issues that others have conveniently ignored. This applies to those in Fashion and Lifestyle segments too.
On one side where Indian consumers are still learning to deal with Organised Retail, the work force too is yet to learn the ropes of this wonder. And that shows in the kind of shopping experience available in the stores. Not very long ago I had the privilege of visiting a store at least three times in a span of two weeks. Among other things their merchandise assortment includes green groceries i.e. fresh vegetables as well as fruits. On all occasions, my experience reminds me of a legal expression 'caveat emptor'- let the buyer beware!
If they have 20 trays for fresh fruits & vegetables, in at least 9 to 10 the trays old stuff has been smartly mixed with the fresh arrivals. The result is if you try to pick up a lemon, three times out of five you either pick up a rotten lemon or your hand touches the wet parts of a rotten lemon. If there are two trays filled with beetroot. You have tough time getting 8 good hard pieces of it as most of them have gone soft. If you try to pick nice shining brinjal for making 'baingan bhurta' what you get are softened pieces and you begin to wonder if those have been already roasted and kept there.
On one occasion, there were three important looking people present just out side the door. Upon enquiry I learn they are the company officers. I tell them about the problem faced, they listen for some time and then one of them asks, ‘Where in this town can you get vegetables past 9 pm ?’ I congratulate him for coming up with an argument, which only makes an attempt to hide the unethical tactics practiced behind flashy store design and name of a reputed retail brand.
Around the same time I had visited a stationery store, a mom-n-pop store, not very far from this outlet. I saw a one rupee coin on the counter. As I thought of lifting it and giving it to the cashier; I realized that it was not above the counter it was actually taped under the glass sheet of the counter. I asked the boy who was attending me as to what might be the purpose of having the coin fixed in this manner. He told me, ‘Many people who come to this store are fooled by this trick and we enjoy the expression on their faces when they realize that they can’t get the rupee coin’. I thought the boy is creative but his energies are misdirected due to lack of guidance. There are many such boys and girls who think of having fun at customers’ expanse. And such ideas are present among the pool of workforce that comes over for interviews to join the Organized Retail.
If you carefully examine these two episodes you will find some similarity in the attitude displayed by employees of the two types of retail enterprises. How such attitudes are surfacing in the Organized Retail is attributable to the practice of ‘brinkmanship’ while hiring new recruits when a store is about to be launched. It is well known that there is a shortage of trained manpower at all levels of Organized Retail. Therefore the recruiters, who usually wait till last minute, bring the candidates and managements to a ‘brink’ where what the recruiter does is acceptable to all parties. Enter ‘placement brokers’ who ‘fix’ the employment by questionable means and still be in ‘good books’ of all; as they have ‘bailed out’ the store management as well as the candidates at the ‘right time’.
Employees who get selected have been briefed by these brokers about what might be asked during the interviews and how to face those questions before a panel of recruiters. After having paid a ‘broker’ to get an undeserved job, the employee focuses on maintaining it. His strategy is ‘do not make waves’. He does not question or report the ‘soft beetroots’ and ‘rotten lemons’ on the shelves. Even if the stores value system speaks of the policy of ‘open dissent’, employees turn a blind eye to the malpractices. And the shopping experience promised by the brand goes for a toss. One can have those ‘mission’ and ‘vision’ statements that illuminate the corporate walls, yet at the end of the day those need to get translated into desired behavior on the floors visited by customers. And such all round questionable practices cast shadows over the deliverable benefits that are sought by consumers visiting floors of Organized Retail.
Observers have come across long queues on the floors of many departmental stores. Queues might please a few retail executives. But they need to check the tendency to enjoy those situations and look at it as a technology and productivity issue for crowds are like shifting sands in a desert, today here tomorrow elsewhere.
That brings us to- ‘What can be done’?
Retailers must use every opportunity to counsel the youth to take up a job in Retail which may well become their entry point of their corporate career. Youth that enters Organized Retail even with a short term view can gain long term benefits from the attitude learnt and experience obtained while ‘serving consumer for a Profit’ for this has become the motto of almost all kinds of economic activities happening around the world. I know of an Electrical Engineer, who in his days of unemployment, immediately after the graduation, worked for several months at a chemist shop in an obscure town of Madhya Pradesh . The attitude and perspectives he gained during that period helped him master every job and occupation he subsequently took up; initially as an Electrical Engineer, then as a retail executive in theMiddle East , and finally as a very successful consultant related to construction trade.
Retailers could use Focus Groups to understand the problems faced by potential recruits and devise recruitment strategy that produces long term stream well trained employees at their stores. Such a strategy may also include sharing useful information with training institutes who are attempting to develop solutions for an industry faced with manpower shortage. Retailers should facilitate post employment interaction between the institutes and the employees so that the process of active and constructive feed back can set in.
The Retail managers need to look upon themselves as in the business of serving the Associates to help them develop their personality and potential. They need to function like Retail Gurus who help Associates plan their respective career and help them at different stages of execution of that plan. It calls for deeper involvement and frequent introspection on the part of Retail managers. At the end of every calendar year a Retail manager must be able to come up with number of employees mentored by him and what has been the impact of that mentoring on the person as well as the firm and the family of the employee.
Towards the end, here is a case of Community Pride Food Stores that demonstrates the depth of involvement needed to make solutions effective:
When Jonathan Johnson was growing up in Richmond , Virginia Richmond 's inner city.
Community Pride has six clean, well-managed stores in urban Richmond that offer affordable, quality products. Eighty percent of its employees live within three miles of the store where they work. Each store has two vans providing rides to customers who aren't mobile. Customers can also cash cheques, pay utility bills, and buy bus tickets, postage stamps, and money orders at stores.
Johnson stresses the importance of education. Employees are encouraged to enroll in many structured training programmes. Also, $5000 scholarships are awarded to employees who pursue college education. Families of high school students who earn all As and Bs and don't miss more than one day of classes per month get 10 percent discount on food.
After struggling over a stolen bottle of wine that cost Johnson four teeth, he gained a new perspective on shoplifters. "If they steal steaks, I'll arrest them," he says. "If they steal bread I'll give them $50 and a job application." He claims that since 1992 he's hired hundreds of shoplifters and at least 60 have stayed with the company for more than three years.
Turnover is low at Community Pride; only 2 of 47 core managers have left. Johnson actively hires from the city welfare rolls - 300 employee since 1997, out of a total staff of 1030. He has cosigned more than 100 car loans and handed out his credit card to cash strapped employees for emergencies (for which service Johnson deducts up to 5 percent from the next weekly pay cheque). He once posted bail for the son of a manager.
Finally, in the recent past Indians have shown once they take up some thing they become best in it. There are hundreds of examples present that would vouch this claim and that is why Indian Products and People conquer every market they reach-out. I am sure in a few years from now, even by 2011, India could lead the world in the field of Organized retail. For that once again GLOCAL would be the best operating word. While we can import the understanding of the 'task' from Global examples and our solutions will have to be painfully and patiently local.
Author:
Navendu Mahodaya
Director
NSOS Retail Academy
nmahodaya@hotmail.com
+91-98930-09099
[Article first published in a fashion magazine in 2008]
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