As most of you know that I spend most of my leisure time either reading or watching good movies which can inspire me. I normally observe the key functions like technicalities in production, VFX, story-telling format & overall direction of the movie. (Given the fact that I had previously managed a post-production digital agency myself & hence these skills have become an integral part of my life).
Recently I watched a new movie “Parmanu” which I felt was from the genre of reality cinema and has inspired me to pen down few of my management tips as a part of my purpose to inspire young minds to focus on enhancing their value based learnings.
”Parmanu” means “ nuclear” in English and as the title suggests the movie has been inspired from real life facts on the nuclear bomb test explosions conducted by the Indian Army at Pokhran in 1998.
My keynotes:
A) Learn the art of storytelling to sell your concept or idea to your management/customer.
The Key protagonist John Abraham used the metaphor of Mahabharata to explain the 5 key skills that would be required to make overall operations covert and successful. They used the concept of Pandavas from the holy book of Mahabharata.
B) Learn to live & survive from organizational politics, group-ism and make your presence felt by pioneering the art of diplomacy.
The key actor uses this skill set quite to his advantage, by consistently following up with his superiors, influencers and trying his best to achieve his overall objective. He used his art of diplomacy to his best while initially, he had failed in managing his peer circle and influencers. But as a true leader, he organized his team with skillful experts from different sectors like ISRO, BARC, Army, telecommunications, Intelligence and Research wing. Like in Mahabharata, Lord Krishna without holding any weapon or ammunition, won the battle for Pandavas by mere giving his strategic inputs to Pandavas from time to time and let the Pandavas use their own inherent skills.
C) Teamwork leads to success.
Sharing of information and well-coordinated efforts of the team leads to success in any operations. Delegate the responsibilities to professionals and make them accountable to the overall project, leads to positive action generating success in any form of business or in warfare.
4) This one is my favorite “You don’t need a uniform to become a hero and serve your country, you can still contribute to your society and country in your own way in your own domain by channelizing your efforts for the welfare of people”.
Hope my management tips would inspire young minds & compel them to take control of their lives by enhancing their value based learnings and skills development. I am sure this article would not only inspire my followers in the Indian sub-continent but would cut across geographies as the learnings from the Holy Scripture (Mahabharata) is generic and socially relevant.
About the author:
Ritesh Mohan is a passionate retail professional with over 20 years in the retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, Business Management & Empowering business owners with his wisdom & experience of around two decades in the industry.[/vc_column_text][/vc_column][/vc_row]
Recently I was a part of a group (mostly comprising of business owners) and we were discussing the importance of marketing & sales in our businesses and how we can improve this function in order to generate more top line sales.
During the group discussion, lots of good points were tabled by each and every member and one such point was on 4 P’s of marketing which is founding principle of marketing (Kotler’s) which has now evolved to 4 A’s mainly
Acceptability
Accessibility
Affordability
Availability
I feel since the terminology has changed but the basic principles still remain valid. One of the important points that come under Acceptability is Consumer Behavior.
Even before SMEs or entrepreneur ventures out to launch or introduce a service they need to ensure whether there exists a market for their product or services. What does their targeted customers or audience perceives their product and services?
Entrepreneurs often forget the importance of consumer behavior and get engrossed in other 4 Ps of marketing.
It is the customer who is the core of the organization and all tasks (activities or product or services) should either make difference to his life by making his life easier. We call this approach as Customer centric approach. Evaluate your promotional ideas or campaigns, if they are adding value to your customer, or they are just another piece of boring advertising.
Consumer behavior decision examines the “processes, especially any particular triggers that compel consumers to buy a certain product.” This is vital for entrepreneurial ventures.
Case study: Gillette launch in India.
When international giant brand Gillette entered the Indian market, way back in 1984, they brought their best sellers from US market which was primarily twin blade razor with a plastic tab on top, which enables easy removal of hairs which used to get stuck between twin blades. They did comprehensive research on this product at MIT University amongst a group of Indian students who were studying there.
The outcome was Gillette’s twin-blade product in India bombarded, they recognized that their best product failed to compel & satisfy Indian users. People who bought the razors were not satisfied with the shaving outcome.
Gillette team analyzed the core behavior of their customers and found that their best razor had failed to deliver to Indian customer’s satisfaction due to:
Indians tend to have rough or hard skin and hence the beard hair needed more precision shaving products.
India as a country always had issues with running tap water, the majority of the people used stored water in a bowl (popularly known as Mug) for carrying out their shaving regime, due to this their key USP of the plastic tab between the blades had failed since it required running tap water.
Indian water is hard water compared with western countries wherein the water is soft, which failed to deliver a good shaving experience.
Once Gillette understood this consumer segment, the company created a new customized product. Gillette Guard, the first product created just for the Indian market, was introduced in October 2010. It was priced at just Rs15 per razor. At Rs 5 for a refill cartridge, Gillette Guard met customer expectations on safety and ease of use.
In Business terminology, we call this as “reverse innovation” i.e. to develop a product that would satisfy the needs of the lower income customer.
They tweaked their communication with some more aspirations around the brand by asking the targeted customers; Are clean-shaven men more successful? Did the nation prefer clean-shaven celebrities? And the big one: do women prefer clean-shaven men? The media picked up the campaign and brand got significant reach in the minimal time span. Today, Gillette India is one of category leader in shaving products sector.
Learnings for start-ups:
Above case study tells us the importance of Reverse Innovation. In today’s technological advance systems, it’s easy to create a product or a service but it is very difficult to find a customer who would pay for your product or services. Hence understanding consumer behavior is of utmost importance even before venturing out with any kind of start-ups.
About the author:
Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development and Brand management, Retail Operations, Sales Management and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.[/vc_column_text][/vc_column][/vc_row]
Technology emerging as the savior for Beauty retail
Background:
As per figures released by Euromonitor International, Beauty retail or Beauty is one of the most promising sectors for the future growth of the retail segment & is valued at USD 9 billion in the Middle East alone.
Our generation is really blessed in terms of technology that we have at our disposal, especially computing devices in the form of smartphones.
My inspiration to write this article comes from a recently concluded webinar wherein I was on a panel discussion with industry leaders and I spoke on the topic of finding a competitive advantage amid cluttered & oversaturated beauty sector.
Making technology initiative – the core of the Beauty retail business.
With the emergence of Pandemic, covid19, the entire world of business has changed.
we are no longer in the world wherein we all had a good time, meeting our customers physically (physical interaction) and getting to know their preferences and behaviors.
The world is now embracing covid19 and adapting itself to live along with it.
The road to recovery is now slow and challenging.
Here comes our biggest friend i.e. Mobile and Web.
Both have the power to transform our current business model and the way we interact with our customers currently.
My article is my attempt to highlight initiatives of such beauty brands in adopting technology as an integral part of their overall strategy and how to find a niche for new aspiring entrants into the cluttered world of beauty.
As consumers embrace technology in their everyday lives, notably through the increasing use of smartphones, the boundaries between the virtual and real-world become increasingly blurred.
Who is driving this digital growth transformation for the brands?
Consumer’s preferences have gone under transformation during lock-downs which has resulted in giving rise to contact-less transactions using eCommerce.
Although discretionary spending has reduced post covid19, the market has witnessed a consumer behavioral shift towards safe, sustainable, and reliable products.
Purchase behavior is shifting from Specialty stores to specialized eCommerce platforms.
Technology playing its role
Skincare:
Demand for high-tech treatments at home has given rise to a range of electronic devices whose claims range from improving the efficacy of skincare products to replicating anti-aging treatments in salons.
Skincare diagnostic tools, from DNA testing to skin analysis, YouTube videos, and diagnostic applications, are all adding to consumers’ experience, both in-store and online, thus affecting purchase decisions.
Diagnostic tools have had a technology make-over and now come in the form of online questionnaires, apps, or in-store devices.
From Sephora’s skincare IQ to Harrods’ Ioma machine, consumers’ desire for customizing their skincare is stronger than in any other category.
Digital apps like OKU (an at-home device and app that analyses skin condition),
L’Oréal’s Make-Up Genius and Klara (an app that sends pictures of consumers’ skin to dermatologists) aim to offer professional skincare analysis in the comfort of consumers’ homes.
Technology in beauty cosmetics playing an integral role in payment processing
Sephora’s latest cooperation with Apple to combine Apple Pay with the Sephora app and create a Sephora Wallet.
Learn how lipstick is being used as an economic indicator, click here.
Customer engagement and Omnichannel experience
One such retailer that transformed its customer engagement and Omnichannel experience is Ulta Beauty, America’s largest beauty specialty store.
Its Connected Beauty vision has allowed Ulta to seamlessly manage real-time inventory across 20,000 products and 800 stores as well as serve customers with in-depth, personalized recommendations, crowd sourced reviews and how-to-videos.
The brand’s Beauty tip workshops actually encourage shoppers to play with products before making any purchases.
Ulta Beauty has taken their loyalty program to a different level by launching a social media platform specifically designed for loyalty members to talk to each other about products and have beauty-focused discussions.
Another brand that is spearheading technology-driven beauty engagement is SEPHORA.
In principle, Sephora’s success comes in part from the retailer’s reputation for always having the newest and best brands.
Both Sephora and Ulta have “really managed to crack what experience in beauty is.” “Experience & technology” is the core of their strategy.
Check out Sephora’s virtual artist cheek try on an app.
New Emerging trend in the Beauty Retail – Organic cosmetics or vegan beauty.
The global vegan cosmetics market size is projected to reach USD 20.8 billion by 2025. (global estimate).
It is growing at a rate of 7% currently (pre-covid).
Increasing concerns regarding health & safety, consumer awareness about the use of animal-tested products, and rising importance is given to environmentally viable products that are likely to stir up the demand for vegan cosmetics.
Beauty Retail – Brands investing in scientific research
Brands like Beauty without Cruelty, MU London organics, and Bare Blossom are investing heavily in research activities.
Using ingredients that are plant-based.
Using more fruit based ingredients instead of synthetic dyes.
The sustainability component in packaging like Use of glass containers and recycled paper, no plastic containers etc.
Steps that a beauty retail entrepreneurs or an aspiring retailer need to take to enter the market
-Using smart branding and carefully designed packaging, innovative brands are able to differentiate themselves from their competition;
– Focus the product USP on Vegan & organic ingredients in sync with governmental regulations and industry certifications.
-Using Stories To Stand Out And Get Ahead In The Beauty Industry
-Create your own audience, doesn’t matter how niche that audience is.
-Adapt the Omnichannel approach – sell online as well as a tie-up with some good distributor or retailer for on-ground presence.
They connect you digitally to the consumers who want to sample your product.
Later, you can follow up with that consumer and turn them into customers and evangelists for your brand.
-Keep pivoting your business by looking at various emerging niches in the segment.
Brand Sweat, provide beauty products to women who enjoy being active and don’t want their look to be compromised
Conclusion:
We are moving towards a reality where consumers can easily get anything, anytime, anywhere.
Retailers that do not take the essential first step to differentiate themselves through innovative customer engagement risk becoming irrelevant – forever.
Watch the video which summarizes the role of Artificial Intelligence in beauty retail
About the author:
Ritesh Mohan is a passionate retail professional with over 22 years in the retail sector, handling some of the biggest brands in beauty, fashion, and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. He specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, Business Management & Empowering business owners with his wisdom & experience of around two decades in the industry.
“What business is McDonald’s into?” was the question once asked by the founder of McDonald’s Ray Kroc to graduating students of a prestigious Management school. Most of the students quickly replied, “Selling hamburgers and fast food”.
founder of Mcdonald’s
Ray Kroc smiling replied, “We are a Real Estate Investment Trust (REIT)”.
A lot of us don’t realize that McDonald’s isn’t really a burger selling restaurant chain. Well, it is, but not purely. Peel back the layers and you’ll find that the corporate entity is actually one hell of a real estate company.
Former McDonald’s CFO, Harry J. Sonneborn, is even quoted as saying, “we are not technically in the food business. We are in the real estate business. The only reason we sell fifteen-cent hamburgers is that they are the greatest producer of revenue, from which our tenants can pay us our rent.”
The fast-food giant came from humble beginnings. The McDonald brothers, sons of Irish immigrants, first opened up a hot dog stand in 1937 in Pasadena before venturing out to open their first restaurant. Ray Kroc, after six years of working with the McDonalds brothers, elected to buy them out and became the owner of McDonald’s Corporation in 1961.
Core brand strategy was coined by their CFO, Harry J. Sonneborn,
Instead of making money by selling supplies to franchisees or demanding huge royalties…the McDonald’s Corporation became the landlord to its franchisees.
They bought the properties and then leased them out – at large markups. In addition to that regular income, the corporation would take a percentage of each shop’s gross sales.
Today McDonald’s makes its money on real estate through two methods. Its real estate subsidiary will buy and sell hot properties while also collecting rents on each of its franchised locations. McDonald’s restaurants are in over 100 countries and have probably served over 100 billion hamburgers. There are over 40,000 locations worldwide, of which only 15% are owned and operated by the McDonald’s corporation directly. The rest are franchisee operated.
It’s a brilliant strategy. Being able to collect on rents helps insulate them from the ups and downs of the business. You have to make rent after all.
The success of McDonald’s can also be attributed in part to the taste of the iconic fast food chain’s shakes and burgers. But the real secret sauce has everything to do with how the company has quietly become more a real estate company than a restaurant chain.
Additionally, in the last two decades, real estate values have increased, which means the overall collateral value of the company’s property has increased, too. So when McDonald’s wants to borrow money to make new investments, it can do so at relatively cheap rates.
McDonald’s is a great example of how diversification helps to not just grow a business’s income but also lower its financial risks. McDonald’s is both a fast food and real estate business.
Learnings from McDonald’s for entrepreneurs or start-ups is that whatever business you might be having, you need to plan for “Business Insulation” i.e. to insulate it from any external factors like economic recessionary pressures or from the competition. Always try to have a backup plan which can keep your business afloat even in turbulent times.
Does your Business has a backup plan?… (If not, then reach me on riteshmohan@yahoo.com, I would be more than willing to render help to my retail fraternity members).
About the author:
Ritesh Mohan is a passionate Retail professional with over 20 years in the retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, Business Management & Empowering business owners with his wisdom & experience of around two decades in the industry.
Have you ever noticed while shopping in a hypermarket that store staffs are busy replenishing stocks on the self, checking or changing price tags, if “Yes”, then please read this article as it would give you insights to appreciate retail store staff’s efforts to reduce “Retail shrinkage”.
My inspiration to write this article is my attempt to help retailers manage their “Retail shrinkage” before it becomes a headache for them.
As per retail shrinkage statistics research by Food Marketing Institute into the causes and cures of a retail supermarket, shrink indicates that 64% of store shrink is directly caused by either a breakdown in or lack of effective store operating best practices, while 36% of store shrink is caused by theft and/or misdeeds.
What Is Retail Shrinkage?
Retail shrinkage is the portion of the inventory that gets lost or stolen.
It is expressed as a percentage i.e. value of lost or stolen stock divided by overall sales.
Why Retail shrinkage causes a headache for retailers?
“Retail Shrinkage” of 4% can wipe off 12% of your Net profit, leaving the cash-strapped retailer in chaos, thinking what has hit them unknowingly.
A survey done in the United States by the National Retail Federation found annually there is a loss of approx. $48 billion to retailers through shrinkage
How to prevent Retail shrinkage in Retail?
With the advent of technology, this task has become less painful but I strongly believe in following the basic principles of Loss Prevention methodology in order to achieve your organization’s goal.
Commitment from Top management and Brand owners:
Any strategic change can only be implemented successfully if there is a complete 100% commitment from the top management or brand owners.
Build a strong Internal audit function:
Develop an Environment of Loss Prevention in an overall organization by:
By making employees accountable.
Employees throughout the company must take responsibility for reducing shrinkage. The company should see loss prevention as equal to sales in importance.
Train Staff to Follow Security Policies and Procedures:
There is a need to train not only retail sales staff but also warehousing staff who are responsible for processing sales request or sales order i.e. reduce variances or shrinkage by correctly picking and packing an item for the store and by proper documentation data entry at the time of processing delivery notes.
3) Customer Service
One of the best deterrents against shoplifting is good customer service. The elements of friendly, helpful service naturally conflict with the accessible environment shoplifters want.
Greeting customers when they come in the store makes them aware you notice their presence. Approaching them to ask if they need help and checking in periodically helps prevent them from feeling comfortable enough to steal.
4) Consider Your Store Layout:
An open floor plan where retail sales staff or service associates can see much of the store from central locations helps as well.
5) Technology:
Security cameras and electronic surveillance tags and scanners prevent shoplifting.
Electronic tags and scanners are used to signal store staff when a customer tries to slip out the door without paying for an item.
6) Preventing Non-Shoplifting Shrinkage:
Minimizing or eliminating employee theft is a challenge. Building a trusting environment with a motivated workforce is the ideal starting point. If employees feel motivated, empowered & fairly paid, they are less likely to feel compelled to steal.
It should be a common goal for all retail floor staffs to prevent accounting errors and fraud. Employees need to accurately count products when they arrive and compare them against Delivery note or what the Point of sales system says they should receive.
7) Annual or Bi-annual Stock audit:
Count the physical inventory in your business every year or twice a year to take corrective steps.
Case study:
In a recent study by an auditing firm on the Loss prevention program by studying companies like Target, Limited Brands, Best Buy, Gap, and CVS.
Their findings were an eye-opener, the average shrinkage rate of these five companies was 44% below the U.S. mean, and one company’s rate was 70% below.
Unique Processes these companies followed that made them stand apart (including points mentioned above)
Using evidence-based management. Decisions must derive from detailed and timely data, not intuition. (Most of the five companies’ store managers received item-level shrinkage data every week.)
Linking shrinkage to KPIs: Companies can help keep shrinkage on the agenda by, for example, providing regular shrinkage scorecards, linking it individual staffs KPI’s and using it at the time of appraisals.
About the author:
Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. Ritesh has been instrumental in the growth of some of the regional brands as well in the Middle East region. He specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
During the course of my work, I regularly meet people from my retail fraternity and during one such meeting, I happened to visit offices of Majid Al Futtaim in Dubai and was truly inspired by a placard (placed at the entrance of lobby) of Group’s Vision & Brand promise which states “Great moments for everyone, every day”.
This brand promise & brand belief is so very powerful (all my brand gurus) would agree and has deeper meaning & conveys the way Retail would be progressing in future.
I salute the top management of MAF group and advertising teams who came up with this fantastic brand positioning for Group and are pursuing it by fulfilling the promise that this group is making to his visitors/mall shoppers.
This creative brand promise has inspired me to pen down few points which could help retail groups and mall owners in coming New Year 2018.
) A) Convergence is the buzzword & to play a pivotal role:
Historically the business model for the shopping center industry has been to connect consumers and retailers physically. It was the retailers’ job to convince consumers to buy something. That model is shifting as a result of technology. The real estate owner or mall developer now has a large part to play in connecting the retailer and consumer both physically and digitally, and to do that mall would need a direct relationship with the consumer.
According to the Fung Business Intelligence Centre, “Showrooming” — the practice of researching a product in the store but buying it online — gets plenty of attention, but recent studies suggest it is far less common than “Web-rooming,” which entails researching a product online and then purchasing it in a store.
In fact, 90 percent of all U.S. retail sales still occur “within the four walls of a physical store,” according to a report by management consulting firm A.T. Kearney.
I would like to quote an example of Westfield London who has created a lounge for COLLECT PLUS, (mall’s initiative wherein the partnered tenants/brands offer their merchandise or discounts which are purchased by online customers and they come to collect the same from the mall.
Perfect example wherein Mall has partnered with brands and helping them reach out to online customers.
B) Adoption of technology to dominate Leadership stance:
Installing Beacons in the common area of a shopping center; Most of the mall owners & shopping centers have embraced mobile apps, they can install beacons to identify hot and cold zones within their malls and share useful insights with their tenants to increase their sales.
The mall could also roll-out digital directories and concierge services that help mall visitors find their way around properties, locate deals and get information about events. Indeed, new technology is empowering mall owners and retailers like never before.
A prominent leading group, owning malls in KSA (Arabian centers) uses mobile phone tracking data through its apps to identify hot and cold spots in their malls and works closely with their tenants to improve their sales.
C) Creation of hub/ platform within their premises:
I would love to see malls creating a hub for Retail Innovation, a physical place to connect retailers and technology providers in a real-world environment. I happened to visit a unique place in Dubai which empowers innovation and youth to take up entrepreneurship, the place is called YOUTH HUB.
It is a unique repurposing & redefining of real estate.
D) POP ups to drive retail engagement with consumers:-
In one of recent dipstick conducted by me amongst my network/ friends/retail fraternity, I found that approx. 52% of respondents believe that pop-up stores are an effective way of discovering new brands.
Gives a platform to young designers, new brands/ new concepts to interact with potential customers & serves two purposes:
1) Gives new brands/concepts some confidence in targeting brick & mortar format with their brands and converging both virtual & physical retail environments. Secondly, provides Mall’s leasing team an option of nurturing brand within their premises instead of scouting for brands outside.
2) Brings Newness to malls and encourages more retail customer’s engagement. E) Trend shifting from fine dining to Healthy street food:
Off lately, I have been observing this trend and asking most of my friends who used to dine out at least 4-5 times in a week, they are moving from fine dining restaurants to nearby cafeterias or local street food joints which are offering healthy as well as freshly prepared meals.
With Advent of food trucks which makes hot meals served to you in 10-15mins time is what engaging & enticing future customers & mall owners should evolve and take into account this shift in cultural trend of eating out that’s occurring in the retail space.
I would like to end my article with an extension of Brand promise which Majid Al Futtaim group makes and that is “Create a place that will become the center of people’s lives” & I wish team MAF & all other mall operators all the very best in their endeavors.
Personally speaking, I would be more than glad to sit down with any of mall owners/developers/my retail fraternity and discuss this topic in great depth.
I encourage all my retail network and friends, mall developers/mall managers to share their feedback on what they feel would inspire all our retail fraternity in 2018.
I wish all my readers a very happy & prosperous New Year 2018.
As I embark on writing my first article of 2018, I have just completed penning my Goals for 2018 and one of my set Goal for 2018 is to acquire a new skill set. I am still contemplating as to what that skill set would be but it is going to be definitely related to Entrepreneurship & Leadership.
Have you ever wondered why we follow our leaders whether in the political environment or in the Corporate world?
This question has been lingering for quite some time and after discussing with couple of corporate leaders and post researching on topic I have arrived at 3 points which I would explain by giving case studies.. (My case studies are inspired from Indian subcontinent companies so my followers and friends from outside subcontinent, kindly excuse me but the principle learning behind each case remains valid universally).
1) All Leaders are good Readers.
Post talking to a couple of CEOs, high-level corporate leaders, I found out that each one of them is an avid reader and have set a goal for themselves to read minimum 2 books a month on an average.
This habit of reading books have made them good STORYTELLERS.
They find CAUSE or Pain in their organization or in the life of their customers and address it with solutions & insights that become inspiring for the workers/employees to believe their leaders.
2) “CAUSE” is nothing but knowing and communicating “WHY “.
Leaders inspire employees or workers not by showing monetary benefits but making them buy the fact as to WHY organization is producing goods or what’s their main objective or cause?
Why are they producing goods or selling services to their clients or customers? What benefit would it bring to their customers? What is their main core reason for doing business i.e. SOUL of business?
Leaders communicate their core purpose in form of an engaging story which inspires and make employees/workers believe in their leadership and align their objectives with organizational objectives.
This forms the core underlying principle & theory of Robert Kaplan’s Balance scorecard for businesses.
Case: Patanjali brand.
We (Indians) would know the meteoric rise of Patanjali brand & its brand promise for PURITY.
Brand Patanjali uses the old philosophy of Eat Pure, Drink Pure to Stay Healthy.
They saw a pain in the marketplace wherein goodness of foods were comprised and market share was monopolized by MNCs.
The brand used this CAUSE coupled with MADE IN INDIA mission started producing products which are either close to natural or close to Purity aspect. (I am not getting into discussion pertaining Organic or completely natural stuff as the brand is not promising on 100% natural idea).
Today the group operates in all major categories i.e. Health, Beauty, oils, rice, wheat, dental care almost all the product categories that one could think about.
I always wonder their storytelling is so compelling that even graduates from Harvard University are eager to join them and work with them for lesser monetary benefits.
Western universities are covering their success in form of case studies.
That’s the power of storytelling.
Case 2: Alibaba.com
I am a great follower and biggest fan of Jack Ma and his ideation. His Meteoric rise from an English teacher to biggest retailer in the world is something one has to acknowledge and learn from him. He has been a living example as to why one should NEVER GIVE UP. He has seen more failures than anyone of us.
His Cause:
Alibaba.com is not into business for making money but their cause is to show World that Chinese are too intellectually strong & can create world’s biggest retail company from China and beat Silicon Valley hands down.
Today, Alibaba.com is world’s biggest retailer without owning a single inventory. They created Disruption in the industry and changed the way we do business.
I would be writing down another article wherein I would explain concepts of Business Profitability and Scalability and how these two things are related to WHY/ Cause behind company’s existence.
I would close my article with my single take-out learning i.e.
“EVEN BRILLIANT IDEA NEEDS COMPELLING STORY & CAUSE”.
As most of my readers know that I am very passionate about Retail management and have been responsible for managing some of the regional brands in terms of Retail operations, Brand management, merchandising planning, Sales, Visual Merchandising.
I have always noticed that most of Retail CEOs/ CFOs often takes a downward look when it comes to “Markdowns”. I recall, my previous boss (who is also my mentor) used to give me a very awkward and nasty look every time I proposed using Markdowns as Marketing tool/ event.
My article will talk about as to how markdown planning can help retailers increase sales, improve margins and better manage product lifecycles.
It is my attempt to clear some concepts and convince senior management to adapt to this wonderful planning tool which can prove to be very effective in their Inventory Planning goals.
Markdowns are often associated with margin degradation and profit loss—and some companies believe that cutting prices for their products could negatively impact their brand image. Although inevitable, retailers have historically viewed markdowns as a necessary evil designed to help sell old or slow-moving inventory.
A) View Markdowns as a function of Price Elasticity: Matching Perceptions with Pricing. An example of a markdown would be if you had a sweatshirt for sale that was originally priced at Dhs 100 and after one month of slow sales, you decide to markdown the sweater to 20% off, making it Dhs 80 at retail.
Although you just lost Dhs 20 of your intended markup on that sweatshirt, in return, you are also inviting more people to purchase it at a price they may prefer vis a vis the original Dhs 100 price. Since the shirt had not been selling well at Dhs100, offering a nice, mark downed price can often result in sales that would not happen otherwise. Hopefully a 20% discount will do the trick, however often you will find that you need to continue your markdown strategies based on slow sales, moving product from 20% off to 30%, 40% and more if necessary.
Most Retail CEOs and CFOs (especially organizations run by finance professionals and not by Retail mindset professionals) often confuse Markdowns with Discounts model.
A discount is a reduction in the price of an item or transaction based on the customer making the purchase. Many retailers offer discounts because they find that customers return to their store versus others because of the discount provided to them. Discount offers “Instant gratification”.
Customers often enjoy the advantages they feel that discounts often give, such as being a preferred customer and therefore getting special treatment. Some boutiques & Spas offer friends and families discounts, which benefits both the retailer and those getting the discounts. It’s a win-win on both sides.
Both a markdown and a discount can be temporary or permanent, depending on how you market them to your customers.
An example of a temporary discount would be “Get a discount equivalent to your waist size”. If your waist size is 32 then avail 32% discount on your purchases.
A temporary markdown example would be if you had a one day sale, offering mark downed prices for only a specific amount of time.
A discount strategy is more Tactical whereas Markdown strategy is more organic in nature. Both should be an integral part of the marketing mix. I recall the statement of Sir Martin Sorrell (CEO, WPP- an advertising agencies conglomerate), who once quipped, “Discounts are like bad cholesterol and Markdowns are like good cholesterol; there has to be less dependence on discounting model, instead push more brand-building efforts”.
B) Using Markdowns to control Inventory Ageing:
You can use both discounts and markdowns as part of your sales strategy to help make the most out of your inventory sell thru and ultimately, your sales goals.
Wasting your retail floor space with products that are not selling will not help you at all, so consider how markdowns and discounts may be able to work for you in your sales strategy.
C) Tie your Markdown planning with your financial plan- how much hit are you willing to take in markdowns? A markdown plan means nothing if it’s not tied to the financial plan. Retailers should determine how much they are willing to spend on markdowns to hit their financial targets. This information ideally flows either from CFO/ CEOs while preparing budgets for next fiscal.
It’s equally as important that retailers are able to not only execute on the markdown plan once it’s in place but also monitor it in real time. This will ensure that adjustments can be made as the season progresses.
D) Determine early on which items you are willing to reduce in price over time and for how much: It implies whether you want to run it on category or on specific collections. Monitor its sales-through rate and then decide the markdown %.
E) Managing Product lifecycles more effectively:
Smart retailers will leverage effective markdown planning to not only ensure that there is less stock left over at the end of the season but to also manage new product introductions and phase-outs.
Caution to Retailers who shy away from Markdowns strategy:
Retailers that avoid putting a markdown plan in place may experience increased cannibalization of new product lines and decreased sales.
The impact could even extend to the store level as new and old products are shoved together on store shelves or displays, resulting in cluttered and disorganized stores that even the most loyal customers will find difficult to shop in.
A Perfect example is “ Part Sale” that we find very commonly in retail stores these days in the Middle East, wherein new merchandise is being sold with that of discounted merchandise in separate enclosures or gondolas.
I would like to end my article by sharing a video wherein an industry practitioner and a successful retailer Mr Kamel Shaban, MD -Capacita brands, has offered one valuable tip to Inventory planners and Merchandise Managers as to how they can use Markdown strategy to keep “freshness of assortments” in their stores by avoiding discounting model trap.
In case if any of my readers, want to know & streamline Inventory planning strategy for their brand then I would be more than glad to share my ideas acquired while practising & closely following this topic.
You can reach me on riteshmohan@yahoo.com in case this topic also excites you.[/vc_column_text][/vc_column][/vc_row]
My Inspiration to write on this topic came from one research study conducted by one of leading Management advisory group who had highlighted the reasons pertaining to failures of family-owned businesses as they approach their 2nd or 3rd generations.
Passing control from one generation to the next is a critical moment for a family-owned business. It can be positive, but often businesses lose momentum. It can bring a family together, but too often it drives a family apart.
Study reveals:
An impressive 88% of current family business owners believe the same family or families will control their business in next five years, but succession statistics undermine this belief.
Only about 30% of family and businesses survive into the second generation, 12% are still viable into the third generation, and only about 3% of all family businesses operate into the fourth generation or beyond.
The role that family-owned businesses play in the economy should not be underestimated. For one, they are in fact the most common type of business organizations, this becomes more complex when we talk about Middle Eastern region due to cultural and social sensitivities.
Post deep diving into this topic and post doing my own research by interviewing with industry leaders who are either from a 1stgeneration or 2nd generation of family business, following are my findings as to why the majority of family-owned businesses fail to achieve success in their 2nd or 3rd generation.
My few insights:
a) Lack of Leadership & strategy:
Most of the founders of successful family businesses are too overly conservative i.e. they do not have clear vision nor they know how to manage funds either internally or externally borrowed & use it for scaling the business. They lack scalability approach.
b)Excessive dependence on founders e. 2nd generation leaders often lacks hunger for success which is found in first generation founders. They look up to their first generation leaders for every petty issue.
c)Too engrossed in the day to day activities/operations, owners often miss long-term vision or strategy.
d)Secretive style of management :
Lack of information sharing with core management team, lack of sharing of IP (Intellectual property rights), Believes in just informing Decisions and taking control on a daily day to day operations.
Lack of succession planning
As per Mr Vijay Madhavan, Sales Director of Petra insurance Brokers LLC, this is one of the main reason as to why family-owned businesses fail to survive in their 2nd & 3rd generations.
a)Handing over is hard.
Company founders have often given their lives to their businesses. So naturally many feel protective and reluctant to step back.
b)It’s also “Emotional”.
A good handover is crucial for the business, but it can also have a big impact on relationships within the family. Where there are several children who wish to be involved, someone needs to decide who will take which role. There is always the risk that someone will feel left out.
c)‘Eldest first’ rule doesn’t have to apply.
The best succession plans are based on a cool-headed appraisal of the different strengths and preferences of the next generation of potential leaders. That might mean favouring younger siblings over elder siblings, skipping a generation or going outside the family.
d)The next generation may have a different perspective. They may want to take the business in a new direction, seek a new relationship with employees, and branch out into new markets. Their aspirations need to be understood and aligned with the overall plan – if there is misalignment it needs to be addressed.
One of the best ways to address these issues associated with Succession planning is by:
“Combining energies of new generation and experience of the older generation”.
Another way which I feel has been successfully implemented across family-owned businesses (likes of Tata group, Hindalco or in some of the Middle Eastern family-owned businesses).
I strongly believe,“Sometimes, it’s best for the family to step back”.
When the business has reached a certain size, the founder might decide it needs the leadership of a seasoned CEO from outside the family – potentially disappointing children who had hoped to take over.
Ownership and management are two different thingsand offer different ways of contributing to the firm’s success. Family members can play an important role in the firm’s success by being good owners, putting in place strong governance and processes at the ownership level.
3) Introduce the concept of Wealth management in sync with succession planning.
Founders can avoid failures of their businesses by:
a) By defining internal equity of family members at the entry of business and at the exit of the business.
b) Introduction of external equity or PE equity in business in order to take it to scalable levels.
c) Clearly defining compensation for participating family members & non-participating family members.
This is very important as most of the times it is found that Money divides the family and its businesses.
2) Evaluate both Management Buy Out or a Management buy-in options in ensuring the business is managed more efficiently and effectively.
I would like to conclude this article by a quote from Mr Sushant Upadhyay, Client Partner of m/s Corn Ferry who quoted:
“De-link Ownership from Management”
I feel this concept and his quote summarizes the entire topic and would help all my readers, who are either first-generation business owners or 2nd generation business owners to plan for their organization’s future and growth initiatives.
Contact me in case you are looking at the fresh perspective of your business strategy, I would be glad to share my wisdom with my industry friends and connections.
As I embark to write this article on visual merchandising which is often kept at last number in the priority list of Retail CEOs, COOs or is often left to Operations team to decide & manage along with store operation. I feel it is important to highlight the importance of Visual merchandising in brand building initiatives and developing loyal customers for the brand.
During the course of my retail journey, I got hands-on experience in managing VM teams and leading VM functions for a couple of middle-eastern brands in my retail career and I have often considered it and have given this function more priority than Marketing or advertising functions in retail mix.
It is my sincere attempt to clarify some fundamental principles of Visual Merchandising to brand owners, retailers and retail professionals so that they can re-energize their brands using Visual merchandising strategy.
Visual merchandising, also known as the ‘silent salesman’, suggests selling by display and presentation. Visual merchandising focal points are situated strategically to circulate the customer in the store and communicate the capabilities and advantages of the merchandise.
This is completed by converting a passerby to a browser with an successful window display, a browser to a spender via the process of ‘conversion’, a spender to a major spender by increasing the ‘ticket size’ assisted by the method of cross-merchandising.
Extension of Brand’s Identity and communication: Visual merchandising is an extension of Brand’s image and should be in sync with brand’s communication strategy.
Imparting outstanding Shopping Experience Visual merchandising enhances the shopping experience by creating suitable ambience, producing an image of the store in the minds of the customers via a combination of colors, display presentations, graphics, lighting, forms and fixtures. If completed in an exciting and dynamic fashion, the shopping experience would be pleasurable for the consumer and make him/her come repeatedly.
Communication Tool Visual merchandising communicates to clients the right message about the merchandise by projecting the latest trends, colors and fashion in apparel retailing. Visual displays are the great communication drivers & deliver an opportunity for retailers to sell a variety of merchandise.
Theme displays based on a season or an event is employed to promote a proper product range.
Coordinated displays contain items that are typically utilized/ sold/ consumed together, growing several purchases besides educating or informing the customer. Classification dominant displays contain all varieties of 1 item, are used to convey the impression of a wide selection.
Importance of VM strategy in Purchase cycle:Consumer’s perceptions, aspirations, motivations and memories play an important role in purchase cycle.
VM alters the perception and attitude of the consumers, forcing them to buy the product in a way that he/she enjoys purchasing goods thus leaving an everlasting shopping experience.
31% of the consumer’s purchases in lifestyle products are impulse purchases thus a store with good displays and theme and décor attract eyeballs, thus increasing footfalls and thus converting footfall into sales.
78% of shoppers recall store name when they liked store window display, interiors or music
How well the store presents its merchandise using displays relates to the generation of brand imagery. Involvement of sensory, emotions, attitudes during the buying process decision provides enjoyment and satisfaction to shoppers.
Visual merchandising help in following ways:
Exterior presentation:sign boards, store exteriors, store signage, window displays and banners.
Store layout:merchandise flow, category zoning, ease of accessibility of merchandise, lighting concept.
Store interior presentation: Merchandising principles, color coordination/ stories, merchandising techniques using mannequins, lighting, music etc, using props to highlight product, pricing signage’s to communicate “Hot deals”, floor and wall coverings, space design to ensure proper circulation of customers across the stores, defining hot and cold walls in store layout process.
Visual Merchandising offers a Multi-sensory experience for the store to its customers.
Live Displays are used sometimes for product displays at the entrance of the store to demonstrate the use of products. Children’s stores often use people dressed as cartoon characters to attract kids’ attention.
Island Displays are displays of merchandise found generally at the entrance of stores to announce new arrivals, special offers, etc. A display podium is erected and decorated suitably.
Dynamic Window displays using Holographic projections
I would like to end my article with a video of my interaction with Mr Anand Kumar, Executive Director- ABRA VM&SD as he shares his wisdom of running a company which specializes in creating a visual retail environment for some of the biggest luxury brands in the Middle Eastern region. Anand shares a couple of tips for Visual Merchandising managers and Retail CEOs which is very relevant in current times of economic downturn and would help retailers develop their Visual merchandising strategy in sync with overall brand strategy.
Contact me on riteshmohan@yahoo.com in case you are looking at getting the fresh perspective of your business strategy, I would be glad to share my wisdom with my industry friends and connections.[/vc_column_text][/vc_column][/vc_row]
