I had blogged once on the dollar store in India; back then I did not know that it was a "branch" of the real American avatar. I chanced upon this article while searching for something else today.
As Wal-Mart Stores Inc. and other retail giants prepare to enter India, an unexpected American rival -- California's My Dollarstore Inc. -- is already here and attracting the affluent middle-class customers Wal-Mart and others covet.
Not sure I agree with "afflluent middle class" since I have visited these stores many times and it is usually people who are looking for something phoren and bargain hunters (like me) who land up here. The affluent avoid these stores. For those who have been abroad, the dollar store here is the same as the store there - definitely not for high quality goods. But if you want stuff like Toblerone (I was surprised to see this here since in socialist India Toblerone was at the same level as Yardley - guess both have fallen) or Chocolate syrup or some cheap toys it is a nice place to go to. Surely not for quality cutlery/china or photo frames or decoratives.
Like I said earlier, the store primarily brings to an end the cheap gifts that were the staple of US visitors to distribute to all and sundry back home. Now, if you want to gift something, ensure that is not available in these parts.
...but goods associated with the American way of life -- Doritos chips, Kellogg's Pop-Tarts, Alberto VO5 hair conditioner -- have long been carried home by Indians living in and visiting the U.S. That helps explain why a store chain associated with bargain basements in the U.S. is attracting the cream of India's shoppers in an economy whose gross domestic product is growing more than 8 percent a year recently.
The point is right, but the conclusion is not. Cream of Indias shoppers - hardly. Doritos, VO5, Pop-Tarts - hardly a definition of aspirational products.
International chains are scarce in India, where the government generally doesn't allow direct foreign ownership in the retail industry. It restricts foreign investment to single-brand retailers, such as Chanel or Nike, or those that come through franchise agreements -- international brands provide the products, retail technology and marketing, but the stores are owned by Indians. Guess Inc., Tommy Hilfiger Corp. and My Dollarstore are among those that have entered the market through franchises.
Guess and My Dollarstore in the same breath - ha. There are a few other nuggets which could find place in a How to write about India 2.0!
Wednesday, January 31, 2007
I had blogged once on the dollar store in India; back then I did not know that it was a "branch" of the real American avatar. I chanced upon this article while searching for something else today.
The text reads, Kerala, Surging ahead on the digital highway.
But the real roads are pretty bad. Two laned, no dividers, manic roadsense, traffic jams - sounds like any other place in the country - but Kerala has not had the industrial growth that others have had.
Without real roads, the digital highway will soon be a traffic jam to reach work - strikes notwithstanding.
Tuesday, January 30, 2007
In these days of a job boom, the government employment exchange does not seem to exist, but it does. Although it does not exist on the radars of too many IT/ITES/BPO companies in India, as per this Hindu Businessline piece. And oh, there is a rule too, that they ought to...
Further, under the Employment Exchange Act 1959, all public sector companies and those private sector companies that do not work in areas related to agriculture, are required to notify most of their vacancies to the nearest employment exchange. (Mr. Arjun Singh - time to play some politics here)
Oh, for the heady days of socialism when one could spend days idling in a queue in front of the exchange.
A look at the Web site of an employment exchange indicates no notifications by any IT/ITES/BPO company. When asked why companies do not notify the employment exchange, the Nasscom President, Kiran Karnik, says it is because companies do not see value in it. "Employment exchanges do not provide a talent pool of employable individuals. Further, they are positioned as catering to lesser skilled candidates only," he says.
Do read the piece and you will know why the current system doesn't work. I am sure companies will be happy to tap into any exchange, private or government - like they do into online job portals.
The government exchange is a paper version of the same with all the tapes attached. Here is a gem:
As government exchanges are not permitted to shortlist more than 20 candidates per vacancy, it is difficult for freshers to be shortlisted.
Despite all the handwringing, the report(er) fails to note that many of those listed at the exchange would also have listed at some other portal and in a lot of cases, information at the exchange in outdated - has to be since the system is far from efficient. Also, the net is far far efficient in getting people than a physical exchange. Perhaps its time for the government to turn it over to Naukri.com or Monster.com
Fresh from a trip along Karnatakas famed coastline (Mangalore and Udupi to be precise). Indias (and specifically Karnatakas) coastline continues to thrill me - Karwar which I covered many years back was impressive. Ullal, Kapu and Malpe beaches were outstanding - even more than Goa especially if you want a beach for yourself!
But coming back to the trip, we had a trip to St. Marys Isles. Not that we had any clue what was in store for us there since our only knowledge of the same was what we read out of Outlook Traveller's 52 weekend breaks out of Bangalore. The boat trip of about half an hour costs 70 rupees per person for the return trip to the isles. The boat itself is as basic as it can get and it is stuffed to the gills with passengers. When you disembark - which is an effort in itself, since there is no pier or anything to make it easy you realize that there are no facilities on the isle and the isle is quite dirty to say the least. All in all, the 70 bucks is a ripoff for the substandard service provided. Not sure if Rajarajeshwari tours - who operates this has any competition. At this point, it appears there is none, so he keeps milking the golden goose with some crappy service.
Mauritius and other coastal tourism spots make money milking isles such as these - and how. They charge a bomb, but they provide facilities, activities, clean places - but this one, does not even have drinking water or signboards or anything. In fact I dont even know if what we went to was St. Marys Isles. Operators like these do irreparable damage to Indian tourism - Karnataka has some nice tourist signboards along the tourist circuit, but more is needed. Karnataka has the potential of many Goas, but this is not the way to go about unlocking it.
Effectively, Rajarajeshwari tours is doing what Indian industry did prior to 91. He is a monopoly and he offers substandard services at high prices. What should be done? Exactly what we did to Indian industry in 91. Offer the same licence (if there is one) to three/four operators - and then sit back to see the difference. At this point it can be argued that the small isle does not have the space for competition, but wasnt that the same argument put forward by industries too!
Thursday, January 25, 2007
An incisive article in the Hindu Businessline today on which retailing format will succeed. The article, with the opinions expressed by those in the industry, does not actually say which format will succeed, as expected. What is interesting is the diversity of opinion.
"The formats that will gain the maximum are the 60,000-70,000 sq ft hypermarkets and supermarkets that offer a wide variety of products at rates lower than the market price, coupled with the retailing experience, given the consumer's basic outlook of value for money." (Girish Vedamani, Retail Association of India)
while heres another
"But according to us, the discount format will be the single most dominant form of retailing across categories like FMCG, pharma and telecom, since they are daily consumption products." (Atul Joshi, Subhiksha)
Obviously, there is no one size fits all when it comes to retail formats - my personal feeling is that having a few stores spread out, a la Big Bazaar or Walmart in the US will take a few years before it can make a mark, if it will make a mark at all. Indians shopping habits (note: Need to write on this) are not the "drive down, fill car with stuff, stock, repeat next week" types - not yet. Which is where the Subhikshas come in. They have got discount retailing right next door - with their low cost formats. And these models will delay the movement into the large store format - and my guess is that companies recognize this and many stores will exist in multiple formats - except perhaps the niche ones. As of today, large grocery stores in malls are more for browsing than serious grocery shopping. Stand alone Big bazaars have a fair share of bulk shoppers - going by the crowd in any of their stores, but in terms of penetration, they are still some way away.
The other part about the article, rural retail, deserves a read. How companies tackle this remains to be seen, but it is an underserviced market by all counts. The rural business hubs of Reliance, e-choupal of ITC hold great promise here. And the lowering gap between rural and urban aspirations - especially in an age of 99 cable channels.
He (N.V. Sivakumar, PwC) said it is extremely surprising that even people living in villages, where the primary source of livelihood is agriculture, want the same value-for-money goods that are offered to the urban population through the modern retail outlets, along with a wholesome retailing experience.
This was expected, in fact, I am not sure why people felt that aspirations/expectations (affordability is another thing altogether) of the rural population would be different than the rest of the country. That should give some impetus to knock out substandard products and outdated technology "created" for the rural market - barely any of them made a mark anyway.
The interesting thing is that when foreign companies sell stuff in India, they made the same mistake, we are now making in selling to rural India. They came with old products which were way off the expiry date in their home markets. But they discovered (surprise! surprise!) that Indians sought the best, albeit with a value tag. We made the same assumption in rural markets and suddenly it is discovered that rural India also seeks the best, with an even greater value tag.
Tuesday, January 23, 2007
Why do Tic Tac containers make so much noise? Did they never think that you could use it in the middle of a meeting?
Aha, and talking of meetings - I was at this amazing one when one of the attendees received a call that and his ringtone sounded like a thousand bugles. Embarassed he was and quickly moved his phone to the silent mode and guess what happened? The phone moved into silent mode, with, you guessed it, the ringtone equivalent of a thousand bugles. Maan! Who would have designed a thingie like that - moving into silent mode with a huge ringtone!
Monday, January 22, 2007
Much like the story on premium milk and construction workers, Surf excel is another of the premium brands which finds usage in multiple categories in the market. Surf Excel, interestingly, is not preferred by those it is aimed at - not used is too broad a word, but I will elaborate. (Disclaimer: These are my observations)
Surf Excel does two things. One, it makes washing easy and two, a small quantity of it can be used for a decent wash. HLL has realized it and that is why you get Surf Excel in 2 rupee sachets (20 grams - but good for a bucket of clothes). But the first part deserves a small look in. It makes washing easy - dont ask me how, but it does and does a good job of washing clothes.
So, if your clothes are washed by a bai, do you want to make her job easier? Perhaps no. So, this target market skips Surf Excel, except when they want to wash some "special" stuff on their own. But on the other hand, senior citizens prefer Surf Excel since it makes washing so easy, as do bachelors (if they cannot find a bai). What about those with washing machines - my guess they think Surf Excel is too expensive to dump in a washing machine (same category as bai) and use some other brand, like Tide perhaps.
For the 2 rupee market, Surf Excel is VFM. And like the milk, it is super value for money for these chaps. Needs less water (not sure if they know of the USP) and makes washing easy too.
Monday, January 15, 2007
Once upon a time in India when Premier Padminis and Ambassadors ruled the roost, nobody feared that their cars would look like taxi cabs. Nobody had a choice. Cars and cabs looked alike. This is not such a big thing in many other countries - Germany has Mercs for cabs - but in India, with the launch of new cars, the car-cab equation is big. The equation is simple. If your car model sells well as cabs (tourist operators, taxis), it sales as a private vehicle will suffer.
The Indica is the first one which sort of suffers - the number may or may not reflect it since India, as far as automobiles go, is a far from saturated market. But you can hear it from prospective buyers - well there are too many of them running as cabs. The Sumo and the Qualis were the mainstay for fleet owners and they never really caught on as a private vehicle. The Tavera is also, for all practical purposes, considered a cab.
The Innova seems to be the only vehicle at this point that sells well to individual buyers despite being a premium cab (perhaps because its premium cabs and not ordinary cabs). Lets see which one wins...
Sunday, January 14, 2007
Sometimes, brands turn up in the most amazing of spaces. Imagine what turned up in a high construction zone (outskirts of Bangalore) and has a large migrant population (BTW, guess who are the newest construction labour - labour from the north east) from the north/north east.
A product that I have often seen these people pick up regularly is this: Nandini, premium milk and its available ranges. This milk is significantly more expensive than the regular milk available outside. The price differential is almost 3-4 rupees a litre - a significant difference for daily wage workers. As a bonus it has strong packets that are quite sturdy which means the risk of losses due to leakage or handling is very low. These people dont have refrigerators nor will they buy milk regularly. So a daily supply from a milkman is out of question - you have to buy bulk coupons. They could buy daily from a shop but the risk is that it could get spoilt.
But not this range of UHT milk. It has a long shelf life (180 days or so) and can be drunk without having to boil it. So, the premium they pay is worth the convenience and savings on time/fuel. I am sure Nandini did not create this brand keeping construction (read the link - the target audience is diabetics, health conscious people and one variant was launched by a doctor) workers in mind, but then, brands like water, find their own level.
Saturday, January 13, 2007
Of late, there has been a slew of activity in the Indian retail space and some acquisitions - big ticket in the retail space. Recently Trinethra was acquired by the AVB group. Recently Reliance acquired Adanis retail venture.
If you were in India and you were not a minnow (Minnows are the local single store kirana) but you did not have pockets as deep as the biggies the best idea seems to be to sell off your retail venture. You have blocked real estate, set up a retail venture and this is perhaps the right time cash in. Bharti Walmart has not even begun yet. And there is a fair amount for space for 5-6 big players.
Predictably, the story is that big guys are on the prowl, acquiring the little guys. Perhaps the "little" guys want to sell out, much like playing the start up game in search of the Google acquisition lottery. Its smart business.
Even as Infosys and the other tech companies get ready to release their quarterly results, my busy self has been going through some reports on IT companies and the direction they are taking.
Notably, many research reports sense that Indian IT firms are slowly moving up the value chain. And what chain is that? IT firms routinely do bits and pieces work for many firms - a bit of accounting here, a bit of re-engineering there, a bit of transaction processing here and a bit of maintenance there. They sense that if they put it all together, they could have an entire new end to end business model (not just one business) in place.
Possible candidates are almost everybody in Indian IT. Some reports talk of Infosys, some Wipro and some Satyam. But my money is on TCS to do the trick.
Sunday, January 07, 2007
The new Volvos used by Bangalore Metropolitian Transport are neat. They are the B7RLE buses and the trip on them is a steal for the fares they charge.
What better to make more money out of them than use the whole bus as a moving advertisement?
Saturday, January 06, 2007
I was walking along yet another self service department store when I chanced upon a stack of Sapana mats in the corner. For those who remember, Sapana mats, when they broke into the scene in 1984/85 was a novelty in the Indian market. The only mats we had were woven of bamboo or jute fibre or other material (which was obviously good, but thats a separate point) and mats were not something you used in the living room.
Sapana changed all that about mats (Good Knight changed the whole definition, but thats another story). Sapana unleashed polyweave (plastic) carpets (and they even had an advert running on TV themed around the flying carpet) into the market and how. I dont remember their introductory pricing, but it was quite affordable and soon everybody had Sapana mats (usually more than they needed). With its range of designs and a cushy feel as opposed to the rustic feel of other mats and of course, washability and durability, it captured the market and how. Sapana salesmen were seen all over townships, residential colonies with their large rectangular bags. (How much would a 100% blank salesman strategy succeed in these days of apartments with security guards is debatable) After Sapana a mat soon become a topic of discussion and elevated to the status worthy of use in middle class living rooms. Predictably there were Sapana look alikes in the market - Sapna, Apna and whatnot. (Door to door salesmen would pitch anything in those days - more on that some other time)
Seeing those mats in a corner, I realised how Sapana has fallen from its grace. Not due to anything else, but because of a consumer boom across all sectors. The star of yesteryear now had a small corner in the departmental store.
Sapana, was perhaps the first experience of a mass consumer boom for the hungry middle class in the 80s. Good Knight perhaps comes next closest.
Wednesday, January 03, 2007
No the projection is not for TCS nor Infosys nor is it an automobile company, nor is it a bank nor is it Reliance or Tata Steel or Airtel. The name of the company is Teamlease, if it maintains its current scorching pace of growth. (The company could become the largest private sector employer in India in 2007; currently it is Tata group as a whole)
Did you say duh? "But there is no Teamlease car or bank or tyre or phone or any product. Atleast not as far as I know."
Thats because Teamlease is a staffing company. They maintain employees on their rolls and send them out on contract to other firms who require them. If Variable capacity is your question, Teamlease (and similar firms) is the answer.
Interestingly Teamlease is a product of gloablization and was set up as recently as 2002. Prior to companies like Teamlease, it was an unorganized market with workers being exploited and middlemen having a field day. (Sounds familiar? Our farming sector is in the same shape today.)
So manufacturing firms as well as IT firms can take people on contract without worrying about Indias labour laws. To say that temp staffing companies can solve all the problems is far fetched, but the fact that has risen to this extent (as has the temp staffing industry) points to how much more employment we can suck in. And to those who feel like crying 'exploitation', please note that Teamlease was founded in 2002, when India was already into its first few steps of globalization (we havent moved too much from that spot, but the industry has) and Teamlease trains its employees and makes them employable.
Notice this on Teamleases industry verticals page. They are mostly into white collar jobs than blue collar jobs - whereas thats the area with the greatest potential - training people with vocational skills to make them industry ready. Also read their White paper on "Case for Temporary Staffing Reform To Reduce Unemployment" and "Indias labour report 2006". If our labour laws were simplified, industries could absorb so much and move away from the disguised unemployment that we are known for.
Monday, January 01, 2007
Swami Aiyar says in the TOI this week that recent takeovers of Indian companies have succeeded overseas also due to the managing capabilities of Indians.
It is true that FLAG was turned around by Reliance, LN Mittals turnaround story at all his mills have been mostly executed by Indians. We have also taken over some other companies that were not doing really well - Daewoo takeover by Tata comes to mind as does Videocons takeover of Thomson facilities.
While his analysis comes mostly from looking at overseas acquisitions, I think the same trend is being repeated in IT too as Ciscos center here shows. IT is as much about management as much as it is about services when it comes to bigger projects and projects and program management and perhaps we are not bad managers after all (something our contractor/bodyshopper image abroad has always stood in the way of enhancing).
Perhaps this seems to be a good trend to watch out for in the coming years.