Multi-Disciplinary Reading – Book Reviews

Supermarketwala, Damodar Mall, 2014 – Definitely worth paying attention to when Mukesh Ambani writes the foreword and Kishore Biyani the preface. Damodar Mall has had a colorful career in Indian retail working with – HUL as brand manager, Radhakishan Damani in conceiving and building early DMart, Kishore Biyani in Big Bazaar and now with Reliance Retail. The insights in the book are varied from malls, supermarkets (DMart, big bazaar), apparel retailing (shoppers stop), packaged food brands (ching’s secret), salons (YLG), gyms (talwalkars), brand building (WildStone) etc. The book was written in 2014, so some of the information is already outdated but some of the observations on the Indian consumer are absolutely timeless.

My notes –

• In US and Europe retail modernisation took place after they reached middle income, unlike in India. Like in telecom where we jumped a stage in the evolution by moving directly to mobile phone bypassing landlines, our retail modernisation is a similar jump (Mukesh Ambani in the foreword of the book)

• While most businesses know the customer is always right, the problem is in identifying the customer correctly (with most management coming from upper-middle class, ‘credit card’ india)

• Demographics – in India one in ten Indians is above 60 years, number of working women has doubled in the past decade (book written in 2014) and two-thirds of urban Indians are self-employed

• In India, its not seasons that drive categories of consumption but marriages and festivals

• Modern retail is a three-legged stool – with customers, supply partners and store colleagues as the legs

• Compared to western societies, consuming India is more frugal and green – where even upmarket homes collect plastic packs of milk and old newspapers for recycling (cabinet next to shoe rack in most houses). Thrift and recycling is our way of life.

• Modernising retail has to be just a couple of steps ahead of the customer and not more (Kishore Biyani in the preface

• The author would travel with Radhakishan Damani to Raigad Bazaar at Alibaug, 90 kms from Mumbai to observe how middle-class India shopped back in ‘99 when only few supermarkets existed (Apna Bazaar, Sahakari Bazaar and Raigad Bazaar – all run by co-ops)

• In places like Alibaug, a petty-industry town with small population, men and women didn’t shop together but yet at Raigad bazaar, both were involved as couples in the shopping decisions, pushing cart through narrow aisles

• These were white-collared people in bank or teaching jobs and coming to a self-service store with your spouse was the modern-thing to do, buying not just groceries but other modern untried things too (Damani’s observations were astute) – saving a little money in the process was a nice thing to do on a Sunday

• Author in his travel to Brazil as part of his HUL gig observed modern retail thriving in Brazil which was a developing country – women would shop alone, and would be brought and dropped back by store-run open-top buses

• In the decade following 2000, consumer purchase behaviour changed drastically with rise in income, growing aspirations and expanding product choices. We are using different products from what we did a decade back and also buying them differently in open-format self-service shops

• In over-the-counter shopping, there’s a mystique between desire and purchase. In self-service shopping, the customer flirts with brands openly and savings is a participative sport

• Author would visit his stores (with Biyani or Damani or other colleagues) and would observe contents of a cart, the body language of customer, where they push the cart and at what speed (similar to our road sense – we stick to left and middle for fast), how we slow down around bins and so on

• The store gains when we slow down, have our guard down and feel positive. Stores are designed to help with this

• Men and women shop very differently in an apparel store. If a man takes shirt to trial room, the possibility of purchase is 2/3rd. For woman its less than 1/4th. When two women shop together, time spent is highest (and hence spends), next is woman alone and then a woman and man together and the worst, a man alone (In an electronics store though men are in their element)

• What you get hear in the uniform, you can never hear wearing a boss’ tie (Author spends time in shops in store uniform)

• Equality has never part of our social and cultural genes all through history – inequality and privilege has always existed though our constitution intended equality, it was never delivered. In malls, hypermarts and supermarkets – there’s no discrimination of any kind built into their design or practice – even if one buys nothing, he gets to use the air-conditioned environment and clean toilets

• One person, unlimited aspirations is the cornerstone of our economic resurgence.

• Businesses that venture beyond large towns into the hinterland will truly be the pioneers as thats where democracy, choice and access will impact lives the most

• Turn a store event into festival and customer responds to the call, with the sense of participation and cheer to get the best bargains (hence all the festive sale ads and decor in stores)

• A newly married woman would shop at the supermarket though kirana store is close by to avoid gossip by the shopkeeper with her in-laws (gem of an observation that’s so uniquely Indian). She doesn’t wish to be assessed, merely served

• Customers welcome bargains and the feeling of having “triumphed” over the shopkeeper – it makes them feel good that they are winning over the retailer, even if it isn’t necessarily true

• In a traditional departmental store , the owner sits safely behind the counter, at a higher level than the customer with fan directed at him while Customer is on the street, lower, sweating – its a position of disempowerment for the Customer (so subtle, so true)

• A woman feels like trying Dove, instead of Haman, she can do so easily without the patronising shopkeeper – she can pick it up, feel it and smell it, check the price and make a decision in a supermarket. The shopkeeper’s help in a traditional store comes at the price of freedom

• A small part of the population has an uneven claim on the infrastructure due to the uneven pace of development. In modern retail, the lower middle class is able to lay claim just as the affluent do (Cheap telecom plans is another eg. of it). Aspiring classes have desires now that there’s a possibility that they will be met and middle class no longer has monopoly over resources

• A migrant worker is able to carry products and lifestyle from the city to his native village and the consumerism creates a ripple effect there

• Security (at a mall or supermarket) means different things to different people. To the young woman its protection but for her father it could mean invasion of privacy (the frisking and checking feels subtly threatening).

• A grand bargain sale with the snaking queues and festival atmosphere on the other hand feels like home to the older men who feel attention is not singled out on them (explains why erstwhile big bazaar or current dmart are designed the way they are). The industrial era environment, factory or warehouse-like feels like home to them

• Modern retail has opened up lot of job opportunities to the local youngsters who for the first time are inducted on how to handle customers (confidence in self, respect for others, listening, firm but polite talk – all different from what they are used to in their family environments)

• As a confident youngster, a young woman trained in modern retail, carries that confidence to her own home with independent opinions and shapes the entire family (for most, this is the first salary)

• Waste and modernity are almost synonymous in our minds. We feel guilty to throw away food, pass over clothes and books as hand-me-downs and so on. The exchange mela therefore is a very Indian thing that satisfies our ethos

• Queues at bus stops, train stations, airports, colleges, temples, buffets show that if you leave over a forearms length between you and the person in front, it will be used to cut across the queue, get bridged or occupied within 5 mins (elbow push factor – valid across social strata). There’s almost a “need” for a little bit of crowding with our bias towards the collective.

• Retailers who went by the western ‘butt-brush factor’ (consumers in west would drop the queue if it gets too tight) and designed lavish layouts were perceived to be “expensive” and hence don’t do well here. People here feel a little reassured by a little elbow-push (might change with increase in affluence)

• Shopping alone in the neighbourhood store vs with family at a supermarket – the expectations, experience and decisions are very different. Everyone is involved in the decision. The extra pair of eyes, hands and ears are attuned to different stimuli, driven by their own needs, wants and temptations. (One member might convince they try a new brand of tea or biscuits for eg.). do aankhen, do haath to cheh aankhen, baarah haath mode as the author calls it.

• Unlike the west where going to the supermarket is a chore, here its part of the monthly entertainment for the family

• Copy shopping – peeping into a fellow-shopper’s trolley and letting it influence your shopping decisions (social proof – online retail does it through “Customers also bought” or some such)

• Trend trolley – a trolley that contains the best offers in the store. Its taken around the store to nudge and inspire

• In an apparel store, for women the most happening place is the fitting room area. Women keep an eye out for what other women are trying out – the voiceless exchange of ideas is more potent than posters on the wall – shops keep the fitting room rack of tried clothes seeded with what they want to sell

• It is not wise to take even the smallest risk over the lifetime-value (LTV) of the customer over the avg. dispute value (handle disputes in favour of customer). The Customer service desk, goods return, alteration are considered “cost items” – instead they should be seen as lifetime value protectors

• Modern retail is where the consumer gets to go on a date with your brand, close and personal. The consumer shops with all senses (or at least two of them) – the product must speak to the customer in a one-to-one interaction

• Switching brands in pre-modern retail era had to be a pre-determined decision (before you asked the shopkeeper). In modern retail, its easy to switch a pepsodent for colgate. Flirting with new brands is the norm

• Making just the right amount of dal or curry that gets finished in the dining table is a minor triumph as refrigerating leftovers is not part of our culture – the homemaker takes pride in serving up authentic food that doesn’t come in packs. With out belief that food is best eaten fresh, packed and preserved food system will take time to penetrate. But we will use the refrigerator for ingredients to keep the produce fresh

• While we don’t mind storing vegetables bought at the farmer’s market in the fridge for a week, we refrain from buying vegetables in the cold section of the supermarket – though technically both are same

• The total installed refrigerator capacity is 1000 Cr litres and growing rapidly (from 2014) and it has influenced the way we buy fruits and vegetables and milk (stocking up)

• WIP foods – batter, chopped vegetables, kneaded dough, chutney, ginger-garlic packets, gravy packs all find space in the fridge but not finished foods, though technically there’s barely a difference

• As urban women in India migrate to nuclear families, away from mothers and grandmothers, their affinity to culture also is slowly dissipating. Currently labour is cheap and its easy to get a cook to make meals but when its not possible or is expensive, culture-neutral ready-to-cook, ready-to-eat meals might takeover as it did in the west.

• There are more consumers for exotic samosa than for guacamole and that wont change in a hurry. Indians talk salad and eat samosa. Our sophistication might lead to bisleri water pani puris (Haldiram’s do it) than towards non-Indian tastes (Nestle’s tastemaker in maggi or Lays’ kurkure are testament to this). But Indians will celebrate their evolving purchasing power with exotic foods while returning to what they grew up with

• Ready pastes, batters are making it easy to make a chinese fried rice or other such foods (maggi bhuna masala, ching’s schezuan fried rice mix, MTR sambhar masala, Smith & Jones ginger-garlic paste etc.) . While we might go to the extent of buying dal makhani masala, we are far from buying ready-to-eat dal makhani, though both are value-add processed foods

• Festivals for us are a license to indulge. Every celebration was accompanied by a food that was considered exotic – that’s how food and culture traveled across the country – sabydana, rajgira atta, bhagar, sweet potato, besan, maida, dates, sevaiyan, sherbet, camphor – these were rarities in different regions and were cherished during festivals. We had an innate sense to try new things during festivals

• Reliance has 42 regional and national festivals they plan for. Increasingly the regional and national cultures are merging with Ganesh Chaturthi being celebrated across the country and mehndi ceremony migrating all the way to the backwaters of Kerala from Rajasthan

• Indian proclivity for sticking to culture while accommodating modernity has given rise to chocolate boxes replacing mithai boxes for festivals

• Shoppers Stop by B.S Nagesh in 1991 was the first fashion revolution in India bringing ready-to-wear fashion sold in self-service way. For the first time one could try variety of designs, cuts, fabrics and colours in both Indian and Western styles

• Zara with faster, shorter design cycles where designs change faster and look fresher while managing to be in-tune with Indian fashion preferences is a different take to watch out for (B.S Nagesh in 2014 was spot on with fast fashion taking over – now with Zudio doing well)

• The self-employed and the white-collared in India wear different clothes. With no fancy designation on the visiting card, the self-employed want to distinguish themselves with the clothes, accessories, pens and cars.

• The salesman in a women’s saree store for wedding sarees is allowed into the woman’s personal space and his feedback carries a lot of weight in the purchase decision.

• The practice of printing M.R.P on all consumer goods by law in unique to India and maybe Sri lanka. Its a byproduct and ugly relic of socialist era to prevent sellers, manufacturers and traders, retailers from exploiting the buyer. It hurts the kirana store guy because he can’t charge more for the convenience of delivering or making something available. In the west, these are called “convenience stores” for a reason and you are charged more for the “convenience”

• Redistribution stockists or RSs are the company’s eyes and ears on the ground as they sell to both wholesalers and retailers. Stockists are barely profitable and their profits are usually less than a single employee’s salary (super thin margins)

• Everyone in the distribution chain is always short of working capital. Organised retail though buys on credit and sells on cash and is always in surplus. An organised retailer thus halving his credit period with vendors from 8 days to 4 days makes his distributor very happy – the vendor now has a stake in the retailer’s prosperity (win-win) – promotion stocks, newly launched products get to the retailer first, local display and consumer sampling budgets were director to the retailer, vendor took care of slow-moving stocks and ensured pipeline was moving smooth and vendor gave retailer the best-in-class margin and the retailer would be last to go out of stock for a product in short supply (DMart model)

• People eating in an Haldiram’s outlet is double the number at McDonald’s (in a highway halt) – so given similar ambience, customer prefers local flavours (very pronounced in south as well with A2B doing what Haldiram’s does in the north)

• Author suggests Indian would prefer a DIFM (Do it for me) model to a DIY (Do it yourself) model. That’s why we have coffee vending machines with an operator. So a kirana store backed by e-commerce portal from Tata/Ambani/Birla/Biyani that panders to the needs of customers could do well (There was talk of Reliance going down this route in the past?)

• If Britain is a nation of shopkeepers, India is a nation of male shopkeepers (from grocery stores to lingerie). The reason is that the shop has to deal with 30 suppliers/sales and delivery persons every day – mostly rough and tough men. It takes a man to deal with these men. Sourcing from a cash and carry store like Metro allows a small shopkeepers to deal with one wholesaler with good terms instead (this can help women run this business). In Japan or Thailand, 25-33% neighourhood stores are run by women.

• WildStone used the weak positioning of Axe deodorants. In India consumption should not be restricted to the creamy layer and must reach out to the middle-class. The edginess of ads which were teasing and tempting and seductive worked – but when it crossed the line to become lewd, it backfired – must stay sensitive to the cultural boundaries

• DMart model – when customer is sure she is getting best value all the time, she lets her guard down, buys more and in the bargain, the store wins

• All DMart did was watch the customer trolley and read everything about Sam Walton and Wal-Mart. It retained its frugal outlook to retail through upheavals

• RKD would pick 10 principles or acts needs to run the business and pick the top two or three that mattered most and then be the market beater in those areas (similar to Buffett’s way of prioritising)

• The merchandise dept. of DMart act like purchasing agents of the Customer and not of the company. If the buyer buys better, they can sell cheaper – what you receive you pass on. Even when the customer is not looking, not careful, they still save money. No marketing required as word-of-mouth is sufficient for this model

• All equipment at DMart, be it shelves, trolleys, scanners, all hardware and connectivity deployed at the stores is expensive, best in class. There are no sales targets. There’s no need for skilled manpower.

• Regional modern retailers with treasure trove of best practices – Pothy’s, Pazhamudir Nilayam, Saravana stores in Chennai. Jalan’s in Varanasi. Sarvodaya in Mumbai and Khadim’s in the east

• “Ching’s secret” realised what the woman wanted in the kitchen was help and not replacement. They didn’t seek to become Cup O’Noodles. They reached market through trial and sampling in modern retail. By providing a bouquet of products for the cuisine together – hakka noodles, soy sauce in a single place – the power of suggestion became a multiplier in itself. Ching’s secret offered a cuisine solution unlike Knorr and Maggi offering a product (Author mentions ready-to-cook idli-dosa batter could become a pan-indian food and it has become true with iD doing it now, along side vada batter and chutneys)

• Talwalkar’s started in 1932 with a promise of making the gym a safe place for a woman to go (unlike the Akharas where only men went).

• Gym is the only ‘store’ the customer comes to everyday. They must be geared for frequent customer contact than a restaurant, salon or grocer

• While Indians don’t spend much in colouring and styling hair (they consider it as spoiling it), they don’t mind spending on skincare – YLG, a completely homegrown business figured this out and it was game changer with skin vs hair being a 60:40 in business with only 10% coming from styling (Kaya skin clinic by Marico did sophisticated high-end skincare as well). YLG grew to 34 salons in 5 yrs and is a market leader with 40% share edging past Lakme in Bangalore.

India will be one of the largest consumer markets and the prize of success will be huge. There will be new consumer categories, new modes of consumption and new technology aiding and disrupting that brands and retailers should pay attention to. The book outlines a lot of nuances that are India specific and there aren’t many books and experts who are as willing to share their decades of insight. Very useful read. 9/10