Third Eyesight - Management Consultants, retail, consumer goods, business strategy, marketing, supply chain, India Subscribe by Email  thirdeyesight retail consumer products consultants Subscribe   |    Facebook  Join the Third Eyesight network on Facebook   |   Contact   |   Sitemap

Recent Posts

 

Recent Comments

Categories

 

What we’re discussing

 

Archives

Grow Up To Find Growth

December 29th, 2016 by Devangshu Dutta

In 2016, brick-and-mortar modern retailers seemed to have begun recovering their confidence, and cautiously investing in expansion. However, currency shortage has significantly dampened demand at the end of the year. The hangover would continue into the first half of 2017, and consumers could be muted overall on discretionary purchases, including fashion, mobile upgrades and out-of-home dining.

On the other hand, while digital transactions introduce a note of caution (friction) in the consumer’s purchase decision, for e-tailers they do reduce complexity, cash-handling costs and potential returns which could provide significant unexpected wins.

I’ve written about this for years, and don’t tire of reiterating: the retail sector must recognise that shopping is a unified activity for the consumer; physical stores and non-store environments are alternative but complementary channels. Brands can and must use whatever channel mix works for them, and brick-and-mortar retailers need to invest in creating an integrated growth blueprint towards “unified commerce”.

On their part, while e-commerce companies are constrained by FDI policy, they will need to invest more in developing “old economy” strengths – strong product differentiation and distinguishable brands. Fashion, accessories, home decor and other lifestyle products are strong drivers of gross margin for all multi-product retailers, and e-commerce players struggling on the path to profit would focus on these even more, as well as on private labels. They also need to have management teams that are able to cast their minds 3-5 years into the future, while keeping close watch on immediate cash flows. Capital is available, but turning risk-averse. All businesses need to focus on up-skilling their teams, retaining good people, improving processes and adopting technology. In recent years, growth in the retail sector seems to have been driven by a “spray-and-pray” approach, not necessarily management sophistication. Spending like there’s no tomorrow is a sure way to no tomorrow.

In short, 2017 could be the year where the entire retail sector grows up – a lot. We hope.

(This piece was published in The Hindu – Businessline on 29 December 2016).

Posted in Apparel, Branding, Consumer, e-commerce, Food & Grocery, Footwear, Health & Wellness, India, Lifestyle & Fashion, Marketing, Retail, Soft Goods, Strategy, Technology, Textiles, Uncategorized | No Comments »

For QSRs, India isn’t a quick-fix but a long game

December 27th, 2016 by Devangshu Dutta

Dominos India

When American fast food standard bearers McDonald’s and Domino’s Pizza stepped into India in the mid-1990s, the market was just ripe enough for take-off.

McDonald’s and later Domino’s Pizza can be credited with not just growing the consumer appetite for fast food but also for fostering an entire food service ecosystem, including fresh produce, baked goods, sauces and condiments, and cold chain technology.

India has been typically difficult for business models driven by scale, replicability and predictability. The customer is price sensitive, operating costs are high and non-compliance of business standards is a frequent occurrence. In this environment, these brands have reinvented the meaning of meals, snacks and treats.

Their growth has set the stage for other international players and also set business aspirational standards for Indian food entrepreneurs and conglomerates alike.

Product experimentation has also been an important part of their success; it keeps excitement in the brand alive and help improve footfall. However, how far a product sustains and whether it becomes a menu staple can’t be predicted accurately. New products also need significant investment in both supply chain and front-of-house changes in standardisation-oriented QSRs, so the new product launch cannot be undertaken lightly. This is one reason these successful QSR formats don’t overhaul their menus drastically but make changes incrementally.

For these market leaders, future scale and deeper penetration is only feasible with higher visit frequency. For growth in middle-income India, they need to become a significantly cost-competitive option to be seen as more than a ‘treat’ or celebration destination.

So, while both McDonald’s and Domino’s Pizza have invested significantly in Indian flavours and menu offerings, perhaps it’s also best for them to reconcile with the fact that there will be a significant part of the consumer’s heart, stomach and wallet that will remain dedicated to indigenous offerings.

In a global environment that’s turning hostile to fast food, India isn’t a quick-fix growth market, but it’s certainly one to stay invested in, for the longer term.

And I have no doubt that as much as these companies aim to change India, over time India will also change them.

(Also published in Brand Wagon, The Financial Express)

Posted in Branding, Consumer, Food & Grocery, India, Marketing, Product Development and Design, Retail, Strategy, Supply Chain, Uncategorized | No Comments »

Festive discounts, online shopping and retail evolution in India

October 9th, 2016 by Devangshu Dutta

P. Karunya Rao of Zee Business in conversation with Devangshu Dutta, Chief Executive, Third Eyesight and Narayan Devanathan, Group Executive & Strategy Officer, Dentsu India, about festive discounts, the evolution of ecommerce and retail business in India.

 

Posted in Apparel, Branding, Consumer, Customer Relationship, e-commerce, Footwear, India, Lifestyle & Fashion, Market Research, Marketing, Retail, Soft Goods, Strategy, Technology, Textiles, Uncategorized, VIDEO | No Comments »

Packaging – Uncovering Personality

August 16th, 2016 by admin

Dominos India

Packaging of products is, undoubtedly, an extremely strong means of conveying the essence of the brand, its ethos and its personality.

Packaging is not only a vehicle to endorse the identity of a brand in a consumer’s mind, the growing need for sophisticated packaging also results from many lifestyle needs such as ease of transportation, storage, usage and disposability sought by convenience seeking and time pressed consumers.

But, increasingly, it also reflects the brand’s responsibility and sensitivity towards Nature and its resources.

If we, as consumers, were to reduce or optimize packaging from our daily lives, especially for food and beverages, there will be a redefinition of the processes involving our purchase and usage. It will also to a larger degree alter the systems and processes of organisations whose distribution and retail is integrally dependent on packaging.

Original Unverpackt, a concept grocery store in Berlin, Germany operates without food packaging that would later turn into garbage. The idea around which it is build is to bring one’s own containers and have it weighed. The supermarket will label your containers. After one shops and gets to the till, the weight of the containers is subtracted and one has to pay for the net weight of the groceries. The label is designed to survive a few washings so one may come back and skip the weighing process for a few more times. In this way, not only do the food products shed their familiar identifiers (brand colors, packaging structures, and bold logos) but the ways they move from shelf to home becomes radically different. While shoppers are encouraged to bring their own bags and containers with them, a range of re-usable jars and containers are also available for purchase onsite. As much as possible, produce is sourced locally.

At this point of time, it may seem difficult to adopt this framework in entirety. However we should remember that just a few short decades ago we followed similar practices such as engaging biodegradable, recyclable, reusable materials for packaging, making use of one’s own containers and bags and filling them in with quantities as per the requirements from the bulk containers.

Singapore’s National Environment Agency (NEA) will be introducing mandatory requirements for companies to use sustainable resources in packaging and reduce packaging waste very soon. It is still being decided in what forms the regulations could be developed, but the preliminary ideas include requiring companies to submit annual reports on how much packaging they use, to develop waste reduction plans, or to meet recycling targets. Belgium on the other hand has been championing the cause of waste management by maximizing recycling and reusage.

The global trends are moving towards sustainable packaging given the ecological resource wastage it creates, the garbage the packaging material produces and the air and the ground water pollution the landfills create. Earth Overshoot Day, which marks the date when humanity’s demand for ecological resources and services in a given year exceeds what Earth can regenerate in that year, is arriving progressively earlier and earlier, indicating that the humanity’s resource consumption for the year is exceeding the earth’s capacity to regenerate those resources in that year.

Another very grim consequence that was witnessed is the frightening and highly visible impact on marine life – since the start of this year more than 30 sperm whales have been found beached around the North Sea in the United Kingdom, the Netherlands, France, Denmark, and Germany. After a necropsy of the whales in Germany, researchers found that four of the giant marine animals had large amounts of plastic waste in their stomachs. Although the marine litter may not have been the only cause of them being beached, it had a horrifying consequence on the health of these animals.

Given the serious consequences and the growing sensitivity towards these consequences, it is imperative for product manufacturers, raw material manufacturers and equipment and technology providers to design packaging with solemn intent to address sustainability.

The best time to reduce the use of packaging was 50 years ago. The next best time is now.

Posted in Apparel, Branding, Consumer, Corporate Social Responsibility, e-commerce, Food & Grocery, Footwear, India, Lifestyle & Fashion, Marketing, Product Development and Design, Retail, Social Enterprise/Impact Investment, Soft Goods, Supply Chain, Technology, Textiles, Uncategorized | No Comments »

Heat Spots in the Cold Chain

August 1st, 2016 by admin

The cold chain sector is expanding quickly due to increased investments from Indian and international organisations going towards both modernisation of the existing facilities and establishment of new ventures. Over the last few years cold-chain has gained a buzz, finding its way not only into industry presentations but also into budget speeches in Parliament. It is widely reported that India needs to build more cold chain capacity, especially to reduce the enormous amount of waste of food products in the chain from farm to consumer.

India is one of the largest producers of agro-products i.e. fresh fruits and vegetables, milk and related products, fishery products and meat. However, due to lack of the required facilities, spoilage of products is comparatively high.

In recent years, significantly incentivised both by business logic and by tax breaks, there has been a fair amount on investment in cold storages. However, the sector is still highly fragmented; there is inequitable distribution of cold storages, interlinkages between storages is also very poor and many facilities are also operating below capacity.

The National Centre for Cold Chain Development (NCCD) reported that as of December 2014, 70% capacity was utilised, where the total number of cold storages available in India was around 5300 and approximately 6000+ vehicles, providing about 30 Million Metric Tonnes capacity of storage. Most of these facilities are located in the states of Uttar Pradesh, Uttaranchal, Punjab, Maharashtra and West Bengal.

Storage and transportation capacity is only the very first step in strengthening cold chain capabilities but, unfortunately, that is where many entrepreneurs and investors in cold-chain are stopping their thought process. Many players in the industry have been using obsolete machinery, and storages are majorly for a single commodity. The result, predictably, is underutilisation of capacity or mishandling of food products leading to operational problems, cost escalations, spoilage and other losses. Just to mention a simple example that many seem to forget: even domestic refrigerators have at least 3-4 temperature-humidity zones: the freezer, the chill tray, the large cool area, and a vegetable tray. In comparison, many cold stores are built without adequate thought to the various influencing factors. It’s important to recognise that in developing a cold chain capability, the products to be handled, the environment in which the cold chain will operate, not only storage but intake, handling and transportation, all have a role to play.

With a fragmented operating environment, both in terms of production as well as distribution, often a single investor or company may not be able to create the business logic to set up a cold chain facility. Collaboration between multiple individuals and agencies may be a way out.

An example of successful use of integrated cold chain is the Tamil Nadu Bananas Growers Federation. Banana growers in the Tamil Nadu belt were diminishing due to lack of appropriate storage facilities, and farmers were forced to sell produce at throw away prices. With introduction of integrated cold chain solutions, the federation of farmers from Tamil Nadu has now managed to gain a hold of the banana market again. They have managed to increase their income manifold by growing better qualities and storing bananas for longer period of time in the integrated cold chains.

Cold chain logistics in the true sense begin with harvesting and post-harvest handling, going on to controlled atmosphere vehicles, cold storages, sorting and grading facilities, modern pack houses and controlled atmosphere retail stores. Most importantly, even operational know-how is something that is not made part of the investment plan, leading to unviable, unprofitable cold chain facilities.

The focus should be to integrate the cold chain, and also build capacities in all areas. As per NCCD (December 2014), India has approximately 6,000 reefer vehicles against a requirement of 60,000. Similarly the number of pack houses available is 250 and the projected requirement is for 70,000. Hence, the need for a more balanced investment in terms of modern pack-houses, refrigerated transport units and ripening chambers is evident and will bring far better results, both operationally and financially.

In addition, there has to be a significant improvement in developing the know-how and skills sets available to the sector. While the country is faced with large-scale unemployment annually, a well-thought out development of the cold chain sector including due investment in knowledge-based initiatives can create significant numbers of better paying jobs around the country, especially in rural areas from where the produce is sourced.

With development of the consumer and retail sector supporting its growth, integrated cold chain development should be at the top of the agenda for government as well as for private business.

Posted in Food & Grocery, India, Retail, Social Enterprise/Impact Investment, Supply Chain, Technology, Uncategorized | No Comments »

« Previous Entries Next Entries »

Copyright © 2003-2010 by Third Eyesight