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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 »

Patanjali – from Yoga to Noodles (Video)

May 7th, 2016 by admin

Third Eyesight’s CEO, Devangshu Dutta recently participated in a discussion about the phenomenal growth of the Patanjali brand, from yoga lessons to a food and FMCG conglomerate taking well-established multinational and Indian competitors head-on. In a conversation with Zee Business anchor, P. Karunya Rao and FCB-Ulka’s chairman Rohit Ohri, Devangshu shared his thoughts on the factors playing to Patanjali’s advantage. Excerpts from the conversation were telecast on Brandstand on Zee Business:

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

Café Coffee Day – steaming or sputtering?

April 24th, 2016 by Devangshu Dutta

(Published in the Financial Express, 10 May 2016)

In about 20 years, Café Coffee Day (CCD) has grown from one ‘cyber café’ in Bengaluru to the leading chain of cafés in the country by far.

In its early years, it was a conservative, almost sleepy, business. The launch of Barista in the late 1990s and its rapid growth was the wake-up call for CCD — and wake up it did!

CCD then expanded aggressively. It focussed on the young and more affluent customers. Affordability was a keystone in its strategy and it largely remains the most competitively priced among the national chains.

Its outlets ranged widely in size — and while this caused inconsistency in the brand’s image — it left competitors far behind in terms of market coverage. However, the market hasn’t stayed the same over the years and CCD now has tough competition.

CCD competes today with not only domestic cafés such as Barista or imports such as Costa and Starbucks, but also quick-service restaurants (QSRs) such as McDonald’s and Dunkin’ Donuts. In the last couple of years, in large cities, even the positioning of being a ‘hang-out place’ is threatened by a competitor as unlikely as the alcoholic beverage-focussed chain Beer Café.

CCD is certainly way ahead of other cafés in outlet numbers and visibility in over 200 cities. It has an advantage over QSRs with the focus on beverage and meetings, rather than meals. Food in CCD is mostly pre-prepared rather than in-store (unlike McD’s and Dunkin’) resulting in lower capex and training costs, as well as greater control since it’s not depending on store staff to prepare everything. However, rapid expansion stretches product and service delivery and high attrition of front-end staff is a major operational stress point. Upmarket initiatives Lounge and Square, which could improve its average billing, are still a small part of its business.

Delivery (begun in December 2015) and app-orders seem logical to capture busy consumers, and to sweat the assets invested in outlets. However, for now, I’m questioning the incremental value both for the consumer and the company’s ROI once all costs (including management time and effort) are accounted for. The delivery partner is another variable (and risk) in the customer’s experience of the brand. Increasing the density through kiosks and improving the quality of beverage dispensed could possibly do more for the brand across the board.

The biggest advantage for CCD is that India is a nascent market for cafés. The café culture has not even scratched the surface in the smaller markets and in travel-related locations. The challenge for CCD is to act as an aggressive leader in newer locations, while becoming more sophisticated in its positioning in large cities. It certainly needs to allocate capex on both fronts but larger cities need more frequent refreshment of the menu and retraining of staff.

An anonymous Turkish poet wrote: “Not the coffee, nor the coffeehouse is the longing of the soul. A friend is what the soul longs for, coffee is just the excuse.” There are still many millions of friends in India for whom the coffee-house remains unexplored territory, whom CCD could bring together.

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

Hyperlocals, Aggregators: Developing the Ecosystem

January 21st, 2016 by Devangshu Dutta

Aggregator models and hyperlocal delivery, in theory, have some significant advantages over existing business models.

Unlike an inventory-based model, aggregation is asset-light, allowing rapid building of critical mass. A start-up can tap into existing infrastructure, as a bridge between existing retailers and the consumer. By tapping into fleeting consumption opportunities, the aggregator can actually drive new demand to the retailer in the short term.

A hyperlocal delivery business can concentrate on understanding the nuances of a customer group in a small geographic area and spend its management and financial resources to develop a viable presence more intensively.

However, both business models are typically constrained for margins, especially in categories such as food and grocery. As volume builds up, it’s feasible for the aggregator to transition at least part if not the entire business to an inventory-based model for improved fulfilment and better margins. By doing so the aggregator would, therefore, transition itself to being the retailer.

Customer acquisition has become very expensive over the last couple of years, with marketplaces and online retailers having driven up advertising costs – on top of that, customer stickiness is very low, which means that the platform has to spend similar amounts of money to re-acquire a large chunk of customers for each transaction.

The aggregator model also needs intensive recruitment of supply-side relationships. A key metric for an aggregator’s success is the number of local merchants it can mobilise quickly. After the initial intensive recruitment the merchants need to be equipped to use the platform optimally and also need to be able to handle the demand generated.

Most importantly, the acquisitions on both sides – merchants and customers – need to move in step as they are mutually-reinforcing. If done well, this can provide a higher stickiness with the consumer, which is a significant success outcome.

For all the attention paid to the entry and expansion of multinational retailers and nationwide ecommerce growth, retail remains predominantly a local activity. The differences among customers based on where they live or are located currently and the immediacy of their needs continue to drive diversity of shopping habits and the unpredictability of demand. Services and information based products may be delivered remotely, but with physical products local retailers do still have a better chance of servicing the consumer.

What has been missing on the part of local vendors is the ability to use web technologies to provide access to their customers at a time and in a way that is convenient for the customers. Also, importantly, their visibility and the ability to attract customer footfall has been negatively affected by ecommerce in the last 2 years. With penetration of mobile internet across a variety of income segments, conditions are today far more conducive for highly localised and aggregation-oriented services. So a hyperlocal platform that focusses on creating better visibility for small businesses, and connecting them with customers who have a need for their products and services, is an opportunity that is begging to be addressed.

It is likely that each locality will end up having two strong players: a market leader and a follower. For a hyperlocal to fit into either role, it is critical to rapidly create viability in each location it targets, and – in order to build overall scale and continued attractiveness for investors – quickly move on to replicate the model in another location, and then another. They can become potential acquisition targets for larger ecommerce companies, which could acquire to not only take out potential competition but also to imbibe the learnings and capabilities needed to deal with demand microcosms.

High stake bets are being placed on this table – and some being lost with business closures – but the game is far from being played out yet.

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

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