Problems for Organized Retail In Kerala

After Uttar Pradesh and Maharashtra, it is time for the organized retail to face hurdles in the state of Kerala. The southern state has strongly resisted against the entrance of new retail formats in the domestic markets. The Kerala government has also shown support in this movement.

There are many big players in the retail scene of the state. Big bazaar and Reliance Fresh have opened a few stores in the state. There is one store of Big Bazaar in the district of Palakkad. Palakkad is a major town in Kerala. It is also my native place.I have seen it changing over the past few years.Also retail growth is witnessed in cities like Cochin and Thiruvanthapuram.

The organized retail has successfully managed to wet the appetite of the consumers of these cities. But the small retailers have been consistently protesting against these retail giants.

There are many co-operatives and professional associations such as All Kerala Distributors Association and Kerala Vyapari Vyavasayi Ekopana Samithi (KVVES) which is playing a significant role protecting the interests of these small traders. Also the local government has taken steps to open hypermarts under the Kerala State Civil Supplies Corporation in major city centers. Furthermore these retail giants have been eying domestic manufacturing companies for their supplies which will make the SME's less competent to compete.

In order to avoid such situations, there are measures taken to change the image as well as the formats of the local players in order to compete with these modern retail companies.

To sum up organized retail would hit a roadblock in Kerala as in the case of Maharashtra or any other state for that matter till long term solutions are put into place to safeguard the Kinara Stores.

Contributed by:Nithin Narayanan with inputs from Vaibhav Agrawal

E-Retailing

Written by:Nithin Narayanan

 
In marketing there is a never ending search for new mediums to sell merchandise and services. Generally marketers follow the tried and tested principles over and over again. Lately the internet has grown to become a valuable medium for marketing.

 Internet has a contemporary feel to it. Not surprisingly, the net has now become an integral part of the youth culture. Whether it is online games, blogs, websites or social networking sites, the youth have always experimented and sworn by it.

 During the past few years, E-Commerce has also grown tremendously. This trend is a natural extension of the growth of the net. The consumer has shown confidence to use the net to purchase items. The net now commands more than 30 percent of the total revenue streams of many Small and Medium scale firms here in India. There are certain industries which have faired well because of the young profile of the users. They are namely electronic gadgets, fashion - apparel as well as custom made accessories, books music and so on.

I haven't met any one youngster who doesn't catch the news on the net. Reading the old newspaper is according to them is passé. Due to the same a major of the revenue is invested in the online business category. This segment of the population which is in the age bracket of 18 to 30 years is the avid user category of services on the net.
This kind of trend is mainly backed up by brick and mortar establishments which instill confidence among the consumers to buy through the net. The companies have a well defined support system for their customers in case of any discrepancy or problem.

Companies today have many options to choose from in terms of logistics ranging from hiring intermediaries or managing directly for their internet options. One hindrance in this is that of the Last Mile Problem. The Last Mile problem does increase the cost of executing the order which might in turn affect revenue in the long run.

But as a whole the net has indeed grown leaps and bounds and it will play an increasingly important role in any business sector in the coming times.

Transformation of Beauty Business

 Written by: Nithin Narayanan

 The Indian beauty business is at the threshold of growth. In the past couple of years this industry has grown leaps and bounds. Now a parlor is as common in a local market as a departmental store. But beauty services are primarily unorganized and mainly are operated by stay -home moms in their houses.

 
Increasingly organized beauty sector has successfully penetrated the Indian market in the past few years and are steadily growing at a healthy pace of 35 to 40 percent annually. There is a general perception that these so called organized salons are better than the unorganized ones. And this is largely true as it provides a host of services to the customer under one roof.

 
The word 'Metro Sexual' is now in vogue among those sections of the population which ironically don't even know the meaning of the same. Now every body wants to look and feel good about themselves and they are not hesitant to spend a good part of their income to achieve this goal.

 
But these beauty services come at steep price and as every body knows Indian consumers are largely price-sensitive. Not many can afford the services of these fancy salons and parlors. This is where unorganized beauty services come in. they are largely located in or near to residential areas and are have lesser prices. Due to the same they still manage to occupy a large share of the market.

 
Specialized services such as Laser Treatment cannot be and should not be done by amateurs. This is where organized sector scores as it provided cutting- edge services to their clientèle.

 
One aspect of beauty services that is posing as a hindrance is that there is no uniformity in the industry. Information and transparency in production methods of these beauty products is critical in building customer base. In turn educating the staff of these establishments and focusing on Customer Relationship Management (CRM) would in all probability consolidate the industry further.

 
Many retailers are also entering this fast growing segment. Reliance retail, Pantaloon Retail and other major players are revamping their strategies to cash in this trend.

 
Well as they say' Looking Good Is Always In' (True even in business).

 

Business leader in focus

Mr. George W. Buckley
Chairman, Chief Executive Officer and President, 3M Co.

• Mr. Buckley has been Chief Executive Officer and President of 3m Co. and its subsidiary 3M Precision Optics, Inc. since December 7, 2005.
• Mr. Buckley has been Chairman, Chief Executive Officer and President of 3M Canada Company, a subsidiary of 3m Co. since December 2005.
• He served as Chief Executive Officer of Brunswick from 2000 to December 2005.
• He served as President and Chief Operating Officer of Brunswick, April 2000 to June 2000
• Executive Vice President February to May 2000;
• President of Mercury Marine Group, 1997 to 2000;
• Senior Vice President of Brunswick, 1998 to 2000.
• Vice President of Brunswick from 1997 to 1998.
• Before Brunswick in 1997, he served as President of the U.S. Electric Motors Division and the Automotive and Precision Motors Division of Emerson Electric Co. in St. Louis.
• Before his successful tenure at Emerson, he served as Managing Director (President) of the Central Services Division of the British Railways Board in the U.K.
• He has been a Chairman and Director of 3m Co., 3M Canada Company and 3M Precision Optics, Inc. since December 2005.
• He served as a Chairman and Director of Brunswick Corp. from 2000 to December 2005.
• He has been a Director of Black & Decker Corp. since 2006 and Thule AB since 2004.
• Mr. Buckley serves as a Director of Polaris Industries Inc.
• He served as a Director of Tyco International Ltd. since December 2002 until December 7, 2005.
• He served as a Director of Ingersoll-Rand Co. Ltd. from 2002 to June 7, 2006 and its Lead Director from June 1, 2005 to June 7, 2006.
• Mr. Buckley did joint study at Universities of Southampton and Huddersfield from which he was awarded a Ph.D. in Engineering.
• He also holds a degree in Electrical and Electronic Engineering and an honorary DSc. in Engineering from University of Huddersfield in the UK.

- Contributed by Vaibhav Agarwal

REAL ESTATE SCENARIO IN RETAIL

Written by: Nithin Narayanan

 Real estate growth in India can be seen in every nook and corner of the country. Indeed this phenomenon has been affecting the markets for a few years now. One can see apartments, penthouses, bungalows which cater to any and every kind of lifestyle. The SEZs , malls , entertainment complexes are all evidences of the growing economy of the country and also depicts the aspirations of our people. As the economic boom spreads across the country the real estate is attracting foreign investors too.

 Coming to retail sector, real estate does play a significant role in achieving the goals of the retailers. One look at any analysis would reveal that there are number of malls constructed and even more are at the planning stages in all the cities across the nation. In one such study that I read, it was mentioned that by the mid of 2008 about 70 million sq.ft of retail space would be added to the retail markets. In spite of the many projects underway , as the demands exceeds the supply currently there is shortage of  500mn sq.ft of shopping space  One thing that must be kept in mind is that not all retail spaces are suitable for brands. In other words, each brand or retailer has its own agenda in terms of the position of the brand or the company name and image among its customers. Hence it is quite imperative to be at the right location. On the other hand the challenge for the developers is to find, get and retain the right kind of tenants, so that it is a win-win situation for both the parties concerned.

 
Increasingly there is a requirement of lobbies in the malls. Also the circulation area where people can move vertically as well as horizontally inside the mall has gained significance. These spaces especially have to be well lit naturally or otherwise and also attractive flooring is the key to wet the appetite of the customer. Until recently in the context of India, general retail spaces had 14' floor to floor height. But now retail spaces have 16' to 20' height which is also the standard worldwide.

 
Another visible trend is that retail spaces are getting bigger. Malls which are recently opened or are under construction have around 15 lakh sq.ft to 19 lakh sq.ft of space. But how long such a trend would remain is to be seen as costs have also risen considerably in the past few years.

 

Business general knowledge questions

1) This company was called Lutsuko and later changed its name to something that literally means 'to lose money'. Which one?
a) L' Oreal
b) Sony
c) Matsushita
d) Honda

2) Which car in Spanish means 'Charming'?

a) Matiz
b) Santro
c) Ikon
d) Corsa

3) Which international brand had an ad campaign - 'Tomorrow is mine' and had signed Rahul Dravid for the campaign?

a) Reebok
b) Nike
c) Pepsi
d) Puma

4) This organisation has 1356 members and has the ad-line "the world put stock on us". Which organisation?

a) NASDAQ
b) LSE
c) NYSE
d) BSE

5) Of whom did Shahrukh Khan once say that 'our figures are similar'?

a) Pierce Brosnan
b) Roger Moore
c) Sean Connery
d) Cindy Crawford

Answer key:
1) (B) Sony, it's name was a tongue twister to many and had to be ultimately changed.
2) (A) Matiz
3)(A) Reebok
4)(C) NYSE
5)(D) Cindy Crawford, in fact, both Pierce Brosnan and Cindy Crawford model for Omega watches.

- Contributed by Vaibhav Agarwal

Retail Site Selection

Written by:Nithin Narayanan

Another important aspect relating to Trading Area is the Site selection. Selecting a site for retail store, be it any kind could be a daunting task as there are multitude of factors to be considered.

 Going by theory, there are three types of sites or locations for a retailer to choose from-

 An Isolated area

 Unplanned trading area

 Planned business area

 A store in an isolated area in all probability is a retail outlet which is located near or on the highways. In this kind of area, there is no direct competition for the retailer. Another advantage for this kind of area is that the rental cost could be low as the area is underdeveloped or developing. Because of the same, a larger retail format can be established easily as there is no scarcity of space. The other factor which is worth mentioning is that a typical retailer conducting business in these areas have the luxury to experiment in terms of operations as the rules and regulations wouldn't be as rigid as it would be on a high end street.

 
An unplanned trading district would be a location where two or more stores are situated in close proximity and thus sharing the consumer traffic in the area. One prominent feature of this is that the proximity of the stores is not due to prior planning. This is particularly true in case of India. As a major segment of retail in India is unorganized as well as family owned, not much emphasis is given to location. It is only now that people are realizing the significance of the area in which it operates.

 
Lastly a Planned Business district or a shopping area would generally have stores which complement each other. It does not mean that a particular retailer would not have any competition, but as the name suggests the whole area would be strategically placed and also very well planned. Like the major shopping districts across the length and breadth of the country. This kind of area does have features which are common to the modern or organized retail formats.

 
One could easily see a definite path of development not only in terms of real estate but also the perception and the attitude of the retailer about the nature of his business. Nowadays no one would find retailers who wish to place his/her stores in an unplanned business area, unless and until the products that are sold have low unit costs. A fine example is the Cigarette industry. For this sector, population is a much more a predictor of success than the image or the location of the store.

 

WTO Zeroing Dispute

When the U.S. Department of Commerce calculates a weighted average dumping margin for a given company, it typically takes into account numerous comparisons between sales in the United States and sales in the home market or third-country market (or costs in the home market).  It is not uncommon for the Commerce Department to find that some comparisons reveal dumping ( e.g., the price in the United States is lower than the home market price), while others reveal no dumping (e.g., the price in the United States is higher than the home market price).  Where a comparison reveals no dumping, Commerce assigns a zero to that comparison, rather than a negative number equal to the amount by which the U.S. price exceeds the home market price.  This practice is commonly referred to as "zeroing."

 

In this dispute, Mexico challenged the use of "zeroing" in both the investigation phase and in assessment proceedings (the proceedings in which authorities determine the actual amount of antidumping duties owed).

 

- Contributed by Vaibhav Agarwal