Friday, September 19, 2008

IRF 2008: DAY 2

Day 2: India Retail Forum
What do shoppers Really Want? (world view) By: Jonathan Banks, Business Insight Director, The Nielsen Company, UK
· The population world over aging because of which the consuming pattern changes with time. The major reason for this aging population is increasing life expectancy and decreasing population growth rate.
· Skewness in wealth and population distribution.
· Middle class population and there income are increasing
· The changes are happening fast and has huge ramifications
· The trend is with GDP increase – retail spend increases.
· Major online purchases happens in travel, books and electronics goods.
(overall a very general presentation)

Winning Retail Strategy By: D Shivakumar, VP & MD, Nokia India
· Strategy is about doing different things and doing things differently
· The story / growth of organized retail will be much higher then even the telecom which is a huge success story in Inida. The organized retail will grow by 42% to $70 bn by 2011
· With time the share and penetration of various categories of product will change.
· The real estate demand & supply gap is huge.
· The driving factor for relationship between three key players namely consummers, manufacturers and retailers were discussed.
· More than third of the purchase in influenced by word of mouth
· Manufacturers are doing vertical integration – shop-in-shop, own outlet, concession agreement etc – to better understand the customers.
· Retailers are using pvt labels to enhance there margins.
· The need is to have proper partnership between retailers and manufacturer – the era of independent growth is over and new era of dependent growth is happening.
· Surplus labor but short in talent – is the biggest challenge.
· Supply chain, need to understand the consumers and creating brand are the major challenges that retailers face.
Private label trends by: Paul Martin, Global sales Manager, Planet Retail, UK
· Discounters are the champions of pvt labels
· Switzerland has maximum share of pvt labels in retail. World avg share of pvt label is around 20%.
· Factors driving growth of pvt label:
o Consumers:
§ Well informed
§ Trust
§ Long market presence of pvt label
o Retail environment:
§ Highly developed market
§ Highly concentrated market
§ International players
§ Fierce price competition
§ Discounter expansion
o Manufacturer:
§ Over capacity – manufacturers sell there product (unbranded) to retail – thus increasing there sales and using capacity as well.
· As the retailers grow they try to influence entire supply chain using the following powers:
o Choice of supplier – breadth
o Product ingredient – shelf space control
o Certification & quality std – retailers can get there pvt labels certified thus giving confidence to consumers.
o Direct feedback from consumers.
o Quality positioning & target group selection – price positioning.

· History of pvt label (started in 19th century):
o Products were imported and the branded domestically by retailer(current status of china)
o Pvt label used as value alternative (India between this phase and next)
§ The brands are around 30% cheaper than mfg brands
§ It causes credibility problems and confusion in the minds of customer
§ Often connected with low std, low quality, cheap, unsafe
§ Educating the customer is the key
o Pvt label used as Segmentation by price (value/standard/premium) (current status of Australia)
§ Strong regional players drives the growth
o Segmentation by categories, sub-branding (USA/UK) – new categories of products develops
o Segmentation by brand evolution eg ethical brands (Switzerland)
· Future:
o Multiple availability of pvt label – in co-operation with other retailer (two retailers giving same pvt label)
o Channel blurring – difficult to recognize role of mfg & retailer eg. Pvt label of cola
o Co-branding – retailers cooperate with mfg brands to tailor their offer to target consumers

Health & Wellness :
- Girdhar Gyani, Sec Gen, Quality Council of India
- DrRK Shrivastava, Dir Gen, Health services, Ministryof health & family welfare, GOI
- Somnath Das, COO, Manipal cure & care
- Anchor: Anand Rangachary, MD (south Asia & ME), Frost & Sullivian
- Rakesh Pandey, CEO, Kaya clinic
- Peter Baker, CEO, H&B Stores (Dabur)
- Ratan Jalan, CEO, Appollo Health & Lifestyle
- Ashutosh Garg, CMD, Guardian Life Care
- Dr Sanjeev K Chaudhary, CEO, Religare Wellness
- Ashish Kripal Pandit, CEO, VLCC
- Viraj Gandhi, MD, Medicine Shop
- Gautam Thandani, Director, 98.4
· The market is expected to grow to 300% in next 3-5 years
· Challenges:
o Manpower Shortage:
§ Availability & Retention of quality staff – companies want to open there own institute but there is strict requirements from govt – regulations are being amended to change the rules and open institutes in PPP format
§ Shortage of doctors
§ Geographical imbalance in distribution of medical college – mostly located in south
o Creating consumer awareness of the product is important – huge negative bias towards wellness industry – trust needs to be built by providing quality service at affordable cost.
o Duplication of product is a big challenge – organized retail can help check it.
o Fixed MRP, Low margin – makes investing for quality difficult
o Adhering to quality std is a challenge – consumer should be empowered and pharmacists should be enabeled
o Procurement efficiency is a problem – mainly governed by size.
o Practicing traditional Indian medicine system (ayurveda, homeopathy) is challenge because of cost and non-availability of professionals
Collaborative Retail Support (SCM) :
- Anchor: Vikram Bakshi, MD, McDonald’s (north & east) & president restaurants association of India
- Abhijit Malkani, Director, ProLogis India
- Pascal Allix, GM, South Asia, Oracle
- Arun Gupta, CIO, Shoppers stop
- Alok Jayant, Industry Principal, Retail & wholesale, SAP India
- Badal Chaudhry, Head, Apparel & Lifestyle Business, Safexpress
- Anshuman Singh, CEO, Future Logistics & Solutions
- Brian Oravec, CEO & MD, Realterm FCH Logistics
- Peter Robilliard, Solution Director, Asia-Pacific Japan, Torex
- Sanjoy Sahgal, CEO, AXIND software
- Thomas Capune, MD, Consulting Partners, Germany

· Challenges:
o Increasing supply chain risk
o Increasing complexity of pdt & services
o Rising prices of energy
o Talent retention
o Wide geography
o Integrating IT with vendors system
o Creating transparency across SC
o Proper co-ordination between sales & supply chain team
· India has sufficiently well established SCM esp in food. Eg: Amul. Here consumption and demand are well matched – but the problem might come when volumes will further increase.
· Avg SCM cost is around 2 – 30% with varying categories and type of store.
· Amount of money being spent in front end is around 13-15% compared to only 4% in SCM. Is this worth doing?
· SCM could be improved if retailers can share sales data with vendors – this will enhance visibility across supply chain
· Collaboration between retailer, vendor and logistics service provider is the key to efficient SCM

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