Dynamic Designs

Started in 1987, Miraj Group has its presence marked in various sectors such Real Estate, FMCG, Stationary, PVC pipes & fittings, Engineering, Entertainment, Tobacco amongst others. Miraj Cinemas – the 3-year old venture of the conglomerate, is now the fifth largest multiplex player in India, credits to releases of regional movies and the growing market in smaller cities, says Amit Sharma, Managing Director of Miraj Cinemas in an interview with Retailer media.

How have you positioned your brand?

Since its inception, Miraj Cinemas is aggressively capturing markets in smaller towns/cities to create a more widespread awareness about the company following an outside inside market strategy.

The current strategy works well in-sync with the revenue generated from regional movies. Where brands like PVR, Cinepolis or Inox are considered as premium or luxury cinema brands, we are known for ‘Value for Money’ proposition. With large presence in Tier II and Tier III cities Miraj Cinema’s present ATP stands at Rs 125 - 130 per ticket, compare to ATP’s of others at over Rs 180, which we believe is a good proposition for our viewers without compromising any of multiplex facilities.

According to you, what are the latest trends in entertainment industry in terms of consumer behaviour?

At present the highest footfall done is in the range of 50 billion patrons for Bahubali, which is mere 3 per cent of our total population i.e. 1.25 million, Thus we are expecting an overwhelming opportunities in terms of numbers of movie goers increase. Additionally, the change in consumption pattern, higher disposable, growing GDP growth rate along with middle class and higher middle class group will only fuel the growth.

Besides, we have also noticed that regional movie releases are become more frequent in recent times, which we believe is a very positive trend for our industry. Presently, we have movies releasing simultaneously in total 9 different languages which includes Hindi, English, Kannada, Tamil, Telegu, Mallalyalam, Punjabi, Marathi and Bengali. Additionally acceptance for Gujrati movie market is growing among consumers.

The industry also have enough opportunity to grow as the total screen count in India is just 10 per cent percent of that of USA and our ATP ranges between 2-3 $ as compared to world-wide ratio where ATP ranges between 6-9 $.

How you plan to compete with peers and what are your strategies for that?

In our industry we all have more or less similar products with little variations over ambience and quality of services. In terms of ambience we are at par with other players and soon we have plans to provide best in class services to our viewers with personalised services which would again a value for money proposition for them.

What is your revenue model and how do you justify ROI?

Our revenue model is same as other players in the industry. Our revenue generates from Box Office, Concession Counter, Advt Sales and 3D glasses.As far as ROI is concerned, we look at ROI from each property that we launch in 4 years of time.

What is the model for ticket pricing? 

As mentioned earlier, our core strategy is to satisfy all our viewers with value for money proposition and thus we do have service offerings for everyone- from an Autowala to BMW owner.

Presently, we have six different pricing slots which are early morning, afternoon and night pricing for weekend and same thing goes for weekdays. Additionally, we also do have flat pricing days, like our highest ticket price for a weekend goes to Rs 180 each ticket; we provide same show on Thursday at Rs 60 (Thursday flat pricing offer).

Can you share the expansion plans of Miraj Cinemas?

Started in 2012, Miraj Cinemas now operates 54 screens across India and is the fifth largest multiplex player in terms of number of screens. We have plans to go upto 100 screens by next Diwali (2016), in states like Andhra Pradesh, West Bengal, Uttar Pradesh, Maharashtra,Gujarat and Bihar.

So far we have invested around Rs 70 to 80 crore for 54 screens and similar budgets will be invested for reaching 100 screens. In next 5-6 years we chalk out plans to cross over 300 screens organically.

Cognizant supported more than a dozen retailers across three continents in the 2010 peak season, representing more than 30,000 stores and billions of dollars in online transactions. It was interesting to learn about their offerings as we recently spoke to Nirav Patel, Vice President, Retail Practice, Cognizant…

Vrinda Oberai (VO): What is the USP that sets apart Cognizant from other players in this space?

Nirav Patel (NP): Cognizant’s integrated services and domain-aligned go-to-market approach has enabled us to build deep expertise of the retail industry. We have applied it successfully to understand the business challenges that retailers face during peak holiday seasons. In addition, our integrated service delivery capabilities through the entire stack of business functions—business process, applications, and underlying infrastructure—helped us visualize and build the Intellipeak solution.

VO: How exactly does your technology provide the retailers with the ability to manage their peak shopping season well?

NP: Intellipeak provides the ability to assess retailers’ readiness for the peak shopping season through an objective evaluation framework. It helps monitor the key KPIs that drive business performance and those that measure system performance in order to scale and meet business demand. For example, the framework helps retailers identify measures to scale their check-out systems to handle peak volumes, plan for ‘surprise’ promotional events and demand for online channel, and so on.

VO: How do you view the Indian market when it comes to the rising demand from retailers to facilitate the management of their retail outlets in a better way?

NP: India is a growing retail market and organized retailing is constantly maturing and improving. We see a rising demand for managing retail outlets. Some of the key focus areas include managing dynamic changes and primitive IT systems requiring hyper-care support, and supporting a variety of store formats.

VO: How mature is the market abroad when it comes to managing retail outlets?

NP: The market abroad is quite mature in managing retail outlets. Yet, with growing consumer demands, there are ever-increasing challenges in managing outlets and other channels of shopping. The emergent trends in consumer retail spending have pushed retailers to constantly innovate and provide differentiated value in their retail outlets, driving end-user experience to advanced levels. Online retailing is also picking up increasing momentum.

VO: What is the kind of demand that you see among various retail players across the globe and which is the retail segment where you are witnessing the maximum demand?

NP: We see a consistent demand for efficient management of holiday peak season across global retailers. We also observe that most retailers across grocery and general merchandise segments are going through a transformational journey to help their businesses grow, which, in turn, entails greater need to ensure that holiday seasons are managed well with the new platforms powering higher business growth.

VO: What are the criteria on the basis of which you research and come up with new technology solutions for the target markets?

NP: We constantly track the changing behaviors of the retail industry and the end-consumers, and what that means to our retail customers. This helps us identify the right solutions for the various target markets.

VO: What, in your opinion, are the key areas to be addressed while managing the peak seasons of the market? Do you see any difference between India and abroad?  

NP: A clear understanding of growing business demands and their impact on the underlying systems and infrastructure is the key to successfully managing peak seasons. An important ingredient of success is the ability to adapt IT to business change and provide a seamless end-consumer experience. While we see definitive peak season periods abroad, peak seasons in India are more in number and frequency, coupled with a dynamic shopper’s profile and diversity that varies between different peak events, making it that much more difficult to rise to changes and maintain 'quiet' periods.

SPAR, the world's largest independent food retail chain spread across 33 countries, unveiled its first hypermarket in the capital, perhaps New Delhi's biggest, spread over 74000 sq. ft on a single floor. Max Hypermarkets India Pvt. Ltd. (part of the Dubai based Landmark Group) has a licence agreement with SPAR International to open SPAR stores in India. On the sidelines of the launch event, Viney Singh, MD, Max Hypermarket India talked to Adeetya Singh of this new venture.

Aadeetya Sriram (AS):Tell us about your first venture in the northern side of the country? What sort of market share are you expecting Spar to attain considering the competition that is already there?

Viney Singh(VS):  We have just started out with our venture in Delhi. The market base that we expect is the upper-middle class segment, because the quality of infrastructure is critical for our format. Things like ceiling heights, ground width provides convenience to the whole shopping experience for the consumers. The competitions we face give us the advantage to analyze their progress and looking into it we make sure we don’t make those same mistakes.

AS: Why did you choose Subash Nagar?

VS: See, west Delhi has one of the best catchments, by way of infrastructure, parking space (up to 1600 cars) and the kind of space available to us over here that is around 74,000 sq.ft that enables us to have the whole shop on the same floor. We see tremendous potential over here, and a mall like this is ideal for our venture.

AS: Will there be a difference in the kind of merchandising you will be providing in the North to that in the South?

VS: We maintain very strict standards of merchandising, safety, hygiene and service levels; and those remain the same everywhere we go. But the merchandising and concepts differ from store-to-store. Depending on the catchment and the availability of importance to the local catchment, we make the required changes.

AS: What sort of marketing strategy have you planned to adopt in the North?

VS : See our marketing strategy for the customers revolve around “ Four pillars” of Spar, and these are , freshness of products, the range of choice , value and the  service. We optimize these pillars, this is a common philosophy for Spar as a brand everywhere, and we try to build word of mouth, which we will do on Saturday. We will have promotional calendars etc.

AS:  Do you plan to adopt different schemes for your products?

VS:  We have the “Every Day Low Price”, a Spar international pricing system, where basically we select certain fast-moving, daily-use items and we price them at the lowest retail price in the city. They comprise of a large part of the consumer purchase. We also have promotions like Best Deal Prices. We also have Loyalty Program, where we have cards, which you can use in any of the selective Landmark ventures for all brands; it’s called the Inner Circle Card. You can carry this card and shop in 4 different stores.

AS:  What sort of growth have you attained in South all these years?

VS: In South, we opened our stores 3 yrs ago; the kind of response and growth we have attained down there has been healthy. We plan to scale up to the other regions as well. The food penetration in the country is 4%, the food and supplies is about 1%, so we feel that is just the initiation of the kind of growth and development we aim to achieve in the North as well.

VS: Do you see yourself as a competitor to the brands like Big Bazaar or want to establish yourself as a premium hypermarket?

AS:  See, with the kind of pricing we have implemented, I don’t think they are very much from the existing hypermarkets, our priority is customer experience, which is very international and represents value. Otherwise, talking about competitors, there aren’t many, you can count them down on your hands.

AS: Do you plan to have an ambassador for your brand?

VS: We don’t really feel the need for an ambassador; our player is the store itself, and the kind of performance the store attains will determine the kind of response we expect to receive.

AS: What are your future plans in the country?

VS:  The overall plans are to have around 30 stores by the year 2013, all large format stores. Current revenue is about Rs 300 cr but we expect to reach 700 by next then 1200 cr. All our stores have achieved cash break even. We plan to have another store in Gurgaon soon. We have a standalone store in Bengaluru, and plan many more in the near future.

Govind Shrikhande, Customer Care Associate, President and CEO, Shoppers Stop, talks with Varun Jain about their expansion plans, the importance of licensed merchandise and more.

Varun Jain (VJ): What are the future expansion plans of the Shoppers Stop? What would be the investment for the same?

Govind Shrikhande (GS): We are looking to expand Shoppers Stop total retail space from the current 1.9 million sq ft to a commanding 3.5 million sq ft in the next four years. We will be investing Rs 500 crore to introduce 40 new stores across the country in the next four years time. We currently have 33 Shoppers Stop outlets, and we plan to add 10-12 new stores in this fiscal with an investment of Rs. 120 crores.

VJ: How does Shoppers Stop look at the competition with so many same format stores present in the market?

GS: The competition is multifold and it is for everyone to see. The competition is not only in the departmental store but also in the specialty store. You have to really create your own space. We have two formats. One of them is a private label where we have a Globus, Pantaloons and Westside operating and then there is a format where Lifestyle and Central operates. So, each of us chose to play on certain strength. We have tried to build an assortment that is very strong in cosmetics, jewelry, skincare, watches and footwear. So, you can see that our assortment is so strong that the competition is not able to take that kind of a share in the market space we are in. Menswear are strong, women ethnic wear is likewise and kidswear with Mother care again is very strong.

VJ: What is the ratio between the international brands and the private labels in the store?

GS: In Shoppers Stop, we have around 18% of private labels and more than 50% would be the international brands. As for now, we are not planning to introduce more private labels in here. We would operate in 18-20% space only. Our focus is on international brands.  We are trying to create an image of house of brands for the fashionable family.

VJ: Why more focus on the international brands, when most of them have their exclusive stores in the country?

GS: See, we are yet to become a brand loyal nation and that is the main reason why I think its better and comfortable for Indian consumers to find different international brands under one roof rather than going to their exclusive stores. For instance, if, I, as a consumer, have to pick a shirt, then I would pick it from a selection of brands that operates in the same category. I can pick a Van Heusen, Louis Phillip or an Arrow, whichever fits best. So we are yet to see Indian consumer sticking to a brand. Say, he only wears a Tommy, in this case, going to an exclusive store benefits. But the majority will go in for a departmental store.

VJ: Any plans of Shoppers Stop going in for the Franchise business model?

GS: For Shoppers Stop, we are not considering the franchising business model, although Crossword stores are on Franchising.

VJ: We have seen Shoppers Stop selling licensed merchandise too often, be it the Vodafone Zoozoo or the Love Aaj Kal merchandise. How important is selling the licensed merchandise from Shoppers Stop point of view?

GS: Selling licensed product is very important from Shoppers Stop point of view. We have sold Om Shanti Om merchandise in the past, which was a huge success. We had record sales and what we sold was like 3-4 times more than what others could sell. We are selling Vodafone Zoo Zoo’s in our stores till date and our customers simply love it. Selling licensed product is very important in terms of consumer connect because whatever is topical will sell. No fashion lasts beyond 4-8 weeks in current scenario and I think that anything that is fashionable, topical and stylish will sell. We focus on licensed merchandise the right way without cluttering them together. We see a good pull and a good customer connect.

VJ: Your take on revenue sharing in malls vs mall rentals?

GS: Consumption is growing and a lot of malls are opening all over India. Big brands and small time players are jumping into the market to make their presence felt, resulting in high rentals. High rents have always been a state of concern for every brand who wants to position themselves in the market. Last year, rent rates were as high as 12-15 percent, but now it has come down to 7-12 percent, giving relief to many of us.

But I firmly believe in the revenue-share model as it benefits both parties without putting pressure on any single body. As we all know that it takes a minimum of 6-7 months for a mall to pick-up, so there will be fewer footfalls. But as soon as business picks up, things go well.

VJ: Where does Shoppers Stop prefer to be present? -In a mall or a high street.

GS: I think both of them have their own places and both will continue to co exist, akin to what we see as big retail vs small retail. There is enough space for both of them to grow.

For more info, visit  https://www.shoppersstop.com/

Loylty Rewardz Management Pvt Ltd. offers end-to-end bespoke solutions for all your consumer loyalty & relationship management needs. In a conversation with Varun Jain, the CEO of Loylty Rewardz, Bijaei Jayaraj, talks about Loylty Rewardz’s state-of-the art technology- LIDSys and how this solution is helping retailers to build a strong and a long- term relationship with their customers.

Varun Jain (VJ):  Please tell us about the inception of Loylty Rewards Pvt Ltd?

Bijaei Jayaraj (BJ): Loylty Rewardz Management Pvt. Ltd., a loyalty and rewards management company was founded in 2006. However, we began our operations in 2008. Loylty’s journey kick started its business with prestigious client, State Bank of India. Loylty Rewardz has designed a debit card loylty program for SBI - FreedomRewardz. Loylty Rewardz not only design and conceptualize loyalty programs but also runs the program for their clients. It focuses on preparation and delivery of custom measurable loyalty programs that create profitability for its clients. With over a decade of experience in Customer Relationship Management activities behind them, the tightly knit network brings together data intelligence, data analytics, creative services, web development, reward processing technology, rewards procurement, and direct marketing for all organisations’ loyalty program.

VJ:  What was the idea behind introducing this solution?

BJ: Loylty Rewardz Management Pvt. Ltd. has developed a state-of-the-art customer relationship and loyalty management platform called LIDSys - Loyalty & Intelligence Development System. The main idea behind the introduction of this solution was to have a robust and an extremely high- end infrastructure and loyalty solution that would be able to provide end-to-end solutions and effectively manage huge amounts of data and even if there is an increase in data, it is managed effectively. With stability, scalability and versatility as its three core features, LIDSys is designed to meet the customer's complete CRM requirements. It is a proprietary tool of Loylty Rewardz that they have developed in-house. Loylty has invested about million dollars in this solution and it took about four years to develop it. Loyalty’s LIDSys is almost like an ERP that provides end-to-end solutions, that is, it helps companies conceptualize, develop and operate loyalty programs, installing best practices and processes towards generating lasting relationships and loyalty amongst their customer base, irrespective of their size.

VJ : What is the aim, functions and the benefits of the program?

BJ : LIDSys is designed to meet the customer's complete CRM requirements. LIDSys is open-sourced 'in nature', so as to be able to plug & play with almost any type of loyalty platforms across industries. The modular architecture has been stress-tested severely and has performed exceptionally well under heavy traffic conditions. The two salient features of this technology are that firstly it is extremely stable and scalable and secondly, it is very versatile and configurable and rule- based. A true testimony to this is SBI’s FreedomRewardz which has 73 million customers and the number is growing month on month, the entire infrastructure is on the same platform.

LIDSys also supports simultaneous management of multiple programs, even under the same corporate. This system also helps us craft promotional offers-based on the data analytics that we have and thus, this helps organization to attract more and more customers by running offers, schemes or promotions on loyalty programs.

VJ: Who do you target...both big and small retailers...both traditional and organised retail? How does it work?

BJ : We have the infrastructure, capabilities and expertise to provide loyalty programs across verticals. We were lucky that BFSI sector has shown their faith in us. Our current clients are State Bank of India, Deutsche Bank, Standard Chartered Bank and Citibank.

Having said that, we are now seeing a huge interest from retail players. Large retail chains are beginning to take a very serious interest in Loyalty and relationship activities and a number of them are talking to us, towards rolling out national level Loyalty Programs.  

VJ : What kind of investment is required to go in for this program?

BJ : The type of loyalty programs varies from industry to industry and from companies to companies. Therefore the investment on these programs would also vary accordingly.

However, basic components of creating a good Loyalty Program is 1) Concept and design – essentially the most critically important aspect of any program. Very often, companies can launch Loyalty Programs without much scientific study. This will not necessarily lead to the desired result. 2) Second part is a robust technology platform that will allow the program to be executed. The program’s continued success depends on this technology platform, and a very versatile platform is able to offer consumer a very versatile, flexible and user-friendly program is a simple manner. 3) Lastly, the program management and development team needs to continue to nature and grow the program on a continued everyday basis. This includes daily operations as well as periodic program development steps like adding new partners of introducing new features or promotions.

The cost for such activities really depends on the scale at which you do it.

VJ: Who all in the retail industry are your clients? How have they benefited from the program? Please substantiate with facts and figures.

BJ : We are currently in talks with a few companies in the retail as well as the BFSI sectors. UP till now, we have designed various loyalty programs for India’s top notch banks like SBI, Deutsche Bank, Citibank and Standard Chartered. These are both debit and credit card loyalty programs where customers get points on their cards when they swipe at Point of Sale (POS). The standard points that can be accrued on this program are 2.5 or 3 on every Rs.100 spent at POS. However, we have partnered with various retail chains so that whenever customers swipe at these partner outlets, they get more points on every Rs.100 than the standard points i.e. 2.5 or 3. Thus, by partnering with these retail outlets, we are helping them build stronger relationships with their customers as these retailers can attract more and more customers through various schemes and promotions that we offer through our technology- LIDSys.

VJ: How has been the response from the industry and how does this program account in benefiting the clients’ business?

BJ : We are a relatively new organization and this industry is at a very nascent stage in India. However, the response that we have received has been extremely good and we have been accepted really well. The industry being new, it will take time for businesses to know it better, but till now it has been well received by our customers.

In the initial stages itself, we have been lucky with clients like State Bank of India, Deutsche Bank, Standard Chartered and Citibank and have been approached by other nationalized and private banks after the success of the current loyalty programs.

We are currently in talks with 3-4 Public Sector banks as well as other retailers. FreedomRewardz, a loyalty program designed for the State Bank Group customers has helped the bank increase its daily transactions from 50,000 to about a 100,000 as well as its customer base tremendously. Currently we run world’s largest debit card loyalty program for SBI.

VJ : What current trend do you see in retail with respect to loyalty rewards program?
 

BJ: More and more retailers today are looking at loyalty programs as an opportunity to retain their customers. Loyalty programs are becoming quite prominent in the retail sector. With the information that the retailers receive from the customers, they are going to the extent of personalizing their relationship with their customers so as to make them feel special which in turn results in customer retention.

VJ: Are there other players too who provide a similar kind of solution/program? How do you differ from them?

BJ: We do not have any direct competition. Loylty Rewardz offers unique solutions to each of its clients, which are designed and conceptualised for that particular company. We are the only player in the industry that provides end-to-end solutions right from designing to managing the operations as well as the redemption of the program is taken care of by us.

VJ: How do you gauge the ROI of the client for such programs?

BJ: Taking the State Bank of India’s case study, after the launch of the FreedomRewardz program that we have designed for them, the number of people that are enrolled in this program are about close to a 75 million in a span of year and this program has become the largest debit card program in the world in a span of one year. Also, on an average the number of transactions from an average of 45000 has increased to over a 100,000 per day. There has been a tremendous increase in the number of transactions per day as well as per consumer. The bank is extremely happy. Similarly, WorldMiles, a frequent flier program designed by us for Deutsche Bank is new and along with this and other programs we plan to increase our customer base to about 50mn more in the next 3-6 months. 

VJ :  Do you have a pan India presence? Do you intend to expand to other regions?

BJ : We are looking at expanding to cities like Chennai, Hyderabad and New Delhi. We are currently in Mumbai and Bangalore and will start operations in the above mentioned cities by the end of 2010. We are also doubling our current employee strength.

Arvind K Singhal, Chairman, Technopak has vehemently voted for opening FDI for multi brand retailers. In a conversation with Rosy Ngaihte he stressed that the government is illogically dragging its feet on giving the retail sector an industry status.

Rosy Ngaihte (RN): Was the retail sector actually affected by the recession?

Arvind K Singhal (AKS): There was no recession in the retail sector. The Indian economy grew last year at 6.7 per cent and hence recession is a very strong term to use. If you check the data of consumption in every category – clothing, food, automobile, telecom etc. it has been positive. During that period, the retailers became more cautious and started focusing on profitability rather than on growth. Also, the developers were not able to raise capital as they had expected and as a result many of the projects for retail space like shopping malls got delayed that in turn slowed down the growth process. Therefore, the retail sector witnessed a slowed growth rate but there was no recession.

RN: What kind of consumer buying behaviour have you observed post the recession?

AKS: The consumers are looking for more options including cheaper ones, their spending can be categorised as need based and aspiration or lifestyle based. The need based goods could be food and grocery; clothing and footwear; and consumer durables and electronics, where they are looking for very good value options. They are not willing to pay premium on these products and are seeking price preference from retailers.

While, in aspiration based categories, people are ready to spend more money on food services, health and beauty; education and learning; leisure and entertainment.

RN: Recently a lot of Private Equity participation has been seen in the retail sector, how positive will it be? What are the other convenient means through which retailers can raise funds and how easily they get access to bank loans?

AKS: I see the alliance to be very promising. The funds available will help the retailers to expand and grow, which will further help in growing the consumption. The scenario could look even better if the government relaxes the rules on foreign direct investment as the private equity money, which is coming from the international sources are not allowed to be invested in the Indian retail business.

The bank loans are not an ideal way to raise funds for retail businesses because as far as the banking system is concerned they would normally give investment against collateralised assets. In retail business, there are a very few assets which belong to retailers. Usually, raising private equity or venture capital or public money is the ideal form of fund raising.

RN: According to the DIPP papers government is considering to open the FDI cap for multi brand retailers, what new avenues will it open for the retail sector?

AKS: I think, if it is opened it will increase competition for sure and therefore, some people might not want that to happen. However in reality, it will turn good for the Indian consumers the moment foreign companies are allowed to own their businesses.

It is time to open the floor for FDI in retail sector, for example, considering companies like IKEA, they have built their business model on the basis of very strong intellectual property. And hence they would not like to share their IP with a partner in India. Likewise Google also operates in India, the government does not say to have a joint venture with an Indian company, then, why the norms are for the retail sector. It is illogical, let the companies decide for themselves whether they need a partner or not or what kind of equity holding, if any, should be there.

RN: Today every retailer mentions of opening its store/outlet in tier I and II cities, what is the success rate from these cities?

AKS: It is not about cities, it is more about the business model. Consumption is certainly happening all across India, in some places it is more while some places witness less consumption. But depending upon the business model, somebody could even be successful in a city which is ranked 500th in the overall spending. All you have to be cautious about is, whether your business model is suitable for the top five cities, top fifty cities, top five hundred cities or top five thousand cities.

RN: What is the current retail trend?

AKS: There is nothing like a single trend because opportunity is emerging in every spectrum of consumption starting from luxury to the very mass. Today, the market opportunity is much broader than it was ten years ago.

In developed countries where the economy is not growing much or facing a slowdown the retailers are facing a bigger pressure like cutting cost or coming out with cheaper products but, as far as, India is concerned they only have to keep cost under control. As consumer spending is increasing there is not much competition among retailers as long as they keep their business model right.

RN: What challenges are faced by the retailers with respect to supply chain and logistics management? How do you think the issue can be addressed?

AKS: The supply chain and logistics are certainly challenging when front end retail comes in. The reason why an investment in the supply chain and logistic has not taken place is because the front end is very fragmented. I can put up a very phenomenal supply chain but for whom, not for an independent kirana stores. Either I will require large customer base or I will need cash-and-carry who will act as front end for the kirana stores otherwise supply chain investment will not take place.

RN: How are the retail rentals currently as retailers are still cribbing over the rental issues?

AKS: The retail rentals are still very-very steep. Partly, it has to do with the inefficiency in the real estate sector. It is high time now to reform the real estate like improving the legal availability of land and improving the FSI (Floor Space Index) or FAR (Floor Area Ratio) availability.

In India, the government sits on every prime land exempting public sector entities and defence. If a part of those lands are made available for putting up new shopping destinations, it will help in reducing the price of the rentals and the price of the commodities as well.

RN: What HR-related issues are faced by the retail sector?

AKS: There is an utter lack of training and I think retail sector has to pick up a certain scale to be able to invest in training. Normally, it is the other way round that first you train and then put up a business. But there is a cost to training, therefore either somebody else should train them or the sector should be allowed to expand and grow because as it grows it will have the resources available to train more people.

RN: Why do you think the government is hesitant to impart the industry status to the retail sector?

AKS: I have no understanding at all and it is quite illogical according to me. The government should be encouraging efficient distribution in retail, without worrying about who owns what. In the last ten years, the government has been dragging their feet on this issue without articulating any reason. They simply call it a politically sensitive subject but they do not explain what the sensitivity is all about and whether it is backed by a justified data.

In the recent years, sports licensing has come across as a great business boom to the Indian retailers. Gone are those days where fans looked at foreign sports merchandise and wished for Indian ones. Utkarsh Singh, Head- Business Development for Rajasthan Royals IPL team lets us know more about the aspects and approaches to sports licensing in India. 
 
Aparna Sharon Isa Dass (ASID): How important do you think Brand Licensing is to an Indian retailer?
Utkarsh Singh (US): Well, I believe it is as important as any other facet of marketing that a brand wants to consider. Depending on the nature and character of a brand and the category in which the brand wants to operate, a brand licensing practice seems to be more sensible to the retailer in order to make a strong base for himself and his product. It is an imperative aspect which is undoubtedly important for both- a licensor and licensee..  

ASID: What all sports merchandise do you intend to launch for Rajasthan Royals?
US: We are considering the entire gamut of possibilities and are just not restricted to three to five categories. We have considered licensing in animation, gaming, movies, music, clothing, accessories and other innovative licensing. Our ability to extend our hand forward into brand licensing totally depends on the market demands and the demand of the target audience. 

ASID: What are the aspects put forth for a retailer who might be interested in Brand Licensing?
US: Basically, we are playing an evangelical role for the retailers. We are investing and creating an infrastructure for licensees and intent to provide a certain level of maturity in terms of relationship, standardisation, protection, of legal issues and financial aspects.  
 
ASID: Do you feel your name could be at a risk while Brand Licensing?
US: One has to be careful about the brand extensions or the product extensions one might get into. However, this is not the case with IPL. We are clear that we would collaborate only with a well known retailer or brand house with great history, experience, and potential matching up to the IPL’s high standard. No matter how much revenue or projections an unknown entity might promise the chances are less for us to get associated with them since our name is attached to the merchandise to be produced. 

ASID: Is it essential for every retailer or brand name to step into the Brand Licensing band wagon?
US: It is absolutely the fact that the brands are increasingly talking to the customers through the products they manufacture. Every product has a buyer’s perspective attached to it. Licensing increases flavour to the success of both- the licensor’s name and the licensee’s revenue, and the bond it creates with the customers. 

ASID: Do you believe that the licensed merchandise would click the Indian masses?
US: According to me, the life span of the manufactured product depends on two aspects- first, what product it is and second, the price of it. If both are right, it’s the recipe to sure shot success. While in cases it just might not be so Take the example of IPL itself, it was a new concept and initially everyone was sceptical however, it has clicked amazingly well. So in short, the mix has to be right, be it the audience or timing. The existence of sports licensing in India would not be short lived.
 

Indian weddings and their lavishness is no secret. So it is no surprise that wedding expos are a big thing during the wedding season. Organising lifestyle shows like Wedding Asia, Wedding Asia-Royal Jewels and The Woman, Maninder Sethi, Director, Excelsior Public Relations speaks about what goes into holding such events. 

Jasmeet Sahi (JS): ‘Wedding Asia’ is one of the most exquisite bridal expos today. How does the Indian indulgence in marriages help the idea of such an exposition? 
Maninder Sethi (MS): Indian marriages comprise of luxury ingredients pre and post marriage, heavy shopping of luxury gifts, bridal wear, jewellery, home décor, trousseau and accessories, decorations, wedding planning, honeymoon planning etc. Finding right ingredient to make the occasion grand becomes a hectic job. Hence a Wedding Asia Exposition makes this task easier by featuring all such luxurious components of a marriage under a single roof.  

JS: Since when has Excelsior been organising ‘Wedding Asia’? What goes into organising these exhibitions?
MS: Excelsior Public Relations started Wedding Asia in the year 2006. Till now we have successfully organised six exquisite editions. Extensive survey and research, hard-core marketing, creativity and a lot of planning goes into organising these exhibitions. 

JS: How is the market like for traditional and designer wear jewellery, considering the fact that gold is at an all-time high?
MS: Undoubtedly the market for gold is at an all time high; however the craving for jewellery among women is also at all-time high. When it comes of weddings, Indians and especially Punjabis are famous for their lavishness where they do not think on spending. Craze for diamonds are seen to be at the height these days. 

JS: Who all form a part of ‘Wedding Asia’? Across which categories do you have participants? 
MS: High-end designer bridal wear, majestic jewellery, fashion accessories, home décor, trousseau, honeymoon destinations, wedding planners and other such essential luxuries form the part of Wedding Asia 

JS: Who are your target audiences and what does the visitor profile comprise of? Do you send out any special invites to consumers?
MS: High-heeled elite strata of the society is our target audience, entrepreneurs, established professionals, corporate associates, esteemed club members, celebrities etc are our prospective visitors. Yes, we do send personal mailers and e-mailers to our target audience. 

JS: How have the consumer preferences changed over the years with respect to wedding collections? Is there a change in what was desired a few years ago to now?
MS: People have now become more style savvy and fashion-oriented with respect to wedding collections. Nowadays people prefer a fusion of tradition and contemporary for every occasion. Earlier designer wear or jewellery was supposed to be meant only for the brides, however nowadays grooms also are conscious of dressing well and looking good. 

JS: Who are the retailers and brands that collaborate with you for ‘Wedding Asia’? How do you distribute the profits from sales?
MS: For Wedding Asia, we are confined to well known and reputed brands from the fashion and hospitality industries. Names like Satya Paul, Monapali, are the brands we have associated with for quite long....in Jewellery big names like NR Sons, MB Jewels, Dillano, Vallini are apart of Wedding Asia. Amadi by Khalid, Abdul Halder who has even designed for Michael Jackson have been a part of Wedding Asia.

JS: Is Wedding Asia held only during the wedding season or is it held during some other time as well?
MS: Wedding Asia is organised for weddings and hence is held during the wedding seasons i.e. August and November. November is also considered as a good season because maximum numbers of NRIs come during this season. 
 

 

With the upcoming of INOX, watching movies is not just pleasurable to our eyes but also to our other four senses. This is because INOX has taken movie viewing experience to a new level. Alok Tandon, CEO, INOX Leisure Ltd speaks on how we can ‘live the movie’. 

Jasmeet Sahi (JS): When did INOX Leisure Ltd come into being? 
Alok Tandon (AT): INOX Leisure Ltd. is a subsidiary of Gujarat Flurochemicals Ltd. and currently has 29 multiplexes and 105 screens in 20 cities across India. We opened our first multiplex in Pune in 2002 at Bund Garden, with a capacity of more than 1000 seats. Our mission is to create India’s largest network of world class multiplex cinema theatres across all the leading towns and cities of India.  

JS: Many multiplex chains enter into tie-ups with food retailers. Does INOX also have such a tie-up, and with whom?
AT: INOX has its own brand of theatre food called ‘Refuel’ where we sell a variety of hot and cold beverages and snacks. To provide more variety to patrons we also have food kiosks operated by outside food vendors where we sell steamed corn, crepes, ice-cream, brownies etc.  

JS: What is the preference of your clientele with respect to films in different languages like in English and other Indian languages?
AT: Apart from Hollywood and Bollywood films, at INOX, we lay a lot of emphasis on regional films also. We are constantly looking at ways to provide our patrons with interesting and varied content. Also, we regularly host film festivals with international, Hindi and regional language movies, plays and rock concerts.  

JS: How much profit does INOX make from branding and advertising exercises carried out by other retailers at INOX?
AT: At present, revenue from multiplex advertising and branding amounts to approximately 7 – 10 per cent of our total revenues. The number is expected to rise as more and more advertisers are realising the power of this medium. Big ticket brands such as Coca Cola, Nokia, Mercedes Benz, The UB Group, Sony, Christian Dior, Kingfisher Airlines, Philips, Nike etc. have chosen to associate themselves with INOX.  

JS: Having been awarded ‘Entertainment retailer’ and ‘Emerging Super Brand’ recently, what is INOX doing to live up to the consumer’s expectations?
AT: We believe that it is all about keeping the customer engaged at a conscious level through information, value-adds and sensory marketing. A few key-areas we focus on are:

Location: It is just as important as content in the multiplex business. While the right content helps in reaching out to the right target audience, the right location attracts higher footfalls. This is why all INOX multiplexes are located in high-traffic, commercial areas, or in the midst of prime residential areas.

Sensory experience: The sensory experience is the key; engaging all five senses of the customer. The moment you walk into an INOX multiplex you will be greeted by the smell of delicious buttered popcorn, a smell that many of our loyal patrons associate strongly with INOX. Music from the latest blockbusters adds to the festive occasion.

Services: Service is a key differentiator and so is maintaining the same standards; we run our multiplexes very much like hotels, your first touch point – our box office is like the reception and you are welcomed with a smile by uniformed staff. All our employees undergo an intensive training program before they come to work in our multiplexes. Adding value to the customer experience is also what we always do. We work with a host of promotion partners like credit card Cos. banks, airlines etc. to build patron loyalty. 

JS: Where all are INOX Leisure Ltd. multiplexes present? What is in store for the future?
AT: INOX multiplexes are spread across many Indian cities. Pune, Vadodara, Bengaluru, Mumbai, Jaipur, Indore, Lucknow, Hyderabad, Siliguri are among the many cities where you can enjoy an INOX experience. The future seems to be very promising as 75 screens are planned for the next fiscal. 


 

Private equity funding is increasing in India, as investors are eyeing long term benefits. Jyoti Prakash Gadia, MD of Resurgent India discusses how retailers should prepare their company to attract PE funding!  

Sharmila Das (SD): What are the parameters that a private equity firm follows to select a retail business enterprise for funding?  Also tell us what are the parameters that a retail business enterprise should follow to select a PE funding company?

Jyoti Prakash Gadia (JPG): Parameters for the Investor in identifying targets:

• To possess a strong management team  
• A robust business model
• To establish strong links across the supply chain
• Following a test-refine-growth model by shedding irrational exuberance  
• Resource planning for scalability that would include human resource and financial planning
• Over emphasising on ‘the location’ is unnecessary. As any location in India can be successful provided the retailer understands the psyche of the target audience and their specific requirement in the target location.

Parameters for the company in selecting right funds:

Given the fact that retailing is not the top target sectors for private equity funds unless they have a global portfolio and focus on retail, the key would be to not be selective. Almost all private equity funds which are sector agnostic, bring in financial strength and corporate governance; value addition in the form of strategic benefits which are opportunistic than planned before investment. So the key becomes the investor’s understanding of the business model and meeting valuation expectations.

The company should look into the past investment track record of the PE funds, the performance and possible synergies with their investee companies.

Investment philosophies, tenure of the fund, limited partners behind the fund etc are some of the parameters a company should definitely look into before accepting funds. 

SD: How PE funding companies perceive their business opportunity in Indian retail.

JPG:  Over the past decade, PE industry had mixed stories both from the multi-baggers

and the bankruptcies. Overall, the sentiment is low towards retail industry. This is due to the lack of clarity on the business model which is still considered a nascent industry.

SD: How should a retailer prepare their business plan to attract PE funding?

JPG: It’s very specific to the nature of retail that the investor is planning to venture into – discount, departmental, niche, lifestyle, etc. More than the numbers, the business plan needs to provide sufficient comfort to the ‘Parameters that an investor would look at while investing in retail’ (mentioned above)

SD: How PE funding helps a retail brand to strengthen their business operation? What benefits PE funding brings for a retailer and to them also?

JPG: As mentioned earlier, the only significant benefit is providing financial strength. Corporate governance is value- add, but still PE players are trying to grapple with issues on this in retail industry. Apart from this, some of the other important value add includes – business planning, second level of check on rational growth, opportunistic strategic growth options and business synergies with other portfolio companies of the PE.

SD: How PE backed company is able to earn higher profits than a non- PE backed retail business enterprise? In this respect what are the benefits a PE funding company receive?

JPG: In terms of profit margin, the points mentioned above on PE value add to the business does help in this respect. But the key benefit is keeping the retailer away from a debt trap which can be really terrible for retail ventures in adverse economic times. Since PE backed companies generally have a sound MIS in place, this helps them in planning strategically, reduce expenses, effective inventory management which ultimately leads to operational efficiency and better margins.

SD: What are the efforts that a PE investor put to prepare the company for IPO, both in terms of their industry relationship and business growth? Please explain.

JPG: PE investors are better networked to the financial world. They have better sense of market dynamics than the promoter. They provide help in better marketing of the IPO, FII and anchor investors.

SD: How do you evaluate the time period that a retail enterprise requires for PE funding support till it goes for IPO. Can it be an unlimited period solely depending on the discretion of the company?

JPG: This time period is generally decided in the business plan itself. Whenever any PE investors enter into the company exit route, it also include time period. But this plan is under constant evaluation. Depending upon the market dynamics, sentiment prevailing, future forecasts, tenure of the fund, etc are the criteria when the company and PE decide to unlock the value. If fund need to exists and value/ time is not correct then it may even look for the sale of the stakes to other funds also.

SD: What is the role of Resurgent India in providing financial and management services to Indian Retail?

JPG: Resurgent India is a full service investment bank and consulting house with services offering across capital syndication (debt, equity or mezz), restructuring (in the form of M&A or financial restructuring), business advisory (business plan and strategy formulation) and transaction advisory (valuation, due diligence and any other allied service). We have worked with a large number of retail clients starting from formulation of business plan, arranging for seed funding, growth capital in forms of debt and equity, business growth strategy formulation and finally to listing on capital markets. At the same time, our Group Company, Ginni Systems Limited with more than 5,000+ retail software installation provides us with great understanding of the business, client network and makes our offering to this industry wholesome and virtually one-stop.