Can Middle Eastern Hypermarkets leverage technology to redefine their businesses & create a new play-field for their businesses?

As I write this article, my inspiration comes from Alibaba who is redefining Retail by leveraging technology. Before I embark on this topic, a few questions to Middle Eastern hypermarket giants like Carrefour, Lulu hypermarkets, Geant, Hyper Panda, Danube hypermarkets, Manuel, Spar, Nesto hypermarkets

a)   How they intend to differentiate their offerings to consumers who are very well connected through the internet, who prefers researching their purchases prior to buying & convenience of shopping?

b)   Have hypermarkets ever thought of business model wherein they grow their scale of operations 10X with minimal investments?

c)   How to tap unexplored territories to grow their sales & market share?

I am sure CEOs, CFOs and CIOs of these companies must have an answer to my above questions but I would like to share my learnings of studying Alibaba’s vision i.e. “Using disruptive marketing as Growth Engine”.

Every strategist would agree with me that if you cannot defeat your competitor then change the rules of the game and that’s what Alibaba did with the launch of their project i.e. Ling Shou Tong which means Connect Retail.

The basic premise of this project is to tap unexplored markets by utilizing existing Alibaba’s strengths of the supply chain, a wide array of products & vast suppliers base, efficient delivery & order processing, order fulfillment & logistics support.

Alibaba, in order to bring efficiencies into their existing businesses and using their existing strengths, has ventured into territory which has been untapped so far by the launch of Project Connect Retail.

They have adopted 100,000 small grocery stores and connected them with their integrated POS system by means of the app, wherein these small grocery owners could benefit from buying directly from Alibaba suppliers which provides Low Prices Everyday brand promise.

This project has created Retail ecosystem wherein these small groceries procure directly from Alibaba thereby eliminating distributors and improving their buying margins and passing the cost benefits to end customers. Customers stand to gain from price benefits and good quality products backed by Alibaba’s commitment. In return, Alibaba gains wider geographical spread using their core strengths i.e. procurement, wider varieties, a large base of suppliers- all neatly knitted into logistics operations.

That’s what I call disruptive marketing or creating a different play-field thus leaving behind all your competitors.

Connect Retail app also provides Business Intelligence to these small groceries i.e. as to which item is selling better in their shops and how much they need to stock and how they need to merchandise or display.

This app also provides information on best-selling products in entire Alibaba’s network and provides access to these products to small groceries in China.

Imagine the scale of operations and growth Alibaba would be achieving thus optimizing its existing investments in warehousing and creation of a large array of products through widespread vendors and bringing both suppliers and end consumers together.

In UAE alone, there is said to be over 20,000 small groceries, which may be getting serviced through various distributors currently. Now if any Hypermarkets try to tap into these segments by providing access to their better procurement, better offers and better supply chains, this initiative would re-define these hypermarket’s market share and would leave their competitor far behind.

Basically, it is out of box thinking approach which is currently lacking in Middle Eastern hypermarkets as they are still thinking traditionally i.e. brick& mortar way by expanding through their existing formats or within their malls.

I would encourage these hypermarket retailers to study Alibaba’s Ling Shou Tong model and learn more to redefine their leadership stance in the region. I would be more than glad to discuss my learnings which I have acquired by closely following Alibaba’s retail 3.0 with any of the big or small hypermarket players in the Middle East market, thus helping my Retail sector to grow beyond boundaries.

Remember “For those who dare to dream, there is the whole new world to win”.

Wishing all my readers Merry Christmas and a very Happy New Year 2018.

Love

Ritesh Mohan

Convergence & Role to be played by Mall owners & Malls in future.

During the course of my work, I regularly meet people from my retail fraternity and during one such meeting, I happened to visit offices of Majid Al Futtaim in Dubai and was truly inspired by a placard (placed at the entrance of lobby) of Group’s Vision & Brand promise which states “Great moments for everyone, every day”.

This brand promise & brand belief is so very powerful (all my brand gurus) would agree and has deeper meaning & conveys the way Retail would be progressing in future.

I salute the top management of MAF group and advertising teams who came up with this fantastic brand positioning for Group and are pursuing it by fulfilling the promise that this group is making to his visitors/mall shoppers.

This creative brand promise has inspired me to pen down few points which could help retail groups and mall owners in coming New Year 2018.

)    A) Convergence is the buzzword & to play a pivotal role:

Historically the business model for the shopping center industry has been to connect consumers and retailers physically. It was the retailers’ job to convince consumers to buy something. That model is shifting as a result of technology. The real estate owner or mall developer now has a large part to play in connecting the retailer and consumer both physically and digitally, and to do that mall would need a direct relationship with the consumer.

According to the Fung Business Intelligence Centre, “Showrooming” — the practice of researching a product in the store but buying it online — gets plenty of attention, but recent studies suggest it is far less common than “Web-rooming,” which entails researching a product online and then purchasing it in a store.

In fact, 90 percent of all U.S. retail sales still occur “within the four walls of a physical store,” according to a report by management consulting firm A.T. Kearney.



I would like to quote an example of Westfield London who has created a lounge for COLLECT PLUS, (mall’s initiative wherein the partnered tenants/brands offer their merchandise or discounts which are purchased by online customers and they come to collect the same from the mall. 

Perfect example wherein Mall has partnered with brands and helping them reach out to online customers.

      B) Adoption of technology to dominate Leadership stance:

Installing Beacons in the common area of a shopping center; Most of the mall owners & shopping centers have embraced mobile apps, they can install beacons to identify hot and cold zones within their malls and share useful insights with their tenants to increase their sales.

 The mall could also roll-out digital directories and concierge services that help mall visitors find their way around properties, locate deals and get information about events. Indeed, new technology is empowering mall owners and retailers like never before.

A prominent leading group, owning malls in KSA (Arabian centers) uses mobile phone tracking data through its apps to identify hot and cold spots in their malls and works closely with their tenants to improve their sales.

      C) Creation of hub/ platform within their premises:

I would love to see malls creating a hub for Retail Innovation, a physical place to connect retailers and technology providers in a real-world environment. I happened to visit a unique place in Dubai which empowers innovation and youth to take up entrepreneurship, the place is called YOUTH HUB.

It is a unique repurposing & redefining of real estate.

D)  POP ups to drive retail engagement with consumers:-

In one of recent dipstick conducted by me amongst my network/ friends/retail fraternity, I found that approx. 52% of respondents believe that pop-up stores are an effective way of discovering new brands. 

Gives a platform to young designers, new brands/ new concepts to interact with potential customers & serves two purposes:

1)      Gives new brands/concepts some confidence in targeting brick & mortar format with their brands and converging both virtual & physical retail environments. Secondly, provides Mall’s leasing team an option of nurturing brand within their premises instead of scouting for brands outside.

2)      Brings Newness to malls and encourages more retail customer’s engagement.

E) Trend shifting from fine dining to Healthy street food:

Off lately, I have been observing this trend and asking most of my friends who used to dine out at least 4-5 times in a week, they are moving from fine dining restaurants to nearby cafeterias or local street food joints which are offering healthy as well as freshly prepared meals.

With Advent of food trucks which makes hot meals served to you in 10-15mins time is what engaging & enticing future customers & mall owners should evolve and take into account this shift in cultural trend of eating out that’s occurring in the retail space.

I would like to end my article with an extension of Brand promise which Majid Al Futtaim group makes and that is “Create a place that will become the center of people’s lives” & I wish team MAF & all other mall operators all the very best in their endeavors. 

Personally speaking, I would be more than glad to sit down with any of mall owners/developers/my retail fraternity and discuss this topic in great depth.

I encourage all my retail network and friends, mall developers/mall managers to share their feedback on what they feel would inspire all our retail fraternity in 2018.

I wish all my readers a very happy & prosperous New Year 2018.

Love

Ritesh Mohan

Want a successful Sales career --- Go & Develop Right Attitude.

I am a firm believer that people remember only stories and not management jargons when it comes to real life. During one of my recent interactions with a couple of brand & social influencers, I realized that how important Story-telling is for upcoming entrepreneurs or budding professionals.

So keeping this narrative in the background let me try to share few tips on how to be a great salesman. (As most of us would be doing our sales budgeting or forecasting for 2018).

Story:

Our parents play an important role in carving out our personality, our character, our ethos by guiding us throughout our childhood.

In our story there exists one such family comprising of our main protagonist (son) and His father. Our main protagonist /hero lived with his family among his other 5 siblings. His father worked as Electric plant supervisor, and his mother worked at a bank. His father taught him to work hard and not to be tempted by street life.

Like any other kids of his age, our main protagonist (son) also used to ask his father to buy him new toys, gifts etc; And on one such occasion his father called him and asked his son to sell his old T-shirt which he had worn only once.

Father: How much do you think this T-shirt would cost now?

Son: $1/-

Father: Good, you must go and sell it for $2.

Here comes the first tip:

a)    Conceive & believe that you can do whatever tasks come your way.

Son: Ok father. I shall do it.

The little boy then took his sparingly used t-shirt and washed it with fragrant softeners, steam ironed it (made it look like new) and took it to neighborhood community market and started showing to his friends & local market customers and finally managed to sell it for $2 after 6 hours of hard work.

Son: Father, here you go. And he hands over $2 to his father.

Father goes to the cupboard and brings out brand new white shirt.

Father: Good Son, now you take this new white shirt and sell it for $200/-.

Son readily accepts the task & nods in confirmation

Son kept wondering as to why his father is doing this to him, which idiot would pay $200 for a $10 shirt, he kept exploring various possibilities, meeting local merchants but never gave up. He stumbled upon a friend who was going for a soccer match and mentioned that their favorite soccer team is playing county match.

As they say, luck favors those who strive for success with their hard work, the hero of my story (little boy) gets an idea and he requests his friend to take him along with him.

On reaching football ground, little boy somehow managed to get close to football players who were very popular. He requested those football players to autograph on his shirt.

He then took this shirt to a community market and puts the shirt on auction and to his surprise, the crowd got really interested in owning autographed shirt & that shirt was bought within 30 mins from the time it was put on auction and guess the price ….. It got whopping $2000/-.

Son (goes to his father): father take $2000/- I have accomplished the task.

Father (with tears in his eyes): Congrats son, my prayers are with you, you shall be a successful man in life one day.

Learnings from this story:

a)      Conceive: Never refuse or reject any task or project. Conceive it as done. Have faith in yourself and if required, learn or acquire skills to do that task or collaborate to build teams in case of startups ventures.

So whatever the targets/budgets are assigned to you by your company, never look at the big figure rather try to conceive ways as to HOW it can be achieved rather than stating, it’s not possible.

Focus on HOW it can be achieved and not on WHY it cannot be done.

b)     Believe in Yourself: If there is anyone who could do that task, is YOU only.

c)      Action: Never ever Give up & Try hard every time you hit a roadblock.

Life from time to time throws challenges at us and we should face it head-on rather than giving in to those challenges.

Remember “For those who dare to dream, there is the whole new world to win”.

                             

Hope my attempt at developing a correct sales attitude with storytelling narration would help my readers & followers in setting their targets for 2018 & same principle could also be implemented in setting our Life goals.

I wish all my readers a very happy & prosperous New Year 2018.

And do you know who this little boy was when he grew up…? He grew to become legendary Michael Jordan- the best basketball player world has ever seen.

Tips for Running Business in era of Millennials

As the world is changing very rapidly so is the consumer’s buying behavior which is continuously going through a transformation. One such example is our kids, you all will agree that they spend more time watching YouTube videos, engaging in apps like snapchat, Instagram, engaging with their Xbox, PlayStation rather than spending quality time playing outdoors or spending time with their friends.

 This very change in kid’s time-spent behavior as made brands like Toys R Us file for bankruptcy & restructuring of debts.

So the valid question is as to How to do business in the era of Millennials?

I am listing down few parameters which would help SMEs or upcoming Retail entrepreneurs to tackle their brand while marketing or selling to millennials.

A)     Go lean – World of business is changing.

In previous decade we never heard about brands like Uber, Facebook, Youtube etc.

·         Uber is the world’s biggest transport provider without owning a single vehicle

·         Facebook & YouTube are the world’s biggest media houses without even producing or owning a single content from their side.

So my advice to entrepreneurs is Go leaner. “Don’t invest in creating big Infrastructure”.

A Company which is very dear to me has made this mistake of creating big infrastructure in terms of supply chain, manufacturing, inventory, in return, they face huge pressure on their Gross margins in order to accommodate overheads and hence current economic scenario of decline in consumer's spending has posed a severe threat to their operations. 

If you are in the manufacturing sector, look for outsourcing your complete manufacturing, get rid of your depreciating assets like plants & machinery. Bring efficiencies in your supply chain by correct forecasting and avoid warehousing costs for storing Inventories which is an important cost in P&L statement.

B)      Find your Unique strength :

Conduct competitive advantage analysis for your company vs its competitors, analyze as to what are your strengths and weaknesses. I am sure every organization has one key strength or one key Hero product which can drive the whole turnaround strategy for the organization. The task is to identify this core Hero product/service or strength.

I would like to quote an example here of Nestlé’s Maggi brand, The brand core strength is its “ 2-minute” promise. All these years, this promise has created entry barriers for several brands who tried to copy Maggi. Brands like Nippon & our very own Indian home-grown brand Patanjali tried to copy Maggi noodles but failed.

Nestle, in order to reinforce its category leadership, launched Maggi oats which were never tried & unheard in any market and today this variant owns 90% of the market share in healthy Oats foods category.

C)      The speed of transactions:

Increase your number of transactions/ sales/ increasing your customer base.

Entrepreneurs and business in order to achieve growth, they avail working capital loans, collateral loans & goes into debt. This debt puts a lot of pressure on Cash flows. The ratio of debt vs inflow tends to fall apart and this move could be suicidal for the organization.

Entrepreneurs tend to focus on their business model more and ignore the importance of cash flows. 

Focus on account receivables and its aging. It is not only a function of finance dept but the owners as well need to focus on this aspect of the business.

SMEs should focus on Organic scalability rather than debt infused scalability. I know various retail organizations in the Middle East who uses bank’s easy collateral loans to drive the expansion of their businesses compromising on debt vs inflow ratio. This is one reason that most retail companies worldwide are struggling to survive the decline in consumer’s purchasing power.

D)     There is no such thing as “ First Mover advantage”, it has changed to “ Fast mover advantage”

Gone are the days wherein First mover advantage was your core strategic competitiveness, now in current era while catering to most demanding, highly knowledgeable customer segment of millennials, we need to be a fast mover.

What happened to Nokia & Motorola?  

They were all having first mover advantage but they were not fast in adapting to rapidly changing customer’s requirements which demanded more engaging operating systems and smartphone.

Apple falls under “fast mover” category and is ruling this segment.

Well, I can write a thesis on Retail and Management topics, but I am sure these 4 points listed above would force each of my readers to introspect, use their creative juices and come up with innovative solutions to sail the current economic turbulent times.

Happy Retailing Folks

Love

Ritesh Mohan