How technology is changing the way we shop & how retailers are re-inventing to digital age?

My current article is in continuation of my previous article which I had written on “Future of retail”. My current article is my attempt to share some key insights and business cases which has helped retailers reinvent themselves to a new phenomenon i.e. Retail 3.0.

I would relate this concept of Retail3.0 to Indian Holy Scripture “Bhagavad Gita” which professes the concept of “Vasudeva kutumbh” which means nothing but Globalization (the world is your marketplace)

In Bhagavad Gita, there is a word called “ tathastu” which means literally “ You ask & You get it” & that’s what is the main premise of Retail 3.0 i.e. how to make the lives of shoppers more convenient by using technology as the main ingredient.

What is Retail 3.0?

Retail 3.0 is the evolution of multi-channel retail distribution. It blends technology with physical brick & mortar retail.

It makes customers (millennials) experience the brand and store more holistically by engaging them & reducing their pain points which a conventional shopping brings with it, for example carrying loads of shopping bags post-shopping to your vehicle and back home.

It Provides convenience and increases the brand recall as the shopper has got himself or herself personally involved in shopping experience both an emotional and intellectual levels. Hence he/she can turn out to be brand’s influencers thus generating more feet-ins and brand recall through social media.

How brands have adapted Retail 3.0?

Case 1:

Company: Bonobos - for men’s clothing store wherein shopper goes n tries out clothes. If shopper likes it, they buy online and garment gets delivered to their home.

Customer Benefit: No hassles of carrying shopping bags.

Retailer’s benefit: Their Retail concept requires smaller area stores that carry limited inventory as it does not require stock room resulting in the addition of more trial rooms for the customers to try merchandise hence smaller spaces means lower rentals and lower inventory holding costs and thus bringing more operational efficiencies.

Case 2:

Hointer 5: is the store wherein you can scan the type of denim jeans and brand of jeans that you want using an app & very pair of jeans that you want to try on will be delivered to a specific dressing room within the selected store of your choice.

Upon trying you may buy it from an app or in case you decide not to purchase then you drop the garment to an allocated shelf and the garment is removed from the app automatically as well.

Case 3: The Store

Brand based in Berlin is a unique example of Retail 3.0. The brand is basically fashion brand but the owners decided to do things differently and stand out from the clutter of fashion brands. They inserted a co-working space, restaurant, hair salon and music pods. They have created a space where their customers could spend the whole day lounging within the store.

Result: Increased dwelling times, Increase in ATV, Increase in feet-ins, higher stock-turns of merchandise, regular visits from fashionistas resulting in free word of mouth advertising as fashion influencers were clicking pics of new merchandise and posting it on their social networks while enjoying free in-store wi-fi and sipping their favourite blend of coffee.

I hope above real-life business cases would help my readers and retail professionals to re-energize their thoughts, their processes to re-invent their core purpose of business and would integrate their core business principles and values with technology and create a whole new retail ecosystem for themselves.

Future belongs to those who dare to think different & act and believe in creating sustainable objectives for their brand. Any retailer or the brand owner willing to meet me for cutting-edge retail solutions, practical guidance for their retail projects can do so by emailing me at riteshmohan@yahoo.com.

About the author:

Ritesh Mohan is a passionate Retail professional with over 20 years in the retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, Business Management & Empowering business owners with his wisdom & experience of around two decades in the industry.

How to full proof your career & prepare for future jobs?

My inspiration to write this article comes from wonderful response and feedback that my earlier article received which I had written on developing “Resilience” and how to decode “No” in your mind.

I would give credit to below line which would kick-start my article and would set the tone for my article.

“The Illiterate of 21^st century will not be those who cannot read & write but those who cannot learn, unlearn and relearn” – Alvin Toffler.

My article is my attempt to provide few tips and guidelines as to how one needs to adapt to new challenges that technology would be posing to us especially in the Retail & service sectors.

With the advent of cashless economy and stores without any sales personnel, i.e. stores like “Amazon Go” which uses hi-tech Artificial Intelligence couple with facial recognition and cashless transaction which indirectly means following job profiles would be redundant in future definitely with advent of machine learning systems: Customer service personnel, Cashier & Merchandisers or promoters.

Above is just one example from the front end of the store, at the backend, various functions like merchandising planning & buying could also vanish since the computers/systems powered by AI would replenish the stocks by generating system LPO to the vendor which gets delivered to stores directly by the vendor.

Personally speaking, the overall future of Retail using AI-powered machine learning systems sounds scary but as there is a saying that when going gets tough it’s the tough who gets going.

The future belongs to those who are ready to LEARN, UNLEARN AND RELEARN. 

My article is my sincere attempt to some useful insights

A)  Hone your skills: Every Job function has technical skills and soft-skills requisite.

My advice would be to develop and polish your SOFT SKILLs which machine learning AI systems would never be able to adapt easily.

What are soft skills?

As per Wikipedia, Soft skills are a combination of people skills, social skills, communication skills, character traits, attitudes, career attributes, social intelligence and emotional intelligence quotients among others.

Always remember People love to do business with People and this premise would always remain relevant in future business as well.

B)   Adapt yourself to changing work/ job requirements:

It’s not just the jobs in demand that are set to change, but also the way we work. As mentioned, organizations are facing skills gaps and employers are increasingly turning to temporary and contract employees in a bid to bridge these gaps.

Not only will you gain experience in this increasingly popular format of working, but you’ll help safeguard your future employability by broadening your range of skills and experience in a relatively short period of time.

C)  Adopt a growth mindset and remain curious to learn new things/skills, even if it does not relate to your professional education or experience.

Mark Twain once quipped “I have never allowed schooling to come in way of my education” and I feel this line said by him is so relevant in coming times.

D)  Cultivate Curiosity: Being curious make life more astonishing and would make you happy & more creative. It’s the creativity that would full proof your career as machine learning systems cannot cope with human superpower i.e. Brain.

E)   Listen to your team & family and assume that anyone who disagrees with your opinion is partially right.

Listening to his kids helped industrialist Mukesh Ambani (chairman Reliance Industries Ltd) to launch “JIO” telecom service provider in India and captured over 10 million subscribers in less than 20 days. 

They understood that future belongs not to “Voice” but to “Data” hence they launched 4G LTE technology wherein their competition were still trying to recover costs of their investments in 2G and 3G networks.

To sum up my article, I would like to emphasize on the fact that change is happening faster than ever before, it took 75 years to get 50 million telephone subscribers or users, It took a popular game “Angry Birds” to reach 50 million downloads in less than 40 days.

Most importantly, find your key strength “your MOJO or WHY” and work on it. Become the expert in your field by constant learning.

I would be more than happy to guide my readers and my connections on Linkedin who would need my cutting-edge advice & solutions for driving growth to their businesses. I can be reached at riteshmohan@yahoo.com

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, Business Management & Empowering business owners with his wisdom & experience of around two decades in the industry.

How to use Inventory planning tool “Open to buy” & use it strategically?

To write this article, I was inspired by the response that my previous article got i.e. on Markdowns in retail, which got read by over 10,000 retail professionals worldwide right from Australia to the UK and of course middle eastern countries.

In continuation of my earlier blog on Markdowns topic, I would like to highlight another important inventory planning tool i.e. OTB or Open to Buy.

I get so disappointed to read Retail industry news wherein we read that classic brands across the world are either closing their stores or filing for bankruptcy & recent example is of Toys R Us. Many retailers had to close their doors because they did not manage their inventory well. One of the biggest contributing factors to mismanagement is a lack of an open-to-buy system with key retailers.

Even the Middle Eastern region is not insulated from this Retail apocalypse, in fact, gone are the days wherein local traders turned retailers used to import container loads of goods and sell at full margin. Cut short to 2018, to sell even 25% of inventory at full price is a dream come true for many retailers amidst tough competition across categories say its fashion, beauty, toys, electronics etc.

What is OTB?

An Open-To-Buy is a budget and involves the full range of budgetary functions. It begins with the planning process, is future oriented, provides guidance on how much to buy, and provides benchmarks for evaluating progress and adjusting future plans. 

Having too much inventory (or the wrong type) during certain periods can slow your cash flow and reduce profits with too many markdowns. On the other hand, if you under-buy (meaning buy too little product) and miss sales opportunities, then you are not making your potential profit (plus damaging the customer experience). A retailer can be sure to stock the right amount of the right products at the right time by using an Open-to-Buy plan. 

How to calculate OTB – its formula?

As per retail textbook, its formula is simple i.e.

EOM (end of the month stock level-desired estimate)
+ Sales (month actual)
+ Markdowns (month actual)
– BOM (beginning of month stock level-actual)
– Merchandise on order (or stock in pipeline/transit).
_______________________________
= Open-to-Buy (Dhs/ AED amount available for new purchases)

For example, a retailer has an inventory level of Dhs 150,000 on March 1st and planned Dhs152,000/- End of Month inventory for March 31st. The planned sales for the store are Dhs 78,000 with Dhs 7500 in planned markdowns. Therefore, the retailer has Dhs 87,500/- Open-To-Buy at retail. (Here there is no merchandise on order).

Now if you operate your brand at 50% margins then multiply Dhs 87500 x 50 %, you shall get OTB budget at cost i.e. Dhs 43,750/-

In other words, how much inventory can I buy without getting myself in trouble? It is also the process of planning merchandise sales and purchases.

Advantages:

OTB brings a balance to stock on hand inventory and future purchasing. This balance allows you to respond to selling trends in a timely fashion.

Since I have been personally involved in leasing management i.e. location scouting for brands that I have handled in the past and currently, I shall explain this in easier layman terms.

Consider merchandise sitting on that shelf is the tenant. Good tenants pay the rent on time by ‘turning’ or selling frequently. Bad tenants are the ones that don’t sell quickly and sit on the shelf for months. They take up valuable selling space that could and should be given to a faster moving product.

As the landlord, ask yourself how long can you afford to have non-paying tenants on your shelves before it negatively affects the total retail operation?

Good inventory control is critical to ensuring an adequate level of stock is on hand for the number of sales being generated.

My personal advice (based on my retail experience in Material resource planning with the leading Middle Eastern retailer):

a)    Before placing your Open-to-Buy plan into operation, ask yourself if each number is realistic. Does it make sense for the way you do business? Keep in mind that many of the figures in your inventory plan are only guidelines. A good rule of thumb is if your actual ending inventory is within 6-8 percent of your plan, you are doing very well.

b)    Be cautious about offers of quantity discounts or free freight if you increase the size of your order significantly over your normal purchasing levels. Most suppliers tend to offer free freight if brands commit to buying certain quantities and this is a trap as the supplier is trying to upsell his quantities to you with an incentive.

c)      Don’t hesitate to markdown slow-moving merchandise. Make the markdown instantly appealing to the customer by offering at least 25% to 40% off the retail price. The faster it is off your shelves, the faster you can bring in a better-selling product that will have a higher profit margin

In the case of fashion or seasonal merchandise, an Open-To-Buy answers the question of how much to buy, but not necessarily the question of which specific items to buy. For that, a detailed assortment plan is necessary.

How the Planning process works?

The planning process begins with building a sales plan.

Once a sales plan has been developed, the next piece of the planning process is to build an inventory plan. The question to ask is this: "How much inventory do I need at the end of each month to support the next month's sales (in some cases the ending inventory may need to support more than just one month of future sales), as well as maintain effective merchandise displays?"

From there, other things like inventory adjustments and markdowns need to be planned.

Finally, from the plans that have been developed, an inventory receipt plan can be arrived at. For any given period (month or week), the planned inventory receipts are the planned ending inventory, plus the planned sales, markdowns and inventory adjustments, less the prior month's ending inventory. Stated another way, the planned inventory receipts answers the question, "How much inventory do I need to bring in to cover my sales, markdowns and adjustments, given my planned beginning inventory, in order to end up with my planned ending inventory?"

A Practical tip from Planning expert Mr Jude Thomas, as he shares his experience with upcoming planners.

Case study:

Brand Benetton uses this statistical tool very innovatively along with their supply chain strategy.

Normally brands in the traditional/conventional way of production dyes complete cotton yarn with specific colours and then produce garments like sweatshirts, tees etc but Benetton does it differently.

Benetton dyes only certain quantities of sweatshirts, tees etc in various colours and sends to their stores, based on the sales movement of specific colour and type (tees, sweatshirts) then only they dye the complete yarn with colour that is fast moving in their stores.

My friends in retail would argue about the loss of time in getting the feedback from stores about which colour is moving fast, that’s where your smart MIS systems come to play, which can give you reports in a dashboard format.

Benetton has mastered this function of getting the feedback from the shop floor to production lines in minimal time period thus they avoid producing colours that would not sell or move thus preventing overstock at production facility stage itself.

This is what I call learning from internal systems and continuously improving your processes to optimize returns or retail dollars.

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, Business Management & Empowering business owners with his wisdom & experience of around two decades in the industry. He can be reached at riteshmohan@yahoo.com

How to get high in life by developing Resilience & handle rejections.

My inspiration to write this new article comes from an Urdu poet Iqbal (1930s), who once quipped:

“Khudi Ko Kar Buland Itna, Ke Har Taqdeer Se Pahelay 
Khuda Bandey Se Khod Poche, Bata Teri Raza Kiya Hai”

Its literal translation for my readers who are not well versed with Urdu:

“Develop the self so that before every decree

God will ascertain from you: “What is your wish?”

These powerful words are so relevant in current times wherein there is so much pain in the corporate world, people are losing jobs in name of management jargon ‘corporate restructuring’. Myself is getting on an average 5-6 resumes every day in my mailbox from everywhere across region & world and hope the same is with my network connections.

This article is my attempt to alleviate some pain in people by inspiring them “to be the change that they want to see in the world”.

I recall a wonderful sentence which says “Change yourself and your perception and you see the whole new world opening its arm for you”.

I may be sounding too positive but I cannot help since my blood group is also “O positive- joking..”.

I strongly believe that it’s only by “Being Positive” we can overcome any challenges.

As a case study pedagogy (thanks to my teachers of Retail management course in IIM-A), I always love to follow and study cases from corporates as an example.

Case 1: Netflix:

Blockbuster refused to buy Netflix, in fact, Netflix promoters were literally laughed out of the meeting for $50 million deal.

Today: Netflix is worth more than $100 billion (And where is Blockbuster?)

Case 2:

George Bell, then CEO of m/s Excite, refused to buy Google for $750,000

Today: Google is now worth more than $498 billion (and where is Excite?)

Case 3:

Ross Perot refused to buy Microsoft for $ 60million.

Today: Microsoft is worth $ 507 billion & growing daily (and nobody knows where Ross Perot is?)

See the relevancy of Urdu poet Iqbal’s words in today’s business scenario.

“Develop the self so that before every decree

God will ascertain from you: “What is your wish?”

When people say NO to you, just keep going! Go all out and write your own Destiny but Never Give up.

Your time shall come wherein these people later will be telling everyone how they met you and wish they would have joined you!

Contact me on riteshmohan@yahoo.com in case you are looking at the fresh perspective of your business strategy, I would be glad to share my wisdom with my industry friends and connections.

About the author:

Ritesh Mohan is a passionate Retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrance retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well, in Middle East region. He specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, Business Management & Empowering business owners with his wisdom & experience of over two decades in the industry.