The Hindu Business Line : Innovation the way to stay ahead, say retailers

IF the fast moving consumer goods industry is constantly working up consumer excitement in the market place, the emerging retail and food services industry is not far behind.

The retail industry is possibly looking beyond generic sales growth to get the big jump in sales. If FMCG companies have looked at product and packaging innovations, retailers are creating excitement around offerings as well as services.

Affordability, according to Mr Amit Jatia, Joint Venture Partner and Managing Director, McDonald's, is a crucial factor for driving sales. The other factors include product, equipment and people, he says.

McDonald's recently launched home delivery of its offerings. It uses the technology platform of SQL-based software to initiate its delivery service. According to Mr Jatia, while addition of restaurants drive up sales, innovation in services provide the spike.

According to Mr R. Sriram, Enterprise Facilitator, CEO and Managing Director, Crossword, innovation is a fundamental feature of its business. Crossword has redefined the perception of what books and bookstores were by widening its product ranges to include movies and stationery.

Even the look and feel have undergone changes — the company took the risk of having huge store formats at a time when the most popular store around was just 1,500 sq ft. It added toilets, placed chairs and, more important, allowed customers to even read books in comfort, not expecting them to be bought.

More important, what has boosted sales is the shop remaining open on Sundays despite criticism. With more customers trooping in on Sundays even nearby stores are now open to take advantage of the `indirect' business.

Mr Sriram added that the loyalty club, another innovation, has 51,000 members. This alone has driven growth. The Crossword Award, another first in the domestic book industry, he said, created goodwill for Crossword and promoted the author, the publisher and added value to the book industry. In fact, Sriram said that every Crossword bill says "goods once sold will be exchanged." This year sales grew by 85 per cent and may grow by 100 per cent in 2005-06.

Shringar Cinema, the film distribution and exhibition company, also discovered that non-conventional ways to sell film tickets accounted for 25 per cent of the total ticket sales.

According to Mr Asim Dalal, Managing Director, The Bombay Store, which is trying to set up more stores in Mumbai and Pune, retailers need to spend more on collecting data and warehousing of data. Retailers needed to go beyond customer expectations. He said a case in point was the success credit card players had had. Penetration was as high as 70-90 per cent even in small cities such as Jaipur, Ludhiana and Gurgaon.

According to Mr Rajiv Merchant, CEO, Domestic Business Division, Creative Mobus Fabrics Pvt Ltd, one of the ways the company drives sales of its home linen brand is to look for "innovative distribution" points or unconventional outlets. For instance, Portico is displaying its products at Godrej Retail stores, Style Spa and Truzo among others. While buying furniture, customers were inclined to spend on matching linens.

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