Indian retail seems to be in a churn. Not many making money, but all gung-ho about the future. How does this work in a real sense? Is this a bubble? What would you recommend be the key aspects to focus upon?

- R. P. Malhotra (name changed on request), Mumbai

Dear NCOR, you made a name change request, as you did not want your retail company to be identified by your friends. Says a lot!

Indian retail outfits are not exactly going through very exciting times. These are really times of churn, as you put it, as retail outfits rejig their retail policy altogether to battle real times. Tough times. And not many are forthcoming with confessions of bleeding bottom lines.

The mistake of most multi-format retail outfits is the fact that they have decided to spread, and spread fast. While this has been good for image, I do not believe it has been good from a core business profitability point of view. If the underlying idea of your business has been scaling up to sell, then you have done well, dear retailer. If, on the other hand, you are building a business that needs to stand amidst all the competition that is slated to enter this space with a complete new philosophy on retail FDI, as unveiled by the government recently, then you need to rejig, and rejig fast.

The prime mistake has been aiming for width first and depth later. In many cases, the aim continues to be width. Depth of business from existing outlets just does not seem to matter. And if that is the mentality at play, then this sure is a bubble.

Retail businesses must aim for growth. But this growth must come from existing outlets rather than from new. It is important for business owners to focus on deepening walk-ins, repeats, revenue and profits from their existing stores. Only when you are confident that you have deepened enough must you aim to open all those sexy new outlets that are on your mind. Correct this first. This, I do believe, is Indian retail’s biggest mistake to date.

Pepsi is in the news for all the wrong reasons. A decline in market share, and a loss of key personnel. Is this the end?

- Kewal Patrao, Bhubaneswar

Kewal, far from the end. I look at it as the beginning of a new Pepsi era. From the churn will emerge a new Pepsi. Possibly stronger and more determined to make a market of India.

Historically, Pepsi started the real and tangible movement of cola focus in the country. It came in the wake of Double Seven and Campa Cola being the two big colas in the Indian market. The Coca-Cola exodus had happened earlier, and Indian brands were dominating the scene in a small but meaningful manner. Pepsi entered this market as Lehar Pepsi, and gradually brought excitement, imagination and zing to cola imagery in the country. It localised. It customised.

Its domination of mindset, however, did not last. The last three years has seen Pepsi vacate both mind and market share. The decline has been gradual, but totally in sync with its declining image share in the Indian market. Pepsi allowed it all to slip away, and Coke was happy. The decline of market share is totally related to the decline in mind share. Wrong investments in wrong formats did Pepsi in.

And then came the leadership bite. People left. I do not believe this is a big issue. Pepsico is a wide and deep outfit. Globally, its ability to fill the biggest boots left vacant is a good one. People will come and people will go, but it will not really rattle Pepsico, the way I see it.

The leadership crisis is a temporary one. I do believe the company will emerge from it stronger and completely charged to take on the battle with Coke in India. A churn in leadership is always good for brands that see ups and downs in market share.

In terms of marketing, Pepsi has shown a will to re-invent its imagery once again in the last year gone by.

The investment made in IPL seemed a good one till the final two weeks of the tournament, when all hell broke loose in terms of the game and its governance. This, to an extent, was most unfortunate for Pepsi.

In terms of business strategy, the company needs to focus more on its distribution. Distribution in the cola market is a key cutting edge requirement. You can blink in any arena, but not in this one. I do believe Pepsi has blinked here too many times in recent years.

Festival discounts seem the norm all over India today. How does this work for brands?

- Swati Deshpande, Mumbai

Swati, consumers just love discounts. When you want to bundle your sales volume into one season, choose a festive season and bundle in the discounts as well. It just means one thing. You can bundle sales into a season deep enough to even claim that you achieved 30 per cent of your annual sales in that one festive season of four weeks.

Discounts are a great lure. In tough times when inflation is eating into anything, discounts that eat into retail prices are seen as a retribution point by price-bitten consumers.

When discounts are given on literally everything there is on offer, it is an effective price cut. Literally everything is on sale. This helps people plan their spends in one big tranche. It helps marketers clear their inventory quick and fast, and helps consumers stock up nice and deep.

From a pure business point of view, discounts that improve cash flows and clear clogged inventory are seen as benign tools that fulfill a key purpose of business. Like “ Daag ”, discounts “ acche hain ”!

(Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc.

askharishbijoor@gmail.com )

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