Ownership of the Customer starts with ownership of the store

During a series of recent training programs for Retail Operations people, I was highlighting the importance of taking ownership of the store and hence the customer. In that context the standard question to the audience would be how many of you take ownership of the store and hence the customers.

 

Predictably almost everyone’s hand would go up. Great; everyone is taking ownership of the store and hence the customer.

 

End of the story? Hardly, it is the beginning.

 

The next question would relate to old, slow moving or dead stocks. Regardless of the format the fact of the matter is that any store has a certain percentage of stocks which are non-moving. These are dead investments and only block up the working capital.

 

So, next I would ask how many have such stocks in their respective stores. Be it 1% or 5% or 10%, etc. There would be an enthusiastic response that, yes there are such stocks.

 

Now my next question; If this was your OWN store and your working capital was tied up would you allow this to happen or would you return the stocks or sell it off at a discount and clear the same.

 

At this point, the crux of the ownership issue will come out.

 

• I don’t have approval from HO to do this. If it was my own store, I don’t need that.
• I informed the merchandising team and they have done nothing.

So on and so forth.

 

Beneath these excuses lies a sad story of helplessness. Under the pretext of control and standardization the Corporate Retail of India today has depowered the store. But, on the other hand they are told that they are the face of the Retailer and they need to own the store and customer. What a dichotomy!

 

Having said that, I am also aware of store managers who had the freedom to act and therefore misused it by putting products on discount to reduce stock, at prices below the cost price.

 

The point is that a happy medium is needed and needed soon. The operations team needs to know their boundaries of the game while the boundaries should be large enough to motivate them to take ownership of the store or customers.

 

Otherwise, ownership of the store and customers will increasingly become empty words spouted during meetings and training programs where participants will enthusiastically raise hands to claim ownership, enjoy some good food and then go back to status quo.

Lack of Ownership and Initiative

I have recently been conducting several training programs for store managers. A common theme that I like driving home is the point of ownership. This is a favorite topic of mine since chain stores constantly talk about this, but on a day to day basis, do absolutely nothing at all to ensure that the store staff have ownership.

A case to the point is my experience recently at two stores while doing Diwali shopping.

First is a chain of discount/ value apparel stores. The store was over merchandised with hardly any circulation space. The staff had left cardboard boxes of stock all over the store, including the stairs and one of the two elevators was blocked with these boxes. Bright spot lights with crowds and inadequate air conditioning was a sure fire-recipe for people to faint. Long lines outside the trial room led to shoppers using the wash room as a trial room and there was a line outside that too!!!

To cut a long story short, we were waiting to get billed and leave. The customer ahead of me was caught up in some complex promotion involving discount vouchers and all that. (That’s a different topic about why people have such complicated promotions).

Anyways, here I was standing in the line and sweating. Sweating - because the store had these nice bright spotlights as mentioned before and the air conditioning near the entrance where the cash tills were located was not working. When my turn for billing came, I asked the person who appeared to be in in-charge (who turned out to be the store manager) why something cannot be done to make this experience better. He was lost!

I suggested that he should get a fan at least near the cash till and he gave a half hearted reply. I can bet that if I went there after a few days later, there would be no fan and no change.

Because, the store manager and staff have no ownership! The guys at the head office grill them about sales and reports. But not about ownership! Sad. But true.

Compare this to a store down the road. A stand alone apparel store. The customer crowd was pretty much the same but one did not feel suffocated as the air conditioning worked, there were no boxes of stock lying around waiting to trip someone, staff were helpful, etc.

When I was billing, which was pretty fast given the crowd, my family members were not crowding around me increasing the tensions. They were enthralled by a magic show. Yes, a magic show being conducted near the billing counter.

I don’t know if this is a result of the owners having read my book, “The Indian reTALES” but I was thrilled that someone was directly implementing what I have written about billing and how to handle the same. It was great to experience ownership of the store where customers felt good after having made the purchases instead of feeling like prisoners who have escaped the Tihar Jail.

So, to my moot point - will the lack of ownership of store managers of chain stores be the death knell?

I think so. Wake up guys and change the way Indian Corporate Retail works.

Empower the store staff and make them own the customer experience.

A few comments/ feedback to the article "Do you have eggs"

Very Appropriate article. Inspite of all the marketing, promotion and planning .....like the "last mile" in telecom...the Retail Store Manager is amongst the most crucial player in the retail game and plays a critical role in making a particular store a success or a failure.
Sanjeev Agarwal
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I read it fully Rajesh. It was “ THE YOU “ in you telling – meaning it was like you are talking to people in that sense. It was great and the example you gave of 20 kg stuff goes into the mind straight.
On the whole ownership needs to driven at each end and by everybody instituted by the top mgmt. Great stuff thalai!
Umasanker
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A beautiful eye opener for the Retail chain openers
Keep up the job
Rgds
Ashima
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Dear Sir,
This is apropos the subject article in Brand Line (19th March 2009). The article is symptomatic of the malady it attempts to highlight and discuss. Organised retail in supermarket terms could loosely be said to have really started in India with the arrival of Foodworld in 1996. However, the problems of poor stock levels, customer service and manpower that we experienced then, remain now, whether in Foodworld or in any of its i-wanna-be-better-than-foodworld competitors. Does not that reflect poorly on the so-called retail professional groomed in those early pioneering organisations and now handling top management roles in today's retail companies?
Everyone knows what the problems are. It's just that no-one seems to have a solution for them, and each new company insists on re-inventing the error wheel and learning the mistakes from scratch!
Sincerely,
Rajeev Iyer
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Hi,
I read the article before I even read your mail. Found it excellent and a true picture of current retail scenario. Please keep writing more such articles. They can be finally compiled as a book.
Regards
Shashi
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Dear Mr Rajesh,
I enjoyed reading your article. Really lucid and plainspeak.
A few days back myself and my wife were waiting in the billing counter of a retail store. The person before us obviously had purchased a lot of things and had difficulty in carrying them home. She was asking the counter girl whether they could be delivered at her house. The girl replied that it would have been possible if she had asked for door delivery before preparing the bill and since the bill had already been prepared and paid she could do nothing about it. The lady walked away saying that she would have to find a better outlet who was more aligned to customer needs for her next purchase. Had the girl in the counter been more responsive to the requirement of the customer by talking to someone to help her out, then she could have helped the store retain a customer.
I just thought I will share this with you. Hope yourself and your family are fine. Our best wishes to you.
regards,
Kannan
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Hi Rajesh,
Ths is a great article... gives one a true picture.
I have also personally experienced a similar situation... the shopping list not getting completely over is a common phenomenon.
In fact, I can add one more thing - the quality of stock. Due to the lackaidaisical attitude, no one worries about quality.
Its high time the retail biggies wake up to the reality. Else, retail business will still remain with the kirana merchants..
Thanks for sharing the article.
Regards,
Hema Narayanan
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Excellent article Rajesh.
Nothing like a personal touch and feel.
Empowerment of store is a big factor for the success of XXXXX. It also leads to loss of revenue.
It is a nightmare for the finance team to control shrinkages (loss of revenues, not necessarily inventory loss) as the ownership is diversified.
A franchisee model (where the franchisee is on the shop floor) address this in a flaw in a major way were ownership is at the last level and at the same time ensure the franchisee to be in touch with the customer as this income is dependent on how well he runs is business.
Regards
Mohan
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Hello,
A very well written article. Am sure its one of the reads that folks at super marts need to better understand ground realities and mindsets of their regular clientele with a view to retain and grow that segment.
Best Regards,
Rahul
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hI,
Nice article. I agree with you on all the issues . Firstly the supply chain should be put in place (which has never happened in all the super markets ). I had personally suffered because of this . They should go for 3PL .. Surprisingly XXXXX has dismantled CFA and had gone for company managed warehouse. XXXXXX is beyond repair. XXXXXXX closed (for whatever reason) . Also , retail outlet has been opened as if there is no tomorrow (blame numbers for this..) and therefore like you rightly said instant baptism is happening with no focus on customer relation, loyalty to the store, conversion, smile and what not..The trainer comes , schedules the programme, goes to the next location for training because store is getting opened. He is busy claiming how busy he has become training people (with no actual input or training )..
In my opinion there has to be merger of mushrooming retail companies and close unhealthy competion ..like having three supermarkets of different brands in a single location ( egg not being available in single lcation !) .. I strongly feel that neither the so called big retails guys are making money nor they are making small kirana stores to make money for survival. My suggestion is that they should talk to traditional kirana (annachi or the Bhai ) train them , and give them the franchisee WITH MINIMUM INVESTMENT and no high fly stuff...else the overall loss will be Phenominal.
Gave my thoughts and your article kindled the same..
Cheers...Kdu

Think like an Omni Channel Retailer

Omni channel retail is being touted as the way forward and the future of retail. Hence the high interest levels as also the aspiration to move in that direction. However the road is not an easy one and there are multiple challenges. While a few are manageable, there are some challenges which would require a paradigm shift in thinking and that is where any such initiative might fail.

The first and foremost challenge is the integrated organizational approach that Omni Channel requires. Offline and online cannot be separate business units with independent deliverables. The challenge to managing this shift lies in being able to balance such an integration while not diluting the accountability and focus on each of these lines of businesses. Take the simple case of credit for sales. In the case of an online order and an offline pick up, who gets the credit for sales? This is important in the context of incentivizing the staff based on sales, which is the norm. 

Similar is the ownership of mistakes and the related costs. If the shopper has picked up products offline and opts for an online based delivery to their home, will the store deliver the purchases or will it go out from a central distribution center. In case of any mistakes with regard to the delivery, who will be responsible and accountable for the same? There are multiple such questions which need to be addressed in the context of Omni Channel and they can be done effectively only if a single unified perspective is adopted.

One possible solution is to adopt a shopper centric model where shoppers from specific geographic areas are assigned to a particular physical store. This could be basis the catchment or trade area defined for that store. Any online activity is treated as a value added service to the shopper and that cost can be apportioned to the respective store. In such a scenario the ownership of sales and other aspects will continue to rest with the store. 

A similar model can be flipped to link a set of shoppers to a designated Sales or Retail manager in the offline operations. In such a case that designated person gets to own the costs and the benefit of sales from that shopper group. They would be similar to a store manager and would operate in a similar manner.

These alternatives are assuming that every shopper opts for Omni Channel purchase which might be a reality in the future but it is not so now. In such a case an interim strategy is required to handle three sets of shoppers; offline, online and Omni Channel.

The biggest challenge would be to manage the shift in the mind set of the front line service staff. Even assuming that the management team buys into the need for change that Omni Channel requires, driving this change in mind set down the line will not be an easy task.

Lifestyle stores can at least adopt a relationship manager model where shoppers get assigned and linked to specific store staff. This would enable a higher level of personalized service as also ownership at an individual level. This would be possible for lifestyle formats because of the relatively lower number of shoppers that frequent such stores. How can such a model be applied for value formats like hypermarkets where thousands of shoppers come in every day and the number of front line staff are also relatively lesser than in lifestyle stores. There does exist a possible solution to this also and the answer might require some unconventional thinking.

However I have saved the biggest challenge for the last which is the temptation to spin off these business segments into separate units for the sake of valuation and funding. Some of the private banks which offered demat and online trading services through their subsidiary were soon tempted to separate this business from banking and also offer online investments on their banking platform. As a customer of such a bank, this has been most frustrating because two relationship managers now pressurize me to do the same thing on two different sites of the same parent bank!

What stops an Omni Channel retailer from spinning off their offline or online business for the sake of valuation and then try to reinvent the wheel by trying to make each of these into Omni Channel again.

The only thing which would deter such a move is a very strong shopper orientation and a constant reminder that the whole Omni Channel evolution is from a shopper perspective and not otherwise.

CLICK Here to read an earlier post about Omni Channel Retail

Small format wins

This was a piece I wrote in April 2006 when the "FDI in retail" debate was at it's peak, about how Kirana stores would always thrive. Is this relevant even now after 3 years?
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In the Indian Retail Scenario, the small format neighborhood store will continue to flourish and grow, midst all the large format discounters. This has been so in most developed countries also. In fact, this development that will sustain any cash and carry operator as this segment next to the hotels is core to any cash and carry operator.

This is because of some very specific factors in the Indian socio economic and physical environment. These are –

Real estate costs and location – Large format discount food formats would have to look at operating in the suburbs, simply because of the rental structure in a CBD. This has implications in terms of a trade off between location and size, which then affects range. Of course formats which leverage the higher margins of general merchandise and offer food as a marginal range might be able to trade off and survive in city centre locations. But for how long is the question in the face of rising real estate costs.

Gap in supply Vs demand of real estate – Linked to the above factor is the gap in supply vs. demand in real estate. This is bound to put pressure on any retail operator with regards to the cost structure. In this context a pure discount led food format, especially a large store would be very difficult to sustain in a sustained manner.

Car ownership – Even with the explosive growth seen in recent year’s car ownership remains much lower than in the west. Take the case of dual car ownership and the situation is even bleaker. Driving to a suburban location, while juggling various other chores and duties would always be a dilemma. Especially, if there are small format stores offering good value in the immediate neighborhood.

Emerging lifestyle – 24/7 is a lifestyle most working couples are embracing if not by design then by default due to the pressures of work. This has redefined the priorities and preferences in a significant manner in most cities. Free time is precious and people choose to spend it in recreation and entertainment instead of engaging in activities that are boring, routine and stressful. With the initial novelty of a supermarket store having worn off, the primary value expected from these operators is one of convenience. It is a trade off between convenience and comfort vs. savings that will determine the choice of going to a large format vs. neighborhood store.

Indian Retail; Learning from a tender coconut vendor

I recently saw this tender coconut vendor in a locality called Mylapore in Chennai. His name is Mr. Rajkumar and when I asked him about the neatly printed price ticket, he said that he decided to put up the same to attract customers as also avoid bargaining with them.

 

 

Apart from his idea of putting up the price ticket, I was impressed by the attention to detail and execution focus. The signage is printed neatly and more importantly it is placed in an eye catching manner facing the traffic flow.

Execution focus is more about common sense and attention to detail. Something this picture clearly demonstrates. Contrast this with what is often seen in the various Retail stores; missing communication, torn posters, slanted price tickets, etc.

That leads me to the topic of ownership. This vendor is clearly the owner/ operators and you can see him standing proud next to his “store”. Obviously his standards of execution are high.

If Retailers work towards creating a similar sense of ownership amongst the staff, they would also take pride in everything inside a store and a customer’s experience would automatically be of a higher level.

Indigenous cost control & Margin Maximization

I am a strong advocate of the conventional neighborhood outlets simply because they display a remarkable amount of ownership and flexibility. I have illustrated this with several posts and also in my book "The INDIAN reTALEs". A few days ago during one of my teaching sessions the familiar debate of how will such stores survive came up. The usual points were covered and I returned to Chennai.

Yesterday we had to purchase a few things and picked it up from a neighborhood medical store. First point to illustrate flexibility; these stores have quickly realized the value of an extended range very similar to how supermarkets evolved into hypermarkets. More range for the existing customer base is equal to obviously more sales.

So, this store too offers a variety of products which are not medicines only.

My first observation was that the carry bag given was actually a branded bag of a national supermarket chain. Simple cost cutting measure for this conventional store. He must have picked up a few bags either during multiple visits to that store or even brought it off from an unscrupulous staff for a pittance. Or the vendor must have offered these extra stocks of bags at a throw away price because they cannot be sold otherwise. Essentially, the medical shop owner spotted an opportunity to cut costs and leveraged it fully.

Next, when I came home and opened the bag to use the purchased products, I was amused to find a price sticker of a different store on the pack. There is a large format discount store in Chennai which is famous for its low prices. The medical shop owner must be picking up a lot of his extended range of products from this store as getting into the distribution system for these products might not be worth it given the low volumes that he can offer. See the picture below. The store name is clear while the price has been struck out. Guess, it would have been a better idea to strike out the store name. But then all his customers might not be a Retailer like me.

This is where the large format store is morphing into cash & carry operations, also. As mentioned in my book, operators interested in India entry might do well to enter this potent segment with potential, instead of lamenting about FDI.

Coming back to the medical store. I cannot but appreciate the remarkable ownership, flexibility and focus that the owner shows and is therefore rewarded with a sustainable business. However, is it scalable? I doubt it. A chain of discount stores used to encourage its buyers to take cash and make opportunity buys from the wholesale markets whenever there was a very attractive trade scheme. It obviously did not sustain as the chain has been closed down.

Regardless one has to appreciate the initiative of the conventional store owner in this as compared to any organizational chain stores wherein cost cutting or margin improvement will result in a whole series of meeting and presentations! The take out is that such organizational chain stores need to bring in more of a trader/ shop owner mentality without compromising on systems and processes to develop a win:win formula.

Coffee beans and perfume selection, a potent combination

I had recently visited a standalone apparel store in Chennai and as most male shoppers do, was prowling around waiting for my family members to finish their browsing. When I neared the perfume counter, I saw an interesting and curious thing. There was a small container with lots of coffee beans kept there. Coffee, as you know has a string aroma and my first thought was that some new perfume with a coffee fragrance (Like the chocolate deodorant!!! Ugh) had been launched.

As a Retailer at heart, I was curious to know about this and asked the counter salesman. He explained that the coffee beans had been kept there to help shoppers make the right choice when purchasing perfumes. Frankly, this was something new and I asked him the logic. He went on to explain that the aroma of coffee beans were supposed to cleanse our olfactory sense (sense of smell).

While it did sound very interesting and innovative, I dismissed the explanation as a sales gimmick as I have not seen this in any of the large lifestyle stores which have far bigger perfume counters offering a wider range.

When I returned home, this was nagging me and I checked i out on the internet and realised that the salesman had been correct.

One site says “Our sense of smell is really powerful but it tires really quickly. We call this tiring “olfactory fatigue.” So, when you smell perfumes/fragrances, smell no more that 3 at a time before you “reset” your nose by smelling coffee beans. If you were to smell 4 perfumes in a row, you are not smelling the 4th one.  Smell 1, 2, 3 “reset” then 4, 5, and 6, etc. So the next time you are at a fragrance counter that has coffee beans, try it.”

Now the larger question is that why the large chain stores do not implement such a simple and customer enabling idea?

My earlier posts and articles about customer orientation and ownership of the customer experience highlight the lack of such a simple step. Retailers need to step into the stores more often, think like the customers and implement simple but effective customer enabling ideas. This is possible only when any retailer thinks from a customer perspective which is in turn possible on when they walk the store often enough and interact with customers. Sitting in conference rooms and devising grand strategies without the feet being firmly on the ground or rather walking around in the store is a sure fire recipe for failure.

Tier 2/3 towns come of age for Retailers

Almost a year ago I was in Tanjore to teach at a business school there. I noticed a few things about the Retail scene there, namely the presence of a few national chains of supermarket. Also, the consumer base was present and the latent need for a better shopping experience was evident in my interactions with people.

I happened to visit that town again after a few months for a wedding and was amazed at what changes can happen within a this period.

Obviously the consumers, shoppers and the Retailers of this town had caught up with their peers across the world. Some noteworthy observations –

Smarter stores – The stores seemed brighter with better signages and also more inviting. When I stepped into one such store the change was obvious. There was better lighting, the merchandise was presented in a more inviting manner plus the personalized service. It made for an unbeatable combination.

Wider range and assortment across categories – Apart from packed grocery, the shelves had a wider range of products be it processed food or some new and interesting home ware product.

Advertising and promotions – The local TV/ cable channels were filled with advertisements of the local retailers across categories. Supermarkets were shown with very appealing self service shelves, furniture, CDIT, you name it and it was there.

Focus on shopping experience - The underlying theme across all these advertisements was the service factor with the personal touch being highlighted in several ways.

All these and more made me accept the reality which I have spoken about often enough and even mentioned in my book "The INDIAN reTALEs"; tier 2 and 3 towns are the future for Indian Retail.

Lastly, the sad reality that national chains are losing out! This was a fact that I could not ignore and if the management of these chains are true retailers, they also will not be impervious to this fact. A simple example to illustrate this reality - a supermarket of a national chain situated on high street has its signage in a sad state. The letters of the signage were missing. If one were to ignore this and enter the store, it was dark, dirty and offered a pathetic shopping experience. Obviously the store manager is either too busy fighting other fires or is just not motivated enough to create a sustainable alternative to the shoppers of this town.

So, in summary what is the take out?

• Be aware of the potentials of such towns and leverage the same.
• Ensure that the staff are motivated enough to leverage the existing potential, especially in such towns which are outside the ambit of corporate networking and also offer several other local employment opportunities.
• Most importantly, hire locally and encourage local ownership in terms of staff profile and empowerment. Increasingly good management and other educational institutes are there in such towns. So finding good talent locally is not difficult and will also prove beneficial as retention would be easier.

A simple reality needs to be kept in mind while handling such local competition. The physical and visual attributes of a store are the easiest to match. Coupled with personalized service the local Retailers have a good competitive alternative. A great and appropriate merchandise with reasonable prices is the core competitive advantage that national chains can and must leverage.