Retail

Different estimates put Indian retail market size between USD 600 -800 Billion and it is projected to grow more than USD 1200 Billion in next three years. There are many things like investment in technology pertaining to this sector, warehousing, tax simplification, 4G mobile network, consumer awareness and confidence, growth in consumption at bottom of the pyramid and increase in education level boosting the retail sector in India. Year 2018 has been very important for Indian retail sector. Walt-Mart gave humongous valuation to homegrown unicorn FlipKart, Amazon bought more. and made strategic investment in Big Bazar, not only that, if Industry rumors are to be believed, it is in talk with Spencers for buyout. Kedaara Investment and Partners Capital acquired Vishal Megamart from TPG, Alibaba showed confidence in BigBasket and Softbank sided with Grofers with big money.

Retailers seems to be convinced that there is nothing called online of offline retail anymore, ultimate battle is for share or control over consumer’s expenditure. Consumers are out there with their money and if you don’t reach out to them, someone else will. Time is over for supplier or retailer driven market; now customers are spoiled with choices. All of it will make big changes in Indian retail sector very soon. I am seeing following trends in coming two years:

1)Bots will replace humans in the job of Category Management: Category Management and persons manning it are backbone of the retail business. They own the business; rest plays the supporting role. But modern organized retail in India has come a long way from 2005-06, supposedly when it made a big entry in the country. After that it has seen many ups and down, but one thing it has ensured is humongous amount of unstructured and ever flowing data of human buying pattern. Now with lots of hard work, research and investment going into retail analytics, a powerful bot probably might have started replacing Category Managers in one corner of offices of Wal-Mart (Read FlipKart), Amazon in Bangalore or Reliance Retail, Big Bazar in Mumbai.

2)Supply Chain will gain more prominence: Role of supply chain in brick and mortar retail was limited to getting the product either from warehouse or wholesale market or distributor’s point to retail point and taking back. In the changed scenario, where estimated e-commerce retail sales in India in 2018 as per India Brand Equity Foundation is $ 32.8 Billion led by FlipKart and Amazon, role of supply chain personnel is rapidly changing and it is doing the multiple role of salesman, delivery boy, pick up boy and cashier. According to Indian Brand Equity Foundation, Indian e-commerce market size is slated to grow to USD 200 Billion by 2026. With manifold increase in delivery points, delivery timings and load, work of supply chain will be more demanding, challenging and prominent and it can’t be automated in chaotic country like India.

3)Hyper local will be new frontier: Though Grofers had to pull out of it, but there is no other option available to retailers other going hyper local. So far, items which had margins to afford the supply chain cost are getting sold more through online retail, but the next frontier to win for e-commerce players are grocery retail, which is of low to very low return. It will be very difficult for retailers to work in inventory led model in grocery retail and expand to Tier-II and III cities. Armed with incentives for service providers and consumers both like what taxi aggregators like Uber and Ola or restaurant aggregators like Zomato and Swiggy, retailers will have to fight for customer attention and retention.

4)Massive Investment in technological Infrastructure: To cater the huge and well spread market and humongous amount of bills, technological infrastructure will be key of survival, which will require massive investment in technology build up, many more server farms across country huge demand of electricity. Without this arsenal, everything will fail miserably.

5)Private Label will uproot Brand’s hegemony in retail shelf: Big brands monopolized the consumer market. They actually forced the retailers to behave they wanted them to behave. But things are already changing and will change a big time in coming couple of years. Online and Offline retail are now run behemoths like Wal-Mart, Amazon, Reliance, Big Bazar and Alibaba, who have deep pockets to create the block or blocks of loyal customers and use it to fight the might of big FMCG companies. Success story of hitherto unknown mobile brands like Redmi, Realme, One Plus etc. using online retail platforms FlipKart and Amazon in Indian market, which has the negative impression about Chinese products, shows that Indian customers prefer feature, quality and value at an affordable price than the big brands. In fact, everyone working in retail field would be witnessing this pattern in different categories.

6)Getting into consumer’s pocket will become more important than getting the business model right: Shopping isn’t offline, online modern organized retail, pop-n-mom store, network marketing etc. anymore. Nothing is working in isolation and nor it will work in future. In fact, none of it worked ever in isolation in the past as well. Though each one of it might have created value for the founders, but none of it guaranteed long-term profitable venture. Each of the business models, alongside the in-model competition is vying for the same consumer expenditure. For example, a customer who has planned to buy a TV can buy it from various brands available in many retail outlets of her city or the online marketplace like FlipKart, Amazon or the company’s online portal; she is deluged with the choice. Now for everyone, money coming out from the customer’s pocket is very crucial to survive and grow. That’s why we are seeing acquisitions of brick and mortar retail companies by online retailers and vice-a-versa.

7)Small Players will have to fight for their survival: Battle ground is already drawn and warriors have taken their side. Individuals with limited capacity will have to take side in the battle, otherwise they will be crushed, because money riding with big players is too huge to be ignored.

Please leave your valuable opinion in the comment section. You can also reach me at mukul.bhartiya@reviewboard.in.

Few days back I was pleasantly surprised to see someone with blue knapsack on his back and “Ecom Express” written on it, riding the bike on the dusty roads of my village in Madhubani district of Bihar, near to Nepal border and around 200 Kilometers away from state capital Patna.

I know for the fact that e-commerce is rapidly reaching out to every nook and corner of the country, but I was considering it still an urban and semi-urban phenomenon but thankfully my unfounded perception got corrected.

Courier business is still a semi-skilled low paying hard labor job, which involves carrying huge knapsacks filled with merchandise and riding bikes, earlier it was riding bicycle. It needs to change now and change for good before it becomes one of biggest bottleneck for the growth of e-commerce in India. Despite all the hype around AI, assortment, merchandise mix and marketing, e-commerce’s success boils down on completion of the transaction which means delivery of merchandise to end consumer, collection of payment and repatriation of collected amount to company’s account. If this last part is not good, note worthy, pleasant and successful then entire operation done before it is a big failure. Different estimates put India’s e-commerce retail sales in the bracket of USD 30-35 Billion in 2017 and expect it to grow to USD 200 Billion by 2016.

So, one can imagine how much pressure will be the team which has to make the final closure of the deal. So, the person who brings your merchandise to your home is no more a delivery boy of erstwhile courier era. Now he is a salesman, a cashier an accountant and the storekeeper; not only he brings your order to you, but collects the cash and maintains the account of collected cash as well. And completion of transaction and satisfaction of consumer out of completed transaction depends on him only.

Two years back, I had purchased a mobile phone from a leading e-commerce site which was to be delivered at Madhubani district. Delivery boy asked me to give him tip of Rs.100/- because I had made a purchase of Rs.15,000/- and I should be feeling happy about it. Moreover I had to literally make several calls to him to deliver the mobile phone which I was excited to hold in my hands. His insistence for the tip annoyed me and I had decided then to report the incidence to the retailer. Somehow I forgot to write to the retailer but I didn’t purchase anything from them for almost a year. We all must have seen few incidences of wrong/damaged product or sometime brick/stone/soap reaching to customers. So, goodwill of any e-commerce company depends on their tail of the value chain, the “delivery boys”, as they are popularly known.

So, the companies should:

1)Treat them as salesman, not the delivery boy
2)Train them as salesman, cashier, accountant and marketer
3)Use them for up selling with digital devices in their hand ( He is the person who can drop a hint about matching product or any product complementing the purchase or what the community is buying to the buyer and his recommendation will carry more value than the online recommendation).

Rest everything can be automated. AI can do the merchandising, Natural Language Generators can write tag lines and blogs, programmed drones can take pictures which can be directly collected from them, so on and so forth.

Now, time has come to see the role of delivery boys in different light, in shinier and brighter light. They are most crucial part of value chain of an e-commerce company and they will remain so for long because now customers have become very demanding and will not accept any inefficiency in any of the operation.

By a rough estimate, India produces paddy, wheat and whole pulses together worth Rs.5, 34, 020 Crore, calculated at MSP for paddy and wheat and bulk price of pulses in whole form. If we take the data of public consumer expenditure for the year 2014-15 made available by Ministry of Statistics and Programme Implementation in public domain and extrapolate the impact of inflation every successive year, India’s private final expenditure on food and non-alcoholic drinks may stand around Rs.18.9 Lakh Crore. It gives a glimpse of scope of business opportunity it provides.

Mr. Nitin Kumar, Company Secretary by qualification and investment and start up expert by profession has worn many hats; but when this time when he told me about his new venture Bishanpur Natural Foods Pvt. Ltd., I would be lying if I say I was not surprised. Since beginning of his professional career, he has been through and through finance professional helping his clients to make money in stock and/or real estate market or investing in general merchandise, education or health start ups. But this time, he not only invested but has been successfully running the business of speciality flours, fox nuts and flax seed. After talking to him I could understand his passion of bringing healthy food which our previous generations used to eat and has disappeared from our plates with changing time. But why was I surprised; because sales of food items demand combined of physical and mental hustle than the just mental one required in financial or real estate market. But as Ann Landers had said “Opportunities are usually disguised as hard work, so most people don’t recognize them”, he chose the hard work way and entered into this business. He is CEO of Bishanpur Natual Foods Pvt. Ltd. 

I asked him straight three questions to understand why is he in this business, what he has to offer, how it will benefit his consumers and where does he see his business in short and medium term. 

Mukul Bhartiya: You are finance professional by education and experience. What led you to venture into food processing, distribution and marketing business and that also, niche products like Chana Sattu, Makhana and Flax Seed?

Nitin Kumar: When I tell you the reason behind it, you will also empathise. Though I am from Bihar but I have lived better part of my life in Delhi and Gurgaon. Who better than person like me can understand the importance of healthy food and healthy life. For us, even pure air to breathe has become a scarce thing. You might have seen the images of hazardous foam emanating from River Yamuna during Chhath this year and let me tell you that this not something new as phenomena. This has been the scene for so many years and it is also open secret that most of vegetables coming to National Capital Territory market are grown in the river base of Yamuna. 

All the trappings of modern lifestyle has taken one thing from us; our time for ourselves. We are always in the rush to reach one place or another, barely taking time to breathe. In order to reach somewhere, we have moved as far away from the nature as possible. And look what it has done to us; it has not only taken us away from nature but has taken away our physical and mental health. 

Having lived a life with these trappings around, we have realized that answer of healthy life is to slow down, look back and find what we lost in the rush of reaching somewhere. Retracing healthy footprints are always good. Our older generations lived life closer to nature. There were no mechanized machines to grind the food; so, most of the nutrients were retained in the food for our consumption. We are making a genuine effort to dig deep, research and find out the natural food for you. We are reclaiming our past with pride, we are reclaiming our health back and we reclaiming our life and the battle start with food.

At Bishanpur Natural Foods Pvt. Ltd, we follow every process to retain the natural nutrients every food has to offer by cold press milling technique. Words become command, command becomes commitment and commitment sets the direction; and our commitment is to take our food habit closer to nature.

Mukul Bhartiya: Please tell our readers about your products and how they benefit from it?

Nitin Kumar: We are in constant search of food which are healthy, wholesome and queen of plates of older and previous generations. I am keen on that. Our first product is Chana Sattu. 

Though there is no specific mention about the origin of word ‘Sattu’, but looking at the nutritional values it provides, it must have come from Sanskrit word ‘Satvik’, which means ‘pure’, ‘complete’, ‘ontological’. No other cereal or pulses is as complete and wholesome as ‘Chana’ or ‘Hoarse Gram’, because it has right amount of Protein, Dietary Fiber, good Carbohydrates, low glycemic index and absolutely no unhealthy unsaturated fat. While almost all the cereals and pulses provide between 150-350 calorie per 100 gram with cereals providing extra carbohydrate and pulses providing extra protein, ‘Chana’ provides energy exceeding 400 calorie. These nutrients build your muscles, make your bone strong, help in preventing constipation and keep your stomach healthy, regulate fluids and blood pressure of the body, fights diabetes and give you the energy to stay active whole day. There are numerous benefits of Chana Sattu.

Some of them are as follows:

• You can drink and eat it both.

• It is high on calorie with good amount of whole carbohydrate, dietary fiber and protein.

• It is gluten free.

• Carbohydrate in Sattu is soluble and ingestible carbohydrate, which is very much required for energy. It is a fallacy that low carbohydrate diet is good. If you don’t get the energy, then how will you survive? Your food should have 45-50% whole carbohydrate to keep you alive and active. 

• It keeps your stomach healthy by preventing constipation. You may be aware that constipation is the cause of many bowel related ailments including gastrointestinal diseases, which has the capacity hurting other part of bodies as well. -It reduces the risk of coronary heart disease, hypertension, diabetes and obesity. 

• Zero saturated fat in Sattu makes it an ideal food and drink.

• Protein in Sattu makes your bones hold the muscles and keep your liver healthy. It makes you look healthy and young. 

Our second product is Makhana or Fox nut. ‘Makhana’ is amalgamation of two Sanskrit words: ‘Makha’ and ‘Anna’. ‘Makha’ in Sanskrit has two meanings ‘sacrificial oblation’ and ‘active/moving/to go/move’ and ‘Anna’ means ‘food’. So, one meaning of ‘Makhana’ is a food which is offered for sacrificial oblation or which is offered to god. Another meaning of ‘Makhana’ is the food which keeps you ‘active’ and on the move, which means it keeps you energetic. Makhana is rich source of protein, calcium, dietary fiber, good carbohydrate and absolutely zero saturated, polyunsaturated and monounsaturated fat. With total 350 calorie per 100 Gm, it is good for your bones, muscles and gut and helps you fight diabetes and blood pressure.

Darbhanga, Madhubani and other parts of erstwhile Mithila Kingdom or present day Bihar produces ‘Makhana’ the most and has been consuming the most as well; now whole world has realized its importance.  

You can eat Makhana raw or after roasting or frying. You can also make different varieties of sweets and pudding from Makhana. 

Benefits of Makhana are many; few of them are as follows:

• Dietary fiber keeps your stomach free from constipation, helps to prevent coronary heart disease and reduces hypertension and chances of stroke.

• Protein helps your bones to hold muscles, makes your body fit, strong, healthy and young.

• It improves the health of your liver.

• Calcium makes your bones strong.

• It is fat free, full of whole carbohydrate, protein and dietary fiber, which makes it a super healthy food without the fear of adding fat in the body.

• Whole carbohydrate gives you energy to be active, fit and fine. 

• Right amount of sodium and potassium in Makhana helps to keep the blood pressure under control and keeps cellular function of your body up and running. 

Our third but not the last product is Flaxseed. Flaxseed is another super food, which should be part of our daily diet. It is very high on protein, carbohydrate, dietary fiber, calcium, Bitamin B-6, Iron and Magnesium. 

 ‘Chana Besan’ is the latest addition in our product portfolio.

Mukul Bhartiya: Tell us about your plans to take your products and idea behind them to wider consumer base? Please also tell us where do you see your business after five years?

Nitin Kumar: See, ours is the social enterprise. Though we can increase the production capacity by rapid mechanization, but our focus is not just providing healthy food options to our consumers but providing as many employment opportunities as possible in rural areas. When you increase the number of human hands at work then it is quite obvious that speed of work gets slowed down. 

In the first year itself, we have established our distribution network in many districts of Bihar and parts of National Capital Territory. In next five years, we will cover entire Bihar, Jharkhand, West Bengal, Uttar Pradesh and Delhi. We are aiming the turnover of Rs.50 Crore in next five years. 

If you want to take the distributorship of Bishanpur Natural Foods Pvt. Ltd., you can reach out to concerned persons at enquiry@villfood.in and + 91 7011 326 404, +91 8700 209 659.

COVID19 has reset the world order and new world order is booting. Since the new world order is booting, old world order is stuck in the throat of everyone; from the governments to businesses to common people.

Though I, like everyone know that every aspect of human life, businesses and governance is affected by this pandemic, I was curious to know how exactly it is impacting supply of essential items in India, which remain opened throughout this lockdown as it should have been. I talked to couple of my friends who have been leading the team selling essentials for their organizations and I am presenting their challenges as they are. They had some “Time to Survive (inventory in hand to cover the sudden eventuality)” but “Time to Recover (get into smooth operation mode with every function of supply chain working properly and optimally)” is still a long shot, despite some of the challenges I think might have been solved.

Here are the challenges they are facing in supplying staples and other essential items:

1)Logistics and Load factor: For smaller organizations or areas where order loads are small, Full Container Load (FCL) are not possible, transporters normally club the orders and deliver at destinations. Though Less than Container Load (LCL) is comparatively costly and less safe, Hundredweight freight method solves the purpose. During this period, as many small businesses remained closed, for small orders, LCL remained an impossible task and so, transporters increased the freight charges to cover the cost and incentive.

2)Credit: Credit helps in creating more liquidity, surplus fund, more customer engagement and increased risk taking appetite. But in this extremely challenging time, everyone’s risk appetite has decreased and wants to protect his/her fund liquidity. This has resulted in disappearance of credit from the market.

3)Stocks: Even for essentials, arranging stock has become challenge due to many factors and it has led to prices of many items increasing a lot. So, prices have become unrealistic as of now and whoever has the stock, charges more for it.

4)Timing Restrictions: Since timing restrictions are there in APMC market yard in metros like Mumbai, picking up and loading the stock itself takes time and in turn, supply is getting crippled. Problem gets even more complicated due to different timing restrictions for retail counters in different areas.

5)Labour challenges: Due to lockdown, there is huge shortfall in supply of labourers. To meet the demand of market, traders are trying to achieve the same throughput from workforce available, which is an impossible feat and can’t sustain for long. For migrant labourers, day and night work is resulting into heavy fatigue which can’t be repaired by money and they just want to leave for their hometown. This problem will only increase once interstate movement of labourers starts freely. A leading online grocer had to cancel around 20000 orders between Rs.30-35 Crore. There is no dearth of orders but there is scarcity of manpower to service those orders.

6)Lack of clarity about government notifications and nature of products at ground zero: Administrative staff i.e police and local administration at ground zero don’t have complete knowledge of food supply chain and so everyone is reading the same rule differently. Since no one wants to get caught at wrong foot during this pandemic, this challenge makes matter more complicated.

You are invited to add more challenges which are hampering the smooth operation of supply chain of essential items and what should be done in future if similar challenges arise? Automation, credibility based inter-trader credit system, AI based robotics, auto-driven transportation vehicles, delivery using drones are part of solution or they will complicate the employment problem of the country?

You will find following blogs on Covid19 useful:

1) Sanjiva Jha Founder CEO BroadArk Technologies on Reigniting the economy

2) Sanjiva Jha Founder CEO BroadArk Technologies on Covid19 Impact

Lockdown due to the fear of community spread of COVID19 has brought in unprecedented situation and it has led to unprecedented buying behaviour. Some of the examples are from my family itself. I reached back my native village to attend some urgent work before the lockdown. Here I am, staying with my sixty five years old mother in the village for last five months and no, my life is not difficult except I have to manage my work according to the situation of electricity supply.

As the lockdown was imposed on 24th of March and became effective from 25th March morning so to say, because by 12 of the night of 24th March, half of the nation must have fallen asleep anyway. Movement of even essential items were difficult initially because law enforcing agencies were not able to figure out difference between essential and non-essential items and they were not ready to take any chance to be called negligent of their duty. So, the vegetables grown in rural areas were not finding its way to urban and town market. Prices of vegetables fell drastically and we were able to buy things at around 35-40% of the earlier price. Though lockdown was dampening news, but not for my mother, for whom travel meant walking in our campus or on the road in front of our house. She was very happy to buy vegetables so cheap and she started buying it from everyone and anyone selling vegetables and I was emotionally manipulated to gorge on vegetables much beyond my capacity, otherwise she would have been forced to throw a big portion of it in the dustbin. For first two months, despite my cautious advice and sometime angry retort, she continued buying vegetables in huge quantity, because it was cheap. Something which was supposedly cheap cost us a lot during that period.

My elder brother living in Bengaluru got so panicked when lockdown was announced that he assumed he won’t get any vegetables to eat. So, he bought a year’s quota of salt thinking that if he doesn’t get vegetables then he will eat chapatti with salt.

Few days back I was talking to a friend, who is heading staples business of major retail chain about the news around impact of COVID19. I told him that I not very comfortable with the way news about miseries due to COVID19 fed to the entire world after locking them inside their houses and flats. They are regularly and without fail being fed with the news of death, despair and conflict. I also said that there is news of biscuits companies are doing roaring business, which means tea business must also be doing similarly good business. Upon hearing this, he said not only biscuit and tea, but savouries, mixtures, noodles etc. are also doing very excellent business.

COVID19 is having whatever impact it is having on all of us and it is visible, but what is not visible is the impact of continuous fear feeding by media after locking us inside our houses on our mind. Hypertension, stress, blood pressure, gas and acidity, arthritis, diabetes and many other lifestyle diseases will start demanding its share from our savings once this is over or there is some respite.

Another friend of mine who is with a retail start-up told me that his neighbourhood store in Thane, Maharashtra, which was unaffected by spurt in organizations dealing in online grocery retail is seeing more than 60% de-growth in customer walk in; many of them have shifted to online shopping due to the fear of the spread of COVID19.

These examples are very few among many. How can we forget the sight of couple of kilometres long queue outside grocery stores in US and European countries or people stocking years quota of toilet paper.

This period has brought out the extremes of human behaviour unlike before. COVID19 is not going away soon. There are many government administered nudge which will change the human behaviour permanently. I am sure many neuroscientists and behavioural scientists must be studying it, but retail organizations must not let this opportunity go away and they must test as many hypotheses as possible and figure out the change in human behaviour and decision making process while shopping. Analysing data may not be able to speak much after this pandemic is over. Once it is over, people won’t be able to recall the entire journey; they will remember the peak and end of the experience. This will lead to loss of many data points which can help the business in future. EEG, fMRI, Mobile EEG and eye tracking devices etc. may come to help for in-store study and placement of products on mobile, laptop and other digital devices real estate, nudges, priming and anchoring stimulus applied should be closely and critically analysed, because this phase will bring out the human decision making process which will be new normal.

Though using tools mentioned above to study human behaviour is the domain of experts from neuroscience, but we can offer our services in setting parameters and calculating outcomes free of human bias.

I can be reached at mukul.bhartiya@reviewboard.in. You can find the detail presentation on Artificial Intelligence and Machine Learning in Retail Analytics here. Interactive Retail Analytics Solution