There is Hope. Listen to CXOs.

I have been thinking about this for quite some time. Actually I think about it every time, I write a report where I have to go through a lot of CXO quotes. For the uninitiated, a lot of senior management people (Chief XYZ Officers) from a lot of companies (especially listed ones) speak pretty frequently with media and analysts tracking those companies - to give out details about ongoing operations or to talk about future strategies and tactics. You can see such people being interviewed all day on CNBC or ET-NOW. And yes, a large part of my work for the last two and half years has involved reading/listening to such senior executives from U.S. client companies.

And I ain't cribbing about it! You know why? It makes me feel good about my future. Every time (read most of the time), an executive spews out inane nonsense, I think, "if this guy made it to the top, then there is a lot of hope for people like me".

Let's see an example. A quite high-ranked executive recently gave this "gyaan" to a group of leading industry observers and analysts:

"At the end of the day, shelf-savvy marketing for us is all about blending and balancing love and value, fusing inspiring ideas with commercial disciplines, and bringing those two together to truly create value."

Anyone who has read Kotler knows that marketing at times does read like global gyaan. But that statement makes the entire book (Kotler) look accurate to the 100th decimal point. And it didn't end there:

“Shelf-savvy marketing is all about converting shoppers into buyers. That’s how value is created, and we do that at the shelf. That’s where it all happens. So we’ve got to be able to make sure that we’re bringing that to life."

I mean seriously??? And that learned audience bought it all? Most of the transcript reads (or must read) like this.

I believe, what he was trying to convey was that his company is planning to introduce more products (or SKUs), at different price points and convey the message to the shopper through in-store media (TV, banners, etc.). But as a fellow analyst pointed out, every consumer company tries to do that - all the time (at least in U.S.). So why waste so many people's time with what is obvious? I guess they have to justify their fat pays somehow.

And this is just one example. We analysts encounter such great quotes every day. Perhaps these CXOs and their speeches are the reason our community exists - if we did not have to interpret them, we would be quite jobless. So yay! One more reason to be happy about people speaking 1000s of words without making any sense! :)

In their defense, some times these executives have to wrap their future strategies in carefully planned words that deliberately don't give out the meaning or the whole truth. And many executives are also able to state whatever they want to in a straightforward manner. But some just are incapable of it.

It is also possible that this inability to understand the meaning behind some great words just means that I don't get the meaning. If so, I can't help it. And if I have bored you with long and garbled sentences that don't mean anything, please forgive me, I am just an analyst. :)

Private Labels and U.S. Innovativeness

Private labels are truly conquering the U.S. retail shelves and consumer mind-space, at least in some categories. Well the basis of this post is this post on Google's Official CPG Blog, so all the stats I mention are derived from the Google blog and their sources are mentioned in that blog.

Ok, so 59 % U.S. consumers are willing to substitute brands with private labels (or generics as Google refers to them initially), but only 12 % are willing to do the same for kids' products. Makes sense.

No wonder then that 1800 new "private-label" food products (27 % of all food products introduced) have been introduced in U.S. in first half of 2009. And private-label manufacturers are getting the hang of the game. Now they know that value is not always = low price. It could be different.

Good. But its midnight and my mind pauses to ponder - 1800 new private label products form 27% of all food products. That means that in six months, 6666 new food products were introduced. That's 36.83 food products a day and 1.53 new food product an hour.

So that's how Americans are using the recession - churning out new recipes (thankfully for food and not for derivatives). And oh btw, it also clarifies, why obesity is an ongoing trend :). But all said and done, this innovative streak is what makes the U.S. economy a great one.

More later.

Lose Weight by Browsing/Shopping @ Big Bazaar

Ok, here's the story. It is about my frustrating yet hilarious experience at Big Bazaar.

This weekend I went to Nirmal Lifestyle, to watch a movie with my flatmate. But as malls and shopper behavior go, my friend wanted to purchase some curtains from Big Bazaar. Prior to entering Big Bazaar, we entered E-Zone and I purchased a pair of headphones. By the time I completed my purchase, my friend had entered the hallowed Big Bazaar showroom and was browsing through the curtains display.

When I followed him into the store, the security guard told me to deposit my bag (headphones) at the baggage counter. I followed his instructions. Then I went to look for my friend, who by then had completed his purchase and moved out from the exit. So I went to the baggage counter to collect my bag. I was told "Sir, you need to exit first to collect your bag." I thought that they would hand me my bag outside the store (like many cinema halls do). When I exited, I asked for the bag and was told, that "Sir, come inside and take it." That's when I found that it was a trap for me to go round and round twice and I started shouting at the security person and the baggage counter person at the entry.

You see, as soon as I entered the store, they insisted that I go round through the exit again. Fair, but then why not allow me to take my bag when I first approached them? I created a ruckus and filled in a feedback form as well. I am sure to no avail, because that won't change Big Bazaar's "policies".

Thinking about this incidence some time later, I figured out a couple of things. First, if the store had been big - like a really Big Bazaar (think Manpada in Thane), I would have compensated for a couple of morning walks right there in the store. Being a lazy fellow, I would have hated that.

Second, being an analyst, I thought they were trying to make me look at the merchandise in the hope that I might purchase something while going through my second round. But no, the entire path from entry to exit was barren - no merchandise, no display, no nothing. Then what was the point of the "policies"?

OK, now let us assume that there was merchandise on display on my path. Then what was the point in asking me to deposit the bag in the first place? If they feared that I might shoplift something and hide it in the bag, then why send me the second time around, through the store, with the same bag in my hand?

I do not know if Big Bazaar makes "policies" in a centralized manner, or each store manager decides the "policies" for his/her store. Whatever it is, their "policies" are more like a set of "fallacies". When you have a U-shaped entry and exit path, it makes only common sense to have a baggage counter that faces both ways, so that a shopper deposits bags at one end while entering and picks them up while exiting, without going round and round twice. But I guess, common sense is a premium thing, not available in Big Bazaars.

More about my shoppescapades later!

Mobile Applications That Can Make Shopping Easier

This morning I was reading The Shopper Culture Blog and it had quite an insightful post regarding mobile applications, where shoppers can create shopping lists and even populate prices so as to budget their shopping trips properly. I must say, very useful for the recession. The blog ends by suggesting that retailers should tie up their back-end processes with such applications, so that a shopper can be provided the exact availability, pricing, and promotion details right on the cell phone, before the person leaves home for shopping. That would seriously make it interesting.

I am just imagining, I create a shopping list as follows:

• Okra
• Mango
• Fish
• Washing Powder
• Chewing Gum

And then the Shoprite affiliated application suggests options - Mango - Alphonso (Rs. 300 per Kg)/ Kesar (Rs. 250 per Kg); Fish - Rohu (Rs. 25 per fillet)/ King Fish (Rs. 35 per fillet) and so on. It would be so cool. I would be able to figure out what my shopping trip is supposed to cost and budget other expenses.

The application can go one step further and point out the locations of various items in a large supercenter like store (Shoprite in Mulund is one). So that I save time in shopping.

Or otherwise, if a retailer wants the shopper to roam about a bit and make some impulse purchases, it would be easier to calculate the effectiveness of its on-shelf displays, shopper marketing, and signage in triggering impulse purchases. It can drive tremendous value for retailers as they can optimize store layouts, signage, and shopper marketing advertisements.

Funny how a small device that was supposed to enable us to talk to distant people, is capable of a retail revolution by itself.

Tools of an analyst

Now that I have been an analyst for two years, I feel I should throw some gyaan around. So here are some tricks of the trade.

First things first, if you are supposed to appear or be a good analyst in any field, you need to understand and learn to speak that field's language, including unnecessary jargon. While if one is good at appearing to be good at something then its the best because the person does not have to make an effort to excel at many things - just one thing - appearing to be good at everything.

Okay, now I do not possess such a divine skill. All I have is an average brain with average number of grey cells and storage bytes. So how do I keep myself updated on the latest in this immense world that is consumer business?

There are three things that I do:

• Trust my brain to remember stuff and assign enough importance to important stuff.
• Never deny any source of information or treat any piece of information as unnecessary. Read it, glance through it, or just save it for reading later, but do not let it slip through.
• Use technology - yes we get most of our information online, but we also get most of our information storing and prompting tools online.

This post actually is regarding using technology to keep yourself updated as an analyst. So let us start with my favorite - Twitter. If one follows the right people and publications (other than friends) then it is really a matter of how many articles can you skim through and how many can you read. If you follow a lot of people on Twitter, then it becomes slightly difficult. Worry not! Twitterdeck is here. This is a desktop software that allows you to classify tweets. So I can follow Retail tweets separately and friends separately.

Another tech tool that I came across and I have to say I changed my default browser because of it is Read Later add-in in Firefox. You can literally assign yourself homework on some other project while working on your current one. There is something called Frame-It as well, that allows you to comment on static homepages and saves your comments. So practically it is like writing a comment in the margin of a book.

RSS feeds help me keep updated in a similar fashion as Twitter, just that I am more comfortable clicking a tinyurl to open some informative article rather than go through a maze of RSS feeds. I still plan to use them, because as I said, there is no point in filtering out information before reading it.

A couple of websites I love when searching for news - www.silobreaker.com - a great aggregator of news that shows news trends as well, WSJ website, and Economist.com.

If you think this post is weird, it perhaps is. I am just a information seeking maniac and love each and every tool that gives me more of it. Many of them have helped me improve my work in my job and thats the payback for all the effort.

Hope some of this weird post was useful. Enjoy!

UK Retailers Wake Up to IT?

Most of the tweets from Retail Week today featured one or the other IT-related news about UK-based retailers.

Lidl UK is introducing a document management system within its property division to digitize more than 200,000 documents.  The system is expected to reduce the time Lidl wasted to sort, filter, retrieve, update, and file information.  The system has the capability to expand across Lidl's European business.

Sainsbury appointed Rob Fraser, a former group IT director at Boots, and currently vice president, consumer, technology & transport at CSC, as IT Director on its operating board.

Jacobs, a 17-store photography retailer in UK is implementing a Microsoft-based multichannel platform from a company named Maginus across its business.  The company plans to improve its customer service across channels.  The MCC system is a complete retail platform with EPoS, ERP, and e-commerce functionalities.

What happened in UK?  All the retailers suddenly decided that it is time to implement new IT systems?  Or do they sense a recovery and want to be ready with a modern avatar for their customers when they return? I want to believe that partially it is the latter, especially in light of the global positive consumer sentiment flying around.

Positive election results in India, positive housing prices in U.S., increased IT expenditure by UK retailers.  Let us hope it amounts to end of the downturn. :)

Hello World!

Hello everyone,

I am Prashant Patel and I am a research analyst.  I have been tracking U.S. consumer business over the last two years now.  I have the unique opportunity that some of us have – staying in India and researching on U.S.  

Frankly, I believe that in the case of consumerism and in most of the related innovations, India lags the U.S. by a generation.  So while 10000-20000 sq. ft. groceries are coming up in India over the last five years, they came up in U.S. in 1960s and 70s.  There are some innovations that came over here almost immediately as they took hold in the developed world – e-commerce being one.  But overall, at least India’s retail industry is one generation behind U.S.’s.

I shop in the Shoppers Stops, Crosswords, Hypercities, and Spencers of India, while I read and write about Wal-Mart, Target, Amazon, and Whole Foods.  I read about a 100-beverage fountain dispenser for Coke and go out and increase Coke’s unit case volume in India.  So I think I am beginning to form a sort of unique perspective around these consumer i ndustries, especially CPG and Retail.

So this blog is at times going to be talking about my research about U.S. and at times about my experiences in India. While I will try to make it fun and insightful, even debatable, sometimes I may have to put across some retail news updates – just for the sake of filling in the voids and keeping the posts flowing.

You may ask, I write about these things for a living, so why write about it here. Well this is a place where I intend to form my own hypotheses and test them independently.  This is where I plan to write in a slightly less constrained language and formats. Many of you, who write reports for a living, know what I am talking about.

With that I will end my first post.  I hope to have fun writing and I hope you all have fun reading this.

Keep visiting.

Cheers,

Prashant