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IRETAILER

Volume 3 - Issue 1
ndian
Detailing retail for professional Retailers

January - February 2009

Indian Retailer 1 www.indian-retailer.com


Contents

Editor’s viewpoint 03
Business News
Retail world in focus 04

What’s in store for Stores?


A look at Apparel retailing 08

RFID
How RFID helps Perishable supply-chain 12

The Dubai Mall


The mother of all malls 16

Giordano
On the shop-floor with Ishwar Chugani 22

Click & Mortar Stores


How they impact Brick & Mortar 26

Recession-proof Retailers
Retail Strategies that work 30

New Products
Vyeing for the market place 34

The Doha Declaration


Corporate Governance in the ME 35

Indian Retailer 2 www.indian-retailer.com


Editor’s viewpoint

W
ith all this talk about the
impending recession
and probably a deeper
depression, it is difficult not to
commiserate with retailers trying Armed with statistical proof that
to cope with the growing nega- consumers are in a recession-
tive sentiment, consumer spend- ary state of mind, the question
ing paralysis and falling sales. before many retailers is how sponse to the shrinking economy
While experts rake through their do they survive as consumers in the early Nineties, when oth-
pro-cyclic and counter-cyclic rein in their spending habits, ers were cutting expenditure and
economic indicators to gauge as banks cut credit, hike rates shrinking their exposure, Taco
the onset of recession, there and as due diligence is strictly Bell implemented their 59, 79, 99
is another indicator of a sliding implemented in processing all pricing plan, where everything
economy, and possibly its best transactions? How can retailers on the menu was available for
indicator — negative consumer overcome challenges posed by 59, 79 or 99 cents, and they saw
sentiment. consumer apathy? The answer sales jump by 40 percent.
probably lies within the AlixPart-
Once people believe they are ners’ survey itself. Winning companies take bold
heading for a recession, it and decisive steps that capture
becomes a self-fulfilling proph- When asked how they plan to consumer attention, generate
esy whereby they will keep cut back on spending, a question market share, and help create
contributing to behaviors that that again allowed for multiple brand awareness that sustain
cause markets to recess even answers, 60 percent surveyed them.
faster. And currently, it looks like said they planned to wait for
neither government bail-outs nor sales and special offers; 52 Toyota is another company that
infusion of capital are going to percent said they would buy understands this philosophy. By
make them change their attitude less-expensive merchandise focusing on being relevant, with
anytime in the near future. and, more relevant to retailers, hybrid and ultra-compact cost-
33 percent said they planned to efficient vehicles that people will
A recent survey on consumer shop at lower-price stores. want to buy now and keep in the
sentiment in the U.S., commis- future, and by focusing on being
sioned by the global business The retail bywords this season affordable, by involving suppliers
advisory firm of AlixPartners, appear to be ‘trading-down’ and in creating efficiencies that leads
found that 67 percent of Ameri- ‘value.’ Consumers are going to lower costs and passing on
cans believe the country is to be trading down in various the savings to customers, Toyota
currently in a recession, while aspects of retail: in the products are positioning themselves not
20 percent think it has already they buy, the volume they buy only as the ‘official car of the
slid into a deeper depression. Of in, the brands they buy and the 2009 recession,’ but also as the
those surveyed, 83 percent think places they buy from. To prevail company that will maintain its
this economic climate will last in this economic climate, retail- global lead afterwards.
more than a year and close to ers need to acknowledge con-
half think the downturn will last sumers’ recessionary sentiment When the economy is ballooning
more than three years. and offer customers better value retailers can afford to sit back
for their money; they need to and take their pick of the pie, but
Negative consumer sentiment eke out expenses and cut costs in an economic downturn they
resulted in heavy belt-tightening in their operations; they need to need to be out there seeking
during 4Q 2008. With con- extract value at every stage of proactive, preemptive actions.
sumer spending accounting for their retail chain. To avoid having unpalatable
more than two-thirds of GDP in remedial actions forced on them,
America, and roughly the same In any economic downturn the retailers need to find creative,
levels in many other developed retailers who survive are usually relevant and resourceful strate-
countries, spending reticence the ones who can rapidly adapt gies that will tide them over this
could have serious implications to the changing mood of their downturn and see them emerg-
for retailers during 2009. consumers. For instance, in re- ing stronger.

Indian Retailer 3 www.indian-retailer.com


News
Business News
Business flows,” BNP Paribas Rasna’s foray into the fast food
analyst Manishi and bakery business in India .
Raychaudhuri said And, the Company, which cur-
in the report. rently operates around 40 outlets
Another key factor in Gujarat intends to enter the
in building FII confi- national market at a steady
dence would be the pace, the Chairman added.
smooth refinancing Most of the outlets would be
or rolling over of company-owned, but we are
the estimated $650 open to franchisees if anyone
billion in dollar- is interested in partnering with
denominated bank us,” Piruz said, on the sidelines
loans to Emerging of Amaethon, the Agri-Business
Market private sec- Summit organized by the
tor banks that are Indian Institute of Management-
FIIs to return to Indian Mar- due in 2009. Ahmedabad.
ket by mid 2009
Rasna opens more outlets Cosmetics
According to a latest India
strategy report by BNP Paribas, Soft drink concentrate-maker According to a recent survey, per
Foreign Institutional Invest- Rasna is set to launch around 40 capita consumption of cosmet-
ments (FII), which pulled out big and 100 small Devil’s Work- ics and fragrances in the Gulf
over $13 billion from the Indian shop retail outlets in Delhi and States is among the highest
stock markets in 2008, following Mumbai, said Mr Piruz Kham- in the world with the average
severe credit crunch in the US batta, Chairman and Managing purchase estimated in the region
and other developed markets, Director, of Rasna Private Ltd. of $334 per head. In 2007,
are likely to return in latter half Devil’s Workshop has marked the total sales value of beauty
of 2009, driven in large part by products in the Middle East was
Indian Rupee appreciation.
FIIs were net sellers in Indian
equities to the extent of USD
13.3 billion in calendar year
2008, the first time since 1999.
And this outflow was on the
back of a record inflow of USD
17.4 billion in 2007. Also, FII
holdings in BSE 500 companies
came down to 16.7 per cent in
September 2008 from 19.4 per
cent in 2005.
The BNP Paribas report re-
vealed that the Indian experi-
ence shows that when the
Indian Rupee started appreci-
ating from mid-2002, FII flows
began accelerating a year later
from mid-2003. “Our outlook on
Rupee appreciation implies that
FII inflows into Indian equities
could restart in H2CY09. Con-
cerns on capital outflows still
exist, but our empirical analysis
shows currency appreciation is
a significant driver of FII in-

Indian Retailer 4 www.indian-retailer.com


around $2.1billion, with skincare and the risks introduced by the
products accounting for 10 to 15 increase in raw material prices
percent of the total. With a huge and the acceleration of inflation
expansion in retail space, tax in Asian countries.
free incomes, growing population Among product groups, ac-
and over 60 percent of the popu- cessories sales showed strong
lation being under 25, it is hardly growth with sales increasing by
surprising that the purchase of around 50 percent during the
beauty products in the Arabian past two years. While Benetton
Gulf has been rising at over 19 Adult range shirt sales in-
percent per year. According to creased by 40 percent. During
latest analysis by research firm this same period, Sisley Young
Euromonitor, demand for natural opened 15 stores and Benetton
or organic prodcuts is one of the Man opened 30 more stores.
key drivers behind the dynamic Benetton attributed the growth
growth in beauty products. Halal to several factors including a
cosmetics is another rapidly good product mix, new higher
growing segment in this part of value product categories and
the world driving business in countries
with good growth opportunities.

tions in the second quarter rose


21 percent to $80.8 million and
in the first half, net sales rose 11
percent to $1.40 billion. While
on a constant-exchange-rate
basis, worldwide sales increased
7 percent and comparable store
sales rose 1 percent and net
earnings from continuing opera-
tions increased 20 percent to
$145.2 million. Net sales in the
first half increased the most in
Europe where it jumped 36 per-
cent to $131.1 million followed
by Asia-Pacific with a 19 percent
increase to touch $436.3 million
and the Americas with a 4 per-
cent hike to reach $796 million.

Mattel releases latest


Consumer Product
Benetton increases Tiffany’s worldwide sales Catalogue
revenue in H1 up 11 percent in H1
Mattel recently announced the
Italian clothing retailer Benet- Tiffany & Co. reported results launch of their latest Consumer
ton announced increased net for the second quarter and six Product catalogue, exclusive to
revenues by 2.9 percent to months first half ended July 31, the Middle-East and Northern
$1,465 million and boosted 2008. Strong net sales growth in Africa, packed with exciting new
EBITDA by 15.7 percent to Asia-Pacific and Europe led to toys for Mattel brands includ-
$230 million over the first half an 11 percent increase in world- ing Barbie, Hot Wheels, Polly
of 2008. Net profit increased wide net sales in the second Pocket, My Scene and Fisher
slightly, up 2.5 percent to $106 quarter. Combined with a higher Price.
million. The company said that operating margin, this resulted From Funky bedroom furniture
the performance was in line with in a 21 percent increase in net to her fabulous clothing collec-
expectations: “The group con- earnings from continuing opera- tion, the new product range has
firms the 2008 full year objec- tions enabling the Company to something to offer every Barbie
tives, although recognizing the slightly increase its earnings fan. Also in the catalogue are
uncertainty associated with the expectation for the full year. Net My Scene and Polly Packet with
unfavorable economic situation earnings from continuing opera- new cool eye-catching stationery

Indian Retailer 5 www.indian-retailer.com


nized for building a manufacturers from around the
largely successful world, Renato’s key competitive
brand and cus- advantage is its ability to offer
tomer base through the same quality product as any
the home shopping leading luxury watch at a far
vehicle ShopNBC, lower price point, a testament to
has announced its the brand’s rapid success and
2009 expansion consumer appeal.
initiatives, which The Renato brand was built on
include an aggres- the direct and interactive rela-
sive Web, televi- tionships we hold with our core
sion, and retail customers. We have been able
strategy driven to achieve tremendous success
by its ‘direct-to- in a very short period of time by
customer’ business continuing to introduce quality,
collections and bags to suit all model. In 2005, Re- well-designed luxury watches at
occasions while the new fan- nato Watches Inc quickly gained an affordable price point” said,
tastic footwear, bold bikes and prominence with the successful founding partner Daniel Mink.
skateboards will take motor-mad launch of its Collezioni line of Renato’s expansion plan for
Hot Wheels fan on one speedy luxury timepieces on the home 2009 includes the continua-
journey. shopping network ShopNBC. tion of sales on ShopNBC as
To find out more information on Spread over three 30-minute its primary vehicle, supported
this unique collections of prod- episodes, the show generated by international expansion ef-
ucts, contact Ewa Kozlowska, over $1.1 billion in sales and forts through other Shopping
Licensing Coordinator on +31 established Renato as a strong Channels in Canada, Germany
20 5030 470 or alternatively by contender in the luxury watch and UK. Additionally, the com-
email at Ewa.Kozlowska@Mat- category. Renato has since pany will focus its efforts on the
tel.com or Taletta van Berckel, established a $30 million-a-year Web with distribution networks
Country Manager, Middle-East gross business by eliminating through PranaGioia.com (an
& Africa at Taletta.vanBerckel@ traditional marketing, advertising, e-boutique for luxury watches),
Mattel.com and distribution tactics typically and continuing with ShopNBC.
associated with the launch of a com, the web component of
Renato continues to luxury watch brand. ShopNBC. Plans to expand its
grow thru ‘Direct-to- In line with the business for- retail presence through licensed
Customer’ approach mat successfully used by Dell Renato boutiques and distribu-
Computers, Renato’s core suc- tors and agents in international
cess is based on an alternative, markets are currently in prog-
Renato Watches Inc, the luxury
direct marketing business model ress, with a strong focus on Gulf
Watch Company most recog-
rooted in direct- countries such as Dubai as well
to-customer sales as Greece, Turkey, and Cypress.
through televi-
sion, the Web, $1.2bn GCC power grid
and other medi- to start trial transmission
ums to generate
extensive brand The Gulf Co-operation Council
awareness of its Interconnection Authority stated
luxury models that it will soon start trial opera-
while keeping tions of its $1.2 billion electricity
overhead and grid that will connect Gulf States
price points low. and help meet the region’s rising
With procurements energy needs. Once all tests are
and components successfully completed, the first
from some of the phase of the GCC grid, which
leading watch will ultimately link the power

Indian Retailer 6 www.indian-retailer.com


of investment 10.6 percent increase recorded
needed for the during the first six months of
GCC power and the year, according to data from
water sectors at as the International Air Transport
much as $120 bil- Association (IATA) released on
lion over the next Tuesday. “The industry crisis
10 years. “We’re is deepening and no region
hoping that by is immune,” said IATA Direc-
the first quarter of tor General and CEO Giovanni
2009 we will start Bisignani. “While the drop in
normal operations the oil price is welcome relief on
of Phase One. The the cost side, fuel remains 30
project’s second percent higher than a year ago.
phase, the connec- And with traffic growth continu-
tion of UAE and ing to decline, the industry is still
Oman, has already heading for a $5.2 billion loss
networks of all six states, is
been completed, with phase this year.” The IATA had earlier
expected to be fully operational
three, covering the construction said that Middle Eastern airlines
in the first quarter of 2009. The
of an electrical substation and will post a 33 percent drop in
first phase of the project will
an overhead line in Abu Dhabi, profits this year to $200 million,
see the interconnection of four
under implementation,” Ebrahim and that the global business
GCC states - Kuwait, Bahrain,
added. environment will remain difficult
Qatar and Saudi Arabia - with
Oman and the UAE to be con- in 2009. International freight traf-
nected by the end of 2010 in International air fic also saw its third consecutive
two subsequent phases. Accord- passenger growth drops month of contraction with a 2.7
ing to Ahmed Ali Ebrahim, Gulf percent decline in August, follow-
Co-operation Council Inter- Middle Eastern airlines recorded ing drops of 1.9 percent in July
connection Authority (GCCIA) a slowdown in international pas- and 0.8 percent in June. Airlines
director for system operation senger traffic growth from 5.3 carry 35 percent by value of
and maintenance, “By the end percent in July to 4.3 percent in the goods traded internation-
of the year we will start the trial August, a sign that the region’s ally. The three-month decline,
operations, which will continue carriers are not immune to the led by weakness in Asia-Pacific
until January 2009.” The system slowing global economy. The markets, is a clear indication that
is aimed at helping Gulf States August figure was well below the global trade is slowing down.
meet runaway electricity demand
by allowing
the transfer
of electric-
ity between
GCC
states, us-
ing excess
capacity
and limiting
the need
for new
investments
in additional
power
generation.
Industry es-
timates put
the amount

Indian Retailer 7 www.indian-retailer.com


What’s in Store for Stores?
According to the annual Christmas Retail Survey conducted
by business advisory group Deloitte, consumers are expected
to spend less on gifts, socializing and food and drink during
this holiday season.

Indian Retailer 8 www.indian-retailer.com


G
azing into the crystal holiday wallet under prevailing ment into women’s fashion to get
ball to divine what’s in economic conditions, retailers them shopping for clothes again.
store for apparel retail- will need to understand their Looking on the brighter side of
ers during the upcoming holiday consumers better than ever and results from surveys, while 24
season, the following scenario offer more relevant products. percent of consumers plan to
became evident… spend less this year, one seg-
The family credit crunch is ment of the population is bucking
With the holiday season fast ap- also apparently taking a toll on the trend and was found to be
proaching apparel retailers in the women’s spending. A survey by most optimistic about the econ-
region are mounting an all-out leading market research firm, omy. In the age group of 16 – 24
attempt to recoup sales figures The NPD Group, showed that year olds, 36 percent intends to
ripped by economic upheavals while spending on men and spend more and 49 percent say
that marked this last quarter of children’s wear were up 4 and they are going to have a good
2008. This year the holiday sea- 6 percent respectively from time during the holiday season
son is energized by the advent previous year’s figures, women’s and worry about the cost later.
of Eid al Adha festivities, a few wear was nearly stagnant.
days following UAE National Day Obviously women are cutting Youth, especially young men
holiday on December 02, and down on their spending in favor were found to be ratcheting their
then two weeks later rounded off of clothes for their children and image by discovering dressing
by Christmas and New Year cel- husband. This unsettling trend up and grooming to be ‘cool’ this
ebrations. Retailers in the region season. The higher propensity of
have the whole of December to Retailers along with this segment to spend on clothes
turn sales around, but can they designers and brands represents an opportunity for
do it? those retailers targeting younger
need to urgently come consumers. But retailers should
According to the annual Christ- up with ways to put bear in mind that attracting this
mas Retail Survey conducted by young shopper not only requires
business advisory group Delo-
more excitement into having the right products on
itte, consumers are expected to women’s fashion to offer, but also being in the right
spend less on gifts, socializing get them shopping for locations and channels to serve
and food and drink during this the ‘I want it now’ attitude and
holiday season. clothes again. web savvy habits of this group.

The diminished discretionary should be setting of alarm bells Also on a positive note, the
spending together with meltdown in the minds of apparel retailers, upcoming holiday season is
in the credit sector is adding to as women’s wear accounts for marked by gift giving and con-
declining bonhomie, as consum- a significant portion of annual sumers responding to surveys
ers look to rein in their expens- apparel retail volume. Curtail- have not given any indication
es. Market analysts predict that, ment in spending in this sector that they aim to stint on that
given the turmoil and uncer- is bound to have repercussions custom. Even though many
tainties in world wide financial on overall apparel sales in the might refrain from purchasing an
markets and the tightening of the coming year. indulgence or splurge gift, and
credit sector, the number of con- for the first time in years, may
sumers who will ‘spend on credit’ Clearly the apparel industry is actually cut down on the number
this holiday season is likely to be not doing their share to gener- of people receiving gifts, apparel
down. Wary consumers will be ate discretionary spending from still remains the dominant article
keeping a tighter control on their women; to reignite customers’ on the list of items people plan
credit card spending, with days passion and entice them to to give as gift to their family and
of charging it to ‘easy credit’ ap- spend more, retailers need to friends.
pearing at least for the moment project women’s apparel front
to be over. and center of their business. Re- But, this year, with very little
tailers along with designers and color and style changes from
The Deloitte survey reveals that brands need to urgently come up previous years, retailers have
in order to take a share of the with ways to put more excite- been able to evoke only a ripple

Indian Retailer 9 www.indian-retailer.com


of interest in apparel and, were they will reduce spending on According to the NPD survey,
it not for the fact that apparel out-of-home entertainment and 60 percent of consumers sur-
poses a safe bet as a gift, it 42 percent plan to cut on their veyed in the US said that either
could have easily lost its prime communication expenses. a ‘special sale price’ or ‘overall
ranking as the most gifted item. In addition to the dampening value for the price’ would influ-
economic situation another ence where or what they shop
To get a better perspective of the factor downing shopping en- this holiday.
upcoming season in this chaotic thusiasm this year is that there Another trend this season was
economic landscape, let us look are no ‘must have’ gifts on store that 39 percent of survey re-
at some more findings from mar- shelves. spondents told NPD they intend
ket researches into consumer to buy gift cards this year, with
holiday spending intentions. In the US, even though holiday 10 percent more stating they feel
decking began appearing in giving a gift card is an accept-
According to a Nielsen survey, some stores by mid Septem- able thing to do and it makes
conducted in UAE on global re- ber there is no indication that holiday gifting easier.
cessionary tactics and spending customers are rushing in to buy
intentions, one in two UAE con- holiday gifts. People seem to be Gift cards are also seen as
sumers said they will cut back waiting it out, knowing the longer better value in this economic cli-
on buying new clothes and try to they delay their purchase the mate given the fact that they can
save on gas and electricity bills better their chances of getting be redeemed after the holiday
during this economic slowdown. special offers or bigger dis- season to take advantage of off-
43 percent of consumers said counts. season prices.

Indian Retailer 10 www.indian-retailer.com


According to Marshal Cohen, dropped to 19 percent, this year
chief industry analyst at NPD we’ll be lucky to hit 17 percent.”
Group, many retailers seem to Elaborating on this Cohen said,
be missing out on an important “While gift cards and online
opportunity — or at least not shopping are contributing to a
“While gift cards properly identifying and seiz- decline in impulse buying, stores
and online shopping ing it — the chance to build on and brands need to reclaim
impulse purchasing. “Impulse and become drivers of impulse
are contributing to purchasing includes buying shopping. They need to identify
a decline in impulse something for yourself, or a gift or even create a hot product
buying, stores and for someone not on your list, or or products and then create a
even an extra gift item for some- forum in which salespeople are
brands need to one already on your list, while available to interact with custom-
reclaim and become you are out shopping. ers, make recommendations and
turn the recommendations into
drivers of impulse Impulse purchasing has made sales.” As Cohen noted, every
shopping. up a significant portion of small bit that can help retailers
holiday sales in past years, ac- build sales, counts, more so in
counting for 26 percent of holi- these days of tightening purse
day sales. In 2006, that figure strings.

The Top Ten items Consumers plan to buy as a Gift in 2008


(alongside what they planned in 2006 and 2007)

Item 2008 2007 2006


1. Apparel 49% 54% 59%
2. Toys 37% 37% 39%
3. Movies (VHS, DVD) 29% --- ---
4. Books 27% 33% 32%
5. Electronics 23% 38% 51%
6. Video Games 22% --- ---
7. Accessories 20% --- ---
8. Music 20% 26% 26%
9. Food 17% ---- ---
10. Fragrance 17% 22% 23%

Indian Retailer 11 www.indian-retailer.com


RFID

Indian Retailer 12 www.indian-retailer.com


The use of RFID (Radio Frequency Identification) technology
in the retail supply chain, especially in developed countries,
has been around for some time now. In this article we look at
some of its impact on perishabable goods.

T
he desire along with finan- ported from distribution centers many countries signing the ATP
cial means and convenient to retail stores and consumers. (Agreement on Transport of Per-
modes of travel has given Optimum cost-effective packing ishables) that imposes stringent
us unprecedented freedom to and forwarding, as well as pro- rules on transport and storage
travel, meet people and experi- tecting against leakage, spillage of perishables. In addition, many
ence the richness and variety and spoilage or contamination countries are demanding that
of cultures and lifestyles around from other cargo, are critical to logistics providers employ RFID
the world. Global interaction the proper logistics of time and (Radio frequency identification)
has led to a better understand- temperature sensitive perish- technologies to simplify and
ing of what was once esoteric, able goods. At every stage of speedup their logistics process-
making many exotic foods and the integrated chain, verification es. RFID involves tagging pallets
fashion into indigenous ele- mechanisms are implemented to with radio frequency transmitters
ments. Spurred by this demand, ensure that refrigerated trans- or transceivers that allow them
many logistics companies have ports and cold storage areas to be monitored throughout the
specialized in the international maintain the correct temperature supply chain.
transport of perishable goods. and humidity to not only ensure
While the term ‘perishable product quality and health safety, One sector that has embraced
goods’ is not limited to food but also reduce damage and RFID technology enthusiasti-
items and can include other loss. cally is the retail perishable
time sensitive items, such as foods industry. Tight use-by-date
chemicals, pharmaceuticals, deadlines, in some cases less
organic products or flowers, for Some industry sources than a week from soil to shelf, is
the purpose of this article we estimate that globally making many in the retail perish-
will concentrate on perishable able foods industry realize that
foods.
up to 33 percent of per- implementing RFID is becoming
ishable freight suffers critical to the success of their
Critical to the successful retail- loss or damage during business. Besides tracking and
ing of perishable foods is its monitoring the goods along their
life-cycle management, which storage and transporta- supply route, perishable goods
includes its proper picking, tion. storage is also made more ef-
packing, forwarding, storing ficient with RFID.
and distributing. For instance,
in order for bananas to reach Some industry sources estimate Cold storages equipped with
German consumers from South that globally up to 33 percent of RFID can know exactly which
American plantations in prime perishable freight suffers loss goods must be moved out first,
quality, logistics providers must or damage during storage and irrespective of when they came
ensure that bananas are loaded transportation. Tens of billions in. For instance, in the case of
onto a ship no later than 24 of dollars that are lost each year strawberries, where storability
hours after being picked. Then, due to rejection of damaged characteristics are often deter-
after a voyage lasting 12 to 14 or poor quality goods could be mined by harvests, the standard
days, the cargo has to be trans- significantly reduced with more first-in/first-out policy of ware-
shipped at a port like Hamburg stringent regulation of transport house goods movement is not
from where they are then taken and cold storage conditions and effective. Pallets with RFID tags
to a storage facility to ripen the implementation of newer having storability data embed-
from green to yellow. Finally technologies. The global sig- ded on them will enable handlers
the ripened bananas are trans- nificance of this issue has led to to move out the berries in accor-

Indian Retailer 13 www.indian-retailer.com


dance with their ripened state. containers embedded with RFID Many international airports are
RFID and related technologies tags. Because RFID makes it developing ‘perishable centers’
also help in relation to optimizing possible to both detect and re- that allow rapid transshipment
temperature within pallets hold- cord any act of tampering with a of perishables using the latest
ing perishables and in address- seal that was applied at the point RFID monitoring technologies.
ing problems of over-heating of origin, it improves security and For instance, recently the UAE
while foods are in storage. visibility of shipments in contain- government opened the “Dubai
ers arriving for inspection. Flower Center” where perishable
RFID could also be the answer goods are stored and processed
to significantly reducing time A number of freight forward- on 30,000 square meters of
needed for customs clearance at ers and shippers are explor- space that can be specifically
ports and thereby boosting pro- ing this technology for the air temperature controlled.
ductivity. Countries implementing transporting their perishables
programs similar to the C-TPAT and airports around the globe The benefits of RFID to the
(Customs Trade Partnership are seeing growth opportunities ‘cold-chain’ through optimization
Against Terrorism) program in being created by the creation of quality, increased efficiency
the United States, could al- of rapid transshipping infra- in supply chain management as
low ‘green lane’ clearance for structures for perishable goods. well as increased savings due to

Indian Retailer 14 www.indian-retailer.com


decreasing wastage cannot be much and how soon products reducing or eliminating product
over emphasized. RFID allows should be put on shelves. wastage.
retailers to automate the track-
ing and recording of product As an example of how RFID In short, RFID not only offers
lifecycle/shelf life of perishables, helps retailers reduce the billions better food safety and reduced
doing away with outdated supply of dollars lost each year through wastage of perishable goods it
chain management solutions that perishables’ obsolescence take also enables speedy and timely
rely on manual, costly, untimely the case of a retail store which replenishment, lowered invento-
and inefficient processes. receives products with less than ries and improved logistics. All of
their desired shelf life. RFID these in turn lead to competitive
RFID tags are being used by information warns the store it advantage and better customer
retailers in a number of innova- has a time-sensitive product on service for retailers seeking an
tive ways to improve the efficacy hand that needs to be acted on edge in overcoming the current
of their perishable goods supply quickly. economic turmoil.
chain. Using RFID data retail- The store can then take immedi-
ers can track how long it took ate action to move the product
products to move from one point quickly to shelf, or, in conjunction
to another thereby improving with dynamic pricing algorithms
efficiency and avoiding bottle- and integrated electronic price
necks. displays, lower the product price
By reading ambient data, such to stimulate sales.
as temperature and humid-
ity recordings, retailers get an RFID thus allows retailers to
indication of how much shelf life gather and analyze powerful
is left for given products and can actionable metrics that identify
use this date to calculate when and competitively price perish-
to replenish perishables and how able goods stimulating sales and

Indian Retailer 15 www.indian-retailer.com


The Dubai Mall

Built by Emaar Properties as part of their 200 hectare, $20


billion flagship Downtown Burj Dubai project, The Dubai
Mall is among the largest shopping malls in the world and
is profiled to become ‘the new heart of the city’.

Indian Retailer 16 www.indian-retailer.com


S
hopping malls, the unveiling of the Dubai Aquarium Opening in the midst
modern day avatars and Discovery Centre. Setting
of nineteenth century a new retail world record, with of an economic down-
arcades and early twentieth nearly 600 retail outlets opening turn and an impend-
century department stores on a single day in a shopping
are rapidly transforming retail mall, the launch event heralded
ing world wide reces-
landscapes around the world. an aura of festivity throughout sion, The Dubai Mall
Not since Sam Walton popular- the mall. Fashion shows on is a bold statement to
ized discount retailing through the high-tech fashion catwalk,
his Wal-Mart stores, has a retail public skating at Dubai Ice Rink Dubai’s venture spirit
phenomenon so seized the and a plethora of other amazing and a compelling con-
collective psyche as the shop- exhibits, galleries and entertain-
ping mall; definitely no other ment, enthralled the thousands
firmation of the strong
recent retail happening has had of visitors who thronged the mall market fundamentals
such singular impact on popu- on opening day. that underpin UAE’s
lar shopping patterns. Today’s
mall-shopping culture has seen Opening in the midst of an eco- economy.
the metamorphosis of shopping nomic downturn and an impend-
centers from mere venues fulfill- ing world wide recession, The set a strong platform for growth
ing people’s shopping needs to Dubai Mall is a bold statement for the retail sector, one that
lifestyle destinations offering the to Dubai’s venture spirit and a reflects Dubai’s forward-looking
whole gamut of shopping, enter- compelling confirmation of the model of creating robust busi-
tainment, recreation and dining strong market fundamentals that ness opportunities for enterpris-
under one roof. underpin UAE’s economy. The es from around the world.”
vigour of Dubai market together
Dubai, while no stranger to with the quality of retailers within At the opening, Jim Badour,
shopping malls of various hues the mall buttresses the mall op- CEO, Emaar Malls Group, said:
or to the shop-till-you-drop erator’s confidence in its viability “The enthusiastic visitor turn-out
culture, was nevertheless left and potential. Speaking on the to The Dubai Mall on its open-
spellbound at the recent open- occasion, Mohamed Ali Alabbar, ing day is a reiteration of the
ing of Emaar Mall Group’s gar- Chairman of Emaar Properties customer confidence and the
gantuan The Dubai Mall. Built by said, “The Dubai Mall is Dubai’s strength of Dubai’s retail sector.
Emaar Properties as part of their tribute to the world of retail and This is a, once-in-a-lifetime, mall
200 hectare, $20 billion flagship leisure. With the mall, we have development that further estab-
Downtown Burj Dubai project, lishes Dubai’s credentials as a
The Dubai Mall is among the thriving regional hub.” He added,
largest shopping malls in the “Dubai’s economy is shaped by
world and is profiled to become the forces of strong domestic de-
‘the new heart of the city’. Lo- mand and economies of scale,
cated just off Interchange One twin propelling forces that have
on Dubai’s main thoroughfare of helped create The Dubai Mall.
Sheikh Zayed Road, Downtown The sustained inflow of tour-
Burj Dubai will, when completed, ists and the diversified growth
be home to other iconic struc- strategies outlined in the Dubai
tures like Burj Dubai, the world’s Strategic Plan will continue to
tallest building and Dubai Foun- energise the economy, and The
tain, among the largest water Dubai Mall will play a key role in
fountains in the world. driving forward the retail sector.”

On the 4th of November, at With over 1.1million square me-


4pm to be precise, after several ters of total area and more than
postponed scheduled open- 350,000 square meters of gross
ings, The Dubai Mall threw open leasable area (GLA), The Dubai
its doors to the public with the Mall, when fully operational, will
have over 1,200 stores. And, 30
Indian Retailer 17 www.indian-retailer.com
percent of the GLA, or around According to Macy’s, parent be Bloomingdale’s first store
165 retailers, will be either new company for Bloomingdale’s, outside the US and the store’s
to the region, or opening stand- their strategic partnership with merchandize assortment, while
alone or flagship stores for the UAE based Al Tayer Group will sensitive to local preferences
very first time in Dubai. The retail see two Bloomingdale’s loca- and customs, is expected to re-
mix is lined up to include two tions — a three-level apparel flect their upscale ambience and
anchor department stores — the and accessories store of about high level of customer service.
upscale French retailer Galer- 13,500 square meters and a Upmarket UK supermarket chain
ies Lafayette and the American one-level home store of about Waitrose will also launch its first
Bloomingdale’s, both opening 5,000 square meters — opening overseas outlet at Dubai Mall,
their first store in the Middle at the Dubai Mall by February which at 5,137 square meters
East. 2010. The Dubai Mall venue will will be the mall’s anchor super-

Indian Retailer 18 www.indian-retailer.com


will provide an al fresco dining entertainment side, the Reel Cin-
experience, while overlook- emas complex with its 22-screen
ing the spectacular 12 hectare multiplex and featuring the latest
man-made Burj Dubai Lake with international blockbusters is ex-
Dubai Fountain as its center- pected to redefine the cinematic
piece. experience when it opens in mid
2009.
Eventually enclosing more
than 33,000 species of aquatic Other attractions at The Dubai
Mall include Dubai’s first Olym-
market. Waitrose is expected to
pic size ice-rink that can convert
be popular with British expats
to a multi-purpose hall, with full
accustomed to the store’s quality
fledged multimedia system and
products, knowledgeable staff
a 20 x 10 meter LED display
and customer service. Hamley’s,
providing a venue for holding
the famous London toy store, is
year-round events. The family
another British brand making its
entertainment precinct, sched-
Middle Eastern debut. The Dubai
uled to open in 2009, will include
store will replicate elements of
KidZania, a 7,400 square meter
its sister store in London with toy
life behind a glass enclosure
demonstrators and magicians
measuring 55 x 20 x 11meters,
and customers being invited to
and with a capacity to hold 10
test toys before buying.
million liters of water, the Dubai
Aquarium’s tank is one of the
Other features include a life-
largest in the world. A 270-de-
sized doll house and an imitation
gree walkthrough tunnel pro-
streetscape of London’s Regent
vides a breathtaking underwater
Street. The mall’s sprawling Gold
view of the marine habitat, while
Souk, the largest indoor gold
an acrylic viewing panel gives
souk in the world, with 220 gold
a frontal view. The acrylic panel innovative children’s edutain-
and jewelry shops is a fitting
ment concept and SEGA Repub-
tribute to Dubai’s status as a
lic, a 7,000 square meter high
regional hub for gold and jewelry
adrenaline visually stimulating
trade.
indoor theme park.
In addition, the 160 food and
Other themed precincts include
beverage shops, including
the Grove with its large retract-
Dubai’s largest food court with
able roof, where retail shop
40 outlets and an organic food
fronts have been pre-designed
mart, are expected to leave din-
to tie in with the open-air
ers at the Mall spoilt for choice.
streetscape concept; a 79,000
The mall’s extensive waterfront
measuring 33 x 8 meters, with square meter Fashion Avenue
promenade, to be lined by
a thickness of 750mm thick and with a 20 meter long retract-
themed cafes and restaurants
weighing 245,614kg has been able LED clad catwalk and the
awarded the Guinness World adjoining 5-star hotel, The Ad-
record for the World’s Largest dress, Dubai Mall and serviced
Acrylic Panel. residences that will open in the
first quarter of 2009. Another
The Discovery Centre is an- hotel, The Address, Downtown
other educational window to Burj Dubai, is already open for
marine life’s myriad attractions business.
through an environment featur-
ing rainforests, rocky shore and Jim Badour, elaborating on The
living ocean ecosystems. On the Dubai Mall, said, “Malls, now,

Indian Retailer 19 www.indian-retailer.com


are not just destinations for premier lifestyle destination that but the qualitative difference that
shopping – they need to offer a revolutionizes shopping experi- we offer to our visitors.”
complete experience, and with ences globally.” Yousif Al Ali,
The Dubai Mall’s integrated offer General Manager of The Dubai The continued attraction of retail-
of retail, leisure and entertain- Mall, added, “With the Dubai ers to premium malls highlight a
ment, it is positioned as the Mall, what matters is not the size retailing view that outlets in pres-
tige malls have a certain cachet
which allows them to maintain
brand image and sell products
at top prices. The consumer in
turn pays for the image attached
to the brand sold at the pres-
tige venue. While physical size,
pleasant atmosphere and added
attractions retain visitors to malls
for longer durations, and the
prestige of malls enhance the
magnetism of retail outlets there,
whether this extended time of
stay and appeal has a direct ef-
fect on the number of purchases
and amount spent by patrons is
still open to discussion.

Over the ages, malls have


evolved to become as the Ger-
man business magazine Brand
Eins said, of the Mall of America
Indian Retailer 20 www.indian-retailer.com
in the US state of Minnesota, to university and its own MBA of shopping malls in organizing
“a place where apart from be- program. From simple groupings the social fabric of our mod-
ing born and dying you can of retail shops congregated at ern society is undeniable; their
easily spend your whole life”. convenient locations to facili- magnetic draw has made the
Incidentally, the Mall of America tate opportunities for shopping, public simulate their everyday
even has its own educational to befitting cathedrals to our life around the commodity-form,
facilities, a joint venture with the disposition of consumptive perhaps making shopping the
Bloomington Schools Authority culture, malls have indeed come last remaining and most endear-
that offers levels from nursery a long way. Today, the influence ing form of social activity.

Indian Retailer 21 www.indian-retailer.com


G IORDANO

“By concentrating on providing attractive,


comfortable everyday fashion, we have built a
family of brands that have become synonymous
with value and quality” - Ishwar Chugani

A
rriving at Giordano’s “At Giordano we are always on
venue in Kuwait’s ‘The the lookout for opportunities that
Avenues mall’, we met strengthen our position as one of
up with Ishwar Chugani, Execu- the leading casual wear retail-
tive Director of Giordano Middle ers in the Middle East. Kuwait
East, to tell us a little more about is a key market for us and it is
the store and his measured important that we do not be-
views on apparel retailing in the come complacent just because
region. Below are excerpts from we have 11 stores in prominent
that interview. locations across the country.

We began by asking Chugani We are always on the lookout


how Giordano, which already for new opportunities, in fact,
has around a dozen outlets we plan on opening four more
located in prominent locations stores by the end of the year,”
across Kuwait, would enhance answered Ishwar Chugani. “Our
its network with this new store? growth and customer endear-

Indian Retailer 22 www.indian-retailer.com


ment comes not just because we This format is part of Giordano’s
have a wide distribution network latest store design philosophy
or a nice store in a well-known and you will see more of it in our
mall. Giordano is a reflection of future stores in the area.”
something more; it is an embodi-
ment of contemporary lifestyle So, what differentiates your
choices - simplicity in design and brand from others, we asked.
quality in substance. Something
many customers are demanding Catering to our strong client
more of these days. base within Kuwait through
excellent customer service and a
By concentrating on providing tight collection of everyday wear
attractive, comfortable everyday is what differentiates us from
fashion, we have built a fam- others explained Chugani.
ily of brands that have become
synonymous with value and “People know who we are and
quality. And it is this emphasis they respect us for what we are.
on our key attributes along with In our stores you do not find a
our total commitment to superior wide assortment of colors and
Over the years Gior- service that has seen us develop styles, we limit ourselves to the
dano stores in Kuwait successfully, not just in Kuwait, basic colors of black, white and
but all over the world.” grey. Earlier our stores were
have been accepted, known for their unisex range of
respected, and recog- While walking us through their clothing, but with unisex going
new store, Chugani elaborated, out of vogue our merchandize
nized for their quality “While location is a key ingre- is stocked along a general split
and value, this has al- dient to successful apparel of about 10 percent for Junior,
lowed us to experience retailing, shopping at Giordano 35 percent for Ladies and the
is more than just shopping in balance 55 percent being Mens-
a robust double digit a comfortable mall ambience. wear. While most apparel stores
growth every year for Over the years Giordano stores tend more towards ladies outfits
in Kuwait have been accepted, we are predominantly a mens-
the past three years. respected, and recognized for wear outlet, but also with some-
their quality and value, this has thing for the whole family. We
allowed us to experience a provide basic everyday outfits
robust double digit growth every – shirts, jeans, T-shirts, khakis,
year for the past three years. easy care trousers, jackets – all
of which you can creatively mix
The customer is always at the and match to create unique
forefront of all our decisions styles.”
in opening and designing new
venues. For instance, if you “By concentrating on our five
look around, you will see that brands, Giordano, Giordano
the store here is different from Concepts, Giordano Ladies,
our other outlets in the country. Giordano Junior and Bluestar
For one, it is larger and more Exchange, we have seen each
spacious than our average 100- grow with its own individual mar-
150 sq. m premises; here the ket positioning and retail identity.
layout stresses a look and feel One reason for this is that the
of light spacious openness. The core concept of all our brands is
merchandize is located more linked to our corporate mission
towards the walls providing cus- of making people ‘feel good and
tomers with a much more com- look great.’ The result is a collec-
fortable shopping experience. tion that includes basic and func-

Indian Retailer 23 www.indian-retailer.com


tional apparel and accessories cessories for men, women and problem solved. This is service.
that suit the contemporary and children; even supplying some It is this focus on quality and
comfortable lifestyle, to concepts of the major brands in the world. functionality of our products and
that convey a ‘dress-up casual’ This phenomenal change has constantly listening to customer
attitude, appealing to sophisticat- been brought about by focusing requirements that has resulted in
ed, up-market customers looking steadfastly on our core corpo- introducing new innovations.”
for choice, variety and individual- rate business values of Quality,
ity and down to our value brand, Knowledge, Innovation, Service The fact that we handle most
Blue Star Exchange aimed at and Simplicity, what we call our things in-house – from design-
customers interested in basic Q.K.I.S.S formula.” ing, tailoring and quality control
apparel at competitive prices. also gives us a lot of leeway
“The heart of our Giordano when it comes to introducing
Giordano International, founded system is based on a totally new collections. The new de-
out of a single store in Hong customer responsive approach. signs and innovative formats we
Kong in 1981, has today grown Information, speed and simplic- introduce like wrinkle-free shirts
to over 1,800 stores in the ity are key components driving and trousers are also a direct
Middle East, Asia, Australia, the entire operation. By keep- manifestation of the cutting edge
India, Eastern Europe and North ing things simple, operations technologies we employ said
America. To what do you attri- are streamlined and this allows Chugianni. “Technology allows
bute this success? for speed which in turn allows us to be in touch with our opera-
the creation of value, because tions around the world and be
“From our beginnings in Hong time is money and by keeping responsive to requests and seize
Kong as a manufacturer of casu- matters consistently simple, opportunities as they arise. For
al clothing, we have developed Giordano can offer customer instance, I can sit in my Dubai
into one of the leading interna- the convenience of knowing office and have direct access to
tional retailers of apparel and ac- where to get their basic apparel our 1800 stores across the world

Indian Retailer 24 www.indian-retailer.com


if you understand the products and their global success story
then you can understand the has also featured as a Harvard
Giordano embodies cost price. “Because we’ve been Business School case study.
the contemporary obsessive about our products Giordano Middle East’s success
lifestyle choices – and service, we believe that has been underlined by its nu-
business will follow. Our focus merous accolades including be-
simplicity in design on price, while maintaining the coming one of the first retailers
and quality in quality and values of our heri- to be nominated for the Dubai
tage, has enabled us to develop Service Excellence Scheme, for
substance. a model whereby its competitive all its stores across Dubai.
pricing helps to drive up volumes
and know exactly what is hap- which brings in more benefits “To make people feel good and
pening at each of our outlets. I from economies of scale.” look great. This straightforward
am constantly in contact with our mission has served the Giordano
key store personnel all over the In terms of the Middle East ap- Group well since 1981 in guiding
world and the result of this direct parel market, Giordano is prob- its growth. Giordano embod-
interaction is a collection of ably one of the top five clothing ies the contemporary lifestyle
relevant and functional apparel retailers in the whole Arab world. choices – simplicity in design
and accessories that are always The brand now operates 150 and quality in substance.
in sync with the contemporary stores in over 15 countries in
and comfortable lifestyles of our the region that includes the Gulf In conclusion, Chugani aded,
customers,” he added. Cooperative Council (GCC) Giordano’s total commitment to
countries, Jordan, Iran, India, superior service and outstanding
“Our centralized design office Bulgaria, Ukraine, Georgia and quality and value has enabled
in mainland China, with over 30 Armenia. The brand’s offering our company to successfully ex-
international designers, works in of timeless, relevant and easy ecute on its multiple-market and
close coordination with our inter- to mix and match apparel has multiple-brand strategy”.
national buying managers, who proved popular
provide local input from around for all age groups
the world. For instance, in this and nationalities,
region, we tend to stock more demonstrating the
loose fitting comfortable trousers global appeal of
than we would in the Far East. the brand.
Also the sleeves for ladies outfits
are longer and sizes are more Besides being
accommodating than in some committed to deliv-
other regions. ering quality prod-
ucts and service
While the centralized design to its customers
center comes up with the bulk of and, strong and
our production material, country sustained financial
markets have a 20 to 30 percent performance to its
flexibility to adapt their orders to shareholders, it is
meet local preferences. In this also committed to
way, we are able to maintain creating a positive
consistent styles and patterns impact in the com-
across our showrooms while still munities where
allowing for individual regional it conducts busi-
preferences to show through our ness. Giordano
collections.” International has
been recognized
The best thing in business, said on an international
Chugani, is to have good knowl- level for its corpo-
edge of your products, because rate governance

Indian Retailer 25 www.indian-retailer.com


Click-and-Mortar Stores

A
s e-commerce becomes often used interchangeably, they
part of mainstream describe two different aspects of
retailing new phrases to web interaction.
describe the online phenomena
are cropping up everyday. Terms The word e-commerce generally
like online shopping, net-shops, refers to the actual buying and
‘from retail to e-tail’ and ‘brick- selling of goods or services over
and-mortar to click-and-mortar’ the Internet and includes among
have become integrated into others, e-retail, online bank-
our daily business jargon. In this ing and online travel services.
respect, it needs to be men- E-business, on the other hand,
tioned that though the terms ‘e- while encompassing e-com-
commerce’ and ‘e-business’ are merce also covers activities that

Over a decade after the dot.com bubble of the Nineties, e-retail has
transformed itself from a fledgling industry into an established,
mainstream, multi-channel one that has broadened the overall
retail landscape.

Indian Retailer 26 www.indian-retailer.com


utilize information, communica- catalogues and prices, improved customers. The study also found
tion and security technologies ease and speed of ordering and that retailers were integrating
in data exchange to support online services throughout the their offline and online experi-
online businesses and facilitate year on 24 hours x 7days basis. ence; 33 percent of retailers
the critical finance and payment had loyalty programs to retain
aspects of it. Though many retailers were customers, and 26 percent of-
initially slow to get on the e-retail fered in-store product availability
Both business models utilize the bandwagon, once onboard, information online; 79 percent
World Wide Web at some stage they appear to have embraced of retailers instituted consistent
in their transactions and are it wholeheartedly and are in it pricing across channels and 46
aimed at improving or transform- for the long haul. The slower percent allowed customers to
ing business processes and ef- and more prudent approach of buy and redeem gift cards on
ficiency. Spurred by technologi- retailers has in many cases paid the website as well as at their
cal and security innovations in off significantly; learning from the brick-and-mortar locations. On-
information and communication failures and successes of e-retail line promotions are also another
technologies, a wide range of pioneers, traditional brick-and-
e-business models have evolved mortar retailers have taken a
including online transaction
Traditional retailers
more cautious approach — in
processing, electronic money most cases integrating online implementing robust
transfers, supply chain manage- as part of a wider multi-channel e-retail strategies are
ment, inventory management, approach. However, as e-com-
automated data collection and merce benefits are being real-
finding numerous ben-
electronic interchange systems. ized, more and more retailers efits including accu-
are now investing in online sites rate, timely stock up-
In this article we look specifically and implementing innovative
at the e-retail aspect of e-com- web technologies that further dates, information on
merce and why retailers should optimize online and offline activ- products and services,
have an online outlet as an inte- ity and help sustain and increase
gral part of their retail business. their overall retail growth.
and streamlining of
many administrative
Over a decade after the dot. Retailers are finding that inte-
com bubble of the Nineties,
tasks like invoicing
grating their online and offline
e-retail has transformed itself activity is becoming key to the and order placing.
from a fledgling industry into an success of their businesses.
established, mainstream, multi- Often online retail serves as powerful means of establishing
channel one that has broadened a conduit for offline sales with customer relationships and driv-
the overall retail landscape. After many retail websites helping ing repeat business.
the early adopters to online retail customers do online window
scene faltered on the web, many shopping — research products, Another element that help
pure-play, only online outlets, read user comments, compare e-retailers further integrate of-
have now given way to estab- prices or find gift ideas — before fline and online experience is
lished brick-and-mortar retailers making their offline purchase. the implementation of Web 2.0
seeking an online presence. technology on their websites.
A study on the state of online The proper execution of Web 2.0
Traditional retailers implement- retailing conducted by For- allows retailers to incorporate
ing robust e-retail strategies rester Research, an indepen- increased interactive elements
are finding numerous benefits dent technology and market and innovative ways to display
including accurate, timely stock research company, showed that and sell products online. En-
updates, information on products as much as 22 percent of offline hanced features include better
and services, and streamlining sales were being influenced by product images, detailed product
of many administrative tasks like the web and with 38 percent of specifications, and the ability for
invoicing and order placing. Cus- online customers being first-time customers to zoom into products
tomers also benefit from online buyers, retail websites were a or have 360-degree views.
retail with easy access to latest viable channel to reach new

Indian Retailer 27 www.indian-retailer.com


The technology allows custom- can Customer Satisfaction Index than 200 companies in over 40
ers to mix and match outfits, (ACSI), released jointly by the industries each year, is the US
or put together an entire outfit University of Michigan and Fore- standard for measuring custom-
on screen, compare products see Results, the market leader er satisfaction both online and
and personalize or customize in online customer satisfaction offline and is a leading economic
products. All of these add to the metrics, customer satisfaction indicator that ties customer satis-
customer’s online experience with e-commerce in 2007 sur- faction to financial results.
and in turn leads to better cus- passed that of the previous year
tomer satisfaction. As technol- by 2 percent, the biggest single- Satisfaction with e-commerce
ogy becomes more expressive, year improvement since 2003. In companies outperformed the
retailers are finding innovative 2007, customer satisfaction as overall ACSI cross-industry aver-
ways of making their online ex- measured on the 100-point ACSI age of 75.1, largely owing to the
periences match the consumer scale was 81.6 points with the superior convenience, access
experiences in the store. e-commerce sector, a score that and ease afforded by the Inter-
outpaced most other sectors, in- net. The ACSI, a cause-and-ef-
Implementing latest technolo- cluding offline retail with a score fect model that links key drivers
gies and integrating offline and of 74.2, utilities with 72.9 and of satisfaction such as customer
online experiences has led to information services like cable expectations, perceived quality,
better customer satisfaction with and telephone with 68.3. and perceived value, is a predic-
e-retail. According to the Ameri- ACSI, which measures more tor of crucial business outcomes

Indian Retailer 28 www.indian-retailer.com


such as customer relationships, general preference for con-
customer loyalty and repeat ducting business online (52%)
purchases. A retailer’s ability to has surpassed preference for
keep consumers satisfied is what conducting business in-person
gives them the edge in today’s (41%) by more than 10 percent-
volatile economy. According to age points.
Larry Freed, CEO of Foresee
Results, “What’s interesting is Simultaneously, technological
when the economy is tough obvi- advances, high levels of cus-
ously people’s spending habits tomer satisfaction and increased
get curtailed a bit. However, online spending have led to
investment in customer satisfac- customers expecting even more
tion goes a long way, especially from their online experience. In
in a tough economy. Satisfac- addition to losing customers to
tion matters and that is what will competition, who are just a click
drive financial success.” away, companies that fail to
provide high levels of online cus-
With 77 percent shar- Of the four major components tomer experience will likely see
that are believed to drive cus- their reputation suffer as a result.
ing their web experi- tomer satisfaction — price, A dissatisfied consumer whether
ence with others and merchandise, availability of online or offline is a liability, but
products, and brand — price is an online dissatisfied customer
with nearly 56 percent thought by some to be a sig- is a snowballing liability on ac-
using online channels nificant factor, especially in an count of the nature of the web.
to share complaints or economic downturn. However, In this digital age, with blogs and
research shows that even in a a plethora of social networking
reviews, the impact of downturn there other factors sites to choose from custom-
online negative pub- supersede the price factor; even ers have a number of options to
in a downturn e-commerce sites voice their grievances about a
licity and its ramifica- are doing well. company.
tions are even more Latest estimates from the US
magnified than offline. Department of Commerce show Online transactional problems
retail e-commerce sales for the that lead to negative feelings can
second quarter of 2008 was also be far-reaching. With 77
$34.6 billion, an increase of 2.9 percent sharing their web experi-
percent from the first quarter ence with others and with nearly
of 2008 and accounting for 3.3 56 percent using online channels
percent of total retail sales esti- to share complaints or reviews,
mated at $1,034.8 billion. the impact of online negative
publicity and its ramifications are
In the UK, an independent even more magnified than of-
survey into online consumer fline. Some of these digital con-
behavior conducted by Harris versations amplify their impact
Interactive, and commissioned by being viewed by millions of
by Tealeaf, a company special- readers and by remaining online
izing in providing insights into indefinitely.
online customer interactions
highlighted the buoyancy of Online businesses need to en-
e-commerce sector. Shoppers sure that their customer experi-
spend over £26.5 billion online ence is always streamlined and
in the first six months of 2008 meets expectations. The reward
(up 38% from 2007). The Tealeaf will be increased ROI, improved
survey also found that, among brand perception, and most im-
all online adults in Great Britain, portantly repeat business.

Indian Retailer 29 www.indian-retailer.com


Recession-proof Retailers
With consumers downbeat on their spending plans; a general slow-
down in personal-income growth; stores with stagnant inventories
and low-price sales on many inventories as soon as they hit the shop
floor and an overarching credit crunch for businesses and consum-
ers alike, where can retailers expect growth to come from? In this
lackluster economic scenario, how can retailers recession-proof their
businesses?

W
ith hike in prices of figures during the year end
groceries, rents, trans- holiday season. A recent survey,
portation and utilities by leading market researcher
eating into their budgets; com- NPD Group Inc., on consum-
pounded by tightening of credit ers’ holiday spending intentions
and threat of redundancies, in the US, revealed that this
many consumers are fastening year 26 percent of consumers
their purse strings and cutting planned to spend less than last
down on discretionary spending. year. The same survey in 2007
Consumer spending reticence, showed only 18 percent said
especially during the last quarter they planned to spend less.
of 2008, is proving quite chal- This 8 percent decline is a clear
lenging to retailers, espcially indication that consumers are
those retailers who had hoped already focused on the idea of
to straighten their sagging sales spending less this year.

Indian Retailer 30 www.indian-retailer.com


will find, need to be properly lower price represents the true
Retailers who keep aligned, effectively leveraged value of the product or service.
changing prices and efficiently implemented In the long term, this means a
in order to ensure success. In potential loss of brand equity
through special low addition to better product qual- along with a possible diminution
price, promotion sales, ity and competitive pricing, the of the product to a commodity
strategies that retailers need to status that sells on price alone.
bundled offers or work on include, product dif- One of the problems with this
prolonged loss-leader ferentiation, introducing new strategy is that, in a commodity
pricing strategies, run and improved products, product market, low prices will not only
relevance, technology and even lead to lower prices for every-
the risk of sending the green retailing. Retailers need to one, but will eventually become
message that the lower find their strengths and build on less viable to sustain; unless
them, introduce lean inventory of course, lower prices can be
price represents the cycles and trim overheads that maintained by product differ-
true value of the prod- do not add to their business. But ences or supported by strong
uct or service. at its core, the strategies to drive alternative profit streams.
economic advantage and power
growth pivots on the ability of If not through pricing, then
retailers to offer consumers a how do retailers prosper in
superior value proposition. this exceptionally challenging
economic climate? The answer
From a consumer perspective lies in offering a differentiated
there is nothing to be gained customer experience that goes
from purchasing a more ex- beyond customer service; it calls
pensive product unless there for implementing highly tailored,
is some tangible or intangible avant-garde retail strategies that
benefit or value from doing so. drive customer loyalty. Retailers
Retailers should be building on who can seize growth opportuni-
this desire for benefit, or per- ties that further their business
ceived benefit, by implementing and introduce new formats and
proper marketing techniques channels that enhance customer
that add value to their products. experience and maximize their
Promoting a product’s perceived sales will eventually be the win-
value through effective market- ners. In a market where retailers
With consumers downbeat on ing helps distinguish and dif- shackled by yesterday’s strate-
their spending plans; a general ferentiate a brand from a mere gies are finding their market
slowdown in personal-income product. Many retailers however share declining, or worse,
growth; stores with stagnant seek to enhance value by using even completely going out of
inventories and low-price sales pricing as their main differentia- business. Smart retailers with
on many inventories as soon tor and unfortunately, most use forward thinking strategies are
as they hit the shop floor and pricing inappropriately. They fail viewing the economic challenges
an overarching credit crunch to realize that frequently fluctuat- that face them as an opportunity
for businesses and consumers ing prices effectively removes a to increase sales and market
alike, where can retailers expect product’s value and in addition share, strengthen and protect
growth to come from? In this sends conflicting and confusing their businesses and engage
lackluster economic scenario, messages to consumers their customers to maximize loy-
how can retailers recession- alty. Here, we look at one such
proof their businesses? Retailers who keep changing retailer…
prices through special low price
For a start, when dealing with or promotion sales, bundled The Swedish clothing retailer
growth in a receding economy, offers or prolonged loss-leader Hennes & Mauritz AB, more
there are a host of inter-related pricing strategies, run the risk of popularly H&M has been a suc-
retail strategies that retailers sending the message that the cess story from its inception.

Indian Retailer 31 www.indian-retailer.com


launch in Japan, the $11 billion
company now has more than
1,600 stores in over 30 coun-
tries and employs nearly 50,000
people worldwide.

While many apparel retailers reel


under the impact of the current
economic downturn, H&M is
seeing it as an opportunity to ex-
pand further. Over the next year,
the company plans on increasing
the number of its retail stores by
as much as 15 percent, focusing
its expansion plans in the U.S.,
Europe, and Japan. How is H&M
managing to thrive in what many
observers call the toughest retail
environment in decades? Credit
the ongoing success to H&M’s
relentless focus on costs that ex-
tends from the company’s core
business model down to its great
merchandise.

More than anything, H&M’s


biggest advantage over its
rivals is its business model. A
team of 100 in-house designers
work with buyers to design and
develop dresses, which are then
outsourced to a network of 700
suppliers, more than two-thirds
of whom are based in low-cost
Asian countries. Not owning any
Established over 60 years ago designers Viktor & Rolf, as well factories and related overheads,
in Sweden the company under- as their well publicized partner- H&M can afford to be more flex-
took major expansion programs ships with pop stars Madonna ible than many other retailers
in the Sixties that saw branches and Kylie Minogue. Recently, when it comes to lowering their
opening all over Europe and in mid-November, when H&M costs.
continental North America. The introduced Comme des Garçons
first Asian store, and also the outfits in their latest collabora- By maintaining their average
first franchise for H&M, opened tion with enigmatic Japanese sales price lower than their im-
in Dubai in 2006 with several designer Rei Kawakubo, savvy mediate competitors like Spain’s
more stores opening all over the shoppers in Tokyo, London Zara, owned by textile conglom-
Middle East in rapid succession. and elsewhere snared dresses erate Inditex and US specialty
off the rack within hours of the apparel retailer GAP Inc, H&M
One reason for the ongo- stores’ opening. has managed to gain market
ing popularity of H&M is their share and customer loyalty. This
exclusive collections produced However, it is more than part- market hold and loyalty has
in collaboration with renowned nership with cult designers that increased even further as the
designers like Karl Lagerfeld, has allowed H&M to post record current recession sets in and
Stella McCartney, Roberto earnings and expand world- consumers trade down in search
Cavalli and avant-garde Dutch wide — with its September 2008 of better value.

Indian Retailer 32 www.indian-retailer.com


So far, this combination of lower optimize, expand and redefine can leverage relationships with
costs and lower prices to cus- their business. They need to existing customers to attract new
tomers has proved a winning align and leverage their growth customers and target sub seg-
formula. Operating profits for the opportunity matrix by intensify- ments within existing customer
year 2007 were up more than 20 ing, expanding and diversifying base. Retailers can develop
percent, to $2.8 billion, on sales growth levers like location, prod- multiple formats or channels to
of $11.9 billion, up 14.5 percent uct/service offers, target custom- reach more target customers
from the 2006 figures. ers and channels or formats. in more shopping situations or

Sales excluding VAT for the For instance, retailers can satisfy different shopping needs
Group for the first nine months promote growth by intensifying of same customer. They can ex-
of 2008 amounted to $8.09 bil- existing customer relationships pand into other business sectors
lion, an increase of 12 percent. and increasing penetration of ex- to create new value for new and
Industry analysts now estimate isting geographic markets. They existing customers in wholly new
that in fiscal 2008, H&M operat- can optimize current offers and areas or converge to create new
ing profits will be 15 percent, to develop untapped potential to concepts to reach new customer
reach $3.2 billion, and sales will serve existing customers thereby segments.
rise 12.6 percent, to touch $13.4 further building or maintaining
billion. their customer loyalty and satis- There are plenty of opportuni-
faction. ties and strategies out there for
Not all retailers can hope to retailers to recession-proof their
emulate H&M’s business model, Retailers can enhance the shop- business, but the question is, will
but in their search for growth ping experience for their existing they rise to the challenges that
opportunities retailers need to be customers through superior mer- confront them? As they say in
more imaginative and systematic chandizing and better integra- retailing, strategy is only as good
in developing frameworks that tion of existing channels. They as its execution.

Indian Retailer 33 www.indian-retailer.com


New
New Products
De Beers has personalized its
Products partnered with YouTube owners
De Beers Adds Sparkle to
movement to fit its image and Google to integrate the website
Time
style. The Swiss Made Auto- into the W902 and W595 Walk-
matic movement allows the man phones, enabling users to
wearer’s natural wrist movement instantly access YouTube from
to automatically wind the watch. their phone. By tilting the phone
Further, it has a power reserve they can watch the videos in full
of 42 hours, when not worn. The screen landscape mode or see
watch is also water-resistant up snaps shot with the 5 megapixel
to 30m. Over 600 hrs of work by camera.
the most skilled watchmakers The W902 Walkman with 8GB
has gone into the making of it. Memory Stick Micro can store
Talisman Suntime Riviere with its more than 8,000 songs and
understated elegance and rare switch seamlessly from music to
beauty is a treat to any watch media to experience crystal clear
connoisseur and is an attestation video capabilities. The W595
to De Beers’ expertise and at- features a 2GB Memory Stick
tention to creativity and technical Micro for storage, a 2.2” bright
superiority. and large screen for impress-
De Beers now has forty stores ing video capabilities and a 3.2
around the world including Lon- megapixel camera.
don, Paris, New York, Dubai, and
Istanbul and are slated to soon
open in Manama and Jeddah.

The Talisman Suntime Riviere, Sony Ericsson’s new


an amazing creation made of line-up of mobiles
357 perfectly cut diamonds, is
the latest grand addition to the Sony Ericsson launched a range
De Beers line of watches. It of mobiles in the last quarter
weighs a total of 51.31 carats, of 2008 to meet the growing
and is designed with carefully need for stylish and practical
chosen baguette diamonds that phones. With the W902 and
have been re-cut to fit exactly. the W595 Walkman models
The watch is created with a users no longer need to
unique 18K white gold case of make a choice between
43 mm diameter, set with 24 music, media and imag-
white and 12 black baguettes, ing. Both handsets enable
a brass-rhodium plated dial and you to play your favourite
a scratch-resistant sapphire tunes, snap those pre-
protects the face of the watch. cious moments or watch
This work of art has a Medal that crystal clear video on
consists of 80 white, 16 black the bright, scratch-
and 1 rough diamonds and the resistant QVGA
bracelet is decorated with 192 screens.
white, 32 black and 1 signa- Also, both phones
ture diamonds on the crown. have a fantastic
The piece is complete with 18K added feature that
white gold, adjustable, deploy- lets you upload
able buckle. Apart from being a videos or down-
piece of beauty, the Talisman is load your favou-
also a technological gem; using rite clips from
the expertise of the best watch YouTube. Sony
manufacturers in Switzerland, Ericsson has

Indian Retailer 34 www.indian-retailer.com


The Doha Declaration

On 10th November, 2008, the


Third Annual Conference of
Hawkamah – the Institute of
Corporate Governance, issued
the Doha Declaration, calling
for the implementation of more
robust corporate governance
frameworks to maintain the
stability and soundness of the
region’s financial system in the
face of the global financial crisis.
Dr.Nasser Al Saidi
Signed by policy makers,
regulators, international institu-
tions and business leaders from The Doha Declaration empha- The Doha Declaration highlight-
across the region and interna- sized the importance of effective ed that Islamic finance, which
tionally, the Doha Declaration creditor rights and insolvency has been resilient to the financial
made extensive policy recom- systems and the development crisis, is a viable complement to
mendations to address the of strong rescue and restruc- conventional financing with its
financial crisis both globally and turing frameworks. These equity risk sharing and ethical
in the MENA region. frameworks, it said, should be investment principles. It called
urgently modernized to facilitate on Islamic finance institutions to
Dr. Nasser Al Saidi, Executive the rescue and restructuring of continue improving their corpo-
Director of Hawkamah said: viable enterprises facing tempo- rate governance by focusing on
“Corporate governance is critical rary and potential distress. The the disclosure rights of Invest-
to the region’s ability to maintain Declaration also stressed on the ment Account Holders, the role
stable financial systems and governance and accountability of of Shari’a boards, and their
minimize the contagion effects regulators. integration within the corporate
of the global financial crisis. The governance structure of the
MENA markets stand to gain by Another key recommendation institution.
implementing and developing was to extend the regulatory and
institutions and corporate gov- supervisory powers of central The Doha Declaration also un-
ernance frameworks that bolster banks to investment banking and derlined the critical importance
investor trust through improved related non-bank financial inter- of good corporate governance
disclosure and transparency mediation. The declaration also for State and Family-Owned en-
standards and rule of law. We urged a review of regulations terprises in the region, especially
cannot afford to ignore corpo- governing credit rating agencies to deal with potential issues
rate governance; too much is at as well as reform to address the of succession of family-owned
stake in our stock markets and shortcomings of risk manage- enterprises and preservation and
credit markets.” ment frameworks. protection of wealth.

Indian Retailer 35 www.indian-retailer.com


Bits that Bite
Selling it down the Nile search, showed retail crime in against 15 hours per week
the UK topping £4 billion ($5.5 spent watching TV. The study
Income from tourism, which billion), in 2008, making UK of- highlights that the internet is no
accounts for about 6 percent of ficially the worst nation in Europe longer only a medium for email-
Egypt’s gross domestic prod- for shoplifting and third in the ing, surfing or shopping, it is fast
uct, is expected to see a rise world behind global powerhous- becoming the primary source of
in financial year 2008 to reach es the USA and Japan. entertainment for this age group.
$11.6 billion, 23 percent up on
2007, according to an official According to the Global Retail Among the 16-30 year olds
in the Tourism ministry quoting Theft Barometer - the largest surveyed, 40 percent claimed to
Tourism Minister Zoheir Garrana. report of its kind in the world, watch TV programs on the inter-
The number of visitors is also surveying 920 of the leading net at least once a week while
expected to jump to 13 million, international retailers - retail theft 56 percent visited YouTube once
19 percent more than in 2007. or ‘shrinkage’ (stock loss from a week and nearly 21 percent
The figures suggest a slight fall crime and wastage) has posed a visited the site on a daily basis.
in rate of growth for the Egyptian serious problem for the UK over However, it is social media that
Tourism industry from fiscal year the last 12 months, with £4 bil- dominates online activity among
2007/8, which ended in June lion worth of stock going missing this age group with nearly 45
2008, when the number of visi- during this period alone. The oth- percent of all time online spent
tors rose 25 percent and income er side to this bad news is that it on social networks.
from tourism rose 32 percent. is worse on the already hard-
The ministry said the lower pressed consumers who end up The good news for marketing
figures were in line with weaker bearing the brunt of this ‘social professionals is that whilst online
global economic climate translat- scourge’ ¬– the equivalent of this market is incredibly willing to
ing into fewer tourists. criminals taxing every household engage with brands with nearly
in Britain by approximately £189 62 percent welcoming online
However, reports from invest- a year. advertising that is targeted at
ment bank EFG-Hermes said their interest and as long as they
their forecast for tourist arrivals As economic scene darkens it are rewarded in terms of value.
in 2008 was more conservative seems light-fingered customers And value to this age bracket
and was expected to reach only and dishonest employees have can mean anything from enter-
12.1 million. The bank said that been looking to unlawful means taining content, online tools that
the official prediction of 19 per- in a bid to get their hands on the enhance their lifestyle activities
cent growth to 13 million also did most desirable goods. The most to exclusive information and
not match official monthly figures frequently stolen products, in access that gives them social
released during 2007, which order, were alcohol, cosmetics currency.
showed a cumulative total that and skincare, women’s-wear,
year of 9.736 million visitors. perfumes and fine fragrances, This age group was also found
When contacted about the razor blades, DVDs and games, to communicate with one anoth-
discrepancy the ministry official, children’s-wear, accessories, er about brands and spreading
who asked not to be named, said designer-wear and, fish. the brands’ message by posting
the correct figure for 2007 was in comments and reviews about
products and services. The
fact 11.2 million. Online brand engage- internet has taken importance of
ment on the rise among word-of-mouth to the next level
UK the retail crime with consumers basing more
16-30 year olds
capital of Europe and more of their purchase deci-
sions on information gathered
Highlighting the hidden impact Research study into the digital from their peers.
that the credit crunch is having behaviors of 16-30 year olds, in
on High Street, the annual study the UK found that that this age In this milieu, it is imperative
carried out for security solutions group is spending a vast amount that brands try to steer positive
providers, Checkpoint Systems, of their spare time online (an conversations through offering
by the Centre for Retail Re- average of 19 hours per week) real value.

Indian Retailer 36 www.indian-retailer.com