Supermarkets Make a Tryst with Record Sales on Independence Day

Top retail chains posted their highestever weekly sales in the six days to Independence Day, when heavy discount offers lured buyers to splurge on daily household products, apparels and consumer durables.

Retailers such as Future Group, Reliance Retail, Bharti Retail, RPG Group’s Spencer and K Raheja Corp’s HyperCITY — helped by active participation of several consumer product companies — offered deep discounts across product categories to push volumes at a time when consumer spending is slowing and there are fears of poor monsoon rains impacting demand.
“Consumers are looking at savings more than ever before,” said Rakesh Biyani, joint MD of the country’s largest retailer, Future Group, whose 164 Big Bazaar outlets across some 90 cities saw more than 8.1 million visitors during the week ended August 15. “We have been working to integrate our supply chain to bring down prices as far as possible.”
Several suppliers, including Coca-Cola, Britannia and Procter & Gamble, participated in special Independence week deals, helping retailers to offer higher discounts than before.
Darshana Shah, business head for marketing at HyperCITY, a hypermarket format run by Shoppers Stop, said increased vendor participation as well as entire malls going for sales helped pull in the crowds. “The sale was definitely better this year as we had stronger and bigger deals since market sentiment was soft,” she said. HyperCITY also increased its spend on marketing this year at around 2% of overall sales. During the week, Big Bazaar outlets sold more than 1.4 lakh packs of a combination of 5 kg of rice and sugar each with 5 litre of edible oil, and more than 1,500 tonnes of detergent. LED TVs, mixer-grinders and induction cookers were among the other top sellers at Big Bazaar, officials said.
Spencer’s Retail said its same-store sales increased 24% year-on-year during August 11-15, driven by beverages, health and beauty, bakery products and staples that saw over 30% sales growth. Sales of FMCG household products grew over 50% while liquor sales rose 30%, Sanjay Gupta, executive director (marketing & business development) at Spencer’s Retail, said.
Such discounting, however, reflects the escalating pressure on retailers, whose sales are slowing during non-discounted periods. “Because of the slowdown sentiment, consumers have been withholding purchases, so companies are trying to push volumes through discount seasons at retail chains,” said Mayank Shah, group product manager at Parle Products, the country’s largest biscuit maker.
But those volumes come at the cost of bottom lines, he added. Earlier this month, credit rating agency Fitch said same-store sales growth of retailers slipped across lifestyle and value-based formats in the quarter ended June, adding that it expects retailers to combat slowing sales by offering discounts.
“However, this may lead to an erosion of gross margins,” Fitch said, while revising the outlook for the Indian retail sector to negative from stable for the first half of this fiscal due to sustained decline in the discretionary spending ability. A slew of factors such as economic slowdown, deepening crisis in Europe, high food and fuel prices has impacted consumer sentiment in the country, slowing sales of everything from cars to carpets.
Some retailers use inflation as a marketing tool. A case in point is Bharti Retail’s “freedom from inflation” campaign at Easyday stores, which help people fight inflation by providing quality merchandise at low prices. Retailers such as Reliance Retail used the week to increase their customer base. Reliance introduced discount offers such as ‘double the difference’ price guarantees across various product categories.


Booming China retail market evolving

Booming China retail market evolving

Booming China retail market evolving 

Foreign and local companies try different strategies to keep growing

China’s retail market is growing exponentially. Accounting for roughly 14 percent of the economy, how retailing progresses is gravely important to the entire economy, and to China’s growth prospects. It is equally important to China’s trading partners.

No economy can reach fully-developed status, including a robust consumption-based economy, without a fully-developed, modern retail and distribution system. The innovation and productivity of the retailing sector affect the manufacturing, agriculture and services sectors more powerfully than does any other industry, save perhaps banking.

Four important trends have dominated Chinese retailing over the past dozen years. The first is a massive and highly successful influx of sophisticated foreign retailers creating extreme competition. By 2005, more than 35 of the world’s top 50 were in China. Some, such as Ikea, are moving cautiously. But most are racing. Carrefour forecasts 25 new hypermarkets annually and Tesco 10 a year for the foreseeable future. Wal-Mart’s billion-dollar investment in Trust-Mart (35 percent stake) and purchase into Yihaodian – one of China’s leading e-commerce websites – demonstrates its intentions.

Management consultant A.T. Kearney predicts double-digit retail growth for the foreseeable future. Domestic players still dominate. Gome Electrical, for instance, China’s leader in household appliances expanded stores by 20 percent, increasingly in smaller cities. Major international retailers are also expanding rapidly, aiming at smaller cities. Metro Group has plans for 100 total outlets by 2015. With 900 million Chinese yet to move into the ranks of the middle class, China will be a magnet for global retail giants for years to come.

The second trend is the substantial competition-induced efficiency gains. Successful technology applications to reduce costs and improve performance are critical where competition leaves paper-thin margins. Some are simple: new lighting, heating and ventilation technologies to reduce energy costs. Others are more fundamental: regional distribution hubs, computer-based stocking, and cold chains critical to modern food retailing. Food and product safety regulations, and middle-class preferences, require more modern distribution technology. It also makes higher-end Chinese goods more attractive in US and Europe when they more closely meet the destination standards.

Recent studies find that international retailers in China focus primarily on brand image. Chinese firms focus more intently on information and communication technology capability. More than just online sales, this means focusing on computer-based business process efficiencies.Research at the MIT Sloan School of Management finds that every dollar of real estate, plant or ordinary equipment a company owns in the US, on average returns one more dollar of market value. Better computer-enabled business or organizational practices, however, add about $10, a total of $2 trillion in the US. ICT-based business process improvement is serious business.

As firms push to reach the large cities of the western interior – what some call the last great industrial adventure – highly efficient logistics structures and processes are critical. These form the backbone of inventory management. World-class management practices in the large retail sector will have profound value-added effects for China; and inevitable productivity spillover into other sectors.

Increasingly sophisticated local retailers make China a tough market for foreign companies. China Resource Vanguard in Shenzhen and Yonghui in Fujian province, for instance, use local knowledge and savvy management teams to grow rapidly despite the entry of Wal-Mart and Carrefour. Wahaha and Tingyi have grabbed market space from Coca-Cola and Pepsi. Detergent producers Nice Group and Guangzhou Liby Enterprise Group have captured about 35 percent of the detergent market, and Haier, the No 4 refrigerator producer in the world, is dominating its market.

The fruits of this competition include aggressive pricing and customer service, more unconditional refunds, nicer shopping environments, more attention to quality and locality preferences of consumers, and product/service flexibility that have improved the overall consumer experience.

The third is the rise of a coherent regulatory structure. Over the last several years, important regulations on the retail sector have been issued, including new labor laws, strict food safety and quality standards, and environmental protection rules. Since the Sanlu milk powder scandal in 2008, central and local governments have begun to pay much more attention to food safety and quality control.

In response, firms have expanded quality control efforts over their own products and those in their supply chains. Retailers increasingly require suppliers to pass formal certification of food safety and quality improvement systems (such as QS and ISO 9001). Standardized international marketing strategies on quality, value and service have helped Chinese retailers build a stronger brand image. Consumers, who often pay extra for foreign brands to get the quality and safety assurance, can increasingly find that comfort with Chinese brands. These brands will become more attractive to foreign markets as well.

Partly as result of new labor laws and a stronger regulatory environment, wage increases of up to 40 percent, more stringent compliance requirements (particularly in the areas of food security and sustainable development), and higher taxes have led to significantly higher costs. These costs are part of a modern, world-class retail sector.

The fourth is the shift to online retailing, or e-commerce. China is expected to have 700 million Internet users by 2015 – as many as in the US, India, Japan, Russia, and Indonesia combined. Last year, Chinese consumers spent 1.9 billion hours online. Seniors and rural residents are new to the Internet but are rapidly becoming active cyber-citizens.

What are they doing? Increasingly it’s shopping. Shopping is the fourth-most-popular online activity in China, and the fastest growing – 36 percent of Chinese Internet users shop, and this is expected to soon reach 50 percent. The Boston Consulting Group reports that China has 193 million online shoppers – more than the US, and five times that of the UK. By 2015, China’s e-commerce sales should match the US, and could capture 8 percent of total Chinese retail sales.

Simply put, companies cannot have a major presence in China without being online, not just to sell, but also to engage with customers where they spend so much of their time. If they are not buying, they are researching. A quarter of consumers research online before purchasing. Another 29 percent research and buy online.

Taobao’s C2C site, for example, offers more than 500 million products by more than 5 million merchants, with 50,000 sales per minute. Unlike eBay, most products sold online in China are new. Major retailers are moving online, such as Wal-Mart via Yihaodian, Gome through

Chinese companies appear to be more aggressive than their foreign rivals in embracing Internet channels. As foreign firms focus on brand loyalty, surveys suggest Chinese firms see ICT as the primary tool to win consumers, especially the important 20-40 year olds. More than 40 percent of foreign competitors had no plans to focus on online sales while 93 percent of Chinese firms already are, or soon plan to be, online.


Coca-Cola uses solar cooler to push rural sales

Sales of soft drinks have long been stymied by erratic power supply, but an environment friendly innovation developed by Coca-Cola India now promises to change all that. Armed with the new product, Coca-Cola India plans to offer an entire range of its chilled soft drink products to markets deep in the hinterland, even where there is no electricity. 

‘eKOCool’, a chest cooler, developed internally by the Indian arm of the Atlanta based multinational, operates exclusively through solar energy, with no other electricity source required to operate it. It has a capacity to store two crates, which contains 48 glass bottles of 300ml each. That’s not all. It can even charge your mobile phone and light up your home.

The innovation gives Coca-Cola a competitive edge to tap new rural markets and ramp up sales of a product which is always best served chilled. Introduced in select rural markets earlier this summer, it has already improved sales dramatically and company officials expect orders of the product from other countries in the system as well.

Says Asim Parekh, VP technical, Coca Cola India: “The eKOCool is an outcome of our technical team’s persistence to use renewable energy for operating cooling equipment. The rural markets pose challenges in expansion as a huge swathe of the rural belt is not yet covered by the power grid hence remains without electricity or has low power. This challenge has now been overcome by Coca-Cola’s new innovation, which will give us a competitive edge as well as a first mover advantage.”

The product loaded into the cooler early morning or previous night is ready to be served chilled in the morning. The cooling equipment brings benefits to the retailer too in terms of saving on the electricity bill and cost of ice.

A pilot project under which 20 such coolers were placed in rural areas near Agra (Uttar Pradesh) has been successfully completed this summer, and has already shown results. Sales from these outlets have jumped nearly five times, a company official said.

Sakhidevi, who operates a general store in Sarvatpur near Agra, says: “We don’t have electricity in the village for hours. Since I installed the solar cooler, my sales have gone up.”

The journey to develop the solar cooler started in May 2009, when Coca Cola India CEO Atul Singh was visiting a rural market in UP and found that many outlets stocking the company’s products did not have any chilling equipment. The outlets were operating out of ice boxes with little ice, since either coolers or electricity were not available.

Says Sunil Gulati, GM Technical, who developed the design; “After evaluating various options, we chose solar energy to eliminate the need to depend on grid-based electricity completely, and to be environment friendly.”

Coca Cola launches mobile marketing campaign

Coca Cola launches mobile marketing campaign

Coca-Cola Great Britain has launched a promotion to give away 50p free mobile credit with every purchase of a Fanta, Dr Pepper and Sprite drink.

The campaign which is aimed at teenagers will run for one month. Cans and bottles carry a code which can be entered at Thereafter, customers can enter subsequent codes online or text the code to 85888.

Credit will be added to the prepay or contract customer’s account within 48 hours of redemption and is available on all the major networks. Coca-Cola Great Britain marketing director Cathryn Sleight said: “We are always looking at innovative ways to engage with our teen consumers. We know mobiles are integral to their lives and we wanted to bring them both value and a point of difference that will fully engage them with the promotion.”

Stumping for Shelf Space

CRAIG MARGULIES is hoping to strike it rich in the grab-and-go beverage cases on the Upper East Side of Manhattan.

A 36-year-old with a master’s degree in industrial psychology, Mr. Margulies left a corporate career to become a sales representative for Guru energy drinks, a new company started by a bunch of old Canadian high school pals.
It might seem like a strange career switch, until you consider that the investors in the last beverage sensation in Manhattan — Glacéau, the makers of Vitaminwater — split $4.1 billion last year after Coca-Cola bought it.
“Bust my hump and get some equity in the company,” Mr. Margulies explained. “That’s what we are all here for.”
 Guru, which is already selling in Canada, is trying to crack the New York market by zipping around the city in electric minicars painted like Guru cans and hiring cheerful, attractive young women to offer samples at convenience stores, health clubs, supermarkets and delis. 

But most of all, it is relying on the skills of salesmen like Mr. Margulies, who in three months on the job has received a quick education on how to win coveted shelf space in beverage cases around the city. It requires a gift for schmoozing, a comfortable pair of shoes and armorlike skin.
The nonalcoholic beverage market, in New York City and elsewhere, is tough. For decades, it was dominated by the soft-drink giants Coke and Pepsi, with a few other brands scrambling for the leftovers. But the industry has radically changed in the last decade, as consumers have turned away from soft drinks amid concerns about their impact on health. Since 1998, Americans have been drinking about 33 fewer cans of soda per person per year, according to Beverage Digest, a trade magazine. 
An enormous variety of drinks, a hundred or more even in small delis, have picked up the slack. Bottled water and Gatorade are big sellers, but there’s also a rainbow of teas, flavored waters, sparkling waters, carbonated juices and yogurt smoothies. And energy drinks, where Guru believes it has found an opening offering products with all natural and organic ingredients.
The explosion of new beverages has been marked by stories of regular folks who started small and made it big with a new drink that they hustled to local stores. Three New York friends created Snapple, which was sold to Quaker Oats Company in 1994 for $1.7 billion. Arizona tea was mixed up by a couple of Brooklynites who first tried flavored seltzer and malt liquor.
Glacéau’s Vitaminwater was the brainchild of J. Darius Bikoff, who insisted on selling his vitamin-spiked flavored water beside regular bottled water rather than in the soda section. 
The four founders of Guru Beverage (Images) have a pretty good story, too. But the ending remains far from certain. While creating a drink in a blender and finding a bottler is relatively easy and inexpensive, making it a successful brand is difficult.  
“Frankly, some of it is luck,” said Gary Hemphill, managing director of the Beverage Marketing Corporation. “Being at the right place with the right product at the right time.” 
Guru’s founders met in high school in Montreal, at Collège Jean-de-Brébeuf, and became close as their paths crossed again in later years. Eric Graveline became an investment banker and moved to New York, where he roomed with François Bazinet, a fashion model. When Mr. Bazinet moved back to Montreal, he and Joseph Zakher opened several nightclubs. Raymond Jolicoeur worked in Canada for several food and beverage companies, including Kraft and Allied Domecq, now part of Pernod Ricard. (A fifth partner, Eric Tomeo, joined later.) 
In the late 1990s, Mr. Bazinet noticed energy drinks for sale in his travels in Europe and Japan and suggested to Mr. Jolicoeur that they introduce one in Canada. They began experimenting with drinks in Mr. Jolicoeur’s Montreal apartment, mixing in botanical ingredients, like ginseng and guarana, that Mr. Bazinet had discovered during his travels. The inspiration for the name came from an article on Bill Gates, which described him as “the guru of technology.” 
“It was like, wow, you know, this should be the guru of all drinks, as strong as we can make it, as healthy as we can make it,” Mr. Bazinet said. Bankrolled by the founders’ savings accounts, the company sold its first can of Guru at a small deli in Montreal in 2000. By the end of the first year of production, nearly one million cans had been sold, mostly in Montreal. 
By 2005, Guru was being sold throughout Canada, and the company was looking to sell in the United States. New York City was selected because it was the largest market, it was fairly similar to Montreal in terms of its many independent retailers, and Mr. Graveline was living there and preparing to retire from Wall Street. 
“If it doesn’t make it there, we would rather know up front rather than later,” Mr. Jolicoeur said. “But if it does make it there, we would feel like we can make it in other cities, not just in America but elsewhere.” He said it was important for the company to prove to itself “that the Guru concept has legs.” 
Guru set up an office in the foyer of a two-bedroom apartment on Wall Street that doubles as Mr. Jolicoeur’s residence and a crash pad for the other partners when they visit from Montreal. Mr. Jolicoeur shares the apartment with a cat named Chloe. “It’s the good-luck cat,” he said, explaining that he found Chloe abandoned on a highway around the time Guru was being introduced in Canada. 
The company’s strategy in New York was similar to what worked in Montreal: trying to get the product into as many retail locations and company cafeterias as possible in a small area to create buzz, and then expanding. 
That kind of small-scale approach works to a point. But eventually you need to have a good distributor. 
In New York, apart from the soda companies, much of that business is controlled by one company, Big Geyser, a Queens operation that has been crucial to the New York success of Vitaminwater and of Honest Teas, a company founded in 1998 by Seth Goldman with a business professor at Yale University. This month, Coca-Cola bought a 40 percent stake in the company for about $43 million. 
When he started, Mr. Goldman was driving cases of his tea around in a van, trying to persuade retail stores to try it. He realized that to gain any scale he needed a distributor who had a fleet of trucks and well-known relationships with retailers. 
“You go into a store, and you’re asking a guy to take a brand on,” Mr. Goldman said. “Who are you? How are you going to get in there?” But if you are connected with an established distributor, he said, the relationship is already reputable. “It’s where they say, ‘Here’s my friend Seth.’ ” Guru chose Exclusive Beverage as its distributor, hoping Guru would receive more attention with a smaller company than it would have with Big Geyser. Besides, Big Geyser was the distributor for Vitaminenergy, Glacéau’s energy drink product and a competitor. 
Steve Gress, Exclusive’s president, said his portfolio consisted of small start-ups like Guru. Asked what makes a hit, he said, “I wish I knew because I’d be a lot better off.” 
Mr. Gress credited Guru as being “very hands-on” and willing to listen to advice on how to succeed in New York. “You need the company support,” he said. “You need to get it in people’s hands and get them to try it.” 
The company started selling its drinks downtown last July. It has advertised in The Village Voice and Time Out New York, sponsored art and fashion shows, and scooted around the city in its electric cars to promote the idea that the car and Guru offer “clean energy.” An 8-ounce can of Guru sells for $2.29 to $2.49, and a 16-ounce can fetches $2.79 to $3.50. 
On a recent Friday just before noon, the Guru cars pulled up to the Dean & DeLuca store in SoHo to offer samples. At the store’s direction, the Guru team set up a table near the fish counter, not ideal, and an off-duty actress, Jesse Barton, offered plastic cups of Guru. 
The reviews were mixed.  “It kind of tastes like if you can imagine orange soda but without the bubbles, without too much carbonation,” said Ian Yellowday. “It’s really good.” 
Jeff Negrin, another sampler, said that Guru tasted better than other energy drinks, which he doesn’t like. And he also liked that it wasn’t carbonated. 
But his friend David Kessler questioned whether Guru was distinctive enough to rise above the growing pack of beverage choices. “We’re marketing guys,” Mr. Kessler explained. “I don’t know if it’s differentiated enough to get my attention to say it’s really unique and I’ve got to have it.” 
Mr. Kessler’s comments crystallize the challenge for Guru’s salesmen, who must convince the managers of company cafeterias and health clubs, vitamin stores and bodegas that they must have Guru on their shelves. “There are so many drinks out there,” Mr. Margulies said. “The only niche we have to play off is that it’s an all-natural product.” 
Yet Mr. Margulies exhibits considerable skill as a salesman. In a morning of sales pitches, he praises Guru’s natural ingredients, taste, can design and Guru name, which he says particularly resonates with people of Indian descent. “The product is the product, but if you don’t sell yourself it makes no difference,” said Mr. Margulies, a Long Island native who is newly married. “You’ve got to make an impression in the first five minutes or you are done.” 
Mr. Margulies tried to do just that with James Kong, the harried owner of the New Market Place deli on East 70th Street in Manhattan. Mr. Kong said he was inundated with sales pitches for new beverages and appeared to be in no mood for Mr. Margulies’s spiel. 
But Mr. Margulies persisted. He offered Mr. Kong a free case of Guru if he bought two, and promised to bring him a sample in a day or two. (Mr. Margulies, who walks his daily route and carries two cans for display, generally sends out samples during deliveries.) 
Mr. Kong said he would buy only one case and wanted the free one, too. He also wanted a taste from one of the two cans that Mr. Margulies carries. 
“Well, if it’s going to get me a sale, crack it open,” Mr. Margulies said. “I prefer Red Bull,” Mr. Kong said after a sip. “But this is not that bad.” 

Source : By ANDREW MARTIN / The New York Times

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