GoFrugal Blogs

1. When slowdown or recession happens, different markets for products and services are impacted differently. When the recession is over and there is overall growth in the economy, how each market is impacted can be broadly classified in to 3 categories
   - Markets Disappear / Vanish : A product or service is no longer needed and so demand for the same becomes non-existent. In this case, it is important for a company to recognize and invest resources on new markets / opportunities
   - Markets are depressed, but stabilize and stay depressed : Demands become less i.e. overall market size shrinks. But the market stabilizes at the lower levels. There is scope for consolidation in this case where the market leader walks away with the large chunk of the market. It is important to align investment, plans and expectations with the changed market scenario
   - Market grows during and / or after the recession & slowdown : It is important that the vendor invests on quality, brand building and reach to become the market leader to exploit the opportunity
So, there is no one rule for all. Each one must analyze where they are and prepare a plan that best suits them

2. Packed lunch or preached advice never last long. So, it is important that each one learns to listen, question, analyze and make their own judgment on which way the market is heading, what is their vision of the future state, how they perceive the company’s role in such future state and plan accordingly

3. Intense engagement is key to survive and win : It is important to listen to customer(s) and learn the market trend. Increase the resources / time spent with customers and spend more time understanding the customer need. Also, switch from sales based planning to demand based planning. In manufacturing and supply chain, it is proven now that companies that implemented demand planning dealt with much lower inventory related issues due to slow down. So, it is important that management measures the increase / decrease in leads, opportunities and deal pipeline to assess the market trend for the products and services. It is critical that people in sales and marketing talk the truth and gives a true picture on these so that management has great visibility on the demand and can do good demand planning. The management must also have an open mind to assess the opportunities and challenges in the market rather than be in a state of denial or hope against hope. Here it is important not to have a cast-in-stone plan but be very agile and flexible in reacting to changing market conditions

4. If you must do a layoff, please call a layoff a layoff. We see most of the major IT companies in India going extraordinary lengths to prove that they did not do a layoff and they just fired the poor performers. We must learn from the US companies on how to handle layoffs. It is important that we understand the psychology of the person being laid off and not make it harder for them to deal with the situation. When a layoff happens, especially in a small company, everyone including the management, other coworkers who keep their jobs and the laid off staff goes through lots of trauma and hardship. So, it is important to show sensitivity to the emotions and make sure the layoff is done in a very transparent and professional manner. It is also important that everyone looks at a layoff either as a condition forced by the market or by the incorrect planning of the management. In simple terms, management must be transparent in terms of sharing the challenges faced, the plans and make sure the entire company faces them as one team

5. Finally, have reasonable expectation and set reasonable expectation with everyone involved with your business from investors to employees, from partners to customers. Setting expectations that you cannot meet, you cannot meet in a profitable manner or those you cannot meet consistently in a sustained manner are the reasons for many of the problems we face

I am sure most of us know these.  I just want to reiterate these simple, what I consider 101 rules of engagement

– Kumar Vembu

It has been 2+ years since the last update here

The last 2 years were eventful for GoFrugal. We continued our momentum and have more than doubled our customer base in the last 2 years. We also made great progress in terms of the breadth and depth of our solutions
The verdict is out on the phase I of the battle between organized and unorganized retail. It is clearly the nimble and low-overhead small, unorganized retailer who won the first round. Clearly, the battle is not over yet and I am sure most organized retailers will come back with increased knowledge, the right tools and the correct economic model required to make it a success

The organized retailers are busy rationalizing their operations by renegotiating rentals and closing  down loss making stores, consolidating by acquiring and merging with others, raising finances to improve their balance sheets and to fund their cash flow needs. In contrast, the unorganized retailer is busy modernizing, upgrading and expanding their business

It is going to be interesting when the phase II of competition between organized and unorganized retail is played out. We have seen that both sides have learnt their lessons, both sides know the strengths and weaknesses of the other. Both recognize the opportunity that motivates them to stay in the game and both are aware of the challenges that face them. We are excited by the role technology can play in the profitable expansion and growth of the retail business, as the Indian population grows up

Are we at an inflection point in Indian retail where the organized retailers are forced to look inward and the unorganized ones are looking outward now ?
With so many changes being adopted in the process, technology and the regulatory areas, we see a whole world of opportunity in front of us
– Kumar Vembu

With increasing real estate prices / rent for retail space and ever increasing competition, it is getting more and more important to plan your retail business well. The location plays a very important role but at what cost, what is the revenue per square foot required for break-even and for profitable operations. Given the gross margin in your business and the average ticket [bill value] size for your type of business, what are the number of sales transactions to be done each day, what is the footfall required to achieve the sales target etc. are becoming very critical

In addition to these, the nature of shopping experience you wish to provide your customers determine the investment required [interior design is a major factor] for your business and the operating cost [number of customer service / sales agents] for your business. It is important that from the store design to the staff in the shop are determined based on the footfall, average ticket size, number of customers handled each day. It is also important to plan the number of checkout counters, the checkout process etc. are also a designed to suit your needs

To make the job of business planning and measurement easier, GoFrugal has launched a retail business planner and a retail health meter

The purpose of the business planner is to provide the break-even average sales per day, target average sales per day for profitable operations based on the gross margin, investment and operating costs. The business planner is aimed at making sure the retailers earn enough to sustain and grow their business. It is important to understand that to grow their business, retailers need to invest on technology and shopping experience on a continuous basis and it is not enough to set the store up and earn a livelihood from the operations. As most successful retail business owners are planning to relaunch their operations, in tune with consumer preferences and taste, I am sure the retail business planner will help them fine tune their plans
The purpose of the retail health meter is to give a perspective on a retail operation to the retail business owner. The health meter shows the profitability and the net return on investment for the current revenue and investments. This will help retail business owners understand how their business is doing and what they have to do to improve their returns

We are planning to improve both the retail business planner and the retail health meter with more analysis and tips on setting up and growing retail businesses. We are also planning to support these analysis as part of our retail solutions

Please feel free to share your feedback and comments to improve our business planning and analysis tools

– Kumar Vembu