The founder and CEO of GoFrugal Technologies, Kumar Vembu was interviewed in The Business Line, the business newspaper from the Hindu group. Kumar had the discussion and interview with the Deputy Editor of the newspaper. The entire transcription is available in YouTube in the following Link :

http://www.youtube.com/results?search_query=kumar+vembu&page=1

In a free-wheeling interview Kumar discusses and shares his insights on various topics ranging from why he choose to be in a product company, on IT service companies, slowdown in kumbakonam, about his dream , about his teacher and of course a lot about the retail.
Links for few specific topics on Retail is given below :

1. http://www.youtube.com/watch?v=iEiczLhrElM

Here Kumar talks about “In which segments of Retail we can find greater technolgy absorption” ?

2. http://www.youtube.com/watch?v=3axmXrQnHXM

A SWOT analysis on organised and unorganised retail.
3.  http://www.youtube.com/watch?v=-Mc_Ejz8w2c

Here, Kumar discusses about the Best practices of traditional retailer that are worth emulating.

4.http://www.youtube.com/watch?v=4mr-mvqXls8

On how the average Indian retailer is connected.

5. http://www.youtube.com/watch?v=ElrJvsN2TNE

On the Mobile applications in retail.

Hope you find it useful !

- Sivakumar

So, what constitutes our friendly neighbourhood Retail ? In a typical neighborhood of about 100 families or above what all retail stores/services we can find ? We can the define the criteria for the “neighborhood” as - it should be in a walkable distance - a 10 year old kid in the family or the eldest grandma/grandpa in the family should be able to walk and buy the things.

Basic Necessities

A departmental store/Kirana shop, a pharmacy store and a vegetable shop are the bare necessities. Sometimes the vegetable shop forms part of the departmental store itself but mostly available as a separate entity. Though the above shops take tele-order and do home delivery, mostly the customer walks-in and purchases the stuff.

Also included in the basic necessity comes the milk vendor and the newspaper vendor. Both these services are home delivered on a fixed-monthly-fee basis. For most of the homes the daily morning chore starts with the above two - a dose of the daily news and a hot cup of coffee.

Add-ons

Along with the above, a bakery, a sweet and savories shop, a chicken/mutton/fish stall, an exclusive fruit shop, a mini restaurant/hotel completes the food/grocery requirements of the neighborhood. Typically these shops may be little farther (within 1to 1.5 kms) and service two or three neighborhood clusters. They may also prefer a fair bit of floating population (adjacent to a bus stop, main road or a junction)

A mini kirana shop (”petti” kadai or a Paan shop equivalent) which mostly stocks cigarettes & related stuff and a tea/coffee shop (standalone or part of the mini kirana shop) are also the necessities in the above areas.

A fancy store and a stationary store to meet the school going kids requirement are the other two shops you can find. They sell the typical bangles, bindhi, toys, greeting card, school maps, note books etc. Some of these shops also sell mobile SIM cards or one can find a exclusive Mobile stores which sells both the handsets and SIM card of all brands of SIM. (Even 10 years before it would have been hard to imagine a SIM card selling store in your neighborhood !!)

Already I can count 16 different types of stores/services to be offered.

Services

A dhobi(Laundry) service, barber shop, tailor shop, cycle service centre, two wheeler repair/service centre, flour-mill are the typical services which you can find in the vicinity of the neighborhood. While these services mostly expects the customer to walk-in and get served, other service providers like electrician, plumber, electronics services engineer are available on call.

Other Stores

Having the reach for three or four neighborhood clusters, these stores typically serve for a much larger audience. Some of these stores are electrical spare parts, general hardware, electronics items, automobile spare parts, paint shops, furniture store, sports shop, photo studio/development centre, household articles like vessels etc. In the food and grocery segment you can find a coffee powder vending shop, rice vending shop and oil vending shop. In the upmarket areas a florist is the recent addition one can see.

The major segments that are missing in the above list are – textiles & garments, footwear, luggage items and Jewellery. Though we can find stores of these type in our neighbourhood, typically the patronage for these segments is comparatively low. Guess most of the customers still prefer the large format stores present in the commercial areas over that of the neighborhood stores (at least for these segments).

On a further micro level you can find transient stores which specialize in only one product and usually sell at a particular time only – say a flower vendor who sells only flowers near a temple only during evening, a tamarind merchant hawking the tamarind on his cycle only during morning and so on.

We can also add a plethora of utility services to the above list – Photocopy services, Internet browsing centre, Courier services, Tours & Travel services, Tuition centres, Creches, …..etc etc.

As we can see there are almost 50 different types of retail products and services (excluding the govt/PSU based service like banks, Post offices ..) serving the consumer. It will be impossible for a single or several big players to dominate such a market. It will always be the story of both organized and unorganized retail co-existing together and as usual the Customer will be the king.

Sivakumar

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

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

Prof. Vaidyanathan of IIM, Bangalore wrote about Retail revolution — Trading away the livelihood of millions? in the The Hindu Business Line on March 8, 2007

While I agree that retailers should be encouraged to use technology including telecom and internet, I donot think the livelihood of small and medium retailers are threatened in anyway. I feel the current investments in organized retail will help improve the quality of life of people involved in retail trade

As part of my job, I read various research reports, articles and views on the growth and opportunity in retail. While numbers vary between these reports, we can still use them to see how unorganized retail will still have significant share in the retail business. Here are some numbers that I have seen in the last few months

• India’s retail trade is about Rs.10 trillion in 2006
• Organized retail share is about 3% [Rs. 0.3 trillion]. This means unorganized retail volume is Rs.9.7 trillion
• Retail trade volume recording about 15-20% year on year growth & is expected to be about Rs.35 trillion in 2015
• Organized retail is expected to have 15% share of the market in 2015
• The above means, organized retail will be about Rs.5 trillion & unorganized retail is about Rs.30 trillion

Basically, we can infer that unorganized retail volume is set to grow from Rs.9.7 trillion today to Rs.30 trillion in 2015. This is a huge growth and it offers significant opportunity for all

As Indian Consumers get more purchasing power, there is opportunity for everyone here. From the tiny trader to the global retail giant, everyone stands to benefit due to India’s growth. The fact that retail is the 2nd or 3rd largest employer means that more people stand to benefit due to investments in retail

I hope we start looking at these investments as an expansion of the overall market rather than what is one’s share in the market

So, the Kirana shop owner should concentrate on his customers and his business instead of wasting his time fighting investment in retail. At the end of the day, the new investments offers a win-win for the retail trader, people employed by retail trade and to the consumer.
– Kumar Vembu