Business success depends upon Customer acquisitions
One of the common myths of ecommerce business is – You build a site on ecommerce platform, integrate with good UI/ UX and provide multiple payment options and load your entire assortment of merchandise..
Voila. You have a business at hand i.e. D2C business model.
There are multiple flaws associated with this thought and one of them is Customer Acquisition cost (CAC), 90% of the ecommerce sites that I have come across, their CAC is higher than their Gross Margins on the product which they sell on their site.
In commercial terms we call this as Burn rate & this is one of the prime reasons why ecommerce business is hard to breakeven.
CAC breakdown includes your advertising spends, your promotions spend, influencer marketing, CRM, backend support, conversions etc that is basically how much cost you spend to gain business from your customers.
Customer acquisition-Rent the Runway turns to Amazon fashion
The US D2C giant Rent the Runway has now partnered with Amazon Fashion to acquire new customers.
Rent the Runway which started as rental business has recently tweaked their business model i.e. to selling of secondhand garments and partnering with Amazon fashion (marketplace) can bring them instant recognition and sales from new set of customers.
Amazon customers can purchase items from Rent the Runway’s designer exclusives as well as secondhand garments retired from its rental service or may even subscribe to their rental services.
To learn more about Rent the Runway business, click here
The company has forged a number of partnerships with retailers and even a hotel chain to ease pick up and drop off of rented items and to fuel sales.
Rent the Runway has always remained agile with changing times and have adapted their business model couple of times as well.
Rental model to subscription model and now selling of secondhand garments.
Summary:
D2C business is highly competitive and any platform which masters the art of acquiring and retaining their customers will come out shinning as winner.
My book, “ How to be a shark salesman” contains actionable insights for professionals to excel in selling by adopting new technology or social selling approach in building & scaling businesses.
Do words like sandbox, Roblox, and Decentraland sound familiar to you?
There is a high probability that you would have heard or come across these words in tech seminars etc; Yes, they are all platforms in Metaverse which is a kind of virtual world that promises to change the world and the way we interact or engage with each other.
The retail sector is one of the oldest sectors known to mankind and is also not far behind this race to make its impact in the metaverse.
Brands like Balenciaga, Nike, Adidas, and now Forever 21 are the newest entrant to the meta world.
Myth- Why there is so much noise about Retail & Metaverse?
Piper Sandler’s research done in the US covering a 7100 Gen Z sample base brought out some astonishing facts.
It suggests that Gen Z isn’t into the metaverse.
The survey found that 26% of teens own a virtual reality device, but only 5% use it every day. Plus, just under half (48%) are either unsure of or not interested in the metaverse.
Despite the given above statistics, retailers, and brands are all pushing their initiatives into the Metaverse to catch the new audience and remain on top of the mind recall of millennials which are flocking to the meta platforms.
Roblox may be one of the biggest platforms with 58.8 million daily active users, a 24% increase from a year ago, according to its latest earnings report.The platform is resonating with younger users as well: As of Q2, 24.2 million daily active users were under the age of 13, according to Statista.
Metaverse Retail examples :
Brands like Gucci, Gap to Walmart, all have launched activations on Roblox, ranging from well-designed virtual pop-up stores to interactive games.
The mantra is “Be present wherever the future customers or future money spenders are present”.
How brands are using Metaverse?
Mainly brands and retailers are using metaverse for:
Interactive engagement
To build a community of engaged customers using games, and making the community earn virtual tokens which are then redeemed in physical stores.
Product trials and fashion forecasting (used by fashion brands)
Product testing of fashion apparel using environments like Roblox, where dressing up avatars is a fundamental part of the experience.
Brands keep track of how consumers are reacting to each avatar and its dresses and based on the popularity decide on the quantities of the garments to be procured from the factories.
learn about fintech tool BNPL (Buy now Pay later), click here.
What is ROI for Retail brands on metaverse?
In its most recent earnings report, the virtual world showed revenue was at $517.7 million, up 2% year over year.
But whether brands can monetize their campaigns, is yet to be seen.
According to McKinsey, the metaverse would have a $2 trillion to $2.6 trillion market impact on e-commerce.
This impact may be direct or indirect because of engagement on metaverse driving purchases or top-of-mind brand recall resulting in purchases.
If you are a Brand custodian and believe that putting your brand in the metaverse adds 5% to your brand’s profits, then let me be blunt here, that is not going to happen anytime sooner.
But yes, being present on Metaverse can increase your brand’s salience.
One of the key skills that would put you stand apart from the rest in the digital era is your Selling skills.
A must-have skill for any entrepreneur.
“If you cannot sell, you cannot build a business.”
Grab a copy of my new book, “How to be a shark salesman”.
Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, Brand Management, Retail Operations, Sales Management, and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry
The Dollar store boom in the United States during the economic downturn time is a known retail case study taught in several B-schools on how these convenience stores reinvented the retail landscape of the US retail sector with their convenience & discount centers that mushroomed in tier 2 and 3 cities and towns across the US.
How does a dollar store stay in business?
The promise the Dollar store concept made at the start was “convenience” and “low price- everything under a dollar” but with time they have evolved and introduced categories like food on the go, household, and gifts which are more impulsive in buying nature.
With times of inflation, the dollar store concept evolved to “5 Below stores” and attracted discount-seeking customers towards them.
According to US research, stores like Dollar Tree, Dollar General, and Family Dollar made up to 50% of the new store openings in 2021 in the united states.
Watch the video below
Taking cues from the retail comeback & success of the dollar store concepts, the Asian dollar concept stores like Miniso and Daiso has also made leeway into the US retail landscape.
These Asian brands have slightly tweaked their proposition by focusing on impulse purchases like snacks, toys, gimmick items and decorating doodads instead of household consumables & basics.
Core areas of differentiation from traditional dollar stores:
Miniso:
“$10 N’ Under” concept which keeps virtually all its merchandise below that pricing threshold.
Miniso’s strength lies in its original and localized designs. The retailer’s Miniso Design Academy is made up of designers from Finland, Denmark, Spain, Korea and other parts of the world and “it localizes its products by collaborating with renowned local IP license-holders to release co-branded products.”
Special emphasis on toys, housewares and home décor accessories. It has new convenient multipurpose gadgets (Bluetooth speakers, selfie sticks, selfie lamps, headphones and mobile accessories) assortment mix which is quite popular amongst millennials and GenZ.
It takes the treasure hunt experience that is a foundation of some dollar stores up several levels.
Miniso operates over 5000 stores over 100 countries across the globe.
To Learn why Ulta beauty loyalty program is a big hit on tiktok, click here.
Daiso:
Like China-based Miniso, Daiso has a very large international presence, with 3,600 stores in Japan and another 2,300 worldwide in 24 countries and regions.
It’s when it comes to pricing that Daiso (the name roughly translates to “big making”) takes a different tack. Its roots in Japan are as a “100-Yen” (72 cents at current exchange rates) store, although many prices are higher – sometimes doubled –, given the added costs of selling Japanese-made products overseas.
The merchandising line-up encompasses literally thousands of skus from apparel to food to home, beauty, kitchen and traditional Japanese paper and craft items. All of it has a classic Japanese design aesthetic.
USPs of Daiso
The mix is much more geared towards household products, toys, home accents and just about anything along those lines you want to buy; Impulse buying is the secret tool used.
As the retail sector is back to pre-pandemic levels and brand Daiso is reinventing itself and coming out “ Just another cheap or dollar store” concept to “Reasonably Priced” positioning.
Check out their new Singapore store at Jurong Point store also features the company’s two other brands – Standard Products, which describes itself as having an environmental focus and is making its debut in Singapore, and a newly-rebranded women’s line Threeppy.
Both the brands are re-building their retail concepts into Experiential centers which is clear from their assortment mix which as well now caters both sustainable products (under brand Standard Products) and Threeppy- which attracts Tiktok’s Genz fashionistas to try out various fashion accessories.
Challenges that dollar store concept /specialty retailer would face
Rising cost of logistics operations would force the retailers to increase their prices
Cost of Manpower in running the retail operations – every store need to become a profit centre in true sense.
Continuous evolution of assortment mix to cater to the ever changing preferences of the customers.
My Learning:
Retail Business is like flowing river, it continuously must evolve itself into new formats; experimentation is the key & staying close to your brand’s DNA ensures that the brand’s success. The dollar store concept holds a strong promise for growth specially in the times of economic challenges.
Toys R Us which shut down its last store in Jan2021 is now making a comeback as a shop-in-shop concept with retail giant Macy’s.
As Fox Business reports, the Toys “R” Us stores inside Macy’s range from between 1,000 square feet to 10,000 square feet in size, with larger flagship stores set to exist in Atlanta, Chicago, Honolulu, Houston, Los Angeles, Miami, New York, and San Francisco.
Last month, Glossier (a beauty etailer) announced its distribution partnership with Sephora. (read the article here)
Nordstrom recently teamed up with at-home fitness brand Tonal to put mini-storefronts into 40 of its stores in an effort to capitalize on the boom of interest in home fitness.
Walmart had earlier set up Disney SWAS stores as well.
What is SWAS model (shop within a shop) & why it is helping brand to reinvent their physical retail?
One of the most popular strategies right now is SWAS, also known as ‘store within a store’.
Store Within A Store, also known as SWAS, is an experiential retail strategy where retailers set aside floor space for partnering brands to set up shop.
This may be done as a permanent lease or as a temporary pop-up lease strategy to drive footfalls into the main departmental store or even malls.
Pop-up stores are very popular amongst luxury brands as well as they get an opportunity to showcase their new collection in a high upmarket commercial space without opening a permanent retail store.
SWAS concepts will often involve value-added offerings in addition to just selling products.
This includes tutorials/product demos, roundtable discussions, or product sampling campaigns that enhance the customer experience and drive a buzz around the brand and the host retailer.
Post-Pandemic, most retailers are trying to reinvent themselves and the SWAS model is an excellent strategy to expand & increase brand presence.
Benefits of SWAS model for the host retailer/ shop in shop benefits.
Adding newness into the store without adding burden on capex.
Partnering with known brands attracts new customers for the host retailer
Maximum utilization of the store space by adding complementing brands to the host retailer’s offerings.
Additional source of revenue generation for the host retailer.
Changes in consumers preferences driving growth of SWAS model
Today, consumers are just as likely to discover new products on social media as they are in-store.
Moreover, 81% of consumers say that they research a product online before purchasing it in any channel.
Why SWAS is a good model?
Having maxed out their online audience and facing increasing acquisition costs, many successful D2C brands have taken the plunge of bringing their products offline to participating retailers.
Product Visibility and product trials are the key to growth.
Retailers can provide unique value by offering experiences in-store that shoppers cannot get online.
Opportunity to touch & feel which is not applicable to the online shopping experience
To learn how a toy retailer could add million dollars to their profits, click here.
Physical stores are a crucial touchpoint – but not necessarily the point of purchase.
Today physical retailers are moving their mindset from Transactional relationships with their customers to “imparting experiences” to build brand loyalty.
Allowing customers to book an appointment via the website for a free makeover, lead the customer to experience not only the makeup brand but uplifts the probability of higher purchases in-store.
Focus of right merchandise mix.
SWAS model helps the brand to optimize their merchandise offering, instead of offering everything, it gives them an opportunity to curate the right product offering which is a more focused approach towards inventory planning.
If you have a young son or a daughter at your home who is fond of gaming whether it is Roblox or any other platforms, You will observe that they get involved and engaged in the gaming environment so much so that they start associating themselves with the characters of the game.
Whether the games are PUBG, Fortnite, league of legends, or Minecraft, one thing is common with all these games is the level of addiction and engagement to succeed to the next level.
Why do gamers get hooked on games?
The author Nir Ayal in his book “Hooked” explains this phenomenon as 4 step process.
a trigger to begin using the product,
an action to satisfy the trigger,
a variable reward for the action,
some type of investment that, ultimately, makes the product more valuable to the user.
How could toy retailers use 3D print phenomenon to their advantage?
If you observe the consumer’s behavior while they are hooked on their game on their pads or gaming console, you will discover the underlying need that exists inside each one of them and that is the need “ To be the part of the game” i.e. superhero fans want to be “immortalized in plastic” by seeing themselves become action figures.
Frankly speaking, during my younger days, I was a big fan and collector of GI JOE figurines and toys.
With the advent of tech tools, the dream for millions of gaming fans is coming to life.
Wherein they can create their own figurine or get “immortalized in plastic.”
Gadgets like 3D printers and facial 3D scanners (which are now available as an app as well) bring the dream of creating your own 3D printed figurine into reality.
Hasbro, the world’s biggest toy manufacturer is spearheading this revolution into the world of Hyper Personalisation for their customers.
The Hasbro Selfie Series, which employs 3D printing to let consumers create a collector-grade six-inch action figure in their likeness for $60.
The team at Hasbro will initially launch with costume designs from G.I. Joe, Ghostbusters, Power Rangers, and Marvel, as well as designs inspired by Star Wars heroes.
To make a figure, fans download the Hasbro Pulse app, scan their face, customize the action figure and hairstyle, and send their mock-ups to 3D printers.
Join my FB group of Retail Evangelists, using this link, click here.
The 3D print advantages to retailers:
Hyper Personalisation will lead to creating brand loyalty which will result in sales.
Building a community of gaming enthusiasts and creating a virality of your campaign without spending on celebrity endorsements.
An unique gifting proposition to gift someone you love their personalized figurine in the costume of their favorite gaming environment.
Want to learn more about Hyper Personalisation, click here.
Check out the video
Summary:
Indeed a long road ahead for our middle eastern toy retailers to look beyond trading.
They need to create experiential gaming hubs using the Hyper Personalisation model similar to the Hasbro selfie series.
If you are a retailer and in need of bespoke strategies to grow & scale your business then feel free to reach out to me.
email me riteshmohan786@gmail.com
My book, ― “How to become a shark salesman”, provides tricks, concepts and hacks to grow your business by learning the Art of selling & become a ―Shark in selling.
Walmart announced a 97% leap in online sales, and some physical stores saw earnings drop by as much as 256%.
Brands worldwide urgently shifted their efforts toward capturing consumer engagement in the digital world.
Retailers who are adaptative and agile quickly learned how to compete with eCommerce, instead of competing with the new buying preferences of the customers, they embraced e-commerce and the convenience of shopping it offered.
We call it the rise of Omnichannel retailing and
I call it “One Retail”.
Recently, one of the middle eastern homegrown eCommerce retailers 6thstreet.com announced that it shall be opening its first retail store in Dubai.
Retail fact 1- Do you know why eCommerce businesses are turning to physical retail?
There is one aspect of the “One Retail” business, that even eCommerce could not match or offer and that is “customer interaction or engagement as it happens in a physical store” & building of a bond by exercising exceptional customer service.
The actual value of the retail environment today is in the less tangible, value of emotional and experiential engagement that only physical retail can offer.
These softer elements are fundamental to establishing long-term consumer loyalty, brand reputation, differentiation, and, ultimately, sales.
Retail fact 2 – It all boils down to customer Experience.
Customer impact takes into consideration customer service, how engaging the store’s design, layout, and features are, and the overall experience that customers have when they visit the store.
A PWC report revealed that when brands offer a superior customer experience, their customers are seven times more likely to purchase from them than from their competitors.
Zappos, instead of focusing on shortening the call times of their call centers, encouraged their call center team to build customer relationships by understanding their buying preferences and knowing them better overall.
Retail is here to stay:
“Nike Live” concept: smaller-format, community-focused stores with tailored offerings and rewards based on local customer feedback and insights.
Even if the final purchase is made online, the importance of the memories, experiences, and emotions tied to the physical space cannot be underestimated in how they contribute to a final sale.
After all, 55% of shoppers visit a physical store before making a purchase online. This is “brand impact”—the role of the physical store in making customers feel more loyal to the brand.
Creating experiential hubs within the store is the key to building engagement.
Ritesh Mohan
The US retailer, Target is increasing the number of “in-store shops” from the likes of Disney, Apple, Ulta Beauty, Levi’s, and Lego offering customers the benefit of multiple branded shopping experiences all under one departmental store.
For the in-store brands, it is providing a platform to reach out to a new segment of customers.
Ikea’s central London stores provide free planning and house-organization services, rather than being a traditional showroom of products for sale.
This may seem like a simple business move—opening new stores to attract new audiences—but its success lies in how Ikea has adapted its retail model to focus more on providing customers with new services and experiences tailored to urban living, rather than simply opening more stores of their famous warehouse formats.
To learn about how to franchise your business, click here
Retail fact 3 – Customer acquisition is the new game of Retail:
One of the most important reasons why eCommerce grew was the low cost of customer acquisition in terms of digital ad spending vs revenue.
But as the organic reach of e-commerce becomes lesser and lesser coupled with the high rising cost of digital spending per click, lots of eCommerce brands are looking toward physical retail to acquire a new set of customers.
As the cost of ad spending increased across digital and social platforms whereas the rentals across all the major markets showed a decline hence it became a lucrative proposition for the eCommerce retailers to open shops and up their customer acquisition game.
Summary:
One aspect that the eCommerce business has taught me is the new retail analytics or matrix.
Instead of focusing on sales per sqft or GMROI, I have started looking at any retail business from these two parameters.
Customer acquisition cost.
Lifetime value of acquired customer.
In my opinion, by focusing on these two parameters, the conventional retail parameters/ matrix automatically falls in place.
In today‘s digital era, everyone is selling to each other.
Employee selling his skills to his employer,
Entrepreneurs are selling their ideas to Venture capitalists,
Boy friend selling his aspirations and dreams to his girlfriend & kids are selling to their parents and vice versa.
Hence we all are in the SELLING Business.
Gone are the days when a chartered accountant used to say, I am not into sales.
Today right from CEO of an organization to the lowest rank is in Sales Business.
My book, ― How to become a shark salesman provides tricks, concepts, and hacks to grow your business by
learning the Art of selling & become a ―Shark in selling.
Ritesh Mohan is a passionate retail professional with over 22 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
Loyalty programs are not only sales drivers but also a strategic tool for retailers to retain their customer base.
Loyalty programs- not defined objectively.
“Ritesh, can you help us in developing our Loyalty program?”
This was the question asked me by one of the upcoming retailers.
I asked them – “why are you planning a loyalty program- is it for incentivizing repeat customers or just because you want to stay updated vis-a-vis your competition?”
The question made my client think…
I asked them another question, “what is going to be one major hook in your loyalty program?”.
The meeting ended as the client needed more time to brainstorm internally and come back.
Most loyalty programs are mere discounting exercises without even keeping track of the customers buying behavior i.e. on what items are they accruing the points and on which item they are redeeming the points.
Personally, speaking I am the biggest fan of Amazon Prime which according to me is a masterstroke when it comes to the Loyalty program which is coupled with a subscription model.
For your information, it has over 80 million subscribers worldwide.
Do what you do so well that they will want to see it again & bring their friends.
Walt Disney
Loyalty program example – Ulta beauty’s ultamate
Another brand that is going big on loyalty programs is Ulta beauty whose loyalty program is called “Ultamate”.
At the outset, their loyalty plan seems more like incentivization but once you peel the layers of the program, one realizes that the loyalty program is based on “Honest incentivization”.
Your spend of USD1/- gets you 1 point.
But what is remarkable about the Ultamate plan is that they use multiple mediums to reach out to their customers, via email, via messaging services.
They track every customer purchase and try to personalize incentivization for each customer by giving them 2x or even 5X points on their spending.
Traditionally loyalty programs form “Buckets” of customers based on their spending at the store i.e. grouping of customers and then cross-selling them their products.
But Ultamate is different as they hyper-personalize the incentivization and entice their customers with 5X points or sometimes 10X points of special promos either online or offline.
A lot of Ulta beauty locations have awesome salons.
And they always have offers for 2x, 3x, 5x points. That means, for every dollar you spend, you’re actually getting $5 worth of rewards.
You also get 2x the points during your birthday month, and they send you tons of other offers throughout the year.
The rewards program allows Ulta Beauty to garner a loyalty most retailers can only dream of.
Sephora, on the other hand only redeems the points in terms of sachets or smaller packs of beauty products.
To learn more about Hyper-Personalization, click here
So how did Loyalty program Ultamate go viral on TikTok?
On TikTok, customers and fans have taken to educating one another on how to make the most of the retailer’s famous Ultamate Rewards program.
the actual customers are posting videos of how they have got their favorite beauty gadget or product using Ultamate points.
Videos on TikTok emphasize “ the tailormade” experience of being an Ultamate Rewards member, teaching other users how to stack coupons and maximize points.
Remember, it is not paid influencers campaign but the actual customers who are using their loyalty points are sharing their experiences.
Ultamate performance indicators –
37.7 million members i.e. around 10% of [the population of] the United States, or the size of Canada.
Ninety-five percent of Ulta Beauty’s sales come from its members.
Moreover, the program has garnered millions of expressions on TikTok wherein the customers are sharing their opinions on the loyalty program and encouraging their friends to try the ultamate loyalty app.
Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, and Franchising & Business Management. He is the author of two books mainly ” Simplifying Retail” and “How to be a shark salesman?”
A franchisor is defined as a brand owner who has a proven system of store concepts that can be scaled for economic reasons.
Understanding what it takes to become a franchisor and how franchisors operate and grow is essential.
Having worked with both franchisee and franchisor, I have learned these tricks the hard way.
(At Koj Est, we were both a franchisee and franchisor of brands like Mikyajy & Nayomi-private label brands)
This article brings forth a few tricks that a business needs to take prior to becoming a franchisor (i.e. appointing a franchisee to run the same business in new territory).
Deciding whether your business can be franchised.
As a business owner, you need to realize that not everything can be franchised.
You have a great concept that you can teach and that’s simple to execute.
There must be an advantage to franchising for you & your franchisees.
The concept must make enough money both for you and your franchisees.
Check if your shop concept can make money, how many stores under your management are making money currently. This forms basis for the like for like analysis.
What is your merchandise holding costs?
Your merchandising stock turn ratio- is it 3 months, 6months or a year.
Your breakeven period based on location segmentations.
How long have you been in a business?
Do you have a franchise manual to replicate the processes, design templates, merchandising processes, replenishment processes for your franchisees?
If you have answered these questions in the affirmative “Yes” then you are ready to proceed to the next steps.
To learn how to build robust franchise systems, click here
Why will anyone want your franchise?
This is the most critical question that as a business owner you need to answer.
What is an ideal franchisee partner look like for your kind of business?
Who is going to be attracted to your franchise opportunity?
Normally, the cost of acquiring a franchisee is very high and may take a long time to find the right partner and do due diligence on them.
A successful proven system forms the basis of why your franchisee will pay you for replicating your system in his territory.
As a franchisor, you may offer support in terms of initial setup training, sales training, L&D eLearning courses;
There are multiple models like initial franchise fees, royalties on sales, marketing, and training fees.
Few franchisors charge a margin on the products sold to franchisees and few lease the equipment or property that they have.
All these fees are deducted from the franchisee’s bottom line and hence answering the below questions becomes critical to ensure the robustness of your franchising program.
Will your franchisee still be profitable?
Will your franchisee still receive acceptable return on investment?
What would be your franchisee’s initial upfront investment?
Does your prospective franchisee support a sizeable portion of required investment? How is his banking creditability?
The best way is to work out a forecasted P&L statement for your franchisee and show them the Return of Investments over a period.
Franchisors need to budget for New Franchises
In the first years of operating a franchise, the costs of supporting franchisees typically exceed revenue from royalties and fees.
New franchises will face the challenge of building enough capital to cover the infrastructure needed to support their franchisees.
This includes support for marketing, accounting, and operation.
This is where most franchising programs fail as the franchisors run out of the patience and budget that they need to sustain the franchise program.
Franchisors should be aware of these costs and know how many franchisee units can afford to operate at a loss or break even. They should be cautious of expansion and should consolidate franchisees if necessary.
If, you are developing your franchise program & need a retail expert to execute your franchising goals for instance.
Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, Brand Management, Retail Operations, Sales Management, and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry
Off lately, sustainability and eco-friendly products have become the buzzwords for every retailer.
Hence, Fashion retailers are introducing collections that are made from sustainable materials, and also shoemakers are now introducing products made from recycled plastic bottles.
Retail is seeing a plethora of brands coming up in the space of sustainability. I am talking about fashion and beauty brands.
The real question,
“Can a retailer adapt their product offerings to meet the expectations of the consumers who loves to care for their environment as well as love to buy products that are ecofriendly and sustainable?”
Sustainability should start with the core purpose of the business and brand.
My article answers this question and provides retailers few hacks and insights.
1. Sustainability approach : Change your instore lightings.
If you use power-consuming incandescent lamps, then it’s high time to switch to LED which consumes a fraction of the power and helps you drive your sustainability mission forward.
2. Switch to E- receipts: sustainability solution
You can capture the key customer’s data and use it for your data analytics. Moreover, also save on printing of paper invoices which in return would save trees and the environment.
A good starting point can be your shopping bag itself.
Areyou using plastic bags or re-usable & recycled paper bags?
Check out the innovative way to recycle the newspaper into a shopping bag.
recycled newspaper shopping bag
Packaging is likely to be a necessary expense for your business.
Sustainable shopping bags may even result in a cost reduction when compared to normal plastic bags.
Case study: Sustainability in luxury fragrances.
One of the most wasteful expenses in any perfume creation is its packaging.
The hard truth is that without the attractive outer box and attractive bottle, the customer does not get attracted to the scent.
Once the customer buys the fragrance, thereafter, its packaging material gets thrown in the dustbin.
Luxury brands spend 15-20% of the product cost on the packaging itself, which according to me is a wasteful expense and can be re-looked by perfume brand owners.
Having spent almost a decade in perfumery, one of the cases which blew me completely was the launch of CK one fragrance.
I had never imagined that a perfume bottle could even resemble a cough syrup bottle.
It was a disruption in the bottle packaging.
Case study:
Luxury niche perfumery house Jules & Vetiver found their brand on “sustainability” positioning.
One of the brand’s founding principles is “luxury without waste”.
It reflects in their packaging, as a result, they used the hand-stitched leather pouch as the outer packaging cover for their minimalistic stylist fragrance bottles.
Usage of recycled paper to create a multi purpose outer box.
Check out the brand’s video here:
Jules & vetiver perfumes
Conclusion:
The sustainability aspect should become the core of Retailer’s DNA.
Until then the words “sustainability , ecofriendly” would just remain a nice topic to be discussed in webinars, conferences.
ABOUT THE AUTHOR
Ritesh Mohan is a passionate retail professional with over 23 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
This is my first blog article this year and I could not find a better day (Vasant Panchami) and a topic that is trending currently in the Indian subcontinent.
Yes, it is, “The Union Budget 2022”.
This is my analysis and perspective, and my views may differ from the rest.
I have attempted a different viewpoint than most economists and thought leaders.
I was invited as a panel guest by the Indo-Gulf Management association to share my thoughts on the Indian Budget 2022
Frankly speaking, the very concept of direct taxations like income tax, capital gain tax, etc are outdated especially in a country like India wherein the only a small percentage of the population pays the taxes. (source financial express).
The tax reforms should not burden the small percentage of taxpayers, rather the focus should be on GST kind of taxation which is consumption-based i.e. you pay for the services or products consumed or utilized. (Majority population pays for GST)
The Budget 2022-23 focus has been on ‘growth’ and ‘CAPEX spending’ across sectors.
It is futuristic looking budget.
A good push to infrastructure by significantly increased capital expenditure, with a renewed focus on supply chain and logistics, and domestic manufacturing
Railways have been the core of India’s infrastructure development and its budget outlay justifies the same.
Linking Railways with the concept of “One station- One product” will boost the local product consumption and logistics.
The locally manufactured products can now easily be transported through nook & corners of the country with ease.
I consider this step revolutionary rather than dolling out subsidies and tax payer’s money in terms of Guaranteed MSP which was actually not solving the farmer’s issues.
By providing the market to the farmers and linking them to the logistical strength of Railways will drive better returns for the farmers.
Actually, the focus of the budget has been in developing infrastructure and supply chain ecosystem for the “Made in India” products.
Budget 2022 from Retail Business Perspective:
FMCG sector growth depends upon rural growth & its consumption.
The 1.5 lakh post offices into the core banking system is a positive particularly for rural India and a higher minimum support price (MSP) allocation will drive consumption of fast-moving consumer goods (FMCG) products in the hinterland.
Bringing the rural population into the banking ecosystem will ensure that any governmental subsidies will reach the needy people through their banking accounts or post office accounts directly.
Supply chain / logistics– Budget 2022
As a part of the ‘PM Gati Shakti’ initiative, a Unified Logistics Interface Platform designed for ‘Application Programming Interface’ will be set up.
This is expected to provide for efficient movement of goods through different modes, reducing logistics cost and time, assisting just-in-time inventory management, and eliminating tedious documentation.
Learn about the business model of food delivery apps, click here
Digitisation measures
75 Digital Banking units in 75 districts of the country by Scheduled Commercial Banks are likely to provide a big push to the digital banking infrastructure of India.
The Most Resilient sector – Agriculture
The agriculture sector has grown 3.6% in 2021-22.
Sustainability initiatives – Budget 2022.
The Budget gave India’s renewable sector a big push.
The electronic Vehicle manufacturing /charging business in focus.
A policy for battery swapping will aid in reducing the upfront ownership cost of EVs, thereby driving customer preference towards such vehicles.
This policy is also expected to encourage the private sector to develop sustainable and innovative business models for ‘Battery or Energy as a Service.
The main rationale behind Green energy is to reduce the burden of our foreign exchange outgo in terms of oil procurement.
Hence encouraging greener transportation would mean that as a country we are less dependent on imported hydrocarbons.
GDP growth rate projected for 2022-23 is approx. 8 to 8.5%.
Industrial sector projected to grow at 11.8%.
Exports to grow by 16.5%.
Housing/ Real estate
Job Uncertainty continues to make people wary of EMIs, with home loans registering a decline vs pre-pandemic levels.
But there was no relief pertaining to Interest waiver or extended period offered to taxpayers in this budget.
However, Affordable housing was clearly in focus, with the finance minister announcing the allocation of ₹48,000 crores under the Pradhan Mantri Awas Yojana.
Startup Boost
Current provisions to qualify as an eligible start-up (extended by a year to 2023);
India has the third largest startup ecosystem in the world after US & China.
New Delhi overtook Bangalore as start up capital.
In 2021, India saw 44 unicorns which is a record.
Beneficial tax rate of 15 percent – Boost to manufacturing sector.
This will provide stability & certainty to the sector.
Customs duty reduced
Customs duty reduced on inputs required for the manufacture of consumer goods like mobiles, cameras, gems etc
Removal of customs exemption on certain items, and providing concessional duties on the raw material that go into the manufacturing of intermediate products will support the Government’s objective of ‘Make in India’ and ‘Atmanirbhar Bharat’.
Some sectors ignored.
Aviation
The airlines expected govt to suspend Minimum alternate tax for the aviation and airport sector for min two years. This is one sector that has taken the hit along with the tourism and Hospitality sector during the Pandemic.
Generating Jobs
The focus on the manufacturing sector will indirectly generate employment for the skilled population.
No relaxation to the existing tax slabs.
There is no change in current taxation slabs for the salaried employees however there is no additional tax burden either.
You can watch the full webinar here.
Summary:
Despite all challenges, the Budget presented by our finance minister is quite forward-looking.
The rest will depend on its execution of governmental policies and plans.
ABOUT THE AUTHOR
Ritesh Mohan is a passionate retail professional with over 23 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.