According to a Wall Street Journal article, the Indian retail sector is showing signs indicating that the retail boom is smaller than anticipated. (Read the WSJ article here )
After the Indian government allowed 49% FDI in retail in 2006, India has grabbed the attention of retailers worldwide. Since then many global players such Walmart and Tesco, as well as domestic players such as Reliance, Aditya Birla Group and Future Group have launched their own retail enterprises and several others are in the process of starting operations and establishing strategic alliances.
However, the road to success in the retail sector in India is still fraught with many challenges. To illustrate, the capital city and my hometown Delhi saw a huge surge in construction of malls and shopping complexes for the oncoming retail boom. There are several new malls in areas previously unoccupied and several under construction. The real estate prices have continued to go up making it more and more expensive for retailers to rent or buy outlets. But most of the newly sprouted retail outlets are struggling to break even. Competition has increased manifold and buyers are still fairly cost-conscious.
There is still a lack of infrastructure in the country. As an example, Delhi has the highest road density in the country and a huge network of highways and newly constructed roads, yet it presents significant ground transportation challenges for retailers such as Wal-Mart that will need to transport materials using huge trucks.
There are several supply chain issues in India. According to an interview by Raj Jain, Wal-Mart’s India President, lack of organized supply chain is among Wal-Mart’s biggest challenges. There are several inefficiencies that contribute to higher costs and prevent the retailers from gaining significant cost advantages.
(Read the Raj Jain’s interview here )
If the number of players in retail keeps on rising without a clear strategy or expansion plans, there is bound to be a string of failures, as the Wall Street Journal article pointed out.
In the midst of these challenges there are some great success stories such as Future Group’s Big Bazar that has become a household brand and continues its expansion across India. I still believe that this $ 350 billion industry has significant opportunities but tapping this huge potential will require deep pockets and ability to survive a few failures and losses, strong understanding of consumer needs and preferences, and ability to develop efficient supply chain systems that deliver cost savings. Like many others, I will be watching with interest to see how the story unfolds…
(Click here for an interesting blog on developments in the Indian retail sector)
Friday, August 29, 2008
Friday, August 22, 2008
Lessons from managing an offshore team
Offshoring has continued to be one of the most important ways through which companies reduce their costs. As per a report by Plunkett Research, outsourcing will become a $500 billion industry in 2008 (See the report on outsourcing trends here )
Establishing offshore operations is just one part of the equation. Successfully managing offshore operations becomes crucial after the inital setup is complete. Managing an offshore team presents its unique challenges. Below are some lessons I have learned from my experience:
Communicate effectively and excessively: When it comes to working in an onsite/offshore model, communication between onsite team and offshore team becomes more challenging and more important at the same time. The absence of face time makes it harder to build relationships and constantly be on the same page. Therefore, communicating using all channels such as conference calls, web based tools, emails, etc., reinforcing the important details, and communicating frequently works much better than just sending a customary email update.
Establish processes early on: The larger the offshore team grows, the more important it becomes to have procedures in place. Good coordination between the onsite and offshore teams is critical for smooth operations. Lack of processes can cause a lot confusion and wasted effort. Therefore, it is important to clearly establish the way things will work, who will own what and what to do in case a process breaks.
Keep the team motivated: Calls at odd hours, long working hours, and cultural differences are some of the challenges that offshore teams constantly face. If not managed carefully, they can lead to low morale, reduced productivity and even attrition. Recognizing the team and individual members, celebrating achievements, actively working to resolve issues, and communicating openly are some of the ways that are effective in keeping the team motivated.
Train the team well: While many teams are advocates of on-the-job training and learning by doing, in an offshore team, there is no substitute for training people upfront. An untrained team may make mistakes that get amplified because of being on the other side of the world, and prove to be very expensive. Pacifying an angry customer and doing all the damage control later may just not be worth the time, effort and costs. Mistakes will happen but sound training can definitely help eliminate some of them.
Always have a contingency plan: No matter how well planned things are, something will go wrong at some point. System outages, server crashes, data issues and other unforeseen events can cause disruption to work. Therefore, it is important to have a contingency plan in place to manage such events and minimize the damage. This is particularly important for an offshore team because when things go wrong during regular business hours, there is no way to warn the onsite counterparts because of the time difference.
In conclusion, managing an offshore team well can make all the difference between a successful and a failed offshore engagement.
Establishing offshore operations is just one part of the equation. Successfully managing offshore operations becomes crucial after the inital setup is complete. Managing an offshore team presents its unique challenges. Below are some lessons I have learned from my experience:
Communicate effectively and excessively: When it comes to working in an onsite/offshore model, communication between onsite team and offshore team becomes more challenging and more important at the same time. The absence of face time makes it harder to build relationships and constantly be on the same page. Therefore, communicating using all channels such as conference calls, web based tools, emails, etc., reinforcing the important details, and communicating frequently works much better than just sending a customary email update.
Establish processes early on: The larger the offshore team grows, the more important it becomes to have procedures in place. Good coordination between the onsite and offshore teams is critical for smooth operations. Lack of processes can cause a lot confusion and wasted effort. Therefore, it is important to clearly establish the way things will work, who will own what and what to do in case a process breaks.
Keep the team motivated: Calls at odd hours, long working hours, and cultural differences are some of the challenges that offshore teams constantly face. If not managed carefully, they can lead to low morale, reduced productivity and even attrition. Recognizing the team and individual members, celebrating achievements, actively working to resolve issues, and communicating openly are some of the ways that are effective in keeping the team motivated.
Train the team well: While many teams are advocates of on-the-job training and learning by doing, in an offshore team, there is no substitute for training people upfront. An untrained team may make mistakes that get amplified because of being on the other side of the world, and prove to be very expensive. Pacifying an angry customer and doing all the damage control later may just not be worth the time, effort and costs. Mistakes will happen but sound training can definitely help eliminate some of them.
Always have a contingency plan: No matter how well planned things are, something will go wrong at some point. System outages, server crashes, data issues and other unforeseen events can cause disruption to work. Therefore, it is important to have a contingency plan in place to manage such events and minimize the damage. This is particularly important for an offshore team because when things go wrong during regular business hours, there is no way to warn the onsite counterparts because of the time difference.
In conclusion, managing an offshore team well can make all the difference between a successful and a failed offshore engagement.
Thursday, August 14, 2008
Best Buy to start selling Apple's new iPhone3G
Best Buy announced yesterday that it will be carrying Apple’s new 3G iPhone. This makes Best Buy the only retailer apart from Apple and AT&T stores to sell the iPhone3G and that too at the same price point (Read the news article here )
Earlier this month, Best Buy had completed its nationwide rollout of Best Buy Mobile, a store-in-store concept along with standalone stores offering a more positive phone buying experience for the customers (Read the press release here)
For Best Buy, this is a great business move! Best Buy has been able to leverage its long standing relationship with Apple to now sell one of its most popular products. There can’t be a better way to capture the smart phone market than to start offering Apple’s iPhone3G early on. The Best Buy Mobile concept, if successful, will significantly increase Best Buy’s higher end phone sales.
For customers, this presents another (and probably better) option to buy the 3G iPhone. This will also give them the chance to compare iPhone to other smart phones such as Samsung Instinct and LG Dare. Besides, the shoppers will appreciate not having to wait in long lines outside Apple and AT&T stores.
With the growing smart phone market, if Best Buy does it right with a combination of good customer service and positive in-store shopping experience, this could be a winner!
Earlier this month, Best Buy had completed its nationwide rollout of Best Buy Mobile, a store-in-store concept along with standalone stores offering a more positive phone buying experience for the customers (Read the press release here)
For Best Buy, this is a great business move! Best Buy has been able to leverage its long standing relationship with Apple to now sell one of its most popular products. There can’t be a better way to capture the smart phone market than to start offering Apple’s iPhone3G early on. The Best Buy Mobile concept, if successful, will significantly increase Best Buy’s higher end phone sales.
For customers, this presents another (and probably better) option to buy the 3G iPhone. This will also give them the chance to compare iPhone to other smart phones such as Samsung Instinct and LG Dare. Besides, the shoppers will appreciate not having to wait in long lines outside Apple and AT&T stores.
With the growing smart phone market, if Best Buy does it right with a combination of good customer service and positive in-store shopping experience, this could be a winner!
What Olympics mean for China
The 2008 Beijing Olympics are not just a sports event for China. Winning the bid for 2008 Olympics was a landmark event for China and China left no stone unturned in its preparation for the Olympics. With a spending of over $40 billion, Beijing Olympics are officially the most expensive games in the history of sports. Apart from being a symbolic victory for China, the Olympics have affected and will affect many other facets of China.
Political implications:
China’s ruling communist party has been surrounded by controversies around its policies on issues such as human rights, religious intolerance, censorship and treatment of Tibet protests. The Olympics torch relay was marred by protests in Europe and the US as activists saw Olympics as a stage to show their ire and opposition towards the regime. While some might agree that politics and sports should be kept separate and that allowing China to host Olympics is not necessarily an endorsement of all its policies, yet Olympics have brought the spotlight onto China and opened it to more media scrutiny and further criticism. This will put additional pressure on China to honor its commitment to better human rights record.
Environmental implications:
Beijing’s air pollution level was higher than World Health Organization standards. Olympics prompted Beijing to clean up its environment. Taking cars off the roads and closing factories is a step in the right direction and will help in the short term. But for a developing economy that will keep adding thousands of cars every month, it will be an ongoing challenge to curtail pollution. However, Olympics might cause China to change its energy policies to ensure lasting long term impact.
Tourism:
China drew more than 2 million visitors from around the world during Olympics. But Olympics will give a boost to China’s tourism industry even after the games are over. The host city Beijing transformed in preparation for the Olympics. From 220 mph fastest rail service in world to Olympics venues such as bird’s nest, Beijing promises a lot more even beyond the Olympics.
Business:
Olympics have not only given an opportunity to China to showcase itself and possibly attract more foreign investment in future, but have also presented a huge opportunity to companies around the world to lure the Chinese customer. This will undoubtedly give a boost to the Chinese economy. The question is – will China make billions more after the Olympics than it spent before the Olympics?
Political implications:
China’s ruling communist party has been surrounded by controversies around its policies on issues such as human rights, religious intolerance, censorship and treatment of Tibet protests. The Olympics torch relay was marred by protests in Europe and the US as activists saw Olympics as a stage to show their ire and opposition towards the regime. While some might agree that politics and sports should be kept separate and that allowing China to host Olympics is not necessarily an endorsement of all its policies, yet Olympics have brought the spotlight onto China and opened it to more media scrutiny and further criticism. This will put additional pressure on China to honor its commitment to better human rights record.
Environmental implications:
Beijing’s air pollution level was higher than World Health Organization standards. Olympics prompted Beijing to clean up its environment. Taking cars off the roads and closing factories is a step in the right direction and will help in the short term. But for a developing economy that will keep adding thousands of cars every month, it will be an ongoing challenge to curtail pollution. However, Olympics might cause China to change its energy policies to ensure lasting long term impact.
Tourism:
China drew more than 2 million visitors from around the world during Olympics. But Olympics will give a boost to China’s tourism industry even after the games are over. The host city Beijing transformed in preparation for the Olympics. From 220 mph fastest rail service in world to Olympics venues such as bird’s nest, Beijing promises a lot more even beyond the Olympics.
Business:
Olympics have not only given an opportunity to China to showcase itself and possibly attract more foreign investment in future, but have also presented a huge opportunity to companies around the world to lure the Chinese customer. This will undoubtedly give a boost to the Chinese economy. The question is – will China make billions more after the Olympics than it spent before the Olympics?
Sunday, August 10, 2008
A la carte pricing in airlines - pillows and blankets on the menu now
In yet another move by airlines in the face of rising fuel costs, Jetblue has announced that it will be charging $ 7 for a pillow and blanket: http://www.nytimes.com/2008/08/05/business/05pillow.html
As airlines try to come up with creative ways to charge travelers money, it seems that travelers will now have to shell out money at every step of their journey – from paying more for booking fees to checking bags to getting drinks on the plane!
For airlines grappling with rising costs, this might help generate some additional revenue, but at the cost of inconvenience for the travelers. This will not only make the headline fare seem much lower than what travelers will actually end up paying but also force them to take their wallet out every time they want something. This string of additional fees for once-free services will undoubtedly infuriate most passengers.
In the airline industry, where no service can be taken for granted anymore, one can only wonder which “luxury” will be the next one to go away! Or like all things, will this come a full circle back to full service all-inclusive airlines?
As airlines try to come up with creative ways to charge travelers money, it seems that travelers will now have to shell out money at every step of their journey – from paying more for booking fees to checking bags to getting drinks on the plane!
For airlines grappling with rising costs, this might help generate some additional revenue, but at the cost of inconvenience for the travelers. This will not only make the headline fare seem much lower than what travelers will actually end up paying but also force them to take their wallet out every time they want something. This string of additional fees for once-free services will undoubtedly infuriate most passengers.
In the airline industry, where no service can be taken for granted anymore, one can only wonder which “luxury” will be the next one to go away! Or like all things, will this come a full circle back to full service all-inclusive airlines?
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