RETAIL CHRONICLES 1st to 15th December, 2018

RETAIL CHRONICLES Fortnightly Newsletter

| Volume 3 - Issue 9 |

1-15 DECEMBER 2018

02 Airline & Airport

Retail- Niche yet profitable

Pg 02

04 Pilferage in Retail

Pg 06

Pg 04

Black friday & cyber monday06 becoming the global phenomenon

08 Luxury Retail in India

11 Retail News

Pg 08

Pg 11

Retail Lab SIMSR K J SIMSR, Mumbai Contact: +91 8896732500, +91 8449248227 retaillab@somaiya.edu

"A satisfied customer is the best business strategy of all."

Michael LeBoeuf Business Author

Airline and Airport RetailNiche, yet profitable - Sagar Anam We all have a memory of our waiting in an airport lobby, after completing all the formalities, gazing at the windows and watching airplanes coming and going and we enjoying each and every moment‌did we just get into our childhood?

Yes a very pleasant site in childhood, but the most boring part of the journey when we grow upand what better than trying a hand on some of the most well-known and best quality products to shop, and that too some of the products are duty free, which means you get it at a price lower than the market. This is where airport window shopping comes to picture.

Initially started with intentions of keeping duty free products, now the airport and airline retail industry have expanded to keeping every possible product- from books to televisions, you name it and you get it, depending on the airports.

Apart from the airports, there are also products available on the flight itself, the Ancillary sales of a flight. A recent report estimates indicate that airlines generated close to $70 billion in ancillary revenues last year.

Let us explore the reasons for the booming of airport and airline retailing: The number of people traveling every year, over 1 billion people travel internationally — that is 15 percent of the global population. And with the recent upturns in the economy, passenger numbers are expected to increase even further.

Travelers are more prone to shop while en-route The open-plan setup: Unlike high street shopping and malls, the travelers have to just get into the open-plan setup at the airport, to buy products of any brands, i.e. the difference of the brands is not visible in airports.

Free time to browse and buy: As mentioned above the pleasure for kids is the worst part for us, adult- thus, as people have quite a lot of free time, they tend to spend more time in shopping rather than waiting and thus resulting in them, buying something.

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Holiday atmosphere: After having passed checkins and security controls, passengers traveling for leisure are left in the right condition to buy items – whether to indulge them, to start off or cap off their trip.

Apart from the airport retail shopping, the products sold in flight also make huge profits for the retailers- companies like Paper Boat, began its selling from in-flight products. This can play a very calculative impression management role in the customer’s mind, as we tend to think that the products sold in flight are expensive and are classy, thus making a perception of the products as classy, and also that as they are not available elsewhere, their demand increases.

Hence, we can say it’s an innovative technique to promote the products, by various companies.

The Future: As in any retail sector, AI can be seen to enhance the user experience in buying products. The same way, AI is playing its role in the ancillary business too. Nowadays, the flight attendants come to the passengers and market various products, not just through normal brochures and pamphlets, but also through AI and lure them to buy or book the product from the flight itself.

Also the airport retail industry is booming and is expected to boom much more in future, as airports such as Singapore airport have restaurants to Theaters to malls to bookstore, amusement park, everything inside the airport itself, which has widened the scope for all the retailers to invest in the Airport Airline industry, targeting the niche sector (rich sector) of the society and be profitable.

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Pilferage in Retail Name- Piyush Sinha PGDM-FS The Retail Industry in India is growing at a very rapid Of the total shrinkage, the shoplifting theft rate is pace. All the major player of the world in Retail with at 45%, which is higher than the global average the likes of Amazon, Wal-Mart, Alibaba or e-Bay, all rate of 43%. Shoplifting is very rampant in of them whether directly or indirectly is a part of the jewellery because of its high value and easy business in India. With more than 90% of the Retail portability. Many thieves operate in gangs and are Industry still a part of the unorganized sector, there is skilled who do not get caught easily. There are a wide spectrum of growth possible in this sector. very few who threaten with knives. After Moreover, the Government of India is also initiating a shoplifting, employee theft accounted for 23.3% wide range of reforms which will benefit the Retail of the retail pilferage. Nowadays store managers Industry in India. are making sure that the employees are checked One of the major problems which the Retail outlets every time they leave the store. The survey are facing is Pilferage. The meaning of Pilferage is highlights that the loss incurred due to employee the reduction in inventory caused by shoplifting or theft is five times more than shoplifting in the Asia petty thievery by the employees. A survey of retail Pacific region. crime in the world says India has the highest retail How to deal with it? shrinkages at 3.2% of the sales. India has always 1. Identify: maintained a top spot with thieves preferring to steal Identification of shoplifter is not an easy task electronic items, jewellery, cosmetics, alcohol, though if the following points regarding the apparel, and other goods because of their value and behavior of shoplifters are considered they could portability. be identified: • Paying more attention to the employees then the goods.

• Walking the opposite direction of employees.

Each time the employees move - they move.

• Picking up random items and "pretending" to look at them.

• If you are an apparel store, watch the number of items people take into the dressing room and check that count when they exit.

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2. Using Preventive Measures: One of the most effective tools to prevent shoplifting is proper inventory control and follow common security practices to combat shoplifting.

Moreover, it is not a bad idea for retailers to block all the views for shoplifting as it also impacts your ability to service. Keeping your store merchandised well will be of big help in the fight against shoplifting. If you have disorganized shelves, how would you know someone stole from you? Empty space on a shelf or display table should be a big signal something is wrong.

3. Stopping Shoplifters: It is important for retailers to plan store policies and procedures for shoplifting early in the business planning process. You hope it will never happen in your store, but the truth is - it will. And when it does, retailers and their employees should be prepared to handle the situation. Take the following into consideration when making your shoplifting policies.

• How do you approach a customer you suspect?

• How do you confront the suspect?

• Who do you call or contact?

• What documentation do you need?

Make sure that they take the time to role-play with their employees the proper procedures.

This is not something they should confront directly in case of such situations. Train them well.

Retailers are constantly struck by outside influences out of their control but the truth is, shoplifters are not professionals. Only 3% of shoplifters are true "professional thieves" the rest are natives which can be stopped easily.

So by following the above 3 points, pilferage in stores can be controlled to a large extent.

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Black Friday & Cyber Monday Becoming the Global phenomenon By- Shubham Thakur According to Pitney Bowes’s “2017 Global Online Shopping Study,” 170 retailers who have a presence in more than 140 countries have shown that there are 66% of their total . consumers who were involved in crossborder trade. Their newly released Border free data proves these sales were prominent in Black Friday and Cyber Monday mostly.

Canada, UK, Australia, Hong Kong, South Korea, China, Saudi Arabia, Russia, Japan, American culture is strongly influential on every part and Mexico topped the list with most crossof the world like the Thanksgiving or the border sales during Black Friday/Cyber entertainment that we got from there is also giving Monday weekend. But the surprisingly those vibes that people try to follow it. Spending biggest winner was India and Kuwait with habit is also one of the important aspect and people 173% and 99% growth compared to last idealize Americans as they do the best only. So what year’s Black Friday/Cyber Monday sale is popular inside America is slowly becoming popular respectively. This year also trend has seen outside America also Black Friday and Cyber the seismic shift in how cross-border trade Monday is one of those retail festivals were buyers with U.S. retailers. Last year total sale was spend their entire hard earned money for pretty good around $691.9 billion worldwide which 5.5% deals. Started as Friday following the Thanksgiving more than 2016 was and this year it is also Day which is celebrated on the fourth Thursday of expecting to grow at 10% to 15%. According November and Monday as the following day after the to Hit wise 13 million transactions were weekend. The term Black Friday in the retail sense processed on Black Friday and 12.5 million was coined in the 1960s to mark the kickoff to the were processed on Thanksgiving. According Christmas shopping season and a festive bustling to NRF in 2017 the average per person holiday shopping. spending was $419.52 which was $289.19 Every year thousands of shoppers across the world the last year 2016. The top retailers were rush to brick-and-mortar store on Friday and visit Amazon and Walmart. Amazon took all the their favorite e-retailer on Monday to get the best 45.1% of online transactions worldwide on deals. This has increased a very large amount of Thanksgiving and on Black Friday it was cross-border trade also.

54.9%!!!

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In addition to last year’s Black Friday and Cyber Monday sale’s cross-border shopping Pitney Bowes identified that certain interesting dimensions to their behavior like what, specifically they were actually buying what they added to their cart and wish list and removed at the payment time. Clothing was selling like a hot cake but there are certain specific thing also that is in more demand country wise also. Cookware sets in Russia and South Korea. Flat-screen TVs in India and Israel. Handbags in Australia, China, Hong Kong, Japan, and Singapore. Jewelry charms in Australia, China, South Korea, and Taiwan.

The reasons why consumer purchase cross-border . is there are a number of unique items available,

Brand is not available in their country and wanted to buy directly from the Brand that makes the In India, 73% of consumers were engaged in products. And there are some reasons where we cross-border shopping during these shopping Indians feels that we should not be engaged in festivals. 68% of cross-border purchases are made on marketplace based e-commerce entities these activities is because first, they took a too and 32% on retailers’ websites. Here in India, 18% long time to deliver, shipping cost is very high and sometimes no local currency is available on that of shoppers made their cross-border shopping medium to transact. weekly which is down by 3% compared to last year.

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Luxury retail in India

BY- Bharat Gupta

As soon as someone mentions the term luxury all of us start imagining things that will always remain beyond the common man’s possession. But, luxury is no longer identified with terms like lavishness and unreachable wishes and has become a necessity for all. The things that were considered to be luxury yesterday is a necessity today. Take the example of cell phones and cars.

Today luxury and need are the two facets of a single coin. Quality experience, value for money, customer satisfaction and creativity are four elements of luxury retail. It is important to take care of these four aspects to make today’s luxury tomorrow’s need.

The term ‘Luxury’ is frequently used by retailers to signify high-end expensive products. As per the survey, the Indian luxury goods market is currently growing at a compounded annual growth rate of 25 percent. India has been identified as a future retail destination by many of the world-famous luxury brands because of a huge population of young shoppers who aspire for an international lifestyle and an impressive rise has been noticed in the number of shopping malls followed by luxury showrooms, along with premium and super-premium stores. Also, Indians have been traveling globally and have had enough exposure to international brands. Indians today have also realized that luxury brands are known for their quality and durability.

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Brands such as Paul Smith, Armani, Versace, Dior, Hermes, Louis Vuitton, Prada, DKNY, Burberry, Paul & Shark are the 10 most popular fashion luxury brands in India. These brands generally cater to two types of customers – the traditionally rich or old money, and the nouveau rich or new money. Delhi NCR followed

by Mumbai, Bengaluru and Chennai are the top leading markets for luxury products in India. Non-metros like Ahmadabad, Pune, Chandigarh, Hyderabad, and Ludhiana are now also participating in this luxury marketing race. About 16% of the total luxury sales in India consist of these non-metros.

Challenges faced by Luxury retail brands: While this market potential looks promising, various cultural, regulatory and legal issues could prove challenging for luxury brands when it comes to settling and prospering in India.

Some of them are: 1. Most of the wealthy Indian consumers purchase luxury brands during business and leisure travel to London, Singapore, Dubai or Hong Kong in order to avoid high import duties.

2. The government’s move to reduce cash transactions for highvalue purchases has led to a decline in luxury-brand sales, as consumers find having to divulge transaction details to the government overly intrusive.

3. Another reason why luxury brands are steering clear of India is the lack of quality retail space – beyond a few airport shopping centers or five-star hotels – and the absence of upscale malls and market streets.

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Future of Luxury retail in India: India's luxury market is set to grow to USD 30 billion from USD 23.8 billion by the year-end on back of growing exposure of international brands amongst Indian youth and higher purchasing power of the upper class in tier II and III cities.

India enjoys the advantage of the youngest consuming population in the world. This country also has an increasing level of disposable incomes joined to high brand awareness level. With the increasing consumer market, luxury retail brands are quite optimistic about the future of retail luxury in India in the coming years.

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Retail news at glance Modi government to change customs duty architecture to boost trade, ease of doing business Amazon reports 'record levels' of UK shopping as Black Friday takes off internationally Technology is giving China's retail sector a lead over its global peers, says JD.com vice president Future of retail may see consumers dealing directly with manufacturers, predicts Intime CEO Buy Walmart, Target as online sales growth starts to outpace Amazon's: Bank of America IKEA Group plans to cut 7,500 administrative jobs

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Our Team Content Head

Raveena Gupta

Content Team Sagar Anam Piyush Sinha Shubham Thakur Bharat Gupta

Retail Chronicles is a bi-monthly newsletter of Retail Lab, the Retail committee of KJ Somaiya Institute of Management Studies & Research, Mumbai. Images used in Retail Chronicles are subject to copyright.

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Design Team Ayush Pangoria Sachin Ghosh Shiva Tadas Surabhi Upadhayay /retaillabsimsr

K J Somaiya Institute Of Management Studies & Research, Mumbai

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