Inside India – Luxury Market; what is it about!

When I introduce myself during gatherings, the inevitable question comes soon; what do you do?

Working for a Luxury Eyewear company, the answer is not as simple as it seems. The worldwide Eyewear market is organised differently from many other branded markets. Big Fashion Houses are not in a position to design, manufacture and distribute Eyewear by themselves because it’s too different from their core business. Cloth, shoes, belts or perfumes are differently designed, produced and are sold in entirely different channels than Eyewear. This is why the eyewear market is dominated by companies like mine, who focus on the eyewear category for these brands and of course we would have some brands which we own ourselves.

Having that question cleared, the next one is very predictable; how is the market in India?

Quite often it becomes a little tricky to respond to the aspirational well-off society without offending the people in India, who have made it in their life and would generally qualify to own these exact products which I am in charge of. Therefore one has to realize, that organized retail only started about 20 years back in India. As a result, one should not expect the same standards prevailing in markets where modern retail has it routes many decades back. Not only that a vast majority does not have the economical capacity to buy luxury goods, 98% of the Indian population would not have the geographical access to it, because luxury retail still keeps its focus on the powerful metros, which are only a few. Given the nature of the Luxury business, the blooming e-commerce platforms cannot bridge this gap. Keeping in mind that we have more than 60 cities in India, which are populated with one million or more citizen, the number of metros might increase in the near future. Of course there are some regions in India which do not belong to the metros, but still have high potential, given their accumulation of High net worth individuals (HNI’s).

As a result, many luxury brands are only known by their name and maybe by their price point. The distinctive brand values, which are the fundament in the luxury business, are not celebrated or appreciated. The distinguished brand heritage, design, technology or creativity do not make a difference to many Indian luxury customer, and it’s more important to include a big logo to ensure that the have’s can proclaim from the have-not.

We should not be surprised by this fact, as the western world grew up for a long time surrounded by luxury brands whereas the same brands were kind of thrown at Indian customers and therefore serve a totally different purpose.

Another challenging circumstance is, that the Indian culture is a bargaining culture. This might route in the recent history, were sellers would overprice their goods, to increase their own margin and to be in a position to give discount as a feel good factor. This is also why the Indian government recently introduced a Maximum Retail Price (MRP) law, which does not allow to sell above the imprinted price on the product, to solely protect the consumer from overpaying a product.

However, the bargaining culture has not changed but goes against the culture of luxury products. To ask for a discount is not the exception but the rule, in most purchasing activities in India. Some retailer, who cannot sustain this pressure, might even find the solution in trading off counterfeit, which again stands in contrast with luxury retail and is a considerable problem in India, as IP protection is not well enough guarded.

Therefore the Indian Luxury market is still highly underdeveloped and many luxury brands have not yet found their entry into the market.

Needless to say that the potential is huge, and growth rates are big (on a smaller basis), otherwise I would not have stayed within this Industry for such a long time. But many commonly learned success models might not work in India, and the industry has to be re-invented to tailor such and interesting but complex market.

The future is here, the future is India. Jai-Ho!

Inside India – The Caste System Outside View

India is a secular country and the biggest democracy. – I tend to disagree to both this statements, but it always depends, as a good consulting firm would always condition.

To me a democracy is a system, where the population is ruling its own society through representatives which represent the interest of the population. But today I don’t want to indulge this topic; it’s just to grab your attention.

Secularism requires disconnect of religion from state affairs or the public education. Beyond dispute the founding fathers of India had a secular country in mind, when the drafted the constitution of India. But even the liberal authors could not resist letting some religious articles find their way into the constitution. The directive that asks states to protect cows from slaughter is for sure one article which strictly follows the conservative Hindu religion. Some States in India go to the extend to completely forbid the consumption of beef, and one can be jailed for eating a beef steak. Allowing a Muslim man to divorce his wife with only oral proclamation, or a Muslim man to have multiple wife’s is another paragraph which a secular system would not tolerate in the constitution. You will find more protective elements towards religious rituals, in the legal system of India, if you want to dig further. Having an offspring from the RSS (Rashtriya Swayamsevak Sangh) as our leader, does not really help to change my mind. For those not familiar with the political influence in India, RSS is an ultra-conservative Hindu nationalist (non-governmental) organization with high influence on today’s ruling party; BJP.

The Cast system basically consists of two angles:

1.        The class (Varna), which refers to social responsibility and belonging, namely Brahmins (Priest, Teacher or Doctors), Kshatriyas (Warriors), Vaishyas (Merchant and Landowner) and Shudras (Servants). Then there is the Dalits, which are historically excluded from the system. The Dalits have many more names such as Untouchables, Other Backward Class (OBC), Scheduled Caste or Scheduled Tribes (SC’s and ST’s)

2.        The caste (Jati), which defines in which occupation stratosphere one is born in and is also quite often represented in the family name. I immediately correlate this system of name giving, to the German speaking community where we have names like Bauer (Farmer), Müller (Mill Operator) or even my own name Blaser (Glass Blower).

Even though considered as very backward by the western world, I personally have changed my mind over time. It looks to me like any other system in western societies, only that they never gave it such distinctive categories and names, which in turn looks a little unorganized, if one might say so. Please think about this statement for some time! The only question remains, how much freedom to choose is required in a social system and how much should this freedom be promoted.

In India this question has been addressed by the Reservation System, which is addressed to enable and promote the OBC, SC’s and ST’s. The government has introduced quotas in several areas, which result in the entry of this underprivileged people into positions which they would otherwise not have access to.

The Indian Parliament for example is hosting 15% SC’s and 9% ST’s. The allocation is made as per the proportion of the state population.

It is also ruled that the Government Position would fall into the quota system, 15% Scheduled Castes, 8% Scheduled Tribes and 27% for Other Backward Classes, which makes it a staggering 50% total for constitutional reservation percentage.

Some states even go as high as 70%, even though the Supreme Court has put a cap of 50% maximum.

Similar situation occur in Public Government Schools and Colleges and are debated for all kind of Universities as well.

As much as I appreciate the support for the underprivileged, there are many concerns coming with it.

I would like to know your view of my interpretation and your idea on how to tackle the challenges we currently face in India?

Jai Ho India!!

 

 

Retail ideas that clicked

When I came to India early 2008 without a job, I planned to take some time out to acclimatized, getting familiar with my new city and just take it easy. I had this privilege because my then fiancée (today wife) was already well established in Bangalore for 10 years and I was landing in a warm and well taken care of nest. But this plan did not take place and as I was blessed with an opportunity difficult to deny, to take care of the entire retail space in the soon to be opened Bangalore International Airport. So I joined as General Manager to build the retail team from scratch, as the first employee to be enrolled.

At that time, hardly any airport was privatized in a PPT model (Public Private Partnership) and accordingly airport retail was generally reduce to selling liquor and cigarettes from a simple rack and if you were lucky, you could find some space to sit and sip a cup of coffee. This was to be changed with the Greenfield Project at Devanahalli, a little outside of the Bangalore center. So we were left with no best practice or modern retail history in the country and had to try our luck with the success models generate across the world. So we did. But India would not be India, if it was that easy. We decided to invest a lot of energy, analysis, data crunching to learn the local flavor and shopping behavior and therefore to improve our performance and the shoppers experience. Going through this massive learning experience, I am keen to share some success and failure stories:

Electronics

Like in any other airport, we were focusing on mobile electronics; Digital Photo, Handycam, MP3 etc. Spending many nights at the airport to observe operations, one could not oversee the many TV panels on the luggage belt, accompanying predominantly passengers arriving from Thailand and Dubai. So I approached our buying head to propose the launch of TV’s in the arrival shop. Oh dear, I was given a lecture in Indian culture and that Indians would never buy a TV without being home delivered and installed, furthermore the lack of local warranty and servicing (being a Duty Free store) would be a deterrent. But this does not make sense! Why would arriving passengers importing TV sets from Thailand and Dubai, but not ready to buy the same in the Duty Free store in India. I spent many meeting hours with team members to try to convince but was always given some educational lessons in Indian culture. Finally I decided to drag the respective members to the arrival store one night to show them 21 TV’s landing on the conveyer belt. Seeing is believing! It took us another 12 month and several visits to the arrival store, to convince the market leader of TV in India, and to finally launch this category as First in India Duty Free. Guess what,.., not only was it a huge success, soon you could find TV offers in all major airports in India.

Perfume & Cosmetics

P&C is normally a value driver in any airport and also we banked big time on it and allocated massive space for all major international well-known brands. Not so in India, the ‘C’ for cosmetics hardly existed and the expensive perfumes did not sell well apart from a few exceptions. We took the very bold call to massively reduce the P&C section, remove some of the aspiring brands and replace them with some of the most successful local brands, including also local ayurvedic brands, keeping in mind that we are located in the south of India, the heaven of Ayurveda.

Furthermore we did an in-depth analysis of the best-selling perfumes, only to learn that majority of female perfumes were bought by men and visa-versa. Concluding that this was either planned purchase, ordered by spouses, or gifts for the same consumer group. So we decided to launch a test to add on to this need, by simple pre gift wrap 50% of the entire perfume section. Not only this left a superb visual impression, buyers also appreciated the fact to make a gift, rather than just being the delivery boy. A promotion we would repeat frequently and without a doubt delivery 20% plus increase of sale.

Food

The success model in food is normally dominated by chocolate, in our case Swiss chocolate. As we dramatically reduce the P&C section, we had considerable space left free, next to the food/chocolate section. Again my preference would go to domestic food products, on which I would get another salvation of Indian culture from my colleagues. My proposal to launch a wide range of Indian Tea was smashed with the argument that everyone Indian would buy their favorite tea before they depart from the country and foreigners would not buy because of the low savings in duty due to low price. Having the TV experience still in my bones, I would not let go so easily and insisted on the expansion of our food section with not only tea but also ready to eat Indian food, Banana Chips from Kerala, Cashew Nuts and (belief it or not) Indian chocolate.

Once more our experimental spirit was well rewarded; we could observe Indians buying entire shelfs of ready to eat food, being challenged to carry the additional luggage on board. With the tea category my colleagues were proven right, Indians hardly bought our local luxury tea, as they felt they could buy their own tea cheaper somewhere else. However the foreigners used the opportunity to stack up their inventory of tea at home and where not shy to shop multiple brands and flavors. Trying to push the foreigners also into the ready to eat space, we launched a tasting section, where we precooked the dishes, installed a microwave to demonstrate the fantastic taste of the Indian cuisine. Only we missed a small element in our endeavor. The foreigners were pretty much scared to eat/taste Indian food before a long distance flight. They feared stomach issues during the flight and did not try a single spoon. The Indians already knew the taste and did not need to try. After only a few days, we came to the conclusion, to remove the tasting section and continue to focus on Indians to extend the taste pallet with Indian food, wherever they were heading to.

Toys

This seemed a difficult category in an airport, because the products are often bought with the support and influence of the consumer, the child. Keeping this in mind, we positioned this category as a so called guilt purchase of returning parents, placing it strategically at the entrance of the store, so that everyone (parent) could see it and be reminded of their loved ones at home, awaiting their return. A gift can only compensate the pain caused due their long absence! Now my Indian colleagues wanted to go one step ahead and activate the category by an experience section, where one could actually play with the toys. I was very reluctant, considering that the kids would not be around and only the buying parent to select the toy, therefore no activation should be required. I handed in for a test period and will never forget the debate we had on who, of our team members, had to solve the 2000 pieces puzzle of the Taj Mahal to put it on display. Yes, another success story, the parents loved the section with remote controlled cars to play with, finished puzzles and flying objects on the ceiling.

Liquor – the King’s category

Finally, some experience in the king’s category liquor, which is the biggest value driver in all Indian airports, without a doubt. The question we asked ourselves was very simple; how to increase the average ticket value in liquor. Given the import restrictions most countries have, the focus was on upselling to more expensive products than the personal favorite one might be. Having failed with tasting in the food section, I did not want to let loose on this initiative, as it is a proven concept around the world. Knowing that most of the international flights would depart post-midnight and passengers would arrive at the departure terminal with empty stomach, I also presumed that one or two 5ml Whisky taster would make them very happy and put them in a good shopping mood. Beside they could taste some liquids which under normal circumstances would not be a part of their repertoire but given the Duty Free price advantage, one might want to trade up. All said and done, the concept would surely work as planned but some considerable obstacles came in to our way. The Indian excise department gave special approval, but changed their mind later on the question, whether this is consumption of liquor or it could be termed as tasting to support buying decision. The bar just behind our liquor section was not happy at all to watch us serving tester of liquor as they assumed their revenue would go down. The tension with both parties made us hand in and stop this concept before it really took off. So we had to look out for other options. This brought us to the attempt to increase the conversion (% of liquor buyers out of total passengers) rather than upselling.

So the question was how to engage more passengers in liquor purchase? Or a little broader expressed; how to engage more people in Duty Free shopping? I didn’t know! To get a better insight, I ordered my entire back-end team to spend at least one night per week on the shop floor selling products, regardless of their position or designation. Oh my,.., I received a lot of resistance and people explained my about their job description and why they would have to spend extra hours in a function, which was not their area of responsibility. Running the risk of becoming the bad guy I still insisted on this project, but allowed that one could team up with their colleagues in pairs or multiple to enforce the team building effect. Still adamant people did not have the choice but to oblige. It actually turned out to be one of the best initiatives ever. People had initial doubts but got first-hand experience, which they otherwise would have never gotten. All of the back-enders gained ‘stories’ which they kept on telling months later. And exactly out of these stories, the underlining message was that the success in selling lies in the friendly and spirited interaction with the customer. So we hired a group of young students, well versed in communication, with the only aim to get involved in discussion with passengers and engage them with our products. I would like to stress the point that these students had neither extra knowledge nor training in any of our product categories. The briefing was very simple; to friendly greet and get engaged with passengers and lead them to the section of interest, if they so want. But most important be you and have fun. The result was astonishing, we would sell liquor bottles priced $ 1’000 and higher, which already accumulated dust, initiated by these students.

Sales at Cash Tills

Another interesting element came out of a customer survey, where the passengers claimed that the waiting time at the cash till was taking too long. We were aware of this challenge, but not in a position to cover the peak times, for arriving / departing full body aircrafts with big number of passengers. Taking the feedback into consideration, we agreed that the waiting time is also influenced by the perception of waiting, while not doing anything, for one’s own check out process. So we created aisle of impulse products left and right of the cues. These aisles would display chocolate, toys, miniatures of any kind etc., whatever does not need long thinking in the purchasing decision. Not only we could reduce the perceived waiting time and make the shoppers happier, we also increased sales, article per ticket and overall ticket value to make us happier.

What I did not highlight in my entire excursion is the common saying; Retail is Detail! Even though this all sounds very simple, the devil lies in the detail. Success and failure is very close to each other. Fortunately in airport retail, we got immediate response on winning concepts and could further fine tune success models.

Wishing you happy selling..

How to become a Person of Indian Origin

To get an Indian Visa still seems to be a major challenge, from an administration point of view. Despite of outsourced Visa application process, the task was still compared with writing a dissertation by a recent visitor of mine and he termed the visa application homepage as one of the worst available on the www.

However, my story is a little different than the one of a regular Tourist, Business Traveler or Expat, because I came to India with no plan to leave the country.

For my first employment visa I spent a lot of time and energy in the FRO (Foreigner Registration Office) in Bangalore, which was basically the local Police Station with some dedicated officers to foreigners. I did not expect to get in contact with the police so fast and also failed to get my work done, No Visa Granted. As plan B, I handed over the reins of my employment visa to my employer and ended up traveling back all the way to Switzerland, just to pose my smiling face to the Indian government at the Indian Embassy in Switzerland. This was my most expensive visa ever.

But hold, job not yet done. As a foreigner, staying for more than 180 days in India, I need to register myself and apply for a Resident Permit from … the local FRO. The local authority had only one small issue, the reference of my company on the visa stated their registered office address as Mumbai but the officer insisted that he needs my companies Bangalore office address written on the visa, otherwise the visa would be invalid and no Resident Permit can be granted. Now I am standing there with a Visa, issued by the Indian Embassy in Switzerland, not being accepted by their own colleagues in India, from the same department, the Home Ministry. It took me another two weeks to mediate between the two Indian government offices, which strictly refuse to communicate directly with each other (this should not have been the last time to mediate between government offices).

As I only got a one year visa, the task to extend it started exactly 275 days later, 90 days before expiry. Feeling already very confident with the system, I decided to take a more ‘professional’ approach this time, to hire an agent to get the work done. To keep a long story short, my outsourcing did not really work either. It took 9 month to extend for 12 month retrospective. This means I was bound to stay in India for 6 month after expiry, with only the application for extension in hand. The agent tried to calm me: “Don’t worry, I will get it done tomorrow, you can use the application as your visa”. Needless to say, I did not have a good time.

So the 275 days leadtime boiled down to 95 days before the next round started. As I am trained to learn from mistakes, I planned to try a new route again, no companies support, no agent. I decided to go by myself once more, and trust in the guy I have the most confidence in. I knew I have to prepare very well, not only with documents but also mentally, handling situations, staying calm, being patient, showing respect (not always sure for what)! Having seen the process twice already and with the just separated FRO office from the Police office I had good reason to give it a try. 



FRO Bangalore



Perfectly prepared as per the latest downloaded application process, with 3 set of application (around 100 pages), properly sorted, bundled and pinned the way they like it. Passport pictures, black pen, everything was there. Most important, I had taken the day off and was ready to spend 10 hours in the newly opened FRO. The rally started at counter No. 1, where I got a digitally printed token (manually handed over) to cue at counter No. 2. At counter number 2 my papers were checked by officer A, who hands them over to officer B to sign it. A new token was issued to grant entrance to the first floor. I kind of thought I can just pick up my visa on the first floor and praise the new FRO for facilities and process. Upstairs I had to register myself, to prove that I was there, a guest book so to speak. Then I cued again for the next counter, where the same work seemed to happen as at counter No. 2. Only that the gentlemen was now informing me, that I need a set of 4 copies. He did not like me demonstrating the Home Ministry homepage and printout, dated the previous day, where it clearly stated 3 copies. He educated me that the homepage was out of date. To my surprise the copy shop to help me out was located just outside the FRO, so it took me less than 10 minutes and 31 rupees to get the additional copy, but another 1 hour in the freshly built up cue on counter No. 3. Now the officer gave me an obstinate headshake and directly hands me over to counter No. 4 with no cueing in between. Here my paper were prepared in right order, form and equipped with a new cover sheet. Hurray one more hurdle taken and counter 5 already in sight and I spot the first female officer manning the counter! Lady 5 was extraordinary friendly and even a bit talkative. While talking she was writing on the cover sheet as there was no tomorrow. She explained me that my application process is completed and the visa extension will be issued after registration and payment. For registration I need to please proceed to counter No. 6, then the request for payment can be availed at counter No. 7 by handing over the slip from No. 6. The payment will be made at counter No. 8, after which counter 6 will issue the visa. Oh My God! I had to sit down for a moment to recapitulate what was told to me and the journey I had already behind me. And there it happened, … , a Korean who seemed to be 2 steps ahead of me in the process, lost his temper and started to shout at the officer at counter 6 with very energetic hand and body movements. It took exactly one hand signal and 30 seconds, before the Korean was removed from the counter, the room and the building. Some processes seem to work seamless but I felt very sorry for the Korean, as I could totally understand his mental stage and loss of temper. Luckily I was prepared well! It took me another 3 counters and a walk outside to claim the only acceptable payment mode, a check from a nationalised bank. I fully utilized the day and had my visa extension in hand.

With a kind of 7^th sense, I walked in to the Directors Office, the head of the immigration bureau, just to friendly share some elements of my experience and to learn if we have some people in common as I worked at the airport, surrounded by an army of immigration staff. He offered me tea and seemed happy to have a chat which was not a complaint but a feedback.

After having an inquisitive look at my documents, he asked: Why don’t you apply for a PIO as you are married to an Indian national?

 

I didn’t believe what I had just heard from the director of the immigration bureau but got confirmation from Google that I would qualify for PIO! As the required documents for PIO were 95% identical with the one for the visa extension, I immediately launched the process.

Only two weeks after my visa extension, the FRO officers were very surprised to see my face again at counter No. 2: “did you not get your extension?”. This time it really felt like a homerun. All the officers were super friendly and helpful, almost like friends. They remembered seeing me and having tea with the director. Everyone wanted to know the story behind my PIO application, me being in India, married to my lovely wife Anupama. It was a happy day, still took me 4 hours but completed the task and got the application approved. 3 months later the PIO was ready to be picked up.

I did not miss to have another tea with the director, to share my gratitude and to set the beginning of my change in mind-set about India’s most difficult entities to work with.

How to explain India

During my professional career in India I have always been exposed to try to explain India as a market. With the change in government and the assumed turnaround of the economy, this task is more than ever important, working for a Multi-National Company in India.

But how to explain Leaders, who have never been to India but read in the Financial Times, that India will be the fastest growing economy in these days to come.

As one knows that ‘learning’ always starts with the already known, I have to compare India with something known to my European friends. Being fully aware, that India cannot be compared with any other economy; I am left with no option than to compare.

So, I do a chart to only be surprised myself:

So many similarities were not expected and nowadays I can spend hours talking on this single chart. Starting from distance and travel time between locations, covering the aspects of different culture, climate, food, language, laws or even ethnics, it has become a ‘walk in the park’ to visualize the dynamics of India.

If still not satisfied, I start to give examples: How would a Norwegian Key Account Manager approach an Italian Retail Chain? Why does Germany not keep the same product assortment as Spain? How many companies keep one marketing department or strategy for entire Europe? Is the shopping behaviour on consumer goods the same in Greece and in Switzerland? And the story goes on..

Being fully aware that I don’t give full justice to the diversity of India (it is more diverse than Europe), I am blessed to have a good starting point to explain India as a market to complete strangers to our culture and economy.

Getting Started

Inside India is my perspective as an Expat in India. There are ups and down in every country we live in and India being a very diverse country with different cultures is definitely the learning ground for the emerging markets. My series of blogs will touch certain parts of my personal experiences in India. To start with I am writing my first blog about my brief stint in India before I go to specific experiences.

I am a Swiss national, who has all his life worked in Europe. My stint had been in Electronics and FMCG. After working in mature markets I got an opportunity to work in Emerging market.

My story in short so far.

Inside India

On January 7, 2008. I moved to India. My knowledge of the country was limited, probably a bit more than an average tourist. This was my big moment. I had opted for a change in my life without knowing what I was getting into. I only knew I was marrying the woman I love and had decided to leave the safe environment of my country to come to India. In the beginning it all seemed very strange, not that it does seem strange today after 8 years but now I am used to a lot which I was not earlier.

lndia the land of diversity, different cultures, and different mind-set all together. One can compare India in its diversity with Europe. No two states in India are alike much like no two countries are alike in Europe.

My experience of this diverse culture and habits started from Bangalore, South India. The IT city which is compared to the Silicon Valley in the USA. Unlike the city in comparison, Bangalore does have a lovely climate but no infrastructure to be acclaimed as a global city.

Bangalore or Bengaluru as some say, is a city of young adults, having a very cosmopolitan culture and busting with energy and fun. A culture easy to blend in socially, humble polite people and very friendly.

I started my work with The Nuance Group. My first job in India and it was fun to do the start up of travel retail at the new airport yet to be launched BIAL.

My days were spent to understand excise and customs laws of India. The work culture here is very unique to me, no clarity of laws and no easy access to information makes it a very challenging country to work in as an Expat.

Fortunately, I had help from my friends and colleagues and with ease I managed to understand the people and do my job with satisfaction. I will say the first 2 years were tough, but then creating history by putting a structure for duty free retail was exciting.

During my stay at Bangalore I got a chance to visit Coorg and Pondicherry, very serene, very beautiful places. I have somehow got an affinity to Pondicherry. A home away from my country and I like visiting this state as often as I can. The place is so serene and calm, for me to spend 2 to 3 days here is as good as going for any vacation in India.

The years just flew away in Bangalore, we never felt that it was 4 years and then one day we had to take a personal decision to move to Delhi. This was an exciting phase again for me. After working in South India in travel retail, I was excited to move to domestic retail and moved to Delhi with Safilo, India.

This was a totally different phase for me.

There is a huge difference in culture and work ethics in Delhi/ Gurgaon. This has been my learning so far. My work gets me to travel within all around India but more intensely to Mumbai and Gurgaon. It is interesting to understand the domestic market of India. Many a times the best practices of mature market which I have worked all my life come very handy for me to work in this environment. These are very interesting times in India and I am hopeful to gain more experience in these markets. It’s challenging to work in emerging markets and the mind sets of people are very different. That’s when I am grateful to my work experience in Europe.

The story will continue further as in my follow up blogs I will share fun stories and certain challenges which I have faced till now.