Great by Choice - Jim Collins

Just finished reading "Great by Choice" by Jim collins.
Very simple read -with loads of numerical data supporting three basic "fundas"

1. 20 mile approach - talks about how imp it is to focus on doing what you have decided to do on a daily basis. if you have decided to run 20 miles a day - data supports the guy who runs just 20 miles per day (whether he is tired and not fit, or feeling extra energetic and fit - he does not reduce or increase the distance) v/s a guy who runs 30 miles when he is feeling great and 10 miles when he is not in the mood.

The illustration of how southwest airlines opened 3 sectors every year - year after year - for three decades v/s United and continental who opened 10 in good times and 0 in recession.

There will be critics who will say that with favourable tailwinds - why not run 30 miles. But I am sold on the 20 mile concept with my current experience.

2. Fire Bullets and then cannonball - How imp it is to try with bullets to set your aim correct and then accumulate all gunpowder to go for final charge. the importance of low cost, low risk and low exposure (to org) of experiments - and then pick the winners with data and fund/ fuel/ support them.

3. Oxygen Canisters - The guy who worries about oxygen when he needs it, v/s one who worries about it from day one. The funda holds true for insurance, SIP, early savings in life as well as cash/ debt exposure for the company.

In current retail scenario - one needs the leadership that can motivate teams to march 20 miles - in good times and bad times - one who can keep firing bullets and evaluate results without bias and ego, and one who do not risk future of entire organisation over egoistic store openings or so called "gut calls"

Retail Mathematics : One basic equation

Over last six years, i have conducted over 1000 interviews for store managers and store teams. To my disappointment, 99.99% of the people have been found lacking on basic retail understanding. It looks like we are creating a set of machines who know just two numbers - targets and achievements.... and nothing beyond that.
Simple questions like - "if you have been given a task to increase sales for your store by 20% over last year, what will you look at" - meet with the standars answers like "i will ask company to spend more on marketing" or "i will ask buyers to buy correctly for my store" .
For benefit of all others, who will go through interviewers like me, here is the equation

Net Sales = (Walk-ins) * (conversion)* (Average Unit Value) * (Units per transaction) * (1-Discount %)

hence to increase net sales :
1. Work on walk-ins - and DO NOT depend on marketing to drive walk-ins. Calls from customer database, acquiring new databases, better service resulting in increased frequency of customer visit - is what a store manger is supposed to drive.
2. Conversions - Most neglected aspect and a non measurable one too in Indian scenario. have never trusted these figures till date (be it guard with click timer or automatic walk in counter). Every single customer walking out, is a loss of sale - present or future.
3. Average unit value - if i have a store in the most premium mall of India - why will i want to drive sales through my entry  price points? One should understand how better understanding of consumers can help suggesting and selling higher price point items - which will result in increased AUV
4. Units per transaction - basket size as it is sometimes called. a dogged determination to increase this beyond two is required in every store. Whenever we have announced incentives, we have seen increase in AUV by 20-30% which clearly shows how much sales one looses in every transaction if employees are not completely motivated.
5. Discount - i have seen trigger happy brand heads who have "promo" as the solution for all increase in sales. It does not work that way. Control on discounts during peak season as well as judicious discount during EOSS is critical to optimal sales and profits.
And see how all of these can be done by people in the stores and not a marketing manager or buyer sitting in some office.

Career in Retail - Why ?

Career in Retail - a tough rewarding choice!

I was at a Management Institute on Friday, talking to students why they should consider a career in retail in today's economy.

While i will get into different options within retail in a separate blog, am trying to put together top 3 reasons why one should get into retail :

Reason No 1 - " there are no set rules still " - If you are one of the dreamers, who believes in old fashioned "create a dent in the universe theory" - this is the field. With hardly any work done on processes and management capabilities in Inian retail - the field needs people who hate to work with SOP's from day one in their job. No wonder, that people who deliver grow really fast. it took me 8 years to head a company, one of my friends became head of operations for one international brand in 5 years time.

Reason No 2 - "Young, fun and learning industry" - In one of my earlier jobs, i have stayed at a plant where average age was 50, and trust me - it was helll of a month for me. This industry is young, this industry enjoys college kind of culture at work - loves to see people making mistakes and learning from them.

Reason No 3 - "There is money - enough and more" - Yes, i have seen salary jump from Rs 2 lacs per annum to 28 lacs per annum for the friend of mine mentioned in point no 1. I have seen jump of 60 times for another friend who started her career with selling on shop floor. I have myself seen 15 times salary jump in these 9 years of my career.

In a nutshell - Learn, Earn and Fun - summarise three reasons to be part of this wonderful industry!!

Looking out for people who dream to create that famous dent in the universe.

Vikas

Retail Profitability - What is the answer ?

For the first five years of my career- the holy grail in retail was psfpd (per sq ft per day sales). All the numbers, buying plans, profitability projections, rental decisions - centred around what the psfpd projections were. The fact that India was shining (as they wanted to believe us) has something to do with this optimism (get the topline, profits will follow)
My next five years have seen shift to the level of obsession - towards Full price Sell Through and gross Margin % as the indicators of retail performance. Again - the recession, failure of many a retail ventures, and the perception that it is impossible to make money in retail has fuelled 180 degree shift.

In the last six months - working with arious teams- I have come to realise that age old "Rupee gross margin per sq ft" - is the term that will offer way ahead to people looking at profitability in retail.
While rupee gross margin per sq ft has always been the focus for bog box retailers, EBO's never looked at this as the concept to follow. No wonder there were missed opportunities on higher sales (trying to chase better gross margin %, or there were unprofitable ventures even after achieving stupendous psfpd's)

I am working on a matrix that can correlate the three. if the Disclosure policy of my organisation allows me to upload the results, should be able to do it in a months time.

Chase Perfection, not Success

These words have been cast in stone - when Aamir Khan used this line in his movie three idiots.
I started my career - chasing misplaced career Goals like - "To be a VP by the age of 35" . Very soon i gave up that aspiration and decided to be the "best retail experience designer in India, running a profitable retail company"

My first job exposed me to corporate world (no wonder still hold that group in high esteem). It was a job that was about branded wholesale business. Gave my heart, soul and everything to learn the fundamentals for five years. My batchmates, had changed 3 jobs by then and were at 2-3 times my CTC package.
My second job was my first step in the business of branded retail (which is very different from wholesale). Two years of hard work, doing things with passion, experimenting without any fear of failure, mastering the art of planning and operations - i proved to be a good student. Did not work for grades (promotions) but invested two years to learn retail.
My third job - helped me grow from a functional expert to a business head. Here i was, learning things about business plans, P&L statements, legal documents, Lease agreements - things that i always thought i will never be able to do. All credit to my CEO for pushing me into doing all of that. He was the one who was never satisfied with 95% application. He just wanted nothing less than excellence (it is another fact that even 115% did not satisfy him ever). Never bothered about people with much lower IQ at better or similar positions or salary.
And here i am in my fouth job - with the responsibility of handling multiple businesses. I have got this break so early in my career - only because of the way my learning happend in the first three assignments. Am going to give my heart, sould and everything - just like my first job - again - to make this a perfect organisation that i have always dreamt of.
The fact that my package is twice that of my B school batchmates - helps me to confidently state that chasing perfection is more profitable than chasing success !!!