A Shivaram, Founder, Retail Gurukul
When an FM radio channel in Chennai starts broadcasting Bollywood Hindi film songs all day long instead of Tamil melodies, people are naturally surprised. But, as retail training expert A Shivaram pointed out, what the change really signals is a significant shift in consumer sensibilities that no smart marketer can afford to overlook.
More and more, he added, social change tends to reflect very rapidly in consumer behaviour and demand trends. Jewellers have to cater to changing consumer choice with an always-apt product inventory that is based on fine consumer insight and superior collaboration with vendors and manufacturers.
A Shivaram is the founder of Retail Gurukul. In a crisp presentation, titled “Business Mantras for Higher Profitability: Managing the Change”, he described how retailers can change their outlook so as to manoeuvre their business onto a more profitable trajectory. He called the process change management, and cautioned that implementing it is quite a challenging task.
Jewellers need to learn how to respond faster, and they can draw inspiration from star vocalist Adnan Sami who, as Shivaram reminded his audience, managed to shed as much as 150kg of his excess weight — in effect making the impossible possible through hard work.
How can a jeweller achieve a similar feat in business? Shivaram has the prescription.
Data makes method from madness
In this era of social media, retailers tend to forget the wealth of information or data that they may be sitting on, or that they can generate. Using Big Data can help them understand their consumers better, said Shivaram — and all it takes is a simple process improvement.
“A jeweller can gather data on where the customers are coming from, what they are buying, the walk-in frequency of a customer, etc. The jeweller can calculate the hits and misses by comparing the number of walk-ins with the number of invoices issued. With this information the jeweller can identify why the customer left the store without buying anything.”
There is a very good reason for such attention to data. Shivaram asked his audience, “Can anybody hazard a guess how much a jeweller spends on each walk-in?” This cost includes advertising, marketing spend, etc. “It is Rs. 1,000 per person. The jeweller should recover that investment through sale.”
That special vendor for you
“When you spend Rs.1,000 on every walk-in,” Shivaram said, “you can’t let the customer go without purchasing anything, just because your vendor hasn’t provided the right mix of products.” It is crucial to maintain a strong rapport with the right kind of vendors.
“Moving beyond generic buying and selling,” he said, “retailers should maintain a mutually beneficial relationship with those vendors who can service special orders or customisation requests with a faster turnaround time, especially in this highly competitive market scenario.” It is also crucial to check that the chosen vendors are reliable.
The perils of choice overload
The secret to achieving higher conversion lies not in expanding choice, but in reducing choice, said Shivaram. To explain what he meant he played a video excerpt of a lecture by Sheena Iyengar, a world-renowned expert on the subject of consumer choice. In the video she explains how retail “choice overload” makes customers simply choose not to choose.
Drawing the lesson, Shivaram told his audience that “We should rethink our strategy of having thousands of bangles of near-identical design in stock, when we sell six bangles a day. It is more difficult to think than to buy.” Retailers, he said, have to consider their inventory more carefully. Their shopping list should grow only out of strong consumer insight.
The right inventory mix, Shivaram went on, helps a jeweller differentiate himself or herself. “You have to focus on your key product strength, concentrate on fast-movers and weed out non-movers in the stock. If your USP is bangles, don’t burden the inventory with solitaires.”
To reduce inventory carry cost, regularly assessing the performance of the inventory is crucial. “If you think that you have made a bad choice by buying a certain kind of jewellery, instead of holding it you can melt it,” he said, firmly. “Dump non-performing inventory. If you can reduce the inventory size by 20 per cent, this will surely add to your profitability.”
Your people, your profit
The final act of Shivaram’s presentation was a detailed plan of action that laid out for his audience how to keep salespeople motivated and achieve superior conversion. Key features of the plan included an achievable incentive structure, hourly incentive programmes, a useful salary structure, statutory benefits and employee stock option programmes, as well as morale-boosting measures like awards and Retail Employees’ Day celebrations. With support like this, he said, salespeople will be motivated to work harder and put in that extra effort that brings in sales.
“If you achieve a 5 per cent improvement in your stock turn, you will be able to comfortably cover incremental growth in human resource expenditure,” said this expert with a heart. “These things don’t cost too much.”