Planning the retail - The tangibles of touch points

Setting up retail outlets is one form of forward integration that gives a company access to additional customer touch points by way of product sales and after-sales service. Successful retail operations strengthen the company brand and enhance customer loyalty. In the Indian context, there have been several examples of SMEs who sensed a retail opportunity and came up with innovative business models that were eminently successful.
    The Amalgamated Bean Coffee Trading Company (ABCTCL) today is more recognised by its chain of branded coffee outlets known as Café Coffee Day. ABCTCL is an integrated coffee company in India with a presence across the entire value chain from plantations to retailing. The company has about 5,000 acres of
plantations spread over Chickmagalur, one of Karnataka’s coffee-growing districts. The company started off as a grower and exporter of coffee beans and later forayed into retail operations. Today the highly popular Café Coffee Day chain has about 552 stores spread across 90 cities, that source coffee from its own plantations and as well as local suppliers.
    A lower pricing strategy compared to competitors and the offer of an equivalent quality product combined with excellent service has made it the most successful coffee chain in India. This thriving forward integration
has enabled Café Coffee Day to charge around Rs40 per cup of cappuccino against Rs4 worth of coffee
bean ingredients. Entry into retail has resulted in a faster growth for ABCTCL vis-à-vis CCL Products, an exporter of coffee.
   Kitchen appliances maker TTK Prestige operates Smart Kitchen showrooms across India. The company has expanded from 50 outlets in 27 cities in 2004-05 to about 200 outlets in 100 cities in 2006-07. The Smart Kitchen is a one-stop shop that showcases the entire range of Prestige kitchenware. Besides presenting the best and latest products from the Prestige staple to consumers, these showrooms use the ambience of a live kitchen with plush interiors to enhance the brand image. The company uses the retail chain to channelise TTK’s new customer care tools such as Prestige Privilege Club (a loyalty programme) and Prestige Kitchen Care (a service programme).
    Namdhari Fresh is a retail venture from the Namdhari Group, the largest Indian manufacturer of hybrid seeds.The unique value proposition of Namdhari Fresh is the supply of quality produce, the majority of which they grow organically. The freshness of the produce is achieved through use of superior cold storage systems
that maintain temperatures of about 10 degrees in the room and the vegetable sales rack. This value
proposition (freshness and superior quality) has helped Namdhari Fresh in commanding a price premium for its fruits and vegetables over regular markets.
      Koutons is a leading apparel manufacturing company that has forward integrated into retail under the
Koutons and Charlie Outlaw brands through a network of 1,147 + exclusive brand outlets. The company started as an apparel manufacturing unit in 1993 and started retailing operations only in 2002.
What is unique to Koutons is that, while most Indian apparel manufacturers cum retailers sell through a mix
of exclusive outlets, national chain stores and multi brand outlets, Koutons sells only through its exclusive
outlets. This strategy has enabled them to focus on quality maintenance and customer satisfaction without
any channel conflict. Not surprisingly, Koutons has grown faster than the Zodiac Clothing Company which
retails mainly through multi-branded outlets.
      Internationally, one of the best examples of forward integration into retail is the Apple store. Apple has built stores that offer a unique customer experience through innovative use of store design. The layout simulates the usage environment at a customer’s home or office, and has less than 20 products on sale.      
     Apple has done away with checkout counters and replaced them with wireless credit card readers carried by the salespeople who also handle payments. There is a strong service element within the store as well.
Every store has a Genius Bar, where trained and highly qualified personnel share insights, technical advice and technical support on different products. All these activities have resulted in the Apple stores grossing maximum annual sales per square feet in comparison to other retail stores like Best Buy, Circuit City, etc.