Category: Customer Experience

Vertical Growth by Horizontal Partnerships

“Real generosity towards the future lies in giving all to the present.” ― Albert Camus, Notebooks 1935-1942

No one exemplifies this trait better than two brands who have seemingly taken the market by storm over night. It takes a lot to be an over night success. Both Meat One and Day Fresh have gotten the formula right. Looking at our demographics and subsequently our culture and cuisine trends in relation to true demand problems, these two have slotted them selves in to being on the supply side of that demand side problem.

What makes this even more interesting is that in Milk segment Engro Foods, tried its hand in a one year experiment with a large budget and 20 odd stores and failed. Both on the uptake of the service and market acceptability. The franchise model didn’t work out for them and they concluded the experiment having spent half of the allocated funds and graciously bowing out of a space dominated by the local player Dairyland . Some times its not a matter of scale or being in the business already its about execution and a well thought out strategy.

So whats next for Dairyland and MeatOne, in an ideal world one would like to think beyond individual companies and dynamics and look to build synergies. To that end a natural distribution point for Dairylands product would be at MeatOne and it would help drive foot traffic which would increase same store sales for MeatOne.

But some one has to take the imitative to review such corporate partnerships and alignment. It also builds a strategic barrier to entry to other Meat or Dairy players who would then think twice about entering the market as they wouldn’t be competing with one strong brand but two and both the incumbent players would have a larger safety net when a new competitor tries to enter.With other large local and foreign conglomerates planning to enter both dairy and meat markets it would be a very interesting mix if these to got together to come up with same store concepts.

With ICI now ironing out the details on a tie up with Unibrands to market the Japanese infant milk brand Morinaga, the writing is on the wall for people to tap in to the milk nutrition market space.In the Meat section there is no substantive information yet but both Engro and ICI are rumored to be exploring these segments, which tells a telling tale around the potential and market size. There are a dozen if not more mid sized, traditionally export oriented brands that are looking to solve the puzzle of cold chain, logistics, distribution and building consumer brands. Much like Meat One did.

Given our shopping habits and an emphasis on fresh consumables, but given the time/traffic and other pressures of not being able to go out to the corner store daily, A multi concept food store that has Milk, Meat, Produce and Bread could be the next retailing phenomenon in the local urban/metro space.

If some one were to build a store footprint that would cater to the consumers basic needs they would most certainly create a new market entry point for them selves, their brand and distribution channels. The market has already shown that people are willing to pay a slight premium for hygienically produced and packaged products in the dairy and meat space, the likes of Hyperstar have proven the same for fruits and vegetables, fresh baked goods at middle market bakeries also prove the concept of paying a premium for a healthier preparation of the same product. The combination of all four should result in an ideal mix for a new relating concept.

These items already exist today but in their own distribution channels if there were horizontal partnerships in the space, the vertical gains would essentially give the non-branded, lower end of the spectrum and traditional producers a tough time. Its time for Pakistani companies to look beyond the obvious and explore avenues that increase their footprint and share holder value.

 

 

 

Mind The Gap – Khaadi –

Gap Inc was the formidable US clothing retailer that was always relevant and wildly popular. It literally came from no where and then grew to having Banana Republic on the high end of the spectrum and Old Navy on the lower end. But some where in the middle it lost its own brand identity and it became too vanilla in a category it had created it self. Where others were giving it a run for its money on its own turf, it was a crisis of confidence, leadership and missteps.

We have our own, perhaps even better version of the Gap success story. Khaadi. It is the one brand that has done every thing right, from customer service, to designs, to branding, to placement to creating its own niche and beyond. But the question is what happens next? 2015 is very different from 1998, staying fresh over a 17 year run is not an easy task for any business, let alone fashion retail. Khaadi has to be commended for what it has done so far.

2014 saw it expand to online a few years after its expansion to the Middle East, Malaysia and the UK. Compared to other retailers, Khaadi has had a decent plan every time when it came to expansion but at a global e-tailing or retailing level there are some things that are strikingly familiar to Gap. Lets start with the Malaysian expansion, the target market there cant possibly be Pakistanis or South Asians alone, just by pure numbers it wouldn’t make sense. What would make sense is to target the local Malay population. They frankly don’t know what Khaadi means or represents.

What they do know is social engagement , their love for trendy clothes and bright colors(even the men). No less Khaadi does not have a Bhasa Malay media campaign. Id caution on taking the billboard and tv engagement space. Malays are pretty digitally plugged in, so a social media campaign or two targeting engagement and brand development would have most certainly helped. Khaadi is too big now to not think about these strategic missteps and it puts it in a similar space like Gap should it continue to not address these items.

Then we have the online store, a great leap into international retail without the physical footprint. But to be a serious player and to beat the “aunties” who are buying Khaadi product from Pakistan and stuffing suitcases and taking them to the US to retail or sell to friends or family, Khaadi has to re evaluate its supply chain, production, fulfillment and delivery logistics. Else it will be beat on price on its own goods locally procured and hand carried to the US and beyond.The first thing that has to change is the online experience. It is harrowingly slow, the site needs to be updated to a proper e-commerce portal with multi currency and multi location shipping. The site just doesn’t need a refresh but instead needs the Khaadi touch to make the experience special like the brand it self. The potential of the e-commerce store at some point would outweigh the sales volumes and FX earnings if executed properly.

That has nothing to do with Khaadis core business, which is to manufacture top quality product. Here in lies the problem similar to GAP, reach out and get the help you need as opposed to trying to do every thing in house or based on the advice of people you know.Its time to get professional advice. At a globally competitive level. Not at a mom and pop shop level where by having COD in Pakistan and shipping enabled to USA you start to think you are the best thing since slice bread. The shipping and checkout process is short of horrible. Khaadi needs to emulate its in store service equivalent to remain relevant. Enough said.

You have the potential, but you aren’t there yet. Its easy, you pay for what you get. In Khaadis case it has the cash to fund this growth. The question is, does it have the foresight and willingness to not die in an industry that it created, the signs are there, it needs a product reboot along with an online reboot. It has to innovate to stay relevant and grow. It would be interesting to see its in store year or year growth ratios.

Then we have the Khaadi Home and Khaadi Khas and Khaadi Kids phenomenon? Any one see similarities to GAP yet? Khaadi is a niche player that needs to go wider and deeper in its expansion strategy, just like Max out of the UAE. A home grown “value fashion brand” that has over 1.2bn$ in Sales and eyeing 3bn$ soon. Now that is ambition, fueled by growth, a stellar management team and not an army of one. They are focused, albeit their niche is a little different but they are doing all the things they need to do to stay on track.

Khaadi in its purest form is limited by the ability of its CEO/Entrepreneur/Chairman at large to wear many hats. The same person that brought it this far. That’s where a Senior global management team comes in to play to go beyond the current state. The CEO should have the wherewithal to see the shape of things to come and realize that he has done an exemplary job in building one of the smartest, well managed, high growth brands in the country. But to play at a global level, re-define the niche and build distribution and logistics capabilities along with production uplift, he needs to now move up to the big boys table. Commit financially, mentally and in principle to lead the charge to make Khaadi into Pakistan’s true first Billion-dollar brand. This can be achieved with focus on the brand it self and not diversions and distractions into other ventures just because you are cash rich.

Stay true to the core before diversification in to other lines of business. Khaadi has had an admirable and phenomenal journey; it can go further but only with the right strategic outlook and plan. The mix is good, but the leadership beyond the founder is questionable for a global expansion charge, that fuels growth 50X from where it is today.