With a quarter of a century in the industry behind him, Sanjeev Rao believes he is particularly well placed to exemplify best practices in the cardinal rule of smart retailing: Location, location and location. In an exclusive interview with Shopping Centre News, he says he’s just getting started on turning the definition of Business Development on its head…
Director of Business Development at Raymond for the past 20-odd months, Sanjeev Rao’s resumé reads like a roll call of India’s most noteworthy multi-channel, multi-format retail conglomerates. From Music World (owned at the time by the erstwhile RPG Group) to Planet M to Jubilant Retail (at Total Mall and Hypermarket), Aditya Birla Retail and Landmark Group, he has dipped his fingers in almost every function of the pie – marketing, operations, management, business development and location strategy.
But it is the last two that seem to come almost naturally to the effusive, expansive Rao.
Describing himself as a ‘high-impact retail leader with profound expertise in all aspects of retail operations and management’, Rao, who graduated from Wharton Business School (ADP) UPENN, has handled core teams of large retail units as a cross-functional expert. His previous assignments include business modelling, expansion and development strategy as Vice President – Business Development at Spar (Landmark Group), where he was also responsible for facilitating sales delivery and developing new formats for hypermarket roll-out. He had been an Assistant Vice President of Business Development and was National Head of Leasing at Aditya Birla Retail Limited for More Hypermarkets.
His longest stint – covering seven years until 2011 – has been at Jubilant Retail’s Total hypermarket format as Vice-President of Operations & Business Development. Rao was entrusted with the task of optimizing the hypermarket format’s profitability – via both location outlays and operations.
On The Raymond Makeover
As on December 31, 2016, Raymond had 1,067 retail stores across all formats, including 47 stores in the Middle East and SAARC region, covering 1.97 million square feet of retail space.
Rao’s mandate, as he sees it, is three-pronged: Escalating the experience at Raymond’s next-generation brick-and-mortar stores (the ‘Ready to Wear’ and ‘Made to Measure’ formats, Park Avenue and ColorPlus), identifying and converting fresh markets, and pinpointing and managing all non-TRS (The Raymond Store) Ready to Wear and Made to Measure franchisees.
Referring to the first of these roles, for Raymond, the challenge, until recently, had been to alter the perception of the brand as a Gen X identity, Rao notes. There needed to be an urgent but thought-through strategy to become more democratic in allure, especially to appeal to younger, millennial shoppers.
“In order to Millennial-ise Raymond, we had to figure out how to arrive at the perfect balance between digital and physical experiences in our stores. Because, while we did want to modernise and be in sync with the young shopper, we also did not want to alienate or intimidate the more traditional, older buyer,” he says.
At the new-generation Raymond Ready to Wear stores, about 60 per cent customers are tech savvy, young shoppers, while 40 per cent comprise the more mature, traditional buyers who prefer a ‘human touch’ in their experience, Rao states.
In Rao’s opinion, adding too much digital content to physical stores has the potential to create too much ‘white noise’, and distracting buyers from the decision-making process. “So. in any of new Raymond stores, we have no PoS counters; we run the selection and transaction processes completely on iPads. There is smart tech, but it is unobtrusive.”
But are customers comfortable with this new way of doing things? “No,” he admits. “For customers who are instinctively intimidated by tech, we personalize the experience manually.” Yet another in-store experiential innovation that Raymond has created is via merchandising – by sacrificing depth for merchandise breadth. Referring to the brand’s ‘99 Shades of White’ campaign, Rao says, “At the front-end, we display more styles than sizes in white shirts, for instance.”
“We display a vast range of white shirts for every conceivable occasion and use. Upon request, appropriate sizes can be called in from the back-of-store inventory. Store shelves are therefore, freed up to create a much richer merchandising experience,” he adds.
On Agility and Advantages
At Raymond, Rao has brought in all of his learnings of two decades to craft a lean, focused strategy that delivers highest bang for buck for the company’s bottom-line. “What I’ve learnt from the food retail business is to be frugal,” he says. “My first call at Raymond was to apply that with respect to our real estate outflows.”
In the first few months at Raymond, he embarked – successfully – on an aggressive plan to ‘correct’ rentals for Raymond across store formats throughout India. “The rent re-negotiations we initiated worked, and have led to much healthier bottomlines for our retail formats,” he confirms.
“For me, the portfolio of business development should not be equated with just expansion or property management, as most people seem to believe. I believe it is really about maximising all investments in the retail footprint, including amending terms of the existing locations if they are unfeasible,” Rao asserts.
“We’ve disrupted some old mechanics of the business development system. For instance, I believe that for professionals in the role of expanding retail footprint, hitting the ground running at all times, not just through an annual plan, is critical. Also, it is important to know when to be a first-mover and when not, especially in virgin markets.”
“There should be a continuous drive to determine which markets and retail spaces are coming up, how the respective catchments are behaving and I need this information every quarter, not annually,” Rao states. “There have been places – in Tier II and II towns – where we have been first movers on a main street, opening three to four stores at a go, not just one. This nimble-footedness is a self-fulfilling prophecy. At Raymond, this has resulted in much higher agility when it comes to generating first-mover advantages.”
In the cause of agility, simplifying and speeding up retail expansion processes is another skill Rao has brought to the table at Raymond. (Part of that could be the outcome of managing an unusually lean team; Rao’s BD set-up has just four people, including himself.)
“We now have a robust process that facilitates a 20-step site approval cleared within just 15 days. We ensure that for viable properties, the LOI (Letter of Intent) is cleared within 48 hours of in-principle approval.”
In order to derive early and sustainable growth, retailers and retail real estate investors must keep their ear to the ground with respect to macro-economic shifts, according to Rao. He offers the instance of Bengaluru’s HSR Layout, a relatively new suburb located in the city’s south-east, which has also become a gateway to Electronic City, a major IT hub of the metropolis.
Rao points out to how fast-expanding employment opportunities in tech and IT drove massive housing demand, which in turn fed retail and retail real estate. “Three years ago, the 27th Main Road in HSR Layout was practially dead. Look at it now; it is a vibrant retail and entertainment hub. Housing has driven this transformation.”
Raymond’s best performing (non-TRS) store is the Made to Measure/ Ready to Wear store in Bengaluru’s Indiranagar. A stunning high-tech retail address, the outlet disti nguishes itself with powerful, eye-popping visual media, including a dynamic video screen replacing a conventional store facade, and everything sold on an iPad.
In approximately three months’ time from opening, the store’s sales revenue rocketed impressively from Rs 20 lakh per month to Rs 55-60 lakh per month, a three-fold jump. What made that happen? “Location, for one,” Rao says. “Being on a main high-traffic road guarantees plenty of eyeballs. However, when a large proportion of the views comes from transient traffic, it is critical that consumers are able to look directly into the store in those few seconds. The all-glass frontage, which doubles up as a video screen, ensures just that.”
“As a retailer, if you’re fortunate enough to be located on a powerful retail location such as our Indiranagar store is, it is imperative that you pull out all stops to be seen, heard and experienced – even from a distance.”
The second factor for this store’s meteoric growth is the product, Rao says. “Premium, but not luxury in pricing, while the ambience is almost ‘luxury-tech’. It’s a neat complement.”
Lastly, people are who finally get in the numbers, he adds. “The store manager, to me, is the CEO of the outlet. Our systems ensure that store staff go through several HR processes, including being trained on language, diction, communication, product knowledge. Additionally, our style advisors have a superb understanding on how consumers behave, what they need and how they need to be serviced.”
On Properties and Partners
Retail real estate in India has been in the throes of a churn of sorts – as has physical retail – over the past couple of years. The expansion of online shopping has led to major strategy recalibrations at many retail and shopping centre developers’ boardrooms. However, despite the challenges that e-commerce poses to physical retail, Rao believes that definitive positives have also emerged, especially with respect to relations between retailers and retail real estate owners.
“A decade ago, revenue share was not even an entity. There was a landlord, and there was the tenant. Period.,” he says. “Now, I see a clear maturity; finally, there is strong acknowledgement of the fact that both parties need each other. From landlord-tenant, it is beginning to resemble more a partner relationship.”
“Shopping centre developers are now much more cognizant of the details of marketing and management, and are willing to throw in their weight to push mall traffic and sales for their tenants,” he adds.
“The relationship has also become much more transparent and equitable. For instance, at some of the country’s best performing malls, tenants who don’t deliver a certain SPF (sales per square foot) are being shown the door. I think this is pushing the right kind of buttons; retailers are being compelled to perform and mall owners are pushing themselves to optimise their investments for the long run.”
Also, developers now recognise the need to spread risk through a versatile occupier mix – with a deepening focus on entertainment and leisure, Rao notes. “This strategy is actually delivering positive spin-offs for retailers; as malls become more powerful social spaces, tenants can only benefit. Having said that, the buck however, still stops with the retailer – and its product, price and people.”
Meanwhile, he is envisioning 100 new stores for Raymond in the next 12 months, while also moving ahead on the company’s retail expansion into Dubai.
Away from work – but innately tied to it – is Rao’s other target: a book chronicling the numerous experiences, insights, stories and anecdotes collected over a two-decade-plus journey in retail. So, will it be a kiss-and-tell biography? “Well, some people could get a little hot under the collar with some of the narrative,” Rao laughs. “But the stories will all be true. And insightful on the art and science of retailing. And definitely entertaining.”