Starbucks enters India with a 50:50 JV with Tata group

by Deepak Sharma on Tuesday, January 31, 2012

Starbucks is set to enter India with its 50:50 joint venture with Tata Global Beverages, a part of Indian conglomerate Tata Group. The plan is to open outlets in New Delhi and Mumbai by as early as August/September timeframe. It will be interesting to see how this JV fares in a country where Tea (or chai as Indians call it) rules supreme.

Tata Global Beverages and Starbucks Form Joint Venture to Open Starbucks Cafés across India

Tata Global Beverages Limited and Starbucks Coffee Company (Nasdaq: SBUX) today announced a joint venture between the iconic international coffee brand and the 2nd largest branded tea company in the world. The 50/50 joint venture, named TATA Starbucks Limited, will own and operate Starbucks cafés which will be branded as Starbucks Coffee “A Tata Alliance.”

The retail stores will be developed in cities across the country, beginning with stores in Delhi and Mumbai in calendar 2012.

In a separate sourcing and roasting agreement between Starbucks Coffee Company and Tata Coffee Limited, Tata Coffee Limited will roast coffee to supply TATA Starbucks Limited, and to export to Starbucks Coffee Company. This agreement paves the way for consumers in India to enjoy the premium Starbucks Experience, while further discovering the unique taste of high-quality Indian arabica coffee worldwide. TATA Starbucks Limited brings together two companies with a rich heritage in and passion for coffee, tea and innovative beverages. Together, the JV will enable an expanded range of beverage offerings for Indian consumers. As an example, the companies have agreed to jointly leverage assets and innovation to offer a premium tea product branded Tata Tazo.

“The joint venture with Starbucks is in line with Tata Global Beverages’ strategy of growing through strategic alliances in addition to organic and inorganic growth,” stated Mr. R K Krishnakumar, Vice Chairman, Tata Global Beverages. “It opens up exciting business opportunities and new formats for Tata Global Beverages. Starbucks brings unique retail expertise as well as a shared sense of business values. We are excited about the opportunities the alliance presents to innovate in the retail space and bring new beverage experiences to more consumers in India, leveraging the global in-home expertise of Tata Global Beverages and the global out-of-home expertise of Starbucks.”

“We’re very pleased to have found the best partner for Starbucks in Tata – a company that shares so many of the same values for conducting business in a way that earns the trust and respect of our customers and partners (employees),” said John Culver, president, Starbucks China and Asia Pacific. “We look forward to bringing the Starbucks Experience to customers in India by offering high quality arabica coffee, handcrafted beverages, locally relevant food, and legendary service.”

What JCPenney needs?

by Deepak Sharma on Sunday, January 29, 2012

There was a lot of song and dance by Ron Johnson, the new CEO of JCPenney and his crew in New York announcing the new JC Penney or JCpenney as it would be called now. Read “The 6 Ways Ron Johnson Plans To Transform JC Penney Into 'America's Favorite Store” to get a dope on what was discussed. This has generated a lot of good discussion on what Ron should do. Some of the views below:

Sucharita Mulpuru, a Forrester Analyst has the following advice for JCPenney.

So, is there anything JCPenney could do to turn around its fortunes? Sure, it could try closing down underperforming or “brand wrong” stores, it could acquire a growing, hot retailer like Francesca’s Collection, or it could spin off its new deal with Martha Stewart into smaller, Martha-branded stores. Notice that all these options are addressing the real estate albatross, which requires either unloading bad real estate or investing in new locations. It’s unclear whether the company has the appetite or resources to do either. I always thought Ron Johnson was a curious choice for JCPenney. He’s a visionary leader with a track record of success generating growth by building new stores. Target was underpenetrated in the US when he was there, and the Apple Stores didn’t exist before he launched them. He’s not a turnaround expert who has experience with tired real estate locations located in B and C quality malls. I’m reminded of an old quote from Warren Buffett: When a management team with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

Forbes cites discussion on this move by JCPenney.

“‘Radical’ is hardly the word I’d choose to describe JCP’s plan to step back from constant price discounting,” wrote James Tenser, principal, VSN Strategies. “Even ‘innovative’ would be a stretch. If it tries to stake out a ‘we’re the cheapest’ position in the apparel/home goods market under Mr. Johnson, I think JCPenney will not fare too well. But if it uses its pricing to reinforce an image of consistently good deals on consistently good quality goods, it can win and keep some fans.”

David Slavick, a retail consultant who formerly headed up Sears Holdings’ loyalty marketing, sees potential in moving to EDLP if coupled with a frequent shopper program that rewards the chain’s best customers.

“JCP is the most aggressive coupon retailer next to Bed Bath & Beyond. Every day, the store is on sale with 20% off coupons, incremental savings for credit cardholders and ‘private’ savings events,” wrote Mr. Slavick on RetailWire. “I don’t see how EDLP will change the dynamic and help them move more apparel or make the store a more compelling place to shop than Kohl’s or Macy’s.

“Buying St. John’s Bay or other private label clothing at JCP with a strong price/value relationship is what causes me to shop the store — plus incremental savings with deep discounts exclusive to me through my credit relationship. The JCP Points program is a bore. What you get for what you spend is not compelling. Personalized benefits for best customers is what ‘should’ be next. Time will tell.”

Gene Hoffman, former president of Kroger and former president of Supervalu, quipped that Penney will be weathering the marketplace now with a “good but leaky unbrella.”

“The ‘best’ is the enemy of ‘good’ … and the best EDLP model already exists. Give me some energized excitement, JCP!” he wrote.

My 2 cents for JCPenney:

1. Think Local – Support locally owned businesses, this will give you a visibility of building local communities while on the same hand give you a differentiator over your national competitors.

2. Exclusive Brands – Look around, spend some time understanding what adults and kids are buying and make that exclusive to JCPenney.

3. Transform internally – This will be the key with all the changes being planned and the rate of transformation will have to be much faster than educating buyers of the transformation.

Microsoft's vision for intelligent systems in retail

by Deepak Sharma

In the recently concluded 2012 Consumer Electronics Show in Las Vegas and National Retail Federation conference in New York, Microsoft demonstrated their vision for Smartstore. The demo included a socially enabled virtual dressing room application called Swivel by FaceCake which is powered by Kinect device. Swivel used Kinect camera to custom fit selected items for the person trying on and overlay them on their body. The demo also includes applications by other partners and shows great use of Microsoft Surface, Windows 7 based tablets and Windows Phone. Here’s a video.

Silicon Valley startup eliminates paper receipts and helps retailers increase customer loyalty

by Deepak Sharma on Monday, January 16, 2012

Proximiant, a provider of tap and go digital receipts, launched today, introducing a private and secure way for retailers and shoppers to track purchases and earn loyalty rewards, cash rebates and coupons without paper receipts, time-consuming signup requirements or membership cards.

Retailers of any size are now able to provide customers immediate access to a variety of programs using a phone-sized USB interface transceiver from Proximiant. The free transceiver easily plugs into a store’s computerized point-of-sale system (POS) and launches within two minutes.

The transceiver’s built-in technology allows it to communicate directly with mobile phones having a Near Field Communication (NFC) chip. When consumers shop at participating stores, they can tap their NFC-enabled phones on the transceiver devices to directly collect a digital copy of their receipt and loyalty rewards.

Much attention in the NFC space has been on mobile payment applications. Proximiant focuses on enhancing the shopping experience by providing itemized receipts for easy tracking of purchases, loyalty programs and coupons, regardless how they pay.

Until the NFC-enabled phones are widely available, Proximiant is offering a bridge solution via a small tag that can be carried in a wallet or put on a key chain to allow shoppers the same tap-and-go capability.

Customers also serve to benefit from this technology through the secure “Digital Receipts” mobile app, which records all their purchases at the time of sale, so they can manage their personal spending, collect loyalty points, cash back as well as the convenience of not having to carry around paper receipts. In addition, they won’t need to provide stores with any personal information, thereby safeguarding their privacy. All loyalty points and offers can be directly redeemed at participating stores using their mobile phones.

Other benefits for consumers include:

  • Rewards, refunds and exchanges without a special loyalty card or paper receipt since images with necessary data and bar codes show up on their app.
  • Ability to quickly access old receipts by inputting the store name or product keywords.
  • Receipts that remain completely private and secure.
  • Access to Proximiant’s Web interface for receipts on their computer when they register their Poximiant account.
  • Help the environment go green by no longer using paper receipts.

“The product is a win-win for both retailers and consumers,” said Proximiant co-founder and CEO Fang Cheng. “Proximiant is the most efficient and secure way for retailers to extend their existing point of sale to an array of mobile loyalty and marketing programs without any IT overhead or customer signup process. For consumers, it makes shopping much more enjoyable and less of a hassle. The device saves companies an overhead investment and it saves customers from the time-consuming and expensive signup process.”

Cheng and co-founders Edwin Evans and Thomas Ahn, both Vice Presidents of Engineering, gave Proximiant its name to transmit the message that merchants and customers are now in much closer proximity to one another.

To date, Proximiant has signed up a dozen stores in the San Francisco area and expects the number to increase as it rolls out more trials later this month and throughout December.

“We’ve gone with a small trial launch to ensure everything is running smoothly,” Cheng said. “We expect to have about 50 retailers by year’s end, mostly in the Bay area. By spring of 2012, we envision the device being in multiple metropolitan areas.”

Consumers can download the “Digital Receipts” app in the Apple iTunes Store or Android Market. Here’s a brief video of how Proximiant works.

Big Data and Retailers

by Deepak Sharma

Over the last few months, there has been a lot of coverage on how Retailers are using Big Data. Wal-mart with its recent acquisition of Kosmix is one Retailer which  is in the forefront of this wave. Here is a collection of articles which discusses how Wal-mart is using Big Data.

How Walmart plans to use Big Data

Kosmix stands out for its ability to search and analyze connections in real-time data streams to deliver highly personalized insights to users. The platform powers TweetBeat, a real-time social media filter for live events. By using this intelligence, Kosmix is building a giant knowledge base called the‘Social Genome.’ This giant knowledge base captures information and relationships about entities such as people, events, topics, products, locations and organizations.

By analyzing their social media activity, Social Genome can make recommendations about products, events or any other activity that the user is interested in. For example, by using publically available social media data, the Walmart product store can suggest product recommendations, based on recent tweets or Facebook wall posts.

While the idea sounds great, doing this in reality is a huge problem — especially since there are thousands of data pieces flowing in a torrent from live data sources such as tweets, Facebook posts and blogs. The data flow was so fast that Kosmix could not rely on the traditional Map-Reduce or Hadoop framework that is typically used to solve Big Data problems.

“Social Media data is the fastest growing source of Big Data today. In addition to being Big Data, social media data such as Twitter also has a real-time nature — it’s not just Big Data, but also Fast Data. With mobile devices, location data is now a new source of both Big and Fast data,” explains Rajaraman, on the technical challenges faced by his firm while building the platform.

To address this Big Data and Fast Data problem, Kosmix developed its own in-house solution called Muppet, which processes streaming fast data in a lightening fashion, over large clusters of machines. Today, Muppet can manage and track data streams with billions of updates a day.

Getting a Handle on Big Data with Hadoop

Wal-Mart Stores, struggling to translate its brick-and-mortar success to the Web, is using free software named after a stuffed elephant to help it gain an edge on in the $165.4 billion U.S. e-commerce market.

As customers flock to social media, Wal-Mart expects sites such as Facebook and Twitter to play a bigger role in online shopping. By analyzing what social network users say about products on those sites, the world’s largest retailer aims to glean insights into what consumers want.

With its online sales less than a fifth of Amazon’s last year, Wal-Mart executives have turned to software called Hadoop that helps businesses quickly and cheaply sift through terabytes or even petabytes of Twitter posts, Facebook updates, and other so-called unstructured data. Hadoop, which is customizable and available free online, was created to analyze raw information better than traditional databases like those from Oracle.

“When the amount of data in the world increases at an exponential rate, analyzing that data and producing intelligence from it becomes very important,” says Anand Rajaraman, senior vice-president of global e-commerce at Wal-Mart and head of @WalmartLabs, the retailer’s division charged with improving its use of the Web.

Big data and the disruption curve

Big data projects are aimed at revenue growth, many efforts are being funded by business units and not the IT department and money is increasingly being diverted from large enterprise vendors.

Nordstrom sees more e-commerce, mobile commerce in its future

by Deepak Sharma on Saturday, January 14, 2012

Nordstrom sees more e-commerce, mobile commerce in its future

The Internet is Nordstrom's fastest-growing channel and, with $1.5 billion in cash on hand, it's spending heavily to support that growth, meaning more jobs at its Seattle headquarters.

The 111-year-old company is working on new mobile shopping options and personalization features, so that visitors to its website might soon receive recommendations based on their online and in-store buying habits.

It's also testing a local same-day delivery service for a possible broader rollout, and it's expanding its merchandise assortment online to give customers more selection. "If you're listening to customers, they're telling you that their expectations around how they want to shop are evolving," Jamie Nordstrom, who oversees the company's website as president of its direct division, said in a recent interview at his corporate offices.

"Many customers today don't have several hours to shop like maybe previous generations did," he said. "They're looking to be efficient, and they're looking for help."