Q&A with Darshan Meta, President and CEO, Reliance Brands

Robin: Can you give me a perspective as to why our retailers and brands ought to be looking at India more closely now?

Darshan: There are three ways to answer that question. To speak on their behalf, they should be looking at India just because the U.S. is a saturated and mature market with an aging population, so the headroom for growth can only happen by robbing from someone else’s plate. Fundamentally, starting with the Baby Boomer generation, the 40 to 50 years of unmitigated retail and consumer boom that the U.S. went through is in some forms – in many forms – tapering off. So they need to discover unconquered territories.

Logically I had suspected that space should have been Europe. I suspect now that it comes to the third-tier larger markets, in terms of land mass, population, and GDP. It brings one to markets like Brazil, Russia, India and China. From our viewpoint, it is a fallacious approach to bring up India and China in the same breath. Depending on what you base it on, we are seven to 10 years behind China. Although geographically we are neighbors, China is better off spoken in the same breath as the USA. [Read more...]

The ‘Do Nothing’ Avon Board…Too Little, Too Late — Dividend in Jeopardy

Rarely has a new CEO jumped into a big-time, high-profile turnaround situation such as Avon Inc. presents. And if history is any guide, the ‘Do Nothing’ Avon Board of Directors will not be of any help.

Sherilyn S. McCoy who took over the CEO slot on April 23rd must hit the ground running. And not only must she put out short-term fires, she also has to develop a long-term strategic plan — on the run. Simultaneously, she must learn a new (for her) direct-sell business model. Plus she has to deal with SEC probes of bribery charges in China; insider trading accusations; and a myriad of operational malfunctions. In fact, many are questioning her first major judgment call concerning Avon, and that is accepting the job in the first place.

McCoy, who was formerly Vice Chairman of Johnson and Johnson, was passed over for the CEO job at the $65 billion pharmaceutical giant in February. McCoy gets high marks for  reinvigorating the pharmaceutical division at J&J facing patent expirations on major drugs. She did not have as much luck when she took over J&J’s consumer business that was hit hard by manufacturing problems leading to the recall of products ranging from Tylenol to baby lotions.

Andrea Jung, former CEO and current Executive Chairman, who has controlled the ‘Do Nothing’ Board for over a decade gets the blame for Avon Products’ current sorry state of affairs, and she deserves more than her fair share. But the real culprit is the Board of Directors. Inexperience cannot be the explanation. The majority of the Board has had some experience with the direct selling model, as six of them have been members for 10 or so years. How deeply they understand the model is another question.

By the time the ‘Do Nothing’ Board acted, the company was already spiraling out of control. Unless Avon’s McCoy turns out to be Houdini, and can pull a rabbit out of a hat, it may well be too late to save the 125-year-old direct-selling beauty company. [Read more...]

Why I Am Aglow With UNIQLO

I first heard of Uniqlo several years ago when the company opened a pop-up store in Rockefeller Center. People were raving about the inexpensive cashmere sweaters. Always interested in a bargain, I checked it out. I was underwhelmed. Not enough sizes, a real mish-mash as I recall. It was dark and dreary. A dull basement space that was completely unexciting.

I returned to Uniqlo from a neutral point of view. However, this time around, the energy in the store, the sharp pricing the great overall merchandising and promotion, plus the fiber/product exclusivity, was so pro positive, that I have gone to the cheerleading side.

Over the last two years I received a couple of Uniqlo turtleneck ‘HEATTECH’ tops as gifts. These are made of a proprietary fabric that keeps you warm in winter by generating and retaining heat. The items can be worn as an under-layer or just alone. The fabric is kind of stretchy, “highly resilient and durable,” anti-static, odor resistant and designed to maintain its shape after repeated washings. And it does. [Read more...]

Patriotism When Politically Convenient

And Hypocrisy Over Olympic Games Apparel

Oh, what an election year can cause. Not that I’m for protecting our manufacturing industries when they can’t seem to protect themselves by being smarter and more innovative than those of the low-cost countries that have replaced them, including in apparel. It may have been inevitable anyway. However, I had to laugh at the hypocrisy of our politicians, and from both sides of the aisle, with their bombastic diatribes aimed at the Ralph Lauren company for having selected Chinese manufacturers to make the Olympics uniforms.

Why now? Where has all of this ire and political posturing been for the last half century as we idly stood by and watched China (primarily) take the apparel and textile manufacturing industries away from us? With one brief, “last gasp” effort in the 1980s led by Roger Milliken, then CEO of Milliken & Company, a leading textile manufacturer in South Carolina, a program called “Crafted With Pride in America” was launched to save those industries from being snapped up by so-called low-cost manufacturing countries. Without going into great detail, after several years and many billions of dollars later, the program collapsed under its own weight. [Read more...]

Eastward and Upward: Chinese Consumers Spend with Optimism and Open Wallets

A study in contrasts, China is showing signs that its rapid economic expansion may be  unsustainable, even as western companies continue to develop a presence there to woo a growing middle class.

Some on Wall Street are bearish on China, including Jim Chanos, who said in a recent CNBC “Squawk Box” interview, “If you looked at the performance of the banks over the last two years… they have been great shorts. They have been going down — they’re down 30 percent over the last two years.”

The country has targeted economic growth of 7.5% in 2012, representing a decrease compared to recent years, according to a recent article in IBTIMES. But China’s National Bureau of Statistics recently reported that the country’s GDP decelerated to 8.1% during the first three months of 2012, compared to the previous year, a figure that is lower than the 8.4% analysts had expected.

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Yet these economic developments have not slowed expansion plans for many western companies. From Levi’s to Louis Vuitton, and from Proctor & Gamble to Starbucks, the last eighteen months has seen a veritable explosion in companies looking to gain a foothold in China, eager to attract its booming middle class.
Just as in the U.S., where “middle class” is an ambiguous term, “middle class” in China also continues to defy classification. Many analysts peg it as those making between $6,000 and $15,000 a year, which represents about 350 million households. Based on international dollars, that figure is about one-third of the average spending power (GDP per capita) in the U.S. [Read more...]

The Omnipresent Retailer: Creating a Demand-Responsive Value Chain

Best Practices from Kurt Salmon

Many retailers are striving to better respond to changes in consumer demand, and it’s easy to see why: They’re pressed to reduce inventories and cut supply chain costs at the same time that the shopping patterns of American consumers have become virtually impossible to predict.

Making matters even more complicated, consumers now have unprecedented access to an infinite number of products and a virtually limitless number of places at which to buy them. They expect to be able to buy exactly what they want exactly when they want it, and if one retailer can’t make that happen, another one (or a dozen others) can.

That’s where a demand-responsive value chain comes in. By shortening cycle times and increasing collaboration across the value chain, retailers can ensure they have the right product, in the right place, at the right time.

1. Shortening Cycle Times

Many retailers are beginning to move production closer to home (leveraging data to inform smarter decisions on the best manufacturing locations) as a way to shorten cycle times. Shorter cycle times can improve responsiveness to demand and increase inventory effectiveness.

The global product margin metric measures the cost from each point of manufacture to each point of distribution and the unique retail price from that point of distribution. Keeping this number in mind allows retailers and wholesalers to optimize total margin by choosing the best manufacturing locations based on discrete costs from multiple points of supply to multiple points of distribution and the retail price at each point.

But after a retailer’s sourcing decisions have been made, there are still several steps that can further decrease cycle times. [Read more...]

The Coty/Avon Dance: A Train Wreck About To Happen

Avon’s sudden hiring of Sherilyn S. McCoy as CEO – almost certainly intended to thwart any takeover attempt by Coty – indicates that the smaller suitor will have a fight on its hands to acquire the giant direct sales company.

Coty would be better off letting this one get away. Its $10 billion offer for Avon is the biggest and most recent effort in its aggressive quest to become one of the world’s major beauty companies – in other words, to play with the big boys. The company has spent over $2 billion on acquisitions in the past two years, including $400 million for TJ Holdings, a Chinese skin care company, and a reported $1 billion for the skin care company Philosophy.  They also picked up nail color maker OPI and Russian brand Dr. Scheller Cosmetics.  Some industry leaders think they have seriously overpaid.  Are they about to do it again?

Avon is a disaster, but Coty (not to mention many on Wall Street) is focused on its worldwide network of 6.5 million sales reps and its big presence in Brazil.  Add some internationally known products to Avon’s product mix and the reps will sell them like crazy. The thought process taking place around that? Synergy, synergy, synergy.  The old school synergistic proponents are drooling.  But drool rarely translates into sales. It can, however, translate into paying too much for an acquisition.

There are questions about the distribution network Coty is so hot to get.  Some believe Avon has drifted off into the Amway multi-level marketing or pyramid model, which counts as revenues the products and promotional materials newly hired sales reps are induced to buy. So, why not hire more reps? A growing share of the company’s revenue, this might in fact be a strategy to offset declining consumer demand.  Avon is losing nearly half of their reps every year. This forces them to troll for and spend most of its advertising dollars for new reps instead of doing heavy consumer marketing to keep the Avon brand brightly lit. In the meantime, traditional Avon sales are slumping.

Coty obviously has access to a mother lode of money, so funding the deal will not be a problem. The banks reportedly still think Avon is a viable company and, if well-managed, can be fixed. The timing is right for Coty and a godsend for Avon.

It’s documented that Coty and Avon have been talking for a while. First it was going to be Avon owning Coty in a stock deal. Now’s it’s Coty owning Avon in a cash deal.

It looks like Coty announced its $23.25 a share offer for Avon to tease out any interest from a giant like Proctor and Gamble, or some large Brazilian company.

If not, then Avon will have to very seriously consider Coty’s offer.  Time is not on Avon’s side. As new CEO Sherilyn McCoy takes over from lame duck CEO Andrea Jung, she walks into a nightmare of bribery accusations in China and other developing markets, slumping sales, a weak senior executive lineup and massive legal fees that are bleeding company profits.

Given all of Avon’s current problems, a thorough due diligence of the company could be very interesting indeed. Imagine what could be lurking in the many closets of such a big, loosely-managed company with so many divisions!

Stay tuned.  As one industry observer said, “They are dancing on the porch now. However, Avon has had other suitors dancing on its porch before, and thus far hasn’t let anyone inside the house. ” Coty’s drive to become an industry giant could become a giant handicap if it results in the purchase of a very expensive, unfixable company.

Time to blow the train whistle long and loud. Hope it’s heard in the Coty executive suite.

How Green Is My Product Line? Measuring Sustainability Success

What is more vital to the survival of an apparel manufacturer or retailer today: commitment to environmental consciousness or keeping production costs low? Five years ago, the answer would have been strongly in favor of being green. Today, amid global debt crises and the rising costs of raw goods, labor and fuel, the emphasis has for many shifted towards the economic from the environmental. Perhaps a better question is: Can an apparel manufacturer or retailer be green while remaining in the black? The answer is “yes,” when a thoughtful, long-term vision fuels the actions.

Prior to 2010, U.S. consumers had enjoyed 15 years of deflationary apparel pricing. Big box retailers attracted an increasingly diverse consumer base, fueled by low prices for apparel staples and the addition of specialty lines by popular, high-end designers and celebrities. Marketers in the highly competitive apparel category seized upon being “green” as a saleable point of brand differentiation. Low-priced and high street brands began trumpeting new and niche ‘sustainable’ fibers within their mix.

The challenges arose, however, when these sustainable fibers proved unsustainable in cost, processing or both. Bamboo, for example, was embraced as a stellar textile fiber because it grew quickly and did not require pesticides for protection. However, the process to convert the bamboo from a plant to a rayon fiber was discovered to be quite chemical intensive. [Read more...]

Quotes To Remember


Q. “How do you become a millionaire?”
A. “Make a billion dollars and then buy an airline.”



“There’s only one problem with that: We’ve got to borrow the money from China to do it.” – Erskine Bowles, former co-chair of the national fiscal responsibility commission



Friends come and go, but enemies accumulate.

After all is said and done, a hell of a lot more is said than done.

An expert is someone who knows more and more about less and less until he knows absolutely everything about absolutely nothing.



“If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” – Milton Friedman, Nobel Prize-winning American economistThe Robin Report - Quotes to Remember

Five Keys to Success with a Slimmed-Down Inventory

by Jon Mays and Brooks Kitchel

The growing emphasis on ever-leaner retailing means the days of hedging inventory bets with colossal surpluses are gone for good. The costs of inventory mishaps—both in terms of actual bottom-line economics and brand experience for customers—have driven many retailers to significantly reduce their inventories.

Meanwhile, it’s grown increasingly difficult to predict the actions of American consumers, whose intentions are less and less correlated to their actual behaviors since the recession.

While most retailers have cut their inventories accordingly, leading retailers are optimizing their remaining inventory to get the most bang for their buck.

1. Aggressively share inventory across channels

Truly sharing inventory across channels creates the opportunity for tremendous customer experience benefits and can help avoid having to mark down large amounts of leftover merchandise.

From a customer experience perspective, shared inventory increases the likelihood that a customer will be able to purchase a product in a particular size or color, regardless of channel. For small bricks-and-mortar locations, sharing inventory can open up a whole new array of choices for customers. [Read more...]

How One Smart Company Got It All Wrong

Suppose you’re the CEO of a successful, multinational food retailer. You’ve had good luck opening stores in numerous countries, many with cultures much different from that of your home country.

You’ve decided the time is right to roll out a fleet of stores in yet another country, this time one that has a culture quite similar to your own.
You’re confronted with many questions to be answered and decisions you need to make, such as:

Should you conduct consumer research, or just send a team of executives to the target country to examine the situation on the ground?

Will you develop a store format similar to the type of shopping experience in the target country, or a brand new format?

Will you source product for the new stores from a third-party distributor while the format is being fine-tuned, or will you spend vast sums developing your own distribution and production prior to opening a single store? [Read more...]


There’s a lot of bluster coming out of Yadashi Yanai, CEO of Fast Retailing (parent of Uniqlo), about how his company is going to be the biggest apparel retailer in the world by 2020 at some $64 billion in sales, six times greater than its current size. He also says pretax profits by then will be 10 times what they are today. He plans to do so through a combination of acquisitions and geographic expansion into China, Southeast Asia, and the U.S. For Uniqlo, this is a necessity, not just an opportunity, given the fact that they are maxed out in Japan, totally ubiquitous, and that they suffered a decline in profits last year.

And, oh yes, they intend to “revolutionalize” how people wear clothes, part of which is to “revolutionize” mass retailing in the U.S. (I’m not sure how they’re defining mass retailing here. I certainly can’t imagine their New York stores stealing customers away from Wal-Mart, regardless of how low their prices are.) [Read more...]