GOLD AND SILVER - CONSOLIDATION IN A BULL MARKET

CLIVE MAUND once again has some excellent precious metal charts

IKEA - ADAPTING TO THE INDIAN CONSUMER

Ikea: Swedish social democracy meets DIY-unfriendly Indians - The ...
by Sanjay Badhe December 11, 2012 ECONOMIC TIMES

Even as the FDI in RETAIL debate rages on in India, here's an interesting article of how IKEA will have to adapt to the Indian Consumer.

Will IKEA be a hit or a miss in India?....... and will the DIY approach work in a country where cheap labour and cheap (although sometimes poorly made) furniture will result in stiff competition for IKEA.

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So will IKEA adopt a cookie cutter approach-similar stores and products-which is the easiest to roll out and implement in India?

From the early days, IKEA has pushed the concept that both the furniture and stores should be unpretentious-standardised design, flat pack furniture, self service, friendly store design where it is easy for shoppers to choose and select, minimal advertising with a dependence on its catalogue and so on. And it passes on all the savings to consumers.

But, will concepts such as flat pack, take home and self assemble work here? Many Indians may not be open to the DIY model even though IKEA believes that getting the customer to put together the product gives a sense of involvement and pride. Will IKEA give the model a twist, as it did in the Middle East, to offer assembly and delivery at a price? In fact, India might well get an independent service of assemblers of IKEA furniture!

IKEA may also have to compromise on its store size because poor availability of space and high costs. IKEA prefers standalone stores, complete with service areas and storage, rather than malls although in the Middle East it does have stores inside malls. IKEA's awareness and image too would need attention. Interestingly, in India the brand might be seen as 'aspirational and fashionable' as in other emerging markets, and not the value-driven brand that it is in Europe. This might be good at the beginning, but could prove to be a problem for the value-driven Indian consumer.

Also, while the catalogue is critical, catalogue-based sales have not been very successful in India. Argos, a catalogue sales retailer that entered India in collaboration with K Raheja group's Shoppers Stop and HyperCity chains, has shut shop.

Will IKEA go for smaller, specific catalogues, arranged by categories, for India? Will it use electronic catalogues and use an online version? 

IKEA's image is built around 'Swedishness', with liberal use of Swedish flag colours of blue and yellow as well as Nordic names for products. Will the lack of a 'Sweden perception' in India actually make the IKEA concept difficult to sell here? 

Perhaps IKEA has to listen to the Indian consumer, before deciding its strategy in India.

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BAYERN MUNICH - FOOTBALL PROFITS

Earn it like Bayern - Business Standard -By Olaf Storbeck

Above is a link to an article from Business Standard Newspaper Mumbai, dated 20/11/2012.

Sound management, good regulation and steady ownership do matter.


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In the mid-60s, the executives of a minuscule football club from southern Germany, Bayern Munich, travelled north toCologne to visit the country’s most successful team. They wanted to learn how to run a professional sports club. And, learn they did. Bayern has dominated the Bundesliga, Germany’s professional league, ever since. 

It has also shown that the sport can be run as a financially successful business. The club has made a profit 20 years in a row. Revenue in the 2011-12 season rose 14 per cent to euro 332 million, with Ebitda up 63 per cent to euro 69 million. And, Bayern sits on a cash pile of euro 127 million. 

Good regulation and steady ownership do matter. Bundesliga rules require that more than 50 per cent of the voting shares in the professional team belong to the club and its members. This prevents star-struck Russian oligarchs, bored US businessmen or spendthrift sheikhs to burn hundreds of millions buying professional teams on hazardous business plans. It also repels investors of the private equity type. Next to the club, two corporate investors ( Adidas and Audi) each hold about nine per cent of the shares in the professional team. 

Bayern’s careful avoidance of the celebrity carnival sort that is the norm at clubs like Real Madrid or Manchester United is another reason for its economic success. The club shuns vanity hires, runs a successful academy, and keeps a significantly lower salary bill than its competitors. Bayern only spends 50 per cent of its revenue on players’ wages — against 70 per cent for the average English club, according to Deloitte. On the revenue side, German rules limit the clubs’ over-dependence on TV rights, inducing prudent behaviour. 

Bayern’s financial clout should keep growing. The club is currently looking for a third external investor to pay about euro 100 million for a nine per cent share of the professional entity. And, a listing isn’t on the cards. 

In the near future, new financial “fair play” rules edicted by the Union of European Football Associations ( UEFA), will hamper all teams’ ability to go on unsustainable spending sprees. This will play to Bayern’s advantage, and further consolidate its standing both on the domestic and international stage.

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