“For well-established companies like ours, continuing brand relevance is a challenge.”
In an interaction with Hoshie Ghaswalla, CEO, BW Businessworld, Titan CFO, Ashok Sonthalia, speaks about the impact of pandemic on business, learning, and the path ahead.
What are the biggest threats faced by consumer businesses now, and how can you as a CFO turn these around?
Consumer businesses have never been easy, but now we are seeing that competition can emerge in a very short time, from areas we cannot anticipate. For well-established companies like ours, continuing brand relevance is a challenge, from the previous to the next generation. A lot of effort goes into getting customers at a young age and retaining them. In the environment we are in, the demand prediction is becoming challenging, especially planning out what will sell. This is difficult when disruptions like lockdowns happen. We run a lot of loyalty programmes and collect data on our consumers. Managing this data while maintaining data privacy regulations is a challenge.
Why is the role of a CFO becoming increasingly important in driving business transformations, especially through the pandemic and now?
A CFO has a complete view of all parts of the company’s business. The CEO leaves some of the stuff to CFOs which are to do with processes, transactions, compliances, and the like. The CFO has to be someone who goes deep into details as well as the strategy part of the company. If he/she rises to the occasion, the brand will have a very good grip of the situation. In the volatile world of today, the importance of capital has increased tremendously. The CFO is at the center, who always has to maintain liquidity, money to invest, in an efficient manner. This is also why CFOs are spearheading digital transformation in most organisations, which forms the core of any company today. This is where vendors, supply chain, and consumers are being managed.
In the disruptive scenario we live in, how do you plan to stay relevant?
While you have to diversify the geographical locations of your supply sources, expand the vendor base, there is no substitute for deep and long relationships. Whenever the crunch comes, you will get the priority and right attention. At Titan we have valued these relationships a lot, which is why our ability to bounce back is very high. Having said that, you cannot depend on one supplier or vendor. Another thing is agility, which is how fast can you move when you see a problem coming.
For the coming financial year, how are you looking at budgeting?
The last two years have been slightly constrained. We were not sure how things would pan out, so there were no gold steps about investments. We had a goal of keeping costs minimum. This year we are going all out, and willing to invest the amount required. At the same time, this has to be managed in a very agile manner. We are expecting FY 23 to be a normal year, even if Covid related things happen.
How are you leveraging data to get insights into the current situation?
We have a loyalty program, which now has over 20 million customers. Our database is very rich, where fresh customers are added every month. Titan started investing in big data analytics and predictive analytics initially about five years back, which also tracks your purchase and what you will buy next. We are at a good stage where we can really micro-target our customers. A lot of consumers do their research online and then come at the store. We then have to take it forward from there. This is where analytics and tracking traffic movement helps. Digital is ever exploding fields, which requires continuous work.
There is an emergence of D2C brands, how do you see the industry responding to this development?
This is a converging world. Most D2C companies are doing well and then they feel the need to connect the last mile with the consumer sometimes. They are getting into ‘phytigal’ experiences. At the end of it, everyone is realising both channels, that is, digital and physical, are very important. Carat Lane, which is a Titan company is a great example of an online D2C player, even if they are only four to five years old. Starting digital, they now have over 130 stores in 45 plus cities. Today you cannot be purely online or offline. The way one can scale up on D2C platforms is amazing, and I would suggest no one should miss that. The younger customers especially, connect with D2C very well.
Sustainability has become core to all industries now. What are some of the initiatives you are taking?
We set up our first watch factory 35 years ago, recruited from poor families in the surrounding areas, training them, etc. Same thing we recreated in Panthnagar, and Roorkee. We created a whole karigar park because the front end was so glamorous, the backend was dark for jewellery industry. Titan completely transformed that. Same thing we want to do in Tanera, which is our handloom outlet. Anywhere people and the planet are involved, we look at sustainability as a part of decision-making. The profit comes after this decision is made. The CSR aspect is not just limited to regulatory aspect. In the entire Covid period, we have helped franchise and vendors employees, understanding they cannot weather this storm. On the environment front, we are taking up lakes one by one in Bangalore and restoring them. Even in the company, we try to create equity where too much differentiation does not exist.
Is there a must-have technology in the current year for Titan?
We want to further sharpen our predictive analytics on our platform. Another area we can further improve is hyper-personalisation. A space that is drawing our attention is the conversation around metaverse. We are also in the lifestyle space where we would like to create products we can sell to our consumers. This is at an experimental stage but is engaging our mind space. The digital never gives you a sense of accomplishment, there is always something to explore.
What are the top three strategic priorities for you over the next one and a half years?
It is very clear for us when we think about international expansion, we want to do it in the jewellery business. There is a store coming up in North America, and we already have one in GCC. The second priority is our new and young businesses, including fragrances and fashion accessories, require a lot of investment. The third priority area for us is of course the whole digital omni.