How to “Re-engage Old Clients”:”Client/Customer Retention”| by: Michael Piermont | ACE

Over the years, clients come and go from your Health-club / Personal Training business. Some may have thought personal training was just a short-term solution, while others didn’t see the results they wanted..

Either way, Re-engaging with old clients is important to running a successful fitness business.. If an individual was your client once, it’s probable that he or she can become a client again !!

Here are some ideas on how to win back your old clients / customers –

1. Provide incentives :

A general economic principle is that people respond to incentives. People are constantly weighing the costs vs. benefits of the decisions they make. To encourage previous customers to come back for more training sessions or classes, you have to tip the cost – benefit scale in your favor. One way to do this is to provide them with a discount. For example, if a client purchases five sessions at the full price, offer the sixth training session for free. If they refer a friend to your training studio, give your referring client his or her next training session for free. You can also encourage clients to bring a friend, a significant other, or heck, even a first date! At the very least, being different will help you stand out and stay top-of-mind.

2. Show you have a long-term plan for their overall fitness :

Having a personal trainer means one-on-one time with a client, which means you as the trainer are completely focused on that client’s fitness. A great way to encourage clients to come back is to sell the individualized-attention aspect of personal training. Remind your clients that you are completely focused on improving only their fitness and working to help them achieve their goals. To drive home that point, show your customers how you can help them set goals and how you can build a workout plan that’s right for what they want to do. When you can show clients you have a plan for them beyond the immediate meeting, you have a distinct advantage and are more likely to earn their long-term business.

3. Share success stories from existing clients :

A great way to reengage a client is to tell them about the success stories you’ve had with other clients. The best trainers use their past successes, such as providing before and after shots, to market their fitness business. Do you have existing clients you could use as part of a case study? If you have success stories of previous clients who do not wish to be featured, you can instead speak in generalities of your success with that particular demographic.

4. Talk about improvements to the facility :

What improvements have you made since you were last in contact with clients? Talk about the extra certifications you’ve received, the new equipment you’ve added to your studio, and any other improvements or new services that you are offering. The fitness world continues to innovate. How is your personal training business evolving with the times? The improvements you make may seem trivial or routine to you, but improving your business is a great way for you to pick up the conversation with an old client.

5. Come up with New Events :

People love trying new things! To encourage clients who have maybe become bored with the same old workouts, come up with a new event that catches their attention. For example, offer a boot-camp series of classes that culminates in participation in a big fitness event. Another great way to reengage past clients is to host a social hour. Set up a happy hour at a local restaurant and truly get to know them beyond the studio. It’s a great way to network with your clients and have some fun !!

Re-engaging old clients definitely takes some effort, but is a great way to help grow your Fitness / Services business. As I mentioned earlier, if they’ve already purchased from you, it should be much easier for them to purchase from you again.

People who are already aware of your business will be easier to convert back into a paying customer, than those who still need to become aware of your Health Club / Personal Training business…

Why “Good Managers are so Rare ?”: in the “name of Culture-Fit”,hiring the “Wrong Managers”| HBR

For too long, Companies have wasted Time, Energy, and Resources ” Hiring the Wrong Managers” and “then attempting to train them to be who they’re not”. “Nothing fixes the wrong pick !! “..

Gallup has found that one of the most important decisions companies make is simply whom they name manager. Yet our analysis suggests that they usually get it wrong. In fact, Gallup finds that companies fail to choose the candidate with the right talent for the job 82% of the time.

Bad managers cost businesses billions of dollars each year, and having too many of them can bring down a company. The only defense against this massive problem is a good offense, because when companies get these decisions wrong, nothing fixes it. Businesses that get it right, however, and hire managers based on talent will thrive and gain a significant competitive advantage.

Managers account for at least 70% of variance in employee engagement scores across business units, Gallup estimates. This variation is in turn responsible for severely low worldwide employee engagement. Gallup reported in two large-scale studies in 2012 that only 30% of U.S. employees are engaged at work, and a staggeringly low 13% worldwide are engaged. Worse, over the past 12 years these low numbers have barely budged, meaning that the vast majority of employees worldwide are failing to develop and contribute at work.

Gallup has studied performance at hundreds of organizations and measured the engagement of 27 million employees and more than 2.5 million work units over the past two decades. No matter the industry, size, or location, we find executives struggling to unlock the mystery of why performance varies so immensely from one work-group to the next. Performance metrics fluctuate widely and unnecessarily within most companies, in no small part from the lack of consistency in how people are managed. This “noise” frustrates leaders because unpredictability causes great inefficiencies in execution.

Executives can cut through this noise by measuring what matters most. Gallup has discovered links between employee engagement at the business-unit level and vital performance indicators, including customer metrics; higher profitability, productivity, and quality (fewer defects); lower turnover; less absenteeism and shrinkage (i.e., theft); and fewer safety incidents. When a company raises employee engagement levels consistently across every business unit, everything gets better.

To make this happen, companies should systematically demand that every team within their workforce have a great manager. After all, the root of performance variability lies within human nature itself…Teams are composed of individuals with diverging needs related to morale, motivation, and clarity — all of which lead to varying degrees of performance. Nothing less than great managers can maximize them.

But First, companies have to find those Great Managers ?? If Great Managers seem scarce, it’s because the talent required to be one is “Rare”.. 

Gallup finds that “Great Managers” have the following Talents : 

  • They motivate every single employee to take action and engage them with a compelling mission and vision.
  • They have the assertiveness to drive outcomes and the ability to overcome adversity and resistance.
  • They create a culture of clear accountability.
  • They build relationships that create trust, open dialogue, and full transparency.
  • They make decisions that are based on productivity, not politics.

Gallup’s research reveals that about one in ten people possess all these necessary traits. While many people are endowed with some of them, few have the unique combination of talent needed to help a team achieve excellence in a way that significantly improves a company’s performance. These 10%, when put in manager roles, naturally engage team members and customers, retain top performers, and sustain a culture of high productivity. Combined, they contribute about 48% higher profit to their companies than average managers.

It’s important to note that another two in 10 exhibit some characteristics of basic managerial talent and can function at a high level if their company invests in coaching and developmental plans for them.

In studying managerial talent in supervisory roles compared with the general population, we find that organizations have learned ways to slightly improve the odds of finding talented managers. Nearly one in five (18%) of those currently in management roles demonstrate a high level of talent for managing others, while another two in 10 show a basic talent for it. Still, this means that companies miss the mark on high managerial talent in 82% of their hiring decisions, which is an alarming problem for employee engagement and the development of high-performing cultures in the U.S. and worldwide.

Sure, every manager can learn to engage a team somewhat. But without the raw, natural talent to individualize; focus on each person’s needs and strengths; boldly review their team members; rally people around a cause; and execute efficient processes, the day-to-day experience will burn out both the manager and his or her team…As noted earlier, this basic inefficiency in identifying talent costs companies hundreds of billions of dollars annually.

Conventional selection processes are a big contributor to inefficiency in management practices; little science or research is applied to find the right person for the managerial role.. When Gallup asked U.S. managers why they believed they were hired for their current role, they commonly cited they met the required Culture-fit, their success in a previous non-managerial role or their tenure in their company or field.

These reasons don’t take into account whether the candidate has the right talent to thrive in the role. Being a very successful programmer, salesperson, or engineer, for example, is no guarantee that someone will be even remotely adept at managing others.

Most companies promote workers into managerial positions because they seemingly deserve it, rather than because they have the talent for it. This practice doesn’t work. Experience and skills are important, but people’s talents — the naturally recurring patterns in the ways they think, feel, and behave — predict where they’ll perform at their best. Talents are innate and are the building blocks of great performance. Knowledge, experience, and skills develop our talents, but unless we possess the right innate talents for our job, no amount of training or experience will matter.

Very few people are able to pull off all FIVE of the requirements of Good Management.. Most managers end up with team members who are at best indifferent toward their work — or are at worst hell-bent on spreading their negativity to colleagues and customers. However, when companies can increase their number of talented managers and double the rate of engaged employees, they achieve, on average, 147% higher earnings per share than their competition.

It’s important to note — especially in the current economic climate — that finding great managers doesn’t depend on market conditions or the current labor force…Large companies have approximately one manager for every 10 employees, and Gallup finds that one in 10 people possess the inherent talent to manage..When you do the math, it’s likely that someone on each team has the talent to lead. But given our findings, chances are that it’s not the manager. More likely, it’s an employee with high managerial potential waiting to be discovered…??

The good news is that sufficient management talent exists in every company – it’s often hiding in plain sight.

Leaders should maximize this potential by choosing the right person for the next management role using predictive analytics to guide their identification of talent..

“Corporate Culture”: the “Biggest Asset, Not on the Balance Sheet”| by: Jerry Rackley | Vistage

The Balance Sheet for any company will list all kinds of assets and liabilities, “except Company Culture“.  There should be a way to account for this, because culture is a critical factor in the success of any company.

A great corporate culture is like a propellant – it helps accelerate an organization toward achieving its goals. Likewise, a toxic corporate culture is like dragging a boat anchor behind you: no matter how high the throttle is set you just can’t seem to pick up speed.

Great leaders understand the value and impact of culture, and that’s why they put effort into creating a healthy one.  Culture is the collectively held values, ideology, and social processes embedded in a firm.  Every organization has a culture, whether it was created intentionally or is the product of evolutionary chance.  For example, a set of contrasting corporate cultures is empowerment and fear.

Here are some Facts for Leaders to internalize as they contemplate and hopefully embrace their role concerning corporate culture : 

Culture is a function of leadership : It doesn’t matter what kind of organization you lead – a Fortune 500 company, small business, football team, or Girl Scout troop – culture is always a function of leadership.  The person at the top of the organization chart is the corporate cultural ambassador.  Do not outsource this responsibility to another person in the company, because you can’t.  The organization, for better or worse, will follow your cultural lead no matter what.

There’s no vacuum where culture is concerned : Leaders range from the charismatic to the technical, introverts to extroverts.  Not all leaders have personalities that recognize the importance or value of a healthy company culture.  Those who don’t appreciate this truth, will discover that just because they haven’t formally expressed the culture, one exists anyway, and it isn’t always a healthy one.  In fact, the less intentional a leader has been about defining and reinforcing culture, the greater the chance is that the default culture is dysfunctional, if not downright toxic.

The “beauty” of culture is in the eye of the beholder : Leaders may claim to have created a healthy culture of empowerment what do the workers believe?  If they don’t feel empowered, then the leader is delusional by saying they are.  When it comes to culture, the leader is often like the emperor in new clothes – believing there is something there when no one else sees it.  If the workers haven’t embraced the culture espoused by the leader, then it doesn’t exist.

Culture is built intentionally : Leaders must decide what kind of culture serves the company and its customers the best then make a priority of building it.  It should not be allowed to evolve because rarely does a healthy culture develop spontaneously.  It requires thought, planning, expression and constant reinforcement.

Culture is more deeds than words : It is very important to articulate all aspects of the desired culture.  In fact, the leader must tirelessly communicate about what the culture is, how it works and what it looks like.  Culture is forged on the anvil of deeds, so the leader must model the expressed culture.  One inconsistency between words and actions can jeopardize the cultural foundation of the company.  In other words, you can tell employees that they’re empowered but the instant you punish one for acting empowered, any cultural capital you’ve accumulated will quickly evaporate. 

Culture building can occur quickly : It doesn’t take long for the troops to follow a leader down a healthy cultural path.  If a leader consistently communicates and models a strong, healthy culture, the workers will catch on quickly.  If there’s a problem, it’s often because middle management is invested in a different culture and feels threatened by any change.  For this reason, culture-building efforts must permeate every level of the company.

Culture correction can take a long time : This may seem contradictory to the previous statement, but when the culture is unhealthy or toxic, it can take years to deprogram the staff.  In fact, the first step is usually removal of the leader responsible for the negative culture.  Even then it doesn’t change quickly, because the collective memory of the victims of a dysfunctional culture literally need time to heal.  It takes concerted effort over a period a years, potentially, to reprogram a company’s negative culture.

Culture Assessment : While promoting a healthy culture is the responsibility of the leader, it’s the concern of every manager and employee in the company.  It’s important to understand how the company’s culture is perceived, but it’s difficult for the CEO to get candor from employees about it.  I recommend that the leadership of the company regularly engage employees at all levels in discussions designed to determine their views of the culture. But, the truth is sometimes hard to come by, because many will fear being honest.  Still just having these discussions will reveal some insights, and it demonstrates that culture is a leadership priority.

Another option is a survey.  Some companies conduct annual employee opinion surveys that research many issues, culture being one of them.  These surveys are anonymous, allowing employees to express their opinions without fear of reprisal.  Conducting such a survey is an excellent idea, but it comes with an obligation: disclosure of the results to the rank and file employees. Do not conduct such a survey unless you commit to complete transparency in communicating the results.  To conceal the results because they indict the company’s culture makes a bad situation worse.

Summary : 

A healthy company culture is a major competitive advantage.  Most leaders would like to attach ROI to any initiative, including culture building and curation.  I don’t know how to measure the ROI of doing this, but I do know that customers can feel a difference when they do business with companies that have healthy cultures.  Employees are simply more committed to the company’s success, and they put forth more effort to succeed.

Furthermore, companies with healthy cultures enjoy greater employee retention, which lowers costs while increasing productivity… For these reasons, don’t allow building and maintaining a healthy company culture fall very far down on your to-do list..

“New Growth Paradigm for Indian Health-care Providers” : “Power to a Patient’s needs”| BCG

Historically, Hospitals in India had no problem filling beds. The majority operated at OR near capacity most of the time, mainly because there weren’t enough beds to meet patient demand. But for an increasing number of hospitals, this may no longer be the case. 

In recent years, Indian Health-care providers have invested heavily to build capacity, and this has benefited both patients and hospitals tremendously. In the last Five Years alone, Top hospital chains have tripled their capacity to serve urban patients, and—largely as a result of these efforts—their revenues have quadrupled.

In some of India’s urban centers, there are now ” 3.3 beds per 1,000 people, which is close to the standard of 3.5 per 1,000 set by the World Health Organization” (and which exceeds the world average of 2.9 per 1,000)..

As the shortfall disappears in some markets and supply and demand come into balance, the basis of competition for providers is shifting. Patients will increasingly be able to select hospitals based on their needs and preferences. Growth in these markets will therefore depend on the ability to understand and meet patients’ diverse needs, and providers that continue to add capacity without differentiating their value propositions will reap diminishing returns.

Most providers, however, have NOT yet figured out how to identify the factors that drive patient behavior or increase satisfaction in this new health-care environment. They may not fully understand why patients select one hospital over another in the first place, and many have yet to develop deep insights into the factors that foster satisfaction over the course of inpatient or outpatient care. Thus, even those providers that focus on improving the patient experience often invest in areas that are not high priorities for patients.

The challenge is compounded by a number of factors, including patients’ tendency to rely on friends or family members when selecting a hospital. Patients are also becoming more like consumers in other industries, demanding better value for their money and requiring services that address more than their immediate medical concerns.

To help providers win in this environment, BCG’s Center for Consumer and Customer Insight, surveyed nearly 1,000 Indian patients to identify the factors that drive patient satisfaction in health care. These interviewees—men and women of all ages with diverse socioeconomic and other demographic profiles—received care from seven of the top private hospital chains operating in 19 urban areas. We asked a variety of questions about their perceptions of and experience with providers across the care continuum. It was the first research effort of its kind ever conducted in India.

The “Survey enabled us to identify FOUR Broad drivers of patient satisfaction : Medical Expertise, Pricing & Process Efficiency, Care & Patient Comfort, and Facilities”. Based on this taxonomy, we derived SIX Insights that providers can use to ensure that their value propositions meet patient needs.

Drivers of Patient Satisfaction :

We identified 21 attributes that disproportionately shape satisfaction with hospitals among Indian patients. We used factor analysis techniques to group these attributes into FOUR Categories and to estimate the relative importance of each as a percentage of the potential contribution to overall satisfaction. (See Exhibit 1.)

1. Medical Expertise – Correct diagnoses, Doctor competence, the perceived overall quality of treatment, and clear communication with patients and family members contribute 33 percent to patient satisfaction. Indian patients cannot use outcomes data to assess medical expertise, because most hospitals do not track or share this information. Before the first visit, patients usually base their assessment on recommendations from their general practitioner, family doctor, or family and friends. Once they begin to receive care, they assess medical expertise on the basis of factors such as the accuracy of the diagnosis and the quality of their interactions with medical professionals during pre-treatment counseling.

2. Pricing & Process Efficiency – Pricing and logical, frictionless service delivery contribute 30 percent to satisfaction. Value for money, pricing transparency, and billing accuracy are the primary factors affecting satisfaction with pricing. Process efficiency depends on such factors as timely completion of admissions and checkout and prompt administration of medical tests.

3. Care & Patient Comfort – The level of attention to and regard for patients’ treatment experience contribute 25 percent to satisfaction. A hospital’s performance on care and comfort is affected by a variety of factors, from the concern shown by doctors and the efficiency with which nurses provide medications to the overall attitude of medical staff. Patient satisfaction also depends on whether doctors visit them regularly and whether staff responds immediately and efficiently in cases of emergency.

4. Facilities – The condition of buildings and the availability of basic services contribute 12% to satisfaction. Satisfaction with facilities depends on whether the hospital meets high standards of cleanliness and hygiene. Patients also require hospitals to provide basic services such as parking, clean drinking water, and cafeterias and other food options for visitors and to maintain a generally pleasant environment.

“SIX Insights” into Patient Needs :

The insights that we identified reflect the priorities that patients will act on with increasing frequency, particularly as the capacity shortfall fades in many markets. Providers that deliver on these priorities can build loyalty among their existing patients and attract new patients from providers that fail to meet expectations. Thus they can maintain and extend the gains achieved in recent decades by building new facilities and expanding existing ones.

1. Medical expertise, more than patient satisfaction, affects hospital selection – When selecting a hospital, patients prioritize medical expertise above all other factors except institutional quality (see “Institutional quality trumps doctor reputation,” below). Even in tier 2 and tier 3 cities, patients rank medical expertise above proximity and pricing as a criterion in hospital selection. However, Indian patients usually lack access to the information needed to assess the expertise of health care professionals over the course of care, and their satisfaction with the care they actually receive is often shaped most by factors not directly related to providers’ medical expertise.

2. Process excellence is essential – Over the course of care, non-medical factors are as important as medical expertise in shaping patient satisfaction. Efficient and caring service is critical. Efficiency has to do with the ability to get things done within a reasonable period and with a minimum of inconvenience. Patients should not have to wait too long to undergo a procedure, and nurses should deliver the right medications on time. Satisfaction also depends on the ability to carry out basic business functions quickly and easily. Patients should not be required to wait for long periods to be admitted or checked out of a facility, and billing should be transparent, accurate, and timely. This kind of professionalism is important because patients are likely to question an institution’s commitment to excellence if they are not treated appropriately during every interaction, administrative as well as medical.

Caring service is about friendliness and concern for patients’ comfort and well-being. In certain respects, caring service is a process issue because it can be manifested through consistency and good customer-care procedures. Doctors should visit hospital patients regularly, and nurses and staff should treat them with compassion.

3. Pricing transparency rivals price – Satisfaction regarding price hinges on clearly communicating the cost of service. Patients are often sensitive about price but may be less so when told in advance how much a procedure or service costs. They typically prefer itemized bills that show the cost of each element of care. Surprises give people the sense that pricing is arbitrary; a patient may be pleased when something turns out to cost less than expected, but this may not increase satisfaction as much as receiving accurate pricing information at the outset.

Billing must also be accurate and timely, and patients should have an easy means of communicating directly with facility representatives about bills and payments. Billing staff should be friendly and willing to help, approaching every interaction as an opportunity to increase satisfaction.

4. Focus on the Basics – Luxuries have little effect on satisfaction levels, but patients expect providers to meet basic standards of service. Most important, facilities must be hygienic and tidy, surfaces and equipment clean and sanitary, and hallways and rooms uncluttered and well lit. As noted above, patients also demand that hospitals provide basic conveniences such as parking spaces and clean drinking water. And there should be comfortable waiting rooms with televisions for visitors, as well as clean restrooms and affordable food options.

Patients do enjoy services such as free Wi-Fi and gourmet food options, but they don’t view these as necessities. Providers that offer beyond-the-basics services get little return on their investment and should reallocate resources to stronger drivers of satisfaction, such as improved clinical outcomes.

5. Institutional quality trumps the reputation of doctors – Hospital reputation is the most important factor affecting patients’ decision about where to go for care. This is probably because reputation is a function of a hospital’s performance in the areas that matter most to patients. In fact, building a hospital’s brand is a more effective way to drive loyalty than hiring star doctors. Our research indicates that 90% of patients who select a hospital based on its reputation are likely to return to the hospital for care in the future, whereas only 75% of those who make their selection based on doctor reputation are likely to return.

This highlights a big opportunity for providers. Most hospitals have focused on assembling and maintaining a roster of well-known doctors, which can be a good way to attract first-time patients but is less effective in building loyalty. Moreover, few hospitals have made a concerted effort to differentiate their brand from those of competitors, and most patients do not perceive hospital brands to be very different from one another. Hospitals can increase loyalty by differentiating their brands on the basis of those attributes that matter most to patients—including medical and non-medical processes that deliver a consistently superior experience across medical conditions and facilities.

6. Personal referrals reign, but the role of the Internet is increasing – Patients rely heavily on personal recommendations when selecting a hospital. Recommendations from trusted general practitioners are the most influential, but patients also put great stock in the experiences of family members and friends. Not surprisingly, many patients continue to see doctors with whom they have had a positive experience.

But almost as many patients now rely on the Internet as rely on such recommendations. Patients regularly check providers’ websites to research facilities, and many search online for information about diseases and medical terms. Hospitals are moving to the Internet at an accelerating pace, hosting patient forums and allowing patients to make appointments online. The use of mobile services is expected to increase rapidly in India, and online recommendations are likely to become more important as a result.

Building a Consumer-Centric Value Proposition :

To differentiate their value propositions and strengthen their brands, providers should develop a clear understanding of their performance relating to the attributes that most affect patient satisfaction. They should also prioritize high-impact areas where delivering superior value will strengthen their relationships with patients and build a competitive advantage.

Our research suggests that Indian Health-care providers should consider prioritizing “Medical Expertise, Process Efficiency and Care & Comfort “.

The health-care sector in India is entering a new, consumer-centric era that will profoundly alter the competitive dynamics among providers. The increasing emphasis on patient satisfaction will be an engine for continuous improvement that will benefit patients and society, while enabling providers to establish sustainable competitive advantages. In the coming years, Indian providers that develop differentiated value propositions rooted in deep consumer insights will set a new standard for success in the country.

They will grow by cultivating lasting relationships with patients and winning share from players that fail to prioritize patients’ needs. In the process, they will catalyze a new phase of development in India’s health-care market..

“Employee Engagement Facts”: What constitutes a good “Employee Recognition Programme?”| BI WORLDWIDE

” Employee Recognition Programmes” are the key to engagement and motivationIn fact, a well-developed programme, with the correct communications to support it, will help employees feel valued by the business, improving productivity and most importantly reducing attrition. 

How do you engage employees and, more importantly, keep them engaged..? 

The start point for any Reward and Recognition (R&R) Programme is communication. The effectiveness of this communication is paramount to a programme’s success.

The Current Scenario:

In a recent Gallup survey conducted for employees, it was found that about 67% of the 42,000 employees randomly selected, were below the level of disengagement. Employees that are disengaged on an average take about 6.19 sick days per year compared to 2.69 days taken by employees that are engaged in their work, causing a massive hindrance to business growth. It was also revealed that disengaged managers are 3 times more likely to have disengaged subordinates.

Infographic - Employee Engagement

Why Employee Engagement :

The simplest reason is because engaged employees are more productive. When employees know that their effort is being rewarded with more than just a salary, their value contribution towards the organisation will directly increase. It is also seen in many cases that along with the passion to work, comes the willingness to recommend their employers to others. An overall sense of satisfaction is achieved that ensures employee fulfilment and retention.

Companies are able to understand that Employee Engagement is a crucial factor in business success.

Yet, over 75% of the Business Leaders ” Do NOT “ have an Action Plan OR Strategy to implement this…!! 

“Apple” plans “small-format stores” at Neighbourhood, High-street Locations “to expand reach in India” | ET Retail

 

“Apple” has informed distributors and trade partners in recent meetings that it is looking to set up exclusive 400-600 sq ft stores in neighbourhoods and some popular high-street locations…

They will focus on mobility products such as iPhones and iPads, besides entry-level Mac computers and iPods, said three of Apple’s trade partners aware of the plans.

“Apple wants to focus more on its entry-level models in these stores such as iPhone 4, iPhone 4s, iPad mini and iPad 2, which are essentially in the sub-Rs 30,000 segment and also its largest-selling products in India,” said a senior executive of a leading trade partner of Apple.

“The company feels these products are also attractively priced over competitors such as Samsung & Sony and hence being closer to the consumer will help to increase the conversion rate,” he said.

“Apple” wants to set up these smaller stores in areas where people have high disposable incomes, there’s a strong penetration of smartphones and a large student population such as Pune, Vizag, Guwahati, Durgapur and Gangtok.

Apple has not set any expansion target for the small-format stores. Apple declined to comment on queries regarding the plan. “We wouldn’t comment on rumours or speculation,” said Apple spokesman Alan Hely at regional headquarters in London.

The company has reached out to existing trade partners and multi-brand retail chains with its small-format store proposal, said the people cited above. One of Apple’s premium resellers, Currents Technology Retail, recently set up two such stores in Kolkata and Panchkula in Haryana. Currents is distributor Redington’s own retail format. Not all partners are enthused by the plan. One leading electronics retail chain decided not to take up the offer as profit margins on Apple are already among the lowest.

“After offering consumer discounts, the margin on iPhones and iPads is 2-5%, whereas it’s 7-10% for Samsung and other brands. Hence, it makes sense to continue with a multi-brand retail model where we can make more money,” said a senior executive at the retail chain.

An executive with another trade partner said Apple’s distributors want to ensure that the format will be viable, which could mean that the plan unfolds slowly.

“Asia & India’s Improving PMI Performance” “against China; The New Normal” | Asia Briefing

“ China manufacturing contracting, Asia expanding as regional demographic changes kick in…” 

HSBC’s “Purchasing Managers Index” (PMI) this month has raised a number of issues, not least the continuing China contraction. The Index, which is published monthly, features a number of primary manufacturing bases around the world, and is an opinion-driven piece on how purchasing managers view their local climate in terms of increases or decrease of orders. With a mean of 50 points being “neutral,” any figure posted below that represents a contraction, while any figure above that an expansion.

China’s contraction has grabbed the headlines, but it is the other Asian countries featured in the index – and especially India, Indonesia & Vietnam – that really catch the eye : All showed expansion.

This is part of an on-going trend and one that will continue indefinitely. HSBC’s comments concerning China are especially revealing: “January data signalled a deterioration of operating conditions in China’s manufacturing sector. This reflected weaker expansions of both output and new business. Firms also cut staffing levels at the quickest pace since March 2009.” This latter sentence means that China-based manufacturing plants HR departments are considering the slowdown to be more than a monthly blip – they are specifically reducing headcount to minimize on-going operational expenses. That is significant because laying staff off in China is an expensive business – China’s labour laws mean compensation has to be paid.

By contrast, India is showing rather more impressive data – the PMI for India reached 51.4 for March, while Vietnam reached 51 and Indonesia at 50.5. Granted, these figures are not spectacularly above the 50 point line, but given a weak global economy one would not expect them to be. Nonetheless, the fact that both India and Indonesia represent huge labour forces at work, and Vietnam is pursuing an aggressive approach to compete with China shows that these numbers are not just a regional whim. They are, I believe, becoming the new normal. We summarize the reasons why as follows :

CHINA – The worlds manufacturing workshop for the past twenty years, China has now gone over the hump of the optimum worker age in terms of the number of workers to dependents. This means that for each worker, there are increasing numbers of dependents to support – and China has the fastest growing number of elderly in the world. At present, some 200 million Chinese are over 60, a figure that will increase to a full 30 percent of the total population by 2030. China is also losing workers, another trend that will continue. These demographics alone are shaping the global supply chain.

Because of this, the Chinese government has been active in ensuring that the middle class in China becomes wealthy – and fast – in order for them to cater for and finance the new Chinese dependents. With an antiquated and meagre pension scheme, China is looking for the future middle class to finance its elderly and will be pressing traditional “Chinese” family values of piety towards the aged to encourage them to support this burden. Consequently, China has been increasing the minimum wage each year by between 15-20 percent, a situation expected to continue.

China’s middle class today is some 250 million. In just six years, by 2020, it will have reached 600 million, creating a gigantic consumer market along the way. At present, China’s age dependency ratio is still reasonably healthy at 36 dependents per 100 workers, however it is deteriorating fast and is expected to double by 2030. This means the products they will buy will not necessarily be manufactured anymore in China – the labour cost will prove too much. Existing manufacturing will stay – but the products required by the increase in middle class will be sourced and imported from Asia. Key Note : China lost 2.4 million workers in 2013, an accelerating trend.

INDIA – One of those sources will be India. Conversely, as China’s workers age, India’s are young – and it has a massive workforce that is still increasing. India’s age dependency ratio is currently 51.4 – higher than China’s – but is set to drop fast.

As India urbanizes, it too will take up much of the demand for global production. It needs too – and in doing so it also needs to improve its infrastructure. China meanwhile needs to keep its aged population happy and be able to provide them with affordable products – one of the primary reasons China has offered to pay for up to 30 percent of India’s total required US$1 trillion infrastructure bill to do so. As Indian infrastructure improves, that young dynamic coming into the labour force will keep wages low. Even today, a worker in Mumbai, one of India’s more expensive cities – will be attracting about US$200 a month – compared to US$760 in Guangzhou. Global manufacturing will increasingly find India attractive as a sustainable and young workforce, coupled with improved infrastructure, starts to kick in and take the weight off China’s shoulders as being the world’s global workshop.

Ford, as an example, have already moved their global production base to Gujarat. HSBC stated that Indian manufacturing moved into a higher gear in January 2014, as new orders expanded at the quickest rate in ten months. Concurrently, exports grew at a solid pace and manufacturers raised their production for the third successive month. The rate of output growth was the strongest in a year. Key Note : India gained 7 million workers in 2013, an accelerating trend.

INDONESIA – India won’t have it all its own way of course, and there is still a lot to accomplish there for the country to properly take advantage of its worker demographic dividend. An alternative is Indonesia, as Foxconn have realised by shifting their total China production of Apple products to Java.

Like India, Indonesia has a massive workforce all coming into the labour market at the same time. As HSBC noted, business conditions in the Indonesian manufacturing sector continued to improve at the start of 2014, and that incoming new business grew at the joint-fastest pace in the history of the PMI series. Additionally, the Indonesian government are prepared to make tax concessions to attract the likes of Foxconn, something that India is less willing to do.

Indonesia’s demographic dividend will see it hit a population of 350 million by 2030, with a favourable age dependency ratio to go with it. Couple with this, Indonesia is a member of ASEAN, which enjoys a Free Trade Agreement with China, reducing tariffs to zero on 90 percent of all products traded. Those future ipads, iphones and iwatches China’s aging population will be using will be manufactured in Indonesia, not China. Key Note : 60 percent of Indonesia’s population is under 30, and that ratio is increasing.

VIETNAM – Vietnam has been attracting manufacturing business away from especially South China for much of the past six years, and this is a trend that will burst into life at the end of next year. Like Indonesia, Vietnam is a member of ASEAN, however differs in that it has not yet fully implemented all the ASEAN free trade agreements at this moment. It is expected to do so by 31st December 2015, by which time all tariffs on 90 percent of products traded between China and Vietnam will cease.

With an average monthly salary of US$150 in Ho Chi Minh City, it will mean an explosion of manufacturing business heading for Vietnam from 2016 onwards – and most of that production with no import duties will be destined for the China market. Vietnam’s infrastructure is improving rapidly, and it shares a common land border with China as well as numerous nearby seaports.

Vietnam’s current labour force is about 49 million of which 45 percent are below 35. The workforce is growing at a rate of about 4 percent per annum. As HSBC note in their PMI report for March, Vietnamese manufacturing growth gathered momentum, highlighted by the strongest rise in output since April 2011, and the fastest rise in purchasing activity in the PMI history. Key Note : Vietnam will reduce its Corporate Income Tax to 20% by 2016 – 5% lower than China

These scenarios mean that the manufacturing onus is shifting away from China and to South-East and India. The demographics alone dictate this will happen, while the ASEAN-China free trade agreement encourages this trend even more.

The new trend of healthy PMI figures for Asia, and a decline in China is already underway, and will indeed become the New-Normal.

The only question is how manufacturers based in China and Asia will now adapt and re-position themselves to take advantage of these demographic changes, and where to shift production too..??