Countering VUCA C-Suite in G-Suits, please! FOR2022 IN HINDSIGHT

TCS Octara.com revisits the 1^st Pakistan Future of Retail Business Summit 2022 (FOR2022) that covered Shopping, Payments, e-Commerce and Last-Mile Delivery.

By Adil Ahmad

It’s been five months since the 1^st Pakistan Future of Retail Business Summit 2022 (FOR2022), a glorious conclave of grassroots operators that constitute the nuts and bolts of the national economy, keeping it oiled and greased and functioning as the barometer of society’s health.

 

Anti-gravity suit warnings

However, in the past five months, from purring like a well fed cat recovering from COVID, the political economy suddenly tanked and went into a nose dive. The anti-gravity suit warnings had been up for a while with lean and agile touted, and rightly so, as the panacea for the pull of earth's gravity that makes people suffer from air sickness, decompression sickness, trapped gas, and spatial disorientation, all of which take a toll on the human body and the body politics.

 

On the 8^th of March, however, the illustrious panels of speakers and a full house of 400 live in-person delegates at the FOR2022 were in a buoyant mood, freshly released from the solitary confines of COVID quarantines and eagerly looking forward to reclaiming lost ground.

 

Azfar Ahsan, Minister of State and Chairman BOI, graced the occasion and pulled some tight G’s that had the audience light headed as they pondered the import of his words that spoke of developing countries in which the private sector generates 90% of the jobs, funds 60% of all investments and provides more than 80% of government revenues. He spoke of 40 regulatory agencies that were hobbling the horses of free enterprise and the undertaking of a comprehensive reform process to make them user-friendly. The proof of the pudding is in its eating was the general consensus.

 

Top Guns

Nadeem Hussain (chairman Fintech Association of Pakistan), Saira Awan Malik (president TCS Express Logistics) and Amir Paracha (chairman Unilever Pakistan) led the keynote speeches, painting the post-COVID operating landscape. They were veterans of surviving the COVID onslaught and no strangers to pulling extreme G’s in a volatile, uncertain, complex and ambiguous operating environment. But the war in Ukraine and our own high voltage politico-economic discord were as yet in the immediate future, and no Top Gun, Maverick or not, could possibly prepare for what was just around the corner.

 

Our panelists that day were no fighter pilots, but they were top guns nevertheless, with thin-slicing driven instincts keeping their boats afloat. Faisal Nadeem Riaz from the Dolmen Group, Seema Aziz from Sefam, Irfan Iqbal Shaikh from Al-Fatah Stores, Asif Haroon from Ferguson, Samoon Sultan from Khadi, Ayesha Dawood from Lawrencepur, Ebad Ahmed from Food Panda, Ahsaan Saya from Daraz and Badar Khushnood (Chairman P@SHA) were part of the frontline line-up at FOR2022.

 

TCS Express Logistics’ Qasim Awan bore special mention for his support as also did Ahad Pharmacy, Payfast, Algo, Creset, Emiraat, IoBM, AF Ferguson, Business Recorder, BoI, and Ministry of Commerce for their contribution to this landmark event. Thirty speakers addressed 8 sessions, with 20 CEOs having traveled from Lahore and Islamabad to attend.

 

Bane of the G-LOC

Fighter pilots can handle greater head-to-toe G forces—up to 8 or 9 G's—and for longer periods by wearing anti-G suits. These specialized outfits use air bladders to constrict the legs and abdomen during high G's to keep blood in the upper body. When the body experiences too much G-force, a person might become lightheaded or even pass out for several seconds—also referred to as "G-LOC" or gravity-induced loss of consciousness, a phenomenon whose antidote is a phenomenal level of battle worthy fitness. 

 

While on the subject of pulling G’s it would be worth mentioning that G-force is a measure of acceleration or deceleration which is the change in speed over time. If you're sitting still reading this, your body is experiencing one G of force, which is the acceleration we experience due to gravity. Rapid acceleration or deceleration from your current position increases or decreases the G-forces on your body, making you feel heavier or lighter, respectively.

 

Rapid acceleration and deceleration have become the new normal worldwide as economies reel from the effects of clogged supply chains and speed up as gaps in the traffic appear, braking and swerving and lunging forward with razor edge reflexes.

 

The Retail sector is a major contributor to the national income of Pakistan and a major employer of its human resource at every level. Over 100 brands were represented at the FOR2022 along with the representatives of the government and financial sector. 

P.K.Menon and Steve Dennis, eminent authors and experts on retail, joined online enabled by Naheed Stores.

 

Pulling off ‘mission impossible’

Hamza Hashmi led the TerraBiz squadron that partnered with the Chainstore Association of Pakistan (CAP) whose leading lights Rana Tariq Maqbool (Chairman CAP & CEO Royal Tag) and Isfandyar Farrukh (Sr. Vice Chairman CAP & MD Hub Urban Brands) succeeded in achieving that which had earlier appeared as a mission impossible, and pulled off a very successful and very pertinent meeting of minds at the FOR2022.

 

There are about 400 brands in Pakistan of which about 250 have become CAP members. “We got our trade license last year and within a year we achieved this summit milestone,” said Rana Tariq Maqbool, deferring to Jawaid Siddique, CAP’s founder chairman.

 

“We have brought together retailers and the industries allied with the retail sector. We have engaged with the government in policy making with agreements made with the FBR and with the commerce ministry for e-commerce and regarding exports. Our human capital is very dear to us. The retail business has emerged in the last 16 years and we are engaging in training all levels from the shop floor assistants to CEOs.”

 

Shedding the comfort zone

On the typical commercial flight and only during specific maneuvers, passengers typically experience no more than 1.3 G’s of force on their bodies and no less than 0.7 G’s. Put another way, the typical passenger will feel a maximum of up to 30% heavier or 30% lighter for brief moments depending on whether the aircraft is accelerating, decelerating, climbing, descending, or turning. In general, most people will barely notice these forces.

 

While commercial flights exert only very minimal positive and negative G-forces on passengers, several orders of magnitude greater are the G-forces experienced by astronauts, fighter pilots and stunt pilots. These types of pilots can experience brief periods of extreme forces of nine and 10 G’s.

I have always maintained that very far from being an Airbus commercial airliner, Pakistan has been ‘condemned’ by its design to be a fighter aircraft, a JF Thunder if you like, manned by top guns who relish and thrill in pulling G’s, living life and playing ball on the knife’s edge, with 220 million+ rallying them on.

 

Ill-prepared, on a song & prayer

However, without highly specialized training and equipment, this level of force would have an extreme effect on the average person within a few seconds. For example, as significant downward G-forces are applied to the human body, blood is forced from the head to the lower extremities, quickly overwhelming the heart's capacity to pump it to the brain. On the other hand, extreme negative or upward G-forces force blood from the extremities up toward the head.

 

To counteract the effects of extreme G-forces, fighter pilots and stunt pilots must first be in good physical condition and peak health, which is more than can be said for the masses. Additionally, they learn and train to execute techniques that require rapid and strong contraction of specific sets of muscles while holding and releasing their breath in a particular pattern, and that requires human resource development of the highest order. These techniques help keep blood from pooling in certain areas of the body.

Also, pilots who routinely push the limits of aviation with maneuvers that place extreme G-forces on their aircraft and their bodies are equipped with special full-body G-suits, as mentioned before, and, in our context, sometimes even our top guns can’t afford these very pricy life savers.

 

The G-suit actively and automatically pressurizes specific portions of itself depending on the forces being applied to the pilot during any given maneuver. For example, during a hard loop, the suit's legs pressurize to reduce the amount of blood that would usually be sent into the lower body by the extreme downward G-forces.

 

“Hum Khud Tarashte Hain Manazil Ke SangEMeel

Hum Wo Nahin Hain Jin Ko Zamana Bana Gaya”

Nadeem Hussain, the Fintech Guru, radiated extreme G’s as he described a ground reality that should theoretically take us from zero to infinity in the blinking of an eye. One cannot even begin to wonder at the super exponential G force that move would generate.

 

Pakistan has more than 55 million smartphones, GPS coverage close to 90% of the country, and an identity network for every citizen of Pakistan in NADRA that enables the ability to do identification for more than 120 to 150 million customers. “These are railroads that you need to figure out how to leverage.” He conceded that estimating the retail trade in Pakistan was a difficult thing that ranged from 50 billion to 75 billion rupees, with e-commerce estimated at 5 billion.

 

Going digital

Mom-and-Pop Kiryana stores came in for special treatment with Nadeem Hussain making a strong case for their nurturing and promotion. “The 2.5 million Kiryana stores have created substantial economic activity. With Telenor and EasyPaisa we made them part of branchless banking. Suddenly the number of bank branches went from 15,700 to 80,000 where you could do financial transactions. And these Kiryana store owners were available 7 days a week since they didn’t play weekend golf.”

 

Leverage the networks that exist rather than starting from scratch was the Fintech Guru’s parting word of advice. “Kiryana stores get less than 6% of the lending from commercial banks while they generate a much larger proportion of economic activity. There are disadvantages for them to shift from cash to digital with bank charges, delay in receiving payment and the tax net amongst them. But if we don’t make the shift then a very large segment of the economy will remain undocumented and we will remain a cash society. 5 years tax holiday will encourage conversion.”

 

Humble soup and soap maker

Describing himself as a humble soup and soap maker facing titans of the retail trade, chairman Unilever Pakistan Amir Paracha paid tribute to the CAP and its 200 member stores that have a combined footprint of more than 20,000 outlets providing livelihood to more than 1 million people directly and indirectly in the country.

 

The FMCG sector has experienced tectonic shifts in the last 3 to 5 years, said Amir, and the pipeline business model developed over the last 100 years is not going to serve us anymore. “We produce a product in the factory, make it go through a distribution network to thousands of retailers, developing relationships with the retailer and gaining prominence in the physical aisles, creating a consumer pull through massive investment in media and getting your product fly off the shelf.”

 

Digital Age customers

Now we are talking to people who are digitally connected, 140 million strong in Pakistan. What matters to them is how many products are trending online. The journey is what excites them. How smooth and quick is the process of order placement and delivery, unpacking the product, and if need be returning the product in frictionless fashion. Are you ready for this kind of future?”  

 

Amir talked about visiting China four years ago and visiting a grocery store where the customers’ mobile phone was capturing the QR code of the products. There was no cash till or checkout counter. No queuing required. The customer paid through AliPay and the shopping was delivered at home. The hassle of navigating a trolley through the aisles is eliminated, as also is the hassle of queuing and dragging your groceries to your car.

 

“From the retailer’s point of view he is saved the cost of maintaining an inventory in a high rent district. He is running a showroom with no need for merchandise replenishment. No need for cash reconciliation. It’s the best of both worlds which we call hybrid or phygital. This was four years back.”

 

Cobweb of conveyor belts & autonomous warehousing

JD.com is the second biggest player after AliBaba and had 5 generations of warehousing of which 4 and 5 were off-limit, being confidential, said Amir. “So we went to a generation 3 facility, a cobweb of conveyor belts, all equipped with sensors. The entire process of pick, pack and dispatch takes them under 7 minutes by 4 people who process 200,000 parcels in 24 hours. It was 1.5 times the size of our National Stadium in Karachi, and by now they have more than 1300 such facilities in China. What we envision as our future is already a reality in some part of the world.”

 

Meta-verse

Pakistan is at generation 1 or at best 2. China is at 4. Gen 5 is the Meta-verse wherein we operate in the virtual world and buy real estate in the virtual world. Demand creation and demand capture are very important which our new age companies have excelled in. but insufficient resources are being allocated to the up-gradation of our fulfillment capabilities.

 

There has been an exponential growth in national storefronts, in the innovation of the last mile delivery, in warehousing capacity by 10 times in the last 3 years. But all this could be wasted if they’re not connected as part of a shared ecosystem powered by fully autonomous artificial intelligence, machine driven forecasting, intelligent automation and highly skilled human operators to unlock the efficiencies that elude us as we remain stuck in our old legacy ways of doing business.

 

Scale up = out-of-stock

Today everyone is busy fighting to be the fastest and in this chase an insane amount of cash is being burnt. But as businesses scale up out-of-stock is becoming an increasing problem. This is because they haven’t invested in the backbone of this process which is autonomous warehousing.

 

“The big corporations would love to partner with you if a jd.com style operation can be implemented at your end. We need to work together. The time has gone where the competition was treated like an enemy. They’re worthy rivals. We need to create a shared platform economy rather than the old pipeline economy. The digital economy is a great equalizer that’s giving everyone a level playing field.”

 

It is a common misconception that maximum aircraft speed and maximum G-force loads the aircraft can create are related—but that's not necessarily true. For example, the SR-71 Blackbird is the fastest jet on earth, capable of reaching a speed of nearly 2,200 miles per hour. However, it can only withstand a maximum of 3 G’s, which is far less than a fighter jet or the fastest aerobatic planes.

On the other hand, an expert pilot in command of an Extra 300 stunt plane can pull 10 G’s, even though the plane has a top speed of just over 200 miles per hour. This is due to the plane's extreme maneuverability and construction that can withstand G-forces significantly higher than even 10 G’s.

 

The Red Baron

Pulling G’s on a daily basis is TCS Express Logistics and its president Saira Awan Malik. A female manning the action stations in logistics is largely unheard of, and Saira dedicated her keynote to addressing ecommerce logistics, the third critical element along with the storefront and digital payments that ensures a successful and robustly functioning ecommerce environment.

 

Estimates tell us that our ecommerce sales are just about 2% of the retail sector, and therein is the opportunity, said Saira. “In 2020 the ecommerce sector accounted for approximately PKR150 billion and in July 2021 it rose to about 200 billion. COVID has acted as a big catalyst.”

 

On-line/ off-line integration

With 55% Internet penetration in Pakistan, between 22% and 33% of the people made an online purchase for the first time during the pandemic. “We think this is a trend and likely to continue. People who have made one purchase are likely to make more as their confidence increases in the system.

 

This sector is expected to grow at about 25 to 30%, and over the last year and a half TCS has seen its volumes increase two to three times. “This is real growth and we have outpaced the growth of the market even though this last mile delivery is a highly contested space. Sometimes we feel that the future is entirely online and there is this rush to digitize. But globally the future of retail is in on-line and off-line integration which has increased.”  

 

Although stunt planes are designed to easily withstand very high G-forces of up to 10 or even 12 G’s, stunt pilots who provide rides to the general public rarely perform maneuvers that exceed 4 G’s. This is because the average person does not have special training to handle more than 4 or 5 G’s. In general, an individual can withstand anywhere between 2 to 5 G’s and be relatively unaffected (apart from an exciting rush of adrenaline, that is!). However, it really depends on the person and what they're looking for in their flying experience.

 

Fast & Furious Flows of Info!

The thing about pulling extreme G’s and surviving them on a sustained basis is that it tends to become the new normal. But that is the anti-thesis of high performance teams that must command the ability to decelerate and strive for a straight and level flight while catering for the weakest links in the chain that may well succumb to "G-LOC" or gravity-induced loss of consciousness when the body experiences too much G-force.

Trying to capture the essence of the day-long proceedings had me on the verge of G-LOC before the remedy appeared. The best way to eat an elephant, I remembered, is one bite at a time. So, from hyperventilation induced by thoughts of devouring the behemoth and choking in the process, I throttled back to slow motion imbibing of what each speaker had to say, much like Keanu Reeves in the Matrix dodging bullets with ease, editing in real time and noting the essence of the countless gems being sprouted.

 

Phenomenal growth

Badar Khushnood (Chairman P@SHA) peppered his discourse with info the push-and-pull of which generated some serious G forces. In Pakistan we have 220 million people of which 190 million have a mobile phone of which 110 million are connected to 3G and 4G according to the PTA’s official data. That’s 50% of the population. The total population of Singapore is 5 million and we have 110 million who are connected. The only challenge is that the GoP heavily taxes quality devices so the quality of connectivity is poor. Tax on the bandwidth is another problem. The GoP wants digitization but puts a 17% tax on laptops. That’s a dichotomy about which associations like CAP and P@SHA fight every day. Our digital access to market has grown phenomenally.

  

Ibad Ahmed (Head of New Verticals & Quick/Now Commerce at Food Panda) went straight up with his afterburners full on, quoting worldwide online sales at $5 Trillion averaging $1200 to 1500 per person. The global Q-com to E-com ratio is 3.5 to 4% and Pakistan is presently at 2.7 to 3% in a short span of 18 months. We often don’t know that we need something until it appears. Q-com caters to instantaneous gratification.

 

Documentation and digitization

Senior Joint Secretary (E-Commerce) Ministry of Commerce Aisha H. Moriani said that there is a lot of focus on documentation and digitization from the taxation side and CAP has put in a lot of effort in the integration process along with the FBR. Documentation and moving towards a digital economy are the foremost priorities which will not happen unless this vision is also adopted by the private sector.

 

“We need champions in the private sector as well as in the government to move together with a positive spirit. We are talking to the FBR, SBP and SECP from the private sector’s perspective. We are also trying to engage with global platforms like Daraz and Amazon which can improve the connectivity of our sellers with the world.”

 

World class

Seema Aziz, founder and managing director of Sefam (Pvt.) Ltd. held forth over Zoom on developing a culture of innovation for manufacturing high quality fabric brands that people love. Seema relived her journey which started in 1984 with the idea of creating a product in Pakistan that was equal in quality to the best in the world.

 

“When we started out I was the only female in a male dominated industry and had a great competitive advantage. Being a consumer myself I knew what the market wanted. Maybe I’m just gender agnostic but it made no difference to me at all. People look at you the way you look at yourself. You need to believe in yourself and just go out there and do what you want to do. People give you the respect that you give yourself.”

 

There’s a huge energy and sense of competition in the market, said Seema. “The challenge is the huge shortage of trained people right across the value chain. Each one of us needs to train new people. We need to team up with academia. In the developed world there is a synergy between academia and industry which is where research and innovation happens.”

 

COVID revisited

Shamoon Sultan (Founder and CEO of Khadi) went down the COVID memory lane and said that the first two months were relatively easy because everything was shut. “There were zero expectations. Everyone was in a big shock across industry. The problems started when the lockdowns eased and the market started opening up partially. That was challenging. Missing the seasons was a setback which we have grown accustomed to by now. The biggest learning was that we have to concentrate on the core business. The partial lockdowns did us more harm and it will take a while longer to recover from that.”

 

It’s going to take a lot of time in Pakistan for online to really take hold, said Shamoon. “People like to go out and see and be seen, which is our primary entertainment. Online is important and some brands have leveraged ecommerce in a big way, but it’s not for us right now.”

 

Reinvention

Faisal Nadeem Riaz (Director, Dolmen Group) spoke of a very futuristic image in which shopping malls would become autonomous warehouses for Amazon and JD.Com. “We treat shopping malls as a different channel as opposed to stand alone outlets. We’re not just a collection of shops. Ultimately what drives a shopping mall is the experience. It’s where you can spend the whole day shopping, dining, and entertainment, and also a place to just walk around with the family in a safe, air-conditioned, convenient environment. It’s a great way to spend the day given the very limited entertainment options.”

 

Malls did better during COVID because of our communications and the realization that we were all in this together and would have to throttle back our pace and profits if we wanted to survive, said Faisal. “So through communication and collaboration amongst retailers and bodies like CAP which engaged with the government we made it through the pandemic. A new sense of appreciation of retailers has come about. We understand each other better and have come closer together. Something positive will come out of this.”

 

COVID’s come and gone though it is still found lurking here and there with the taking of precautions still very much on the cards. However, it is the economic meltdown that we are presently experiencing that poses a clear and present danger. The C-Suite is well advised to keep their G-suits handy.

 

PULL QUOTES

 

“There are developing countries in which the private sector generates 90% of the jobs, funds 60% of all investments and provides more than 80% of government revenues” - Azfar Ahsan

 

“G-force is a measure of acceleration or deceleration which is the change in speed over time” – Google

 

“The Retail sector is a major contributor to the national income of Pakistan and a major employer of its human resource at every level” – Hamza Hashmi

 

“We have brought together retailers and the industries allied with the retail sector. Our human capital is very dear to us. The retail business has emerged in the last 16 years and we are engaging in training all levels from the shop floor assistants to CEOs” - Rana Tariq Maqbool (Chairman CAP)

 

“The 2.5 million Kiryana stores have created substantial economic activity. With Telenor and EasyPaisa we made them part of branchless banking” - Nadeem Hussain (chairman Fintech Association of Pakistan)

 

“Today everyone is busy fighting to be the fastest and in this chase an insane amount of cash is being burnt. But as businesses scale up out-of-stock is becoming an increasing problem. This is because they haven’t invested in the backbone of this process which is autonomous warehousing” - Amir Paracha (chairman Unilever Pakistan)

 

“In 2020 the ecommerce sector accounted for approximately PKR150 billion and in July 2021 it rose to about 200 billion. COVID has acted as a big catalyst. We think this is a trend and likely to continue. But globally the future of retail is in on-line and off-line integration which has increased” - Saira Awan Malik (president TCS Express Logistics) 

 

“GoP heavily taxes quality devices so the quality of connectivity is poor. Tax on the bandwidth is another problem. The GoP wants digitization but puts a 17% tax on laptops. That’s a dichotomy about which associations like CAP and P@SHA fight every day” - Badar Khushnood (Chairman P@SHA)

 

“Documentation and moving towards a digital economy are the foremost priorities which will not happen unless this vision is also adopted by the private sector” - Aisha H. Moriani Senior Joint Secretary (E-Commerce) Ministry of Commerce

 

“Each one of us needs to train new people. We need to team up with academia. In the developed world there is a synergy between academia and industry which is where research and innovation happens” - Seema Aziz, founder and managing director of Sefam (Pvt.) Ltd.

 

“Online is important and some brands have leveraged ecommerce in a big way, but it’s not for us right now” - Shamoon Sultan (Founder and CEO of Khadi)

 

“Ultimately what drives a shopping mall is the experience. It’s where you can spend the whole day shopping, dining, and entertainment” - Faisal Nadeem Riaz (Director, Dolmen Group)