by teamrecOrganized retail, since its very inception in India has been a subject of discussion, related to it’s size, scope, future and moreover it’s impact on pop and mom kirana stores and farmers, for whom, this is a source of livelihood. With the entry of big national as well as international players, organised retail has crossed many a milestones in the last 3-4 years, be it the number of outlets, its penetration, volume of business generated not only for themselves but for their vendors and the huge employment created. But other than the word “Organized Retail” and the Brand of the famous promoters (I am the part of this fraternity); none of us have been able to create an identity, other than that of discounted prices which we offer to our consumers.
Once, I was in discussion with one of my friends from a competitor organization regarding our organisations achievements. We both were busy blowing our trumpets, but very soon we realised that we were both doing everything similar in exactly similar ways and it was also being replicated by the kirana store next to my housing society who was pursuing it without any extraordinary promotion. The cost of which would otherwise have forced him to close down long back.
There can’t be uniqueness in any strategy for a long period of time, as a successful strategy is copied or is being tried to be copied by all at any given point of time . But organized retailers need to create a brand identity based on the value proposition it offers and consumer shopping experience. Being part of this industry for long, I can say that this is easier said than done. A normal convenience store is opened in the catchment of around 4000 households based on certain cost calculations and expected revenue. This number is significant not only for achieving the desired top line and margins but for satisfying and retaining too, otherwise our main objective to make this business viable would not be achieved.
Consumers are king and they have proved this time and again by not frequently going to many stores opened by big organized retailers, forcing them to close down. At the same time, consumers have also patronised certain stores, which have benefitted from the efforts they have put in to address consumer needs. If you ask any person in Mumbai, “D Mart” is a store which is rated highly by some as the favourite place for monthly shopping, while some have given their heart to “Sahakari Bhandar” and the residents of Mulund prefer “Shoprite”. If you go to Pune, there is loyalty for “Grahak Peth”.
What extra these stores do; may be the following:
1) Understanding the catchment and bringing in right merchandise assortment: Peanuts feature occasionally in the food habit of northern part of India and I applied this understanding when I was a part of Reliance Retail, Maharashtra Team, where “poha” is the staple diet and peanut a key ingredient. The result was disastrous and I corrected my mistake without wasting any time. Selling refrigerator to an Eskimo may look like a heroic job but it’s not right because they may buy once but will not repeat it. So, it is imperative to make mass customization of assortment and make it suitable for the catchment. Consumers may be tempted once or twice by an aggressive pricing but will not compromise on the availability of their requirement.
2) Product Availability: It is widely accepted that a consumer may go to a store once or twice for “aggressive pricing” but ultimately he/she likes to shop in a place where they get their entire monthly shopping basket. I have seen many consumers walk away leaving trolley full of products, in case they do not get even the smallest item, whose buying they cannot postpone. Product availability is a convenience factor for them and that’s why they frequent a supermarket, otherwise they would have gone to any normal kirana store. So far, I don’t think any organized retailer has reached that mark and a lot needs to be done here.
3) Pricing: I was invited by my ex-colleague to join him in a new retail venture in Punjab some time back, started by a decent sized rice trading firm. In the process, he took me to the visit one of the stores they had opened. He proudly told me that they were very aggressive in their strategy and were selling “Methi” priced at Rs. 2/- Kg against the price of Rs. 12/- which was being charged by the vegetable vendor outside. The logic behind it was, “I want to kill competition”. That might sound very macho but the final outcome was obvious, one can’t run a business at a loss. The vegetable vendor is still there, the retail chain is out of business.
The question to be asked here is, “whether the consumer really asked for this type of pricing”?If it would have been so, then they would have queued up at the store, which is definitely not the case. Consumer is ready to pay for the quality, although quality is a very relative term and it changes according to their buying prowess. That’s where the merchandiser’s mass customization and pricing skill comes into play. According to the need of the catchment, merchandiser needs to create different price points in the store, with every price point catering to a segment of consumer. Also to be taken care is the fact that there should not be a big gap between two price points so as to make graduation to the next price point easy for the consumer. This makes the consumer feel welcome in the store with her present buying capacity as well with her aspirations to upgrade to the next social level being addressed. Furthermore, the pricing has to be consistent. In food retailing, price fluctuation is inherent and can’t be done away, but the inconsistent pricing not matching with market gives a wrong communication to the consumers. It has to be noted here that only pricing can’t be the differentiator in the market.
4) In-store Execution: In store execution can be addressed in different parts.
4 – a) In-store display: Store is the face of the entire retailing organization. Consumer does not see and neither they are interested to see what happens at the backend. There have been different strategies for in-store displays, some favouring rural bazaar type display and others going with neatly arranged planogram. Whatever should be the display strategy, eventually it should lead to comfort for consumer in finding her requirements inside the store. She is obviously not there to solve the jigsaw puzzle or play Sherlock Holmes to locate her stuff. Unfortunately, this is the case everywhere and the store staffs have also failed to help. They might be having their own reason, but what matters is attention to be given to the consumer in such a way that it should not unnerve her and at the same time it should not leave her entirely on her own in the store. Proper signage is definitely needed to guide the consumers towards different categories.
4 – b) In-store Price Communication: Another important point is in-store price communication. Almost all the organized food retailers follow different pricing strategy for different products. They sell some of the items on the maximum retail price printed on it and sell some below MRP. Pricing strategy and price changes in the corporate and zonal office and hence in the system which needs to be addressed and incorporated, but communication of the same goes missing at the store / floor level, where it is equally required. It adds to the confusion and deters consumers from taking the buying decision. It has been observed that Indian consumers are normally of shy nature, and who likes to shop in a crowd so that nobody recognizes her/his buying capacity, at the same time aspires to upgrade her buying to the next price point. A proper pricing communication gives this confidence to her, to be of her own, a freedom from dependency.
4 – c) Staff Knowledge and Etiquettes: Very important point is knowledge of the staff about the product they are selling. As we discussed above about the importance of pricing and price communication, every consumer comes to the store for a product at a certain price point according to her budget and at the same time she also aspires to graduate to the next price point. But before doing so, she wants to be doubly sure that the quality and features of the product which she is aspiring to buy with her hard earned family money is doing justice. The role of convincing her is completely on the shoulders of the store staffs. So, it is very imperative for the Category Managers to train the store staffs about the features, benefit and value proposition of any product. It will help them to engage consumer in conversation and convince them. Similarly, the staffs should be polite and warm to the consumers. It sometimes becomes difficult when consumer becomes abusive and offensive, but they have to handle it tactfully. Retail is 24 X 7 job and when the entire world enjoys a holiday, retail staffs are standing in the store to welcome shoppers. Continuously standing in the store for hours, and in the case of food retailing, unloading the vehicle, taking the stock to the store floor, unbagging and placing it in the shelves tires them a lot. So, the Store Managers need to rotate the duties, address the physical work issue of store staff.
4 – d) Queue at Cash Till: The most painful part of the shopping experience at a Retail Store is standing in the queue and waiting for your turn for the billing process. This problem is a bit more in food retailing, where there is quite a possibility of a product’s different unit having different MRP. The cashier finds it very difficult to pick the correct MRP quickly, because once he scans a product many MRP gets flashed on the machine. So, internal supply chain as well as store staffs are required to maintain only those MRPs in the system, whose stock is available. Alternatively, retailers are using this time to push the sales by keeping impulse items like chocolates near the Cash Till.
5) Private Label: Almost all big retail organizations in India are run by industrial houses which are at times bigger than the Indian arm of the FMCG giants and their name is a brand in the remotest part of India. It’s good that these stores are selling different branded products from their stores, but also doing the same are the local kirana stores. Putting it in the different way, if a consumer wants to buy a Close up toothpaste, she can go to either local kirana or a supermarket, but if she wants to buy a “AU79” range of men’s grooming products, she will have to come to “More”, “Supermarkets” or “Healthy Life” range of food products, then she will have to go to Reliance Fresh only. To pull the consumers towards a private label, there has to be a sustained effort from everyone from the organization, because it’s quality, features and quality proposition will bring in more footfalls and work as a differentiating point between kirana and the organized retail. This will not only work as differentiator but also help in improving financial health of the company. Private label is the biggest brand builder for the retailer. Once the product gets a place in the consumers mind, then she will automatically remember the place where she has to go to get it.
6) Home Delivery: Yes, this is one subject which is widely being followed and important tool to win consumer’s loyalty, only glitch here is the timelines. Retailer has to ensure that product purchased by the consumer is delivered at the time agreed.
7) Loyalty Benefits: We become friends or get into a relationship with somebody purely on the basis of what we are getting in return. Consideration may be different for everybody, emotional, physical, financial etc. A consumer can go anywhere to shop for their monthly requirement. If she/he is coming to a particular store continuously, then she/he needs to recognized and rewarded for that. The reward may be in any form but needs to be measured in terms of money and social status.
8) Feedback, Evaluation and implementation: Since retail is about direct dealing with the consumers, their feedback needs to be instantly recognized, evaluated and addressed. Why I am writing so, because every successful supermarket gets between 500-1000 footfalls everyday and every consumer is entitled to have their own opinion on certain things. Once their opinion is recognized and evaluated from the business perspective, it has to be implemented without delay and the consumer should be informed about the progress. It will make her/him feel an important person for the organization.
While taking the relieving letter from one of my previous organizations, I met my Reviewing Officer. I told him my reason for leaving was that I had put a lot of effort in the location where nobody wanted to go and gave better business than anybody else in that segment, met more people, out placed competition, created a brand for the company, but I was not duly recognized and rewarded. My Reviewing Officer wished me luck for the future but cautioned me for not being a good salesman for myself. He said, “You made company’s voice audible in the outside market and did an excellent job, but at the same time you did not make your voice audible to the decision makers for your career growth. In any dynamic organization or market, you will have to make your voice heard; everybody has different priorities.”
So, all the good work a retailer is doing has to be communicated to all the stakeholders, communication medium may vary. It will create an identity of the retailer based on certain qualities, which will create a better shopping environment for the consumers, and result in loyalty from their side. Branding will never be a one time exercise of creating a logo or picture; it is a relentless exercise to provide consumers what has been promised to them continuously, without fail. If you are caught winking, then somebody will replace you. Your strategy may be copied, but remember you may be the first one to do it. Everybody remembers “Edmond Hillary” and “Tensing Sherpa”, after them many more have achieved the feat, but how many of us remember. You will always have the first movers’ advantage.
ABOUT THE AUTHOR
Mr. Mukul Bhartiya is currently working as National Category Manager with Aditya Birla Retail Ltd, looking after pulses category. He has 10+ years of experience in the field of Sales and Marketing in Food FMCG, Food Retail and Commodity Futures.
He is a MBA from Center of Management Education, VAMNICOM, Pune run by Ministry of Agriculture, Government of India.
He has shaped up and established the business of different organization in different geographical locations, i.e., Staples business of ABRL in Mumbai, Staples business of Reliance Retail in Rest of Maharashtra, Commodity Futures business of MCX in Bihar/Jharkhand and Retail & Consumer marketing business of NAFED in all over India. He has also worked on formulating business strategy of agriculture commodity marketing for NAFED for 2 years and designed strategy for procurement and disposal of oilseeds under Price Support Scheme during the period of 2002 to 2005.
He has been given appreciation letter for presentation and review of business activities of NAFED by Estimates Committee of Parliament, which reviews the non-plan expenditure of Government of India.
He has done a project of International Trade Development among cooperatives in India, Iran, Kuwait and Sri Lanka for International Cooperative Alliance. This project was presented in different meetings of ICA at Thailand and China during 2004-05.
He has published an article titled “Edible Oil Market Scenario” in market outlook segment of May-June 2003 issue of Oils & Fats Today.
