Is organised retailing a boon?
Distribution plays a key role in the success or failure of any brand. Hence it is always on the priority list of marketers. What is working and what is not working in organised retail?
“Even traditional shops are upgrading”
Hemant Malik, COO, Trade Marketing & Distribution, ITC FMCG
Because of the large formats, other retailers who compete with the large retailers are also getting their act together. They have improved the way the products get displayed. They are also trying to have formats like new chains where people can go and pick up their product. They are also creating check out formats. So it is not only about 4,000-5,000 outlets that big retailers have. The second level of outlets is also trying to learn and adapt. They are trying to pick up good things. And needless to say they always have advantage of location.
So, the traditional shops are also trying to offer the similar experience as in the modern retail shops. They don’t want consumer to go back and say that the particular product is not available here.
Third is that the retailers today want to keep the widest possible range. So getting your product placed and get visibility is becoming a big challenge for marketers. Also consumer’s purchase decision is influenced by the fact what they see when they go inside. So, marketers need to spend a lot of money on the retail outlets.
“Brands are getting a fair and equal chance”
Sumit Sahay, Head, Marketing, Croma
The market today is witnessing the growth of organised retailing because the consumer is looking for more hygienic and well appointed place to shop from. Retail shopping has been augmented with the presence of multiple channels of entertainment such as food courts. Modern retail is playing a key role in exposing consumers to a completely new way of shopping. The format provides a plethora of choices and gives brands an equal and fair chance to reach out to the consumer. Challenges in retailing are not consumer oriented but are more commercial in nature (overall enterprise making, profit-making and absorbing additional costs involved in operating such kind of environment). The only challenge on the consumer end for marketers is that they have pre-conceived notion that products in modern retail are expensive but this is also slowly changing.
“Retail has become a way to entertain”
Sanjay Tripathy, Head, Marketing, HDFC Life
Retailing in India has changed in last 10 years and it has really caught up. Now single brand retail and multi-brand retail chains are there. So it is of two types, retail chains as a brand itself with different brands in its stores, and those stores, which sell single brands. Retail brands have really proliferated, if you look at shoppers stop, big bazaars etc. Other international retailing brands are also entering into India, for example, WalMart and Carrefour.
Earlier the retail chains and hyper markets were the things of metro and big cities, but now they are also moving to smaller cities. Whether it be apparel brand or music or cosmetics or even daily necessities like foods and vegetable, people are really spending time on retail shops. This is probably because it provides a good shopping experience and also consumers look for entertainment around the stores as they are mostly located around the malls, cinema halls and multiplexes. So going for shopping becomes more of family outing kind of thing today.
Retail has become a way to entertain with your family and enjoy shopping. And in most of the cities it is catching. Though the organised retail is still a small portion of overall market, it is growing multifold.
“Choice has diluted brand loyalty”
Anisha Motwani, CMO, Max New York Life Insurance
There is an attention deficit syndrome among consumers as far as modern retailing goes. It is very difficult to grab consumer attention for any significant time period for your product or brand. There is a choice syndrome which is leading to dilute brand loyalty.
Also I feel there are brands that are shouting for attention all the time. There are too many brands vying for consumer’s attention.
“Modern retail is squeezing margins”
Sameer Suneja, Managing Director, Perfetti Van Melle India
From the marketers’ perspective modern retail formats are something to look forward to. Undoubtedly, it is helping products and brands.
It will allow companies to bring specialty products, different kind of products, different kind of packaging, different formats etc. It will also help distinguish the marketing from the product proposition point of view. Having said that, it is also true that it will definitely put pressure on the margins for a category because modern trade by definition is known to be squeezing the margins for the manufacturers around the World. From my perspective that will always be a challenge to maintain.
The rise of modern retail formats has resulted in manifold changes in the marketing space. On one hand it has given a huge push to new brands and products. On the other hand, it is also forcing traditional retailers to modernise and keep pace. To compete with organised retail, the traditional shops are also trying to offer similar experience. They have improved the way the products get displayed, they are also trying to have formats like new chains where people can go and pick up their product. They are also creating check out formats.
But the picture is not all rosy. There are some negative impacts of this ever expanding retail culture. The modern retail format provides a plethora of choices. Reports suggest that around 85 per cent of purchase decision today is made at the point of sale. So the consumer doesn’t decide which brand he will buy before he leaves home for shopping. He rather walks into retail store, has a look at all the brand’s available and makes a decision then and there. This means the idea of brand loyalty is an obsolete notion to the consumers now. Also with so many brands shouting for attention all the time consumer’s are developing attention deficiency syndrome. Apart from that retail formats also squeeze the margins for the brands.
Undoubtedly, organised retail is taking the marketers on the high road but at the same time it is giving those bumps to the brands. So it is important for the marketers to keep in mind the challenge that retail environment is presenting for them and be prepared to tackle those challenges with the best of their strategic weapons.