FDI in retail: Shopper mktg experts to wait & watch
While there is a series of positive discussion around FDI in retail, shopper marketing agencies believe it’s too early to draw a way forward
Although shopper marketing has only really permeated mainstream marketing over the last few years globally, its proponents argue that it is an important move away from the short-term and adversarial past of trade marketing and sales promotion tactics to a more strategic marketing discipline that has a key role to play in an integrated marketing approach.
India saw the advent of sophisticated shopper marketing in 2010 when Publicis Group’s Saatchi & Saatchi X set its base. However, there was not much buzz in the space for the next one year. The prevailing go-to-market strategy has entered its next stage of evolution with a series of global shopper marketing agencies establishing its presence in India. Today there are over a half dozen global shopper marketing agencies and many specialised in retail advertising agencies, as they call themselves.
While shopper marketing is a relatively new concept in India, industry experts believe it will soon become the dominant concept for in-store selling. Thanks to the thumb ups given by the government of India to allow 51 per cent FDI (Foreign Direct Investment) in multi-brand retail sector. A few conditions, such as a minimum investment of USD 100 million and a required FIPB (Foreign Investment Promotion Board) nod have been introduced, but the decision overall is expected to open up the economy, especially retail, in a big way.
For shopper marketing agencies, increase in FDI is exactly the thing that we were looking forward to which will make us into a mainstream discipline. There will be a significant investment from marketers into shopper understanding, shopper communication, relationship management with key customers. While there is no doubt that shopper marketing is here to say, the FDI norms will just accelerate us to being an important part of the marketing mix,” said optimistic Ketan Desai, Managing Director, Integer Group India.
For marketers, these specialised agencies will give a whole new communication channel, where there can be immense opportunities at the point of sale level. These agencies will be able to analyse shopping behaviours and be in a better position to channelise the brands’ investment. Marketers will be able to better cross sell their brands creating more value for their customers and themselves. More importantly, they will be in a great position to be able to up-trade their customer base to more premium ranges.
While there was a segment of the society that anticipated that it could lead to widespread unemployment, Shashi Sinha, Vice President, Laqshya Media, comes from the positive school of segment. He said, “The reality is that labour force has become more skilled and we have become more productive as a society. These fears are also unfounded. As time goes by, a new order will emerge which will positively be better than what we have seen or are anticipating.”
Though there is a bunch of opportunities that these new agencies can go and grab, there is still a wait and watch situation ahead as far as foreign investments are concerned.
“We still think it will not be a situation soon where the foreign investors will rush in thousands to buy in or invest. There are many foreign sceptics out there still who have closely watched the 2G case, the retroactive tax law amendment on Vodafone tax case and the worst being that many large political parties are affirmative that they would scrap FDI if voted to power. So let us not expect that there will be torrential rain of FDI very soon. But having said that, the FDI in niche segments and categories will happen soon, like the entry of Starbucks,” said Abhijit Sengupta, Chief Operating Officer, Touchpoint, a division of Outdoor Advertising Professionals India.
A tough road ahead...
Will the announcement has brought in ray of hope to a lot of segments of economy, the way ahead looks a bit tough especially for retailers. The challenges that will arise for retailers will be able to establish a philosophy and a brand identity for themselves. Some will cater to mass, while some will need to be more premium. “They will have to understand the complex Indian shopper and carve a niche for themselves. Challenges for marketers will be that they will have to add the customer (retailer) into their marketing briefs and investments. They will need to create programmes, communication, infrastructure that works along with the retailer’s goals and not just their brands,” mentioned Desai.
Sengupta is keen to see the battle between private labels and the branded labels. He added, “Let’s wait and see who wins. Also, FDI in retail being left to state governments, many states will not be open. So I guess there will be varied consumer experience from one state to the other.”
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