Sunday, October 23, 2011

Tier 2/3 towns come of age for Retailers

Almost a year ago I was in Tanjore to teach at a business school there. I noticed a few things about the Retail scene there, namely the presence of a few national chains of supermarket. Also, the consumer base was present and the latent need for a better shopping experience was evident in my interactions with people.
I happened to visit that town again after a few months for a wedding and was amazed at what changes can happen within a this period.
Obviously the consumers, shoppers and the Retailers of this town had caught up with their peers across the world. Some noteworthy observations –
Smarter stores – The stores seemed brighter with better signages and also more inviting. When I stepped into one such store the change was obvious. There was better lighting, the merchandise was presented in a more inviting manner plus the personalized service. It made for an unbeatable combination.
Wider range and assortment across categories – Apart from packed grocery, the shelves had a wider range of products be it processed food or some new and interesting home ware product.
Advertising and promotions – The local TV/ cable channels were filled with advertisements of the local retailers across categories. Supermarkets were shown with very appealing self service shelves, furniture, CDIT, you name it and it was there.
Focus on shopping experience - The underlying theme across all these advertisements was the service factor with the personal touch being highlighted in several ways.
All these and more made me accept the reality which I have spoken about often enough and even mentioned in my book "The INDIAN reTALEs"; tier 2 and 3 towns are the future for Indian Retail.
Lastly, the sad reality that national chains are losing out! This was a fact that I could not ignore and if the management of these chains are true retailers, they also will not be impervious to this fact. A simple example to illustrate this reality - a supermarket of a national chain situated on high street has its signage in a sad state. The letters of the signage were missing. If one were to ignore this and enter the store, it was dark, dirty and offered a pathetic shopping experience. Obviously the store manager is either too busy fighting other fires or is just not motivated enough to create a sustainable alternative to the shoppers of this town.
So, in summary what is the take out?
  • Be aware of the potentials of such towns and leverage the same.
  • Ensure that the staff are motivated enough to leverage the existing potential, especially in such towns which are outside the ambit of corporate networking and also offer several other local employment opportunities.
  • Most importantly, hire locally and encourage local ownership in terms of staff profile and empowerment. Increasingly good management and other educational institutes are there in such towns. So finding good talent locally is not difficult and will also prove beneficial as retention would be easier.
A simple reality needs to be kept in mind while handling such local competition. The physical and visual attributes of a store are the easiest to match. Coupled with personalized service the local Retailers have a good competitive alternative. A great and appropriate merchandise with reasonable prices is the core competitive advantage that national chains can and must leverage.


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