Indian Retail – Point & Counterpoint: Potential of Shop-in-Shop

During one of my regular forays to the various Retail outlets I came across this very well presented Shop-in-Shop (SiS) for a coffee brand. The whole presentation was very impressive, the promoter manning the SiS was helpful and the coffee aroma that was wafting around that place had its own impact.

 

The fundamental idea was quite simple. The customer chooses the preferred roasted coffee beans, which is weighed and then put into the small machine which grinds it into the powder ready for making filter coffee. The customer whom I saw was so involved in the process that the anticipation of going home and drinking the coffee was clearly etched on his face. Definitely, this was one of the best moments of customer engagement seen by me.

 

Such SiS seems to be a good option for brands that are keen to engage customers at a retail level as also have a high level of brand visibility. One can see similar examples for color cosmetics in the counters maintained by leading brands in health and beauty as also department stores. However, the key difference was the degree of customer engagement. While the cosmetic counters definitely are very good for brand visibility, it is yet another purchase point for a shopper. Some initiative to engage the customer might increase the impact of such counters.

 

Lastly, is the all important factor of cost Vs benefit. I think that such SiS score high on this count also as brands are always in a tug of war with regard to visibility with the chain stores. A minimum guarantee for the space being occupied with revenue share would work out well for all concerned. The minimum guarantee can be considered as a marketing expense as it does deliver high brand visibility.

 

All in all a Win-Win-Win opportunity for the brand, retailer and more importantly the customer.

 

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Sign of changing times!

Saw this sign about power cut at a diagnostic center recently, which has some relevant points which Retailer's should explore.

 

 

• Adapting to the operating environment - With power cuts being the norm in Tamil Nadu nowadays, this was a good gesture to keep customers informed. I have experienced the few seconds (Which actually feels like minutes) of black out before the generator kicks in in stores. Retailers can consider putting up similar signage where relevant.
• Flexibility in signage - I really appreciate the small slots where the time of the power cut can be changed depending on when it has been announced. Many stores are littered with irrelevant signage just because they don't have such a flexibility and the staff cannot remove the same. Retailers should always factor in such flexibility in any relevant signage.

 

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Retail signage idea

Recently I saw a promotion signage put up by a small stand alone apparel store. The signage grabbed my attention and would like to share it as it can be easily replicated by other Retailers.

 

 

The rough and ready look and feel stands out amidst the digital printed signs one sees everywhere nowadays. My guess is that this store has used some old flex material and spray painted the message. It is a great idea as the urgency comes across very well. Especially when the "Hurry" seems to have been added on in a hurry (pun intended). 

 

A few suggestions to make this even more effective –

• Use red paint for some of the key words like shown in the edited picture below.
• Reduce the text. Use “3” and “1” instead of words.
• Make the font size of “conditions apply” smaller. I do not mean make it miniscule, just smaller!

Indian Retail - Point & Counterpoint: Great ideas are a waste of time without execution focus

A few days ago I woke up to see a half page advertisement of a national Retail chain which was trying something new and interesting. They had affixed a scratch card to the advertisement and I am guessing that they were hoping that this would trigger curiosity and drive walk ins.

Sadly, the scratch card had been already scratched out and the offer was visible which completely defeated the very purpose of a scratch card. The other evident lack of execution focus was that the scratch card had been affixed upside down as you can see in the picture. (Retailer’s name has been masked)

 

 

A good idea and this is in line with the basic Retail focus of generating customer footfalls and then focusing on conversion inside the store.

However this good idea did not factor in some basic ground realities. Namely, that a scratch card which has already been defaced will have absolutely no impact on any potential customer. The other reality is that anyone will be tempted to scratch and see what is in such a card, very similar to the universal fixation of breaking the bubbles of a bubble wrap sheet.

So, another great idea which sounded fabulous when being presented seems to have fallen by the way side.

How could this great idea become very effective?

Very simple, factor in the reality that news paper agents will have access to these and if they can insert pamphlets in a paper, they can definitely scratch and see what is hidden.

Just print a random number sequence on a card which is stuck on the advertisement. This card can be shown while billing and the offer pertaining to that random number can be accessed from a data table which is uploaded in the billing software. The curiosity value is retained and the idea becomes effective.

Lastly, there could be one more perspective. In Tamil Nadu there is a ban on lottery or what is called as game of chance. This is one reason why coupons always have a slogan and then gets defined as a game of skill and not chance. (A leading ice cream brand had to withdraw a national promotion only in TN, a few years ago due to this reason). Maybe, the scratch cards were defaced deliberately. In which case why spend so much of money in making these cards and getting them fixed onto the news paper advertisement.

A distinct lack of execution focus seems to be coming through and that is a big NO, NO in Retail.

CLICK HERE to join the discussion about “Execution Focus” on my page and share your perspectives and examples.

Indian Retail - Point & Counterpoint: What is Customer Orientation?

Change has always been an issue for any Retailer and this is about the change in terms of currency. As shoppers we all tend to hand over large denomination currency and expect the Retailer to give us change. Smaller, stand alone stores handle this by giving small toffees in lieu of change and if we do not want that, it is either give the exact change or live with it!

 

Larger stores especially the chain stores cannot afford the indulgence of handing out toffees or sweets instead of change. It is expected that they give the correct change to the customer. Therefore these chains try and get adequate amount of change from a variety of sources apart from the banks that even include the groups of beggars. Read more about this in my earlier post.

 

This is both a business need which is painful as also a sensitive point with regard to customers.

 

That is the context, when I saw the following poster in a shop and I was very impressed by this initiative and also astute step. In a single stroke this Retailer has combined his business need with a shopper issue and has managed to create value all around.

• Value to the customer because they will benefit for no significant extra effort.
• Value to the business because, for no incremental cost, the Retailer is resolving an issue without having to run around for it.

 

This is what I call as a true customer orientation: a solution to a business need that clearly benefits the customer directly or indirectly.

 

So, customer orientation is not a separate, independent activity or department’s responsibility. It is about ensuring that every business activity of the Retailer delivers an end customer benefit and conversely, that also helps the business.

 

CLICK HERE to join the discussion about “Customer Orientation” on my page and share your perspectives and examples.

"Basic Retail Model" video

There is a "Basic Retail Model" which I have written about and propagate as it is relevant to any Retail business.

The model explains how to make any store successful as also will help any Retailer to develop a strong competitive advantage in a sustainable manner.

This video shows the "Basic Retail Model" being explained by me in one of the Retail Management class.

 

Indian Retail – Point & Counterpoint; The gain and pain from MRP

Once again my oft repeated grouse about which I have posted several times crops up again.

Times of India carried a news item titled “Chilled drinks drain the pocket as shops charge extra for power” and had the following chart which as part of this news report. This clearly shows how shops are selling soft drinks, juices, etc. at prices which are 10% to 25% more than MRP. Needless to say this is illegal and in February 2012 IRTC has been fined Rs. 10 Lakhs by New Delhi District Consumer Disputes Redressal Forum.

 

 

Who benefits from MRP? Or rather the key question is who follows MRP?

Today MRP has become redundant and market dynamics defines pricing at the Retail end. The fact that a majority of shops in India sell many products above MRP and get away with it is ample proof that this legislation is outdated.

The typical counterpoint to this is how consumers are protected against being overcharged because of MRP.

Is that a valid statement? Not at all.
 

As consumers we all pay what the shop keeper asks whether it is below, on par or above the MRP. This is not restricted to only shops and the same reality exists in Hotels, Restaurants, Malls, Airports, etc. The only saving grace is that many of the corporate and larger entities today source products which has “For sale in select trade channels” printed on the product. This enables them to pursue a differential pricing which is invariably above the usual MRP.

Even in the above mentioned article a shop keeper is quoted as saying “I can't possibly charge more because if I do, then customers will walk into the supermarket a few meters away and buy the product there at MRP.”

Sure, IRTC has been fined for charging more than MRP. But, how many others have been penalized for flouting the MRP rule in spite of this being an open secret. Interestingly, the Judiciary seems to have a different perspective about MRP. In 2007 The Delhi High Court passed a judgment that hotels and restaurants can charge more than the MRP. This was justified in the ruling because such places provide ambience and services to their customers. However, this does not apply to shops and retail outlets.

I wonder why?

By this same logic the “cooling charge” is not illegal as it does constitute a “service”. Anyways, the stand alone stores do charge above MRP if possible and also gets away with it. By the same logic, the self service chains also provide service and ambiance and should therefore be exempt from the MRP rule.

So, who is then left to follow this out dated MRP concept? Therefore, if every channel has a reason and logic to charge more than MRP, why have this at all?

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Picture courtesy - Times of India, Chennai edition dated 10th March 2013

Point & Counterpoint: Employment Vs Entrepreneur approach to leverage Retail opportunities

Every interaction is a give and take, even when one is teaching or training. This was validated after a recent interaction with students of a B School about Retail. A few of them came up to me and in the midst of the typical queries about FDI, future or Retail, etc., they asked me something which has actually set me thinking and the take out I got from this session.

 

They wanted to know whether the expected Retail boom had entrepreneurial possibilities similar to what happened during the IT boom.

 

Invariably I keep talking about the great employment potential and career opportunities in the Retail sector and this question has taught me to think in a whole new perspective.

 

While I answered that there are indeed entrepreneurial opportunities, I would like to share my views for comments and inputs from others simply because such opportunities definitely exist.

 

Some initial ideas which can be built upon and experimented with are;

• Partner, take over or even start a standalone store which follows the “Basic Retail Model” and will therefore offer a viable value proposition. Franchising is a good option to explore.
• Set up a consolidation business for the small vendors who typically are not covered by the existing distribution system. One recent discussion I had with a person was about trying to do something along these lines for the vegetable sellers in his village.
• As I often point out Tier II and II towns are great growth stories waiting to happen. Explore that.
• Chain stores today require many support activities and that presents a whole new world of entrepreneurial options. For example; Physical stock checks are a tedious and painful process. If a credible service to manage this is given, there might be takers.

 

The underlying theme in all these ideas is a strong focus on a sustainable and viable value proposition.

 

Lastly, thanks to this question by the student I will start to build upon inputs that will help Retail related Entrepreneurship which has a great future.

 

The point to debate is, I was asked about entrepreneurial opportunities by a few students out of my interactions with 1,000 plus students in the past year. Before talking Retail entrepreneurial ideas, should we focus on kindling and developing a basic entrepreneurial spirit?

 

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