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October 24, 2009
By Ranju Sarkar
New Delhi October 24, 2009
With retailers downsizing operations, many senior executives from fast-moving consumer goods (FMCG) and telecom who had jumped on the retail bandwagon a couple of years ago are making a quiet comeback.
These include some high-profile names who were in the limelight when the going was good.
Former banker Murlidhara Kadaba, who was head of financial services at Reliance Retail, has moved back to his old industry as senior managing director, Altamount Capital Management, a Mumbai-based wealth management firm. Kadaba, who has worked with Citibank and American Express, continues to be associated with Reliance Retail as advisor.
Amit Bedi, who was the business head for Reliance Retail, has moved back to telecom as CEO for Tata Teleservices, Bihar. Bedi earlier led the marketing operations for Hutchison (now Vodafone) in Punjab.
Then again, Rohit Malhotra, who headed Future Group’s operations in the south, has moved back to Bharti Airtel. So has Harvardhan Soin, a senior HR executive, after a stint with Aditya Birla Retail.
“The slowdown brought in a reality check in retail. Companies today want to pay for a role,” says the CEO of a Delhi-based retailer, who didn’t wish to be named. The slowdown left retailers with excess people.
Devangshu Dutta, CEO, Third Eyesight, a retail consultant, believes that retailers had built a pipeline of people anticipating certain growth, which has toned down in the last one-and-a-half years. For instance, retailers were growing at 50 per cent in square footage (adding new stores) before, a rate that has fallen to roughly 30 per cent in the last 18 months.
In the absence of retail-specific talent in the country, retailers were forced to hire from consumer-facing sectors like FMCG and telecom — that is, “anyone remotely related to consumer”. It worked when retailers were expanding and the only thing that mattered was how many stores they added. The slowdown exposed the weaknesses of this hiring strategy.
Anand Raghuraman, consultant with Boston Consulting Group, says functions that many people were handling were not aligned to their previous jobs. Retailers admit there were problems. Take the marketing function. In an FMCG firm, a marketing head’s job is to create brands and run campaigns. “In retail, brand is what you deliver in the store; the marketing operations are on-ground promotion and, most importantly, your speed of response,” said a CEO.
The sector differs from FMCG in pace and focus. ‘‘It is 5 per cent strategy, and 95 per cent implementation. In retail, the speed of response has to be much faster. In FMCG, you can sit and plan, and implement it in six months. In retail, people have to take calls all the time. In retail, it is about yesterday, today and tomorrow. In FMCG, you can classify customers into Sec A, B, and C but in retail, customers within a city can be different across catchments. When it comes to nuances, it is different,’’ adds an expert.
Besides, many of these executives came from well-established organisations like Hindustan Unilever, which was different from working for a start-up where the processes were not well-defined. ‘‘Some of these executives were disenchanted and struggling,’’ adds Raghuraman.
‘‘You need a different mindset to work in an unstructured environment. The variables won’t be known to you. Sometimes, the stock doesn’t come and you have to go with cash and buy from a distributor, or sometimes even from a competitor,’’ says an executive.
The executives have a different take on their exits. Nitin Tipnis, who moved from Reliance to head Hover Automotive that is developing a sales and service network for Nissan, says he changed from one industry to another because it gave him an opportunity to do something different.
Tipnis, however, says retail is here to stay since there’s no dearth of spending — people are buying more than what they want. “What I am doing is also a retail operation, I am developing an independent marketing, sales and service organisation and deliver customer satisfaction,” he says.
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October 10, 2009
By Vishal Krishna
BusinessWorld
10 October 2009
Indian shopping hotspots are sporting more and more golden arches these days. If McDonald’s is expanding like never before, not far away is KFC (Kentucky Fried Chicken), though on a lesser scale. Their guests are young, their menus glocalised, their branding established, and their menus are no longer over-priced. After more than a decade in the highly fragmented quick service restaurant (QSR) segment — only 20 per cent of the Rs 10,000-crore segment is organised — McDonald’s and KFC are growing at a nippy 20-25 per cent, despite the slowdown.
“In a recession, we see ourselves as a good substitute for premium dining,” says Amit Jatia, managing director of Hardcastle Restaurants, a joint venture partner of McDonald’s. “We are rapidly expanding because we have tested the supply chain for over 15 years and it has given us the opportunity to scale up.” McDonald’s, which had 20 stores in India till 2002, today has 160. It plans to open 200 more over five years, with an investment of Rs 500 crore. KFC, the smaller player with 52 restaurants, plans to open over 100 more outlets in the next two years.
Though McDonald’s foray into chicken nuggets this year has taken it into KFC territory, the companies give the impression of ignoring each other. “The Indian market is very large for QSRs and our focus is on large portions of white meat, while the competition focuses on different products,” says Unnat Varma, marketing director of Yum Restaurants, which has been developing KFC and Pizza Hut in India. The pricing of its menus makes McDonald’s a quick eatery with the average per person spend at Rs 100. KFC’s spend is higher, at Rs 125-150.
Thanks largely to dishes such as McDonald’s Veg McPuff and Chicken Maharaja, and KFC’s Veg Thali and indigenised Hot and Crispy, not only are the two no longer viewed as outsiders by jingoists, they also have a fast-growing loyal clientele. In 2009, McDonald’s guest count has crossed 30 million; in 1996, when it started, the count was a little more than 200,000. KFC’s annual guest count is expected to rise from 3 million today to 5 million by the end of 2010.
Many Indian retailers have not turned cash positive because they burnt most of their money on building the front-end. But, “McDonald’s and KFC have got an amalgam of things right,” says Harish Bijoor, a Bangalore-based brand and marketing consultant. “While McDonald’s has converted millions of people with its Rs 20 happy price menu, KFC has done it with its large portions as a QSR-plus restaurant.”
Staying Ahead In The Numbers Game
It has taken McDonald’s, which has a global turnover of $22 billion (Rs 1.1 lakh crore), almost 12 years to operationally break even in India (KFC is yet to break even). That in itself is not unusual; Bijoor says cereal maker Kellogg’s took 23 years to break even in Mexico. “The costs incurred on store design and supply chains are huge,” says Jatia. “Now, I am expanding in Chennai and I have to prepare the back-end to service that region, which requires large investments.” Of McDonald’s’ Rs 1,200 crore investments in India so far, Rs 250 crore was for the supply chain alone.
McDonald’s supply chain in is decentralised — a store manager sends a requisition to its logistics partner Radhakrishna Foodland (RKF) though a data management system, who in turn informs Vista Foods, which McDonald’s’ global supplier, OSI Global, bought in partnership with Hardcastle Restaurants. “We source everything for McDonald’s locally and process,” says Bhupinder Singh, Vista’s CEO. Vista, which has invested Rs 30 crore in its processing capacity, works on a 15-day lead time with farmers and meat suppliers in a just-in-time format; RKF picks up the supplies and stores them at its distribution centre before dispatching them to every store individually. A McBurger for Rs 13 is possible only due to this efficient supply chain.
Other than a tie-up with Venky’s for chicken, KFC outsources buns, vegetables and transportation from different vendors. While this explains its slow expansion and gives McDonald’s a clear advantage, KFC’s limited, chicken-based menu does not need the kind of supply chain McDonald’s has struggled to establish. It is also the reason why McDonald’s can envisage expanding faster into the metros as well as the tier-I and tier-II cities, but KFC cannot for now.
More To Come
McDonald’s and KFC are unique because their international competitors (Burger King and Church’s Chicken, respectively) have not come to India yet. Local chains such as Nirula’s are popular in their cities of origin but to compete with these two MNCs, they will have to manage a complex supply chain and open stores quickly, which is unlikely to happen on a large scale.
Moreover, the supply chain costs for international restaurant chain brands are complex and play out on a much larger, national scale. Rents, salaries and power make up the largest overheads, and they cannot be rationalised without affecting quality benchmarks.
“The only way to turn profitable is with a growing customer base and they have achieved this with product consistency,” says Devangshu Dutta of Third Eyesight, a retail consulting firm in Delhi. He says the flywheel concept of engineering applies to food retailing too, where a company could be slow, but by building the right things such as supply chains and prudent store openings, it creates momentum for growth.
Sources say both KFC and McDonald’s spend 5 per cent of their turnover on marketing. They also invest considerably in R&D — select McDonald’s outlets have been experimenting with a breakfast menu for over a year now. But, “We will doubly want to check that there are volumes in a menu before we launch anything,” says Abhijit Upadhye, director, supply chain, McDonald’s. In the quick service food business, no decision is taken in a hurry.
(From BusinessWorld, Issue of October 10, 2009)
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September 21, 2009
By Vishal Krishna
BusinessWorld
September 21, 2009
Normally, the performance of the market leader is a fair indicator of which way the wind is blowing in a sector. But there are always exceptions, and this is one such. According to data from JP Morgan, Pantaloon’s store sales have been on a steady rise since March this year (see ‘Scaling Heights’). Another big player in retail, Shoppers Stop, has also declared a profit of Rs 3 crore for the April-June 2009 quarter, after making a Rs 40-crore loss in 2008-09 fiscal.
These signs of hope, however, stand starkly against overall consumption trends. Although the real GDP numbers for June show a resilient Indian economy growing at 6 per cent, consumption has fallen. According to Kotak Mahindra Bank Treasury Services, private consumption expenditure was at Rs 4,91,000 crore in the first quarter of 2009-10, down 2.6 per cent from Rs 5,04,342 crore in the fourth quarter of 2008-09. Compared to the same periods last year, consumer spending grew 1.6 per cent for the first quarter this fiscal, down from 2.7 per cent in the fourth quarter of 2008-09.
Nobody understands the mixed signals better than Pantaloon. “The sentiment has improved, but we are cautious on expansion,” says Rajan Malhotra, president of strategy and convergence in Big Bazaar, the food and grocery hyper format of the Future Group “Only festival sales could improve the second quarter’s results.”
Analysts say that the delayed monsoon has already begun to impact the earnings of FMCG companies — the main suppliers to organised retail. Combined with slowing consumption, the organised retail industry, especially those in the food and grocery space, will continue to struggle. In such a situation, retailers are adopting a variety of strategies to ease the pressure on margins.
Apparel Versus Food
“Retailers have been focusing on value items and private labels to sustain their margins,” says Abheek Singhi, partner and director of Boston Consulting Group (BCG) in Mumbai, adding that apparel retailers would fare better because of higher margins of up to 45 per cent. This move is apparent in Pantaloon’s strategy of expanding its value sports apparel format, Planet Sports, ahead of food and grocery retail. Currently functioning with 94 stores across the country, the company will add 10 more by the end of the second quarter. “We have seen a 22 per cent rise in sales over last year and there is potential in opening larger format stores,” says Ravdeep Singh, CEO of Planet Sports, attributing the trend to affordable sports apparel gaining in sales. Also intending to expand is Shoppers Stop, which primarily deals in apparel and accessories. “We will be adding four stores in the next four months, thanks largely due to rationalised rents,” says Govind Shirkhande, CEO of Shoppers Stop. “But our older properties need to further rationalise rents.”
What about the food retailers? Apart from the poor consumer sentiment, they were hit because of other reasons. In the past three years, top food retailers such as Reliance Retail, Big Bazaar, Aditya Birla Retail and Spencer’s Retail added more than 2,000 stores. Many of these stores were in poor locations where sales remained low and rentals were steep.
Rent rationalisation, therefore, has been a critical component of strategy for retailers in recent times. And it has begun to show results. According to a recent KPMG report, retailers are now getting less expensive rates when signing properties. As a result, rentals now comprise 5-6 per cent of operating costs, compared to 7-10 per cent earlier. “Retailers have reviewed their strategies in cutting costs, and benefits will show up in the next quarter,” says Devangshu Dutta, CEO of Third Eyesight, a retail consultancy in Delhi. Besides, some analysts feel that despite the dipping consumption numbers, discretionary spends have actually begun to rise marginally, aided by a variety of factors.
“Consumption has shown some nascent signs of recovery,” says Ajay D’Souza, head of Crisil Research. The positive performances of Pantaloon and Shoppers Stop are initial indicators. Analysts say that the growth has not been driven by promotional activity as witnessed during the early part of this year. “Rising consumer confidence, recent tax cuts, lower interest rates, stable wages and overall improvement in the economy are the catalysts,” says D’Souza. With the festival season about to kick in, hope runs high.
Waiting To Expand
“Although margins took a dip from December 2008, the situation has improved during July-August and we have had a sales growth of 25 per cent over March to June 2009,” says Dipali Goenka, director of Welspun Retail in Mumbai, which runs over 200 stores across the country.
Smaller retailers who had decided to ride out the downturn storm by holding on to expansion plans last year, are now preparing to add stores because they anticipate sales to pick up over the next six months. Blackberry’s, an apparel retailer, says sales grew by 40 per cent in the first quarter of FY10 over the fourth quarter of 2008-09. “We were lucky not to have expanded last year,” says Sunil Goklani, general manager of Blackberry’s Retail. “Now that the market is beginning to see signs of a recovery, we are looking at new properties.” Blackberry’s plans to add 20 stores to its current count of 35.
A similar expansion strategy is being followed by Basecamp, an adventure-travel accessories retailer, which had only one store when the downturn set in. Now it has four stores, and plans to open another three in three cities. “We are a niche retailer and have experienced a rise in sales,” says Anish Goel, managing director of Victorinox India, who also runs Basecamp in Mumbai. “It is important for us to be in the right geographies to run the retail business.” Being in the right places, with the right rents, and the right products are what retailers, big and small, are focusing on. Besides fervently praying for the consumer to return to her high-spending ways.
(From BusinessWorld, Issue of September 21, 2009)
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September 7, 2009
By Manish Pareek
Progressive Grocer
Food retailers are investing in a war on the senses
Food and grocery retailers are leaving no stone unturned
to gain the loyalty of the spoilt-for-choice consumers. One
bad experience and poof! The loyal shopper is gone for good.
Not only does this imply assuring good shopping experience
every time a consumer enters a store, but also retain them
by ensuring an impressive visual treat for them.
You get only one chance to create the first impression. This
impression would either create a happy loyal shopper or would
eliminate their chance of ever stepping into the store again.
A store that projects a differentiated image and branding
definitely gains in the long term.
And with the retail scene heating up in the country, only merchandise and the brand name of the retailer store would not help eliminate the competitors. Instead, more attention and fine detailing needs to be done in terms of designing the store and visual merchandising inside the store.
In the information-laden consumer world, shoppers are increasingly asking for better and newer products. Most of the times, the customers are more knowledgeable than the store employees. Thus, raising the bar of what retailers and the store employees need to know. What is the way to know the mind of the customers and capitalise on it? The answer lies in Visual Merchandising, which is taking retail experience to a different level.
Why VM?
For many food and grocery retailers, strategies based just
on price have been rendered ineffective as big players have
mastered the “mass” end of the marketplace with
scale management and better efficiency. Traditional levers
of competition, such as assortment, service and customer and
market segmentation, which were once differentiators, are
no longer the buzzword. More and more store owners are placing
extra emphasis on interior design which has progressed from
the shop-fitting to entertaining and inspiring the customers,
and hence providing added value to the store.
Customers respond both consciously and unconsciously to visual
clues when they visit a store. Marketing books repeatedly
make suggestions about business imaging and creating a brand.
Even a news print needs to be visually appealing in order
to entice readers to read it. Visual merchandising is an artist
method to ensure that merchandise sells faster. It’s
a tool to appeal to the visual senses of the customer. It
is downplayed element which is gaining popularity nowadays
with the introduction of self-service in retail stores. There
is increased emphasis on store layout, building, fixtures,
equipment, colour displays, silent communication tolls, and
window display. In-store displays have taken the art of retailing
to a higher level.
Visual merchandising pushes impulse buying. Devangshu Dutta
of Third Eyesight opines, “Impulse buying at the cash
counter with small stores is only possible if the cash counter
is around 15 to 20 sq.ft. If the density of the stock at cash
counter is low and well-arranged, then impulse buying can
be well-reciprocated by the customers.”
How does VM help?
1. Publicises the business
2. Publicises the product
3. Lays a foundation for future sales
4. Builds prestige
5. Educates the public
6. Supports popular trends
7. Harmonises pure business inter¬est with aesthetics
8. Arouses Interest
9. Creates Desire
10. Causes Decision to Buy
11. Takes Advantage of the Highest Profile Location
12. Directs and Redirects Common Customer Traffic Patterns
Where to start from and where does it end?
VM begins where the customers connect first with the store – the exterior of the store. Tjsi part sets the tone for a shopper’s experience. This effect may become secondary over time as other aspects of the store’s environment take over and leave lasting impressions than a store’s exterior. But exterior of a store design cannot be neglected as it is a billboard and the first communication point, at least during the initial visits.
Samar Singh Sheikhawat, VP Marketing, Spencer’s Retail Ltd, shares, the outside and therefore the retailers need to understand that the store interiors also play a vital role.”
A good in-store design creates atmosphere, helps establish store branding, and guides people through their shopping experience. Creating the right ambience inside the stores and store designs are indeed part of the total communication process with the customers. The small F&G retailers do have space constraint within the store many-a-times but creating an inviting entrance or an appealing frontage is definitely possible.
The retailers can use the following outside features as the initial VM tolls such as
• Signage
• Window Display
• Entrance
It is seen that many retailers still under use the element of store exterior. But from the signage to the smallest item in the window, the store front should be considered as a strategic marketing tool, which acts a good branding.
The Signage
Signage, not only highlights the name of your business, but it also adds visual beauty to the street and streetscape. Signage is a direct indication of the store’s image. Using it as a tool for customers walking down the street, motorists stopped in traffic or patrons of public transport, who may only have a few seconds to scan the line of shops on the street is the call. Sheikhawat says, “A row of well-maintained, unique and at times ‘whimsical’ signs adds a lot of character and personality to any shopping strip. It always pays well to be a bit peculiar. But the F&G retailers in India, to a certain extent know and have used this to a good knowledge.”
Window Displays
A good window display enhances communication of the product,
brand and image. Samar Sheikhawat says, “The window
can communicate a viewpoint or trigger an emotional response,
giving the customer a reason to enter he store. Stores only
have a few seconds to get the customer’s attention.
So use it to the best of one’s ability.
What is the most interesting is that this does not always
have to be a costly affair. Use of the simplest items can
make for a dynamic statement and aid in the sales of product.
It is better to have balanced merchandise in the window display
and props should not consume more space than merchandise.
The Entrance
The way one welcomes guests at home, the same way create an invitation entrance for the customers. The entrance to the store leads the customer to the store and merchandise. Stores with selling racks and table outside the store should always ensure the entrance is not blocked. Decorative tile work on the floor of the entrance could reflect the image of the store or simply add character. Adding greenery, for example, a topiary tree on either side of the entrance will effectively ‘frame’ the entrance to the store.
“Every business house and businessmen knows why merchandising is important and a good merchandised store will be worth its weight in gold as it will inspire, excite, educate and stimulate the customer, resulting in healthy sales and ongoing patronage,” Sheikhawat says.
For the entrance the smaller size players (around 200 to 400 sq ft) should aim fro inviting counters if entry of customers into the store is not possible. At the counter it is better to keep products that are close substitute or complimentary to the main product with the main product (how would a retailer know which is the main item in every shopper’s basket???). But he counter should not be clogged with excessive products.
How to connect with five senses?
When placing a VM plan into reality, some of the factors to consider are attracting the five senses of Sight, Smell, Sound, Touch and Taste. Visual is the first factor in getting the customer to come in – are the colours, brightness, size, and shapes friendly or will they turn the potential customer away?
Devangshu Dutta comments, “Sight, attractive display
of the product with colour will facilitate this sense to be
utilized to a good extent. And a well-lit store is a delight
to walk into and make sure the prices are well displayed as
well.”
The aural element plays a key factor. Does the background
music playing matches the product? Is the pitch of the music
comforting or annoying? Does the store have a fresh, clean
smell to it or does it give the impression of a seldom visited
store? Is the air temperature comfortable for the majority
of the clients?
Smell, open product display for that of spices or prepared food is good. It is better that they are fresh and well laid out in front of the counter or the display section. The smell of the store as well needs to be fresh so use a light scented air freshner regularly and also cleaning the floor with a scented lotion will keep the surrounding clean and fresh.
In lifestyle retailing, peppy music in the stores would drive the sales whereas slow music there would be a bit odd. But soothing music, on the other hand, in spa would be perfect. The ambience of a small store, which cannot have clear zoning in their stores, can drive the behavior of the customers.
Touch & Feel is the most important amongst the five sensory marketing basics and is widely used. Every F&G retailer, whether big or small, organized or unorganized, uses this element to let the consumer judge the freshness of their stored products. Majority of kirana stores uses this sense to boost up the sales.
The sense of taste should be given utmost importance. For instance, letting the consumers taste the samplers when they are buying packed foods, will help drive the sale. Or in the case of cheese, let there be samplers so that they can taste and select the type of cheese they would need.
Sheikhawat of Spencer’s shares, “At any store for a good VM, the store design, in-store communication, feature displays, and merchandise presentation – all play synergistic roles in connecting with the five senses. Lighting, for example, should be tried for retailers who have the option of space and investment. The small retailers can have well-lit shelves and counters with bright lights at the top and fading lights as they move down the counter or shelf. Allow customers to comfortable read product information with good lighting inside the store.”
He adds, “Figure out VM hotspots in the store and create dramatic feature displays, whose themes are consistent with what store aims to serve the customers with, at these hotspots. The merchandise presentation on these hotspots will allow customers to conveniently touch and feel or taste the products. Edutainment signs and posters should be used in strategic places around the store and engage the customer at the point of sale.”
Colour
It is a good idea to research what each colours associate mentally to most shoppers. For instance, Wal-Mart is widely known for using blue accents. Because of the colour choice made by Wal-Mart in the beginning years, mot shoppers identify the blue with this huge retail chain. This has created a feeling of familiarity for the shoppers.
There are more factors involved in design and environment
planning than just painting the walls of a store. Depending
on what the store is attempting to express to the customers
will help to solve the correct colours for the products one
is selling. Colour zoning is also well used for identifying
certain areas within the store. Colors can also help in leading
a person, with eyesight or reading problem, find the ay inside
the store. Dutta says, “There should be not too much
of mix and match or colours in one store. The changes should
take place according to the product sold, the time of play
and the locality as well.
“Even developed markets have different shades of color
in each store depending in the area they are operating in.”
Layout
Layout of a store is often set by the corporate headquarters so all stores in a retail chain look similar and help consumer connect with the store, no matter which location. Dutta adds, “The same layout for a big retail chain is sometimes possible as it depends on the availability of the property which is same as the previous one. But for small retailers it depends on locality and the demand within the locality. Formats will be different with each individual store and the layout will change from store-to-store based on the investment allocated to the outlet. Store design requires in-depth knowledge of your product mix and what your store needs to communicate.”
But the overall design of the store must create an atmosphere that encourages the shopper, to lower his or hers psychological defences and become interested in the merchandise offered. Everything is interconnected and design needs to reflect the intent of the business, as well as appear appealing to the shopper.
Atmosphere
The right kind of atmosphere is created by the store and
interaction with the customers. The interaction between, the
store employees and shoppers’ creates the overall feel
of the store. Each retail store in a chain has a different
atmosphere. But for smaller retailers there is rarely a concept
of chain of stores but they can still create a better atmosphere
as the owner deals directly with the customers. The customers
prefer taking the suggestions of small organized/unorganized
F&G owner more than the employees at a big retail store,
which is definitely a major plus for the small players.
Store display, floor layout, traffic flow
Having promotional displays of higher value in high traffic areas of the store is good and the same holds true for enticing the impulse purchasing of lower value items. Additional service displays are best located in low stress locations such as post-check out kiosks. Devangshu Dutta cautions, “But be careful of offering displays that are too well-structured. Studies have revealed that displays with too much organization create a lack of trust and interaction between the customer and the display.”
Individual retailers: display space is of utmost importance.
Small retail stores do not assure easy access to the merchandise,
because of their size, whereas larger formats have the option
of open displays and they use it to the fullest. Customer
access beyond the counter is important and closed counter
doesn’t help. In the developed and high income areas
there is a lot of change and the retailers (whether organized
or traditional) are influenced by the population there in.
As well-planned floor layout will effectively maximize the
retail space for greater return. A much more careful arrangement
of fixtures and display racks form and influence the footfall.
The smooth flow between the low and high traffic areas is
better for the store as are easy access, visible aisle-ways
and suitable aisle patterns etc.
Any store attempting to save room by adding shelves that are too high for the average consumer will turn customers away. Crowded or narrow aisles will also leave a negative impression on the client.
Sheikhawat articulates, “It is important to communicate the brand’s identity, the features and benefits of the product range in every way and at every square inch possible. At Spencer’s, we convert negative spaces inside the store to positive ones by actively indulging the customers with well-positioned feature displays and compelling edutainment materials that attract them, pique their interest, and impel their decision to purchase.”
Are they doing anything wrong?
Both Sheikhawat and Dutta are of the view that VM in F&G segment is new for everyone in India but very few players are using them. So there is still a long way to go before they master this art.
However, there are some common errors which are confused with visual merchandising which are:
Common Errors
• Too much merchandise
• Too little merchandise
• Display changes too slowly
• No display budgets
• Lack of an underlying theme
• Too many props
• Inappropriate props
• Displays changed too seldom
• Lack of attention to detail
• Errors in applying the principles of display
The largest component of retailing is visual. But the biggest visual challenge is to constantly monitor the store’s appearance by viewing it differently. So, every single day marks a brand new start for the retailers.
Conclusion
So how can retailers entice the customers to enter their stores?
Devangshu: “In that case we are looking at the silver magic bullet – which does not exist. So it is up to the retailers to look at their stores with a new eye every time. Keep upgrading the store with a new innovative idea, use the store area available and not make the areas congested with excessive products for a big display, rather have a better display with minimal products of high sales value.”
Samar: “To the contrary, I think that a lot of inroads have been made by F&G retailers in improving the overall ambience and character of their stores in the past two years. We have definitely taken store design and visual merchandising as an important aspect of our 360-degree brand experience. Synergizing brand and product communication from outdoors and in the stores is an effective tool for us.”
A store owner has a lot of homework to do, when designing is done, to endure success. Every element should be selected carefully to match the products being sold and what the store needs to communicate. Ergonomics also must be positioned in the acceptance for success. When creating the selling environment, the owner should be able to make a positive statement about what the product they are selling that will excite the shopper
One can understand that a lot of effort and planning must be incorporated in the VM elements to create a successful retail store. Direction must be clearly be focused at the overall need of the store. Investing in design and environment changes just for the sake of investing without any comprehensible motive will only lead to long-term failure. Overall, the final decisions are still made on what each owner thinks is beneficial for their store.
There was a time when a retailer could simply rent a building, put a product in that store and be successful. But that is history – today the choices abound. It is a more competitive retail environment than it has ever been before. Store design and visual merchandising is emerging as the most successful distinguishing factor for a retailer. Now, is the time.
admin
September 7, 2009
A few years ago when I was called upon to make a presentation about customer loyalty, I ran into this brick wall of, “Do loyalty programs work or don’t they?”
The way around the wall was to not look for a black or white answer. Some programs work and some don’t. The difference, I found, was in the degree of impact on core operations (e.g. product selection, displays, pricing etc.) – i.e. how these were fine-tuned from the feedback and other information collection from the loyalty program.
What was certainly clear is that we can clearly differentiate
between loyalty that is “bought” (discounts, freebies, loyalty
points etc.) vs. loyalty that is “earned” (i.e. you attend carefully
to what the customer is saying she wants, and you make sure
that you go all out to provide that).
The hotel and airline industry, where well-structured loyalty
programs have their roots, depended heavily on buying loyalty.
Interestingly, these are now proving to be long-term liabilities,
which initially led airlines to put an expiration date and is
now leading them to de-value the mileage points (just like a
country would devalue its currency!) – thus customers would
need more points to make the same trip.
On the other hand, those retailers, hotels or airlines that have learned from their loyal / club / elite customers, have made sure that their offer is constantly value-added, and in some cases constantly differentiated.
In most markets, the top criteria for a consumer to select a store are operational (location of the store, availability of product, range of merchandise, pricing, etc. etc.), and often there is a huge gap between what the consumer expects and what the retailer serves up. In that context, a loyalty program is like applying band-aid to a fracture!
Does this all mean that all “bought loyalty” is useless and that loyalty programs don’t work? Not at all! Retailers can certainly use loyalty schemes to identify high value customers and cultivate them through ongoing exchange of information, and also reward customers for their purchase behaviour. But building and retaining relationships with customers and increasing the share of customer spending in-store is something that can only be delivered by better operations.
We need to reconsider the motivation to have a loyalty program. “Loyalty” schemes’ primary benefit is not loyalty, but a basis of building relationships with individual customers in gathering “Purchase Trend and Product Information” and in achieving better focus and targeting. These need to be used to improve operational effectiveness which produce loyalty – product focus and a service customization opportunity.
