A very interesting note (click title) on the success of Apple's retail stores.
We believe brands must have control over all elements of their customer engagement, especially distribution. This works for every brand, in every category- if you see the brand as a "leader".
Controlling distribution is seen as expensive keeping in mind the cost of space, staff and inventory. But it is a customer facing activity.
Outsource manufacturing, finance, logistics. Set up metrices to control the delivery. A 1 in a 100 error may still be acceptable.
But control and master your customer facing moments.
Leadership cannot be outsourced. Nor can the 4Ps (pricing, product, distribution, promotions (communications).
Ritu and Venkat
Showing posts with label retail. Show all posts
Showing posts with label retail. Show all posts
Tuesday, 23 June 2009
Wednesday, 15 April 2009
Lessons for Indian retailers from Why we buy (Paco Underhill)
Indian demographics tilted towards the youth (and reduced wealth in older age) makes for a phenomenally different shopping experience, compared to the West.
I went back to Paco's "Why we Buy" recently, after reading his book "Call of the Mall". I was disappointed with "Call of the Mall", and went back to Why we buy to understand what it was that i enjoyed about the book when i read it in 2000.
Paco's book in 2000 was a mix of social observation and science fiction. India had maybe 3 malls back then, so it was interesting to read what we believed would be the future of Indian retailing (the science fiction part). I have always believed that Indian retailing will not pick up till we have better road connectivity. Else malls would be located in the city center where high real estate prices and immense competition would severely limit their sustainability. (this has been the case to this day)
In 2009, as i re-read the book, i still felt a bit of "science fiction " to it.
But Paco makes an interesting point. Understand your customers and build the shopping experience around it.
This got be thinking about what the profile of the Indian mall shopper is today. Specifically, the grocery shopper in the new super(hyper) markets springing up around the country. Young family: Age 27-40; husband wife with zero, one or more kids.
No baby boomers!
No single male or female shopper (very very rare).
This is a very homogeneous profile.
The aged in India are financially less well off, and would often avoid driving on the manic roads to go to a super market 15 miles away. The mom and pop store in India is definitely continuing to thrive with home delivery options keeping his customers loyal to him.
Young men and women, who live with their parents, do not shop for grocery.
Independent men and women order home delivery or shop closer to home, thereby maximising leisure time on the weekends.
The literacy rate in India is low, and it implies that a number of couples in the 35-50 age group have only recently gained upward mobility. Their use of technology is limited. A stores have a lot of "help".
1. self check out counters are non existent.
2. store workers weigh and price all non-packaged goods (fruits and vegetables. This also helps to control pilferage.
Home and apartment sizes are very small, implying that households have to shop at least once a week. Since both the husband and wife work, shopping is then a chore that has to be done. The browse to buy ration ( amount of time browsing a category before buying a product) is very low. Decisions are made on brand recognition and price. Period.
(Interestingly, supermarkets have not yet begun to integrate play areas or eating areas within the store in an attempt to prolong the visit. The idea so far has been to maximise store space with as many products and brands as possible. Consumers in a rush want convenience, not choice. The Indian grocery shopper is always in a rush)
Given these characteristics, i am surprised that malls:
- do not package all goods, including fruits. I believe this comes from the belief that Indians like to feel everything before they buy. True of my parents generation, not of mine. (and my parent's generation does not visit the super market)
- have too many brands.... when the browse to buy rate is low, this is not a good idea.
- do not offer home delivery options (within a 5 km radius for example)
Why we buy continues to be a fascinating reading and extremely relevant for a market taking its first steps to becoming a consumption society.
venkat
I went back to Paco's "Why we Buy" recently, after reading his book "Call of the Mall". I was disappointed with "Call of the Mall", and went back to Why we buy to understand what it was that i enjoyed about the book when i read it in 2000.
Paco's book in 2000 was a mix of social observation and science fiction. India had maybe 3 malls back then, so it was interesting to read what we believed would be the future of Indian retailing (the science fiction part). I have always believed that Indian retailing will not pick up till we have better road connectivity. Else malls would be located in the city center where high real estate prices and immense competition would severely limit their sustainability. (this has been the case to this day)
In 2009, as i re-read the book, i still felt a bit of "science fiction " to it.
But Paco makes an interesting point. Understand your customers and build the shopping experience around it.
This got be thinking about what the profile of the Indian mall shopper is today. Specifically, the grocery shopper in the new super(hyper) markets springing up around the country. Young family: Age 27-40; husband wife with zero, one or more kids.
No baby boomers!
No single male or female shopper (very very rare).
This is a very homogeneous profile.
The aged in India are financially less well off, and would often avoid driving on the manic roads to go to a super market 15 miles away. The mom and pop store in India is definitely continuing to thrive with home delivery options keeping his customers loyal to him.
Young men and women, who live with their parents, do not shop for grocery.
Independent men and women order home delivery or shop closer to home, thereby maximising leisure time on the weekends.
The literacy rate in India is low, and it implies that a number of couples in the 35-50 age group have only recently gained upward mobility. Their use of technology is limited. A stores have a lot of "help".
1. self check out counters are non existent.
2. store workers weigh and price all non-packaged goods (fruits and vegetables. This also helps to control pilferage.
Home and apartment sizes are very small, implying that households have to shop at least once a week. Since both the husband and wife work, shopping is then a chore that has to be done. The browse to buy ration ( amount of time browsing a category before buying a product) is very low. Decisions are made on brand recognition and price. Period.
(Interestingly, supermarkets have not yet begun to integrate play areas or eating areas within the store in an attempt to prolong the visit. The idea so far has been to maximise store space with as many products and brands as possible. Consumers in a rush want convenience, not choice. The Indian grocery shopper is always in a rush)
Given these characteristics, i am surprised that malls:
- do not package all goods, including fruits. I believe this comes from the belief that Indians like to feel everything before they buy. True of my parents generation, not of mine. (and my parent's generation does not visit the super market)
- have too many brands.... when the browse to buy rate is low, this is not a good idea.
- do not offer home delivery options (within a 5 km radius for example)
Why we buy continues to be a fascinating reading and extremely relevant for a market taking its first steps to becoming a consumption society.
venkat
Monday, 29 September 2008
Road infrastructure and the development of retail trade
Very brief note.
I looked back on some thoughts i had scribbled 10 years ago. A question I had asked during a company sales conference to the head of sales. He was emphasising in the late 90s the emergence of organised retail and how chains like Shopper's Stop - Subhiksha would become a dominating force changing our distribution approach.
My question: Where in the world has retail trade ever preceded the emergence of good road infrastructure and suburban connectivity?
The point i was making then is valid even today:
Does "organised retail" not look to capitalise on low rental costs in the suburban areas and then attract people willing to drive the 20 Km to their shops?
When will Indian roads permit a family to cover 20 Km in roughly 20 minutes?
If you're an organised retailer located in the city- forget it.
1. Your rentals will always put you at a disadvantage compared to a kirana shop.
2. Your size will never be large enough to exploit the scale effect.
3. You will always have competition within 3 minutes walking distance.
I looked back on some thoughts i had scribbled 10 years ago. A question I had asked during a company sales conference to the head of sales. He was emphasising in the late 90s the emergence of organised retail and how chains like Shopper's Stop - Subhiksha would become a dominating force changing our distribution approach.
My question: Where in the world has retail trade ever preceded the emergence of good road infrastructure and suburban connectivity?
The point i was making then is valid even today:
Does "organised retail" not look to capitalise on low rental costs in the suburban areas and then attract people willing to drive the 20 Km to their shops?
When will Indian roads permit a family to cover 20 Km in roughly 20 minutes?
If you're an organised retailer located in the city- forget it.
1. Your rentals will always put you at a disadvantage compared to a kirana shop.
2. Your size will never be large enough to exploit the scale effect.
3. You will always have competition within 3 minutes walking distance.
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