Category Archives: Retail Consumer/ Behavior

“Retail revolution is on us:” Vikas Garg

MATS_logoFDI in retail will not lead to unemployment and closure of small shops, asserted Vikas Garg, Senior Consultant, Technopak Advisors, while addressing the ‘National Level Retail Summit 2007′ organised by Jain Group of Institutions owned, MATS School of Business & Information Technology in Bangalore.”The retail revolution is on us, and regardless of FDI the revolution will happen. Even, FDI when allowed in retail, will also not result in unemployment and closure of small shops,” added Garg.

Shoppers are now wanting the cheapest, biggest and the quickest products/services from their retailers. They are moving towards the ‘est’ model, said Vipul Parekh, Vice-President, Merchandising, Indiaplaza.in (erstwhile Fabmall.com). He was commenting on the changing behaviour the Indian customers.

Customised product mix for Spinach customers

Spinach_logoSpinach, a subsidiary of the Delhi based, Wadhwan owned DHFL, which so far has a cluster of 19 retail stores across Mumbai, as a part of its strategy to garner share from traditional kirana stores, offers customised products to its customers, depending on their socio-economic profile and ethnic domination in a given store locality.

To cite an example, Spinach offers Khakras in Gujarati dominated Borivali, while it offers speciality fish in Seven Bangalows area. Taking into account sensitivities of its customers, it also has exclusive vegetarian outlets in Saibaba Nagar and Ghatkopar.

Even the pricing could change according to requirements of a given locality. It has separate range and pricing plan for different Mumabi suburbs.

Source: Business Standard

The changing consumer

“It’s really tough to know a customer just by taking a surface look or a surface descriptor such as male/female or age or ethnic group. To understand your customers’ needs today, you really have to understand their lifestyles, opinions and attitudes.”

– David M. Szymanski, director of the Center for Retailing Studies (CRS) and professor of marketing at Texas A&M University.

How do we justify, when we spend?

brainOur reader Rajeev came across an interesting piece about what goes through our mind before we buy something? How do we make peace with ourselves before we purchase something, we really don’t need?

Here’s what goes on in our heads before we spend money on stuff we probably don’t need. Certainly, there would be more, but some of the more common ones are:

  • I deserve it. I work all day. I’m going to use what little money I have to bring myself a little bit of happiness.
  • I got paid today. It’s Friday. I have a little bit of cushion to spend money and buy myself a little something. Friday nights are for having fun and going out.
  • I “need” to buy it. I need a new laptop. I need a new mp3 player. I need new jeans.
  • Buying this is more like an investment. This thing will pay for itself. Once I buy a new bread maker, I’ll never have to buy one again for the rest of my life.
  • It’s been a while since I bought something new. My television is getting old. It still works but it’s time to buy a new one.
  • I only live once. I want to spend my money while I’m still young. I’m not going to enjoy it as much when I’m older. I’ll invest my money when I’m a little older.

42,000 fake Dabur Amla hair oil bottles, 1 lakh labels seized

DaburLogoAs many as 42,000 fake hair oil bottles, about one lakh labels and two drums of Dabur Amla hair oil were seized in a raid conducted by Delhi police on manufacturing units involved with production and packaging of fake Dabur Amla Hair Oil. The raids were conducted under the orders of the High Court, in an effort to curtail the counterfeit products’ racket according to PTI report.

“These raids are an effort to tackle the problem of fake products entering the Indian market”, said a company release. Fast Moving Consumer Goods (FMCG) market alone has been facing losses of Rs 2600 crore every year due to the counterfeit products, added the release.

Dabur had filed a suit here against the spurious manufacturers in Timarpur and Daya Basti districts of Delhi, the Dabur release said, adding in the raid at the two locations fake foods worth Rs 75 lakhs have been recovered.

Retailers loose $5.8 Bn. in shop lifting and thefts

shopliftingDespite all the closed-circuit television cameras, electronic article surveillance (EAS) and security personnel, retailers continue to wage a losing battle against shoplifters, says Jack L. Hayes International Inc., a leading loss prevention and inventory shrinkage control consulting firm.

Among 24 major retailers surveyed by the firm, which represented 13,313 stores nationwide (U.S.) with combined 2005 annual sales of more than $519 billion, a staggering $5.8 billion (or 1.6%) was lost to shoplifters and employee theft.
But according to the survey, an even more worrisome concern to retailers is the growing threat posed by dishonest employees. In fact, the survey shows that for every 26 employees, one was caught with a hand in the cookie jar in 2005.

The survey also found that the number of employees caught stealing in 2005 rose to 68,994, an increase of 11.4 percent over the previous year. By the same token, $49.9 million was recovered as a result of those apprehensions, an increase of 17.8 percent over 2004.Mark Doyle, president of Jack L. Hayes International, says the $5.8 billion figure was derived by multiplying total sales by 1.6 percent, which is the average shrinkage according to the 2005 National Retail Security Survey conducted by the University of Florida.

Doyle says the total theft loss amount may be even higher. “We took 30 % (against usual 20%) for paperwork and systems errors. If anything, we were more conservative.”

“The dollar losses are staggering,” says Doyle, adding that in the end everybody gets hurt because retail theft “drives consumer prices higher.”

Look for the cat-and-mouse posturing between retail surveillance and shoplifters to get even dicier as the holiday season approaches. “Without looking at hard data, retail thefts tend to increase during all busy shopping seasons,” said an expert.

“Rich people love low prices, the poor need them”

HypercityHypermarkets have caught on the imagination of poor and rich alike. Shoppers are thronging to 25 or so of the country’s Hypermarkets. And, there is a scope for 1,000 such markets in 67 retail destinations by 2010, says an interesting report in Rediff.

“We expected 3,500 footfalls a day, but, by the second week of its launch in May, the figure stood at 12,500,” said Andrew Levermore, CEO, K. Raheja promoted HyperCity Retail.

What makes Hyper markets click? The convenience of one stop shopping, lower prices, or wider choice of products? May be all, but price appears to be the major driver of increasing footfalls.

People may love to shop, but their eyes never stray too far from the price tag. “Rich people love low prices, the poor need them,” says Livermore. “Unless your prices are the best, especially in the food and groceries (F&G) segment, there’s little point,” adds Levermore, explaining that it’s actually the perceived value that customers believe they’re getting that is going to matter.

So, how are hypermarket retailers coping with the pressure to offer lower prices and still make money? Here, are a few of the strategies followed by some of them:

Right Product Mix: To overcome lower gross margins of 10 to 12% on Food & Grocery (F&G), retailers are trying to optimise the product mix of F&G and General merchandise. A product mix comprising 40% food and 60% of non-food could enhance gross margins to a respectable 18-19%. While Hypercity, is able to achieve a mix of 60  non-food to 40 food, Big Bazar is able to do even better with 63% of non-food.

More Non-food Display: Higher non-food sales are achieved by allocating higher shelf and display space. Food display space is restricted to around 20%. This works, because shoppers, in any case, are there to shop for food items.

Store Labels: Hypermarkets are also working hard to discourage sales of branded products. They are promoting their own labels, though, it is not easy to promote them beyond a point due to strong customer brand loyalties for a class of goods, such as, FMCG. While Hypercity has achieved store labels sale of around 30%, Trent promoted Star Bazar has been able to touch only 10%.

Increased Volumes: “Suppliers themselves are willing to give away more if the volumes are high enough,” says Neeti Chopra, Marketing Head Trent.
Bypassing Middlemen: Retailers are also striving hard to keep costs in check by improving sourcing efficiencies. By pruning on the middleman and reaching farm gates, retailers are able to improve margins. “There are too many middlemen” says Levermore.