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.

Socio Economic Classes (SEC categories)

IRS_Logo Almost every one associated with retailing, marketing, media and consumer economics is required to deal with SEC categories. These categories are important as they help in effectively segmenting markets and targeting communication to core consumers.

Terms like, SEC A, SEC B, and the like are freely tossed around by all, however, only a few know their real meaning. Very few, for example, may be aware that many traders, who may be affluent with more spending power than most executives will fail to make the ‘high’ grade, if they are not graduates.

Although, MRUC & Hansa Research have come up with a new concept of Household Potential Index (HPI) to reclassify consumers, SEC continues to remain universally referenced classification of consuming classes. While, a detailed postings on HPI will soon follow, we explain below the basis of classification of different urban SEC categories and their relative importance in relation to marketing/ retailing potential: Continue reading

Reputation is more important than fear of enforcement

Our reader Rajeev has sent an interesting story about importance of cleanliness and reputation in running a retail food service business.

According to the story, Smith, general manager of CiCi’s Pizza, said that …. “a food-service business lives on its reputation. Good quality, service and price won’t mean much, unless cleanliness and food safety are top notch.”food2

Smith agreed with …. health officials, who said the biggest incentive for food-service businesses to deliver a safe product is not the threat of enforcement action, but their reputation.”That is true,” Smith said. “If somebody has a good dining experience, they might tell one or two people. But if they get sick or have a miserable dining experience, they’ll tell 20 or 30 people or more. They’ll tell everyone they know.”

“We live on our reputation.”

Thanks Rajeev-kk

Why Coke? Brain provides answers

Marketers have always espoused power of the brand. They have known for years that Coke and Pepsi, both of which although nearly identical in color and chemical composition; evoke strong subjective preferences for one or the other, mostly though in favor of Coke.

This is not new; what is new, however, is that progress made in brain imaging techniques (such as, functional braincokevspepsi scanning- fMRI), have begun to offer insights into functioning of human brain in relation to brand preference behavior of consumers as they find two different systems of brain being involved in generating such brand preferences. Based on such studies, neuro-scientists are able to offer explanations for success or otherwise of a brand or a campaign. This has led to increase in clamor of marketers for the new field of Neuromarketing (a field of study created from combining the knowledge of marketing with that of neuroscience). The new field is of particular significance to understand consumer perceptions on store A vs. store B even though both of which may be offering same products at comparable prices.
In a path breaking study, comprising 67 subjects, conducted at Baylor College of Medicine, scientists attempted to put to rest that age-old question: Which one you prefer, Coke or Pepsi? The experiment tried to seek behavior patterns of consumers when only sensory information (color, taste, etc) was provided to them vis a vis when cultural information (brand cues) were provided to them. Results and methodology of this study can be viewed in Neuron- a prestigeous science journal.

The verdict of the study: Brand knowledge biases consumers’ preference decisions and two separate systems in the brain are involved in generating these preferences. In the case of Coke and Pepsi, sensory information plays only a part in determining consumers’ behavior. Indeed, brand knowledge (at least in the case of Coke in the study) biased preference decisions Continue reading

Tweens and Teens: Do You Know the Difference?

Children between the ages of 8 and 14 – tweens and young teens – are a powerful demographic group. They control billions in purchasing power and make up 60% of Internet users under age 18, and as tweens become teens, their online activities change dramatically.

preeteens_and_teensThey may be small in stature, but they have a huge influence.”Teens ages 12 to 14 go online more frequently than children who are 8 to 11, spend more time online and engage in a variety of online social and communication activities, such as instant messaging and social networking, that kids slightly younger have yet to grasp.”

No marketer should make the mistake of thinking that there is no difference between tweens and teens. The transition from childhood to adolescence is a big turning point — socially, mentally, physically and emotionally. Just ask any parent with children between the ages of 8 and 14.

“It also marks a turning point in online behavior,” says Debra Aho Williamson, eMarketer senior analyst and the author of the new report, Tweens and Teens Online: From Mario to MySpace.

Biometrics to bring relationship centerstage

“Mass marketing is evolving into one-to-one relationship marketing, where brands seek ways to isolate their most valuable customers”, says John Costello, president of consumer and retail at Pay By Touch, a privately held biometric payment company in San Francisco.

biometric2According to Costello, his company’s 3 million members eventually could, with a touch of a finger at a kiosk in a grocery store, receive offers tailored specifically to their needs and shopping history.

Although promising, the field of biometric technology and the prospects of Pay By Touch have many hurdles to overcome before mainstream adoption including a battle with privacy advocates predicts a recent report in Advertising Age.

 

Costello has earlier held high-level marketing positions at Yahoo, Sears Roebuck & Co. and, most recently, Home Depot

Combating retail shrinkage with RFID

rfid2Retail shrinkage is the difference between book stock and actual stock. It is the unaccounted loss of retail goods. Its main causes are theft by employees, administrative errors, shoplifting by customers or vendor fraud.

Rakesh Biyani, Director, Pantaloon feels that as India enforces the MRP (Maximum Retail Price) system, the retailer has very little profit margin. Large retail outlets such as Big Bazaar and Pantaloon have investments in RFID, CCTV and antennas to reduce retail shrinkage reports Network Magazine. RFIDs in particular are being adopted widely by these retail majors. “If somebody steals goods without paying, it is the public who ends up paying for it. We identify compulsive shoplifters and often catch them three or more times in the same month. We try not to involve the police especially when teenagers are involved. This is where RFIDs are useful in protection of goods,” explains Biyani.

Dharmesh Lamba, Country Head, Checkpoint echoes the sentiments. He points out that India’s organised retail is only 3 percent while 97 percent is unorganised. “India is the second largest growing economy in retail, after China. Around 300 plus shopping malls are coming up in 2006 alone. New products launched globally are now launched simultaneously in India as well,” says Lamba. Continue reading

Smart shelves heading your way

shelvesnewAn RFID enabled technology, under development, is soon to begin gathering information on buying behavior of customers.Thanks to deployment of RFID enabled smart shelves, retailers will be able to collect data on questions like:

  • How many of customers considered buying an item?
  • How many of them really bought it?
  • Which of the other items were bought together?
  • Which of the items on display received attention of the customers?

In short, it would now be possible for retailers and marketers to collect information on popularity or otherwise of any item, according to a report published in Engadget.