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Visual Merchandising: Brownie points!!

Emotions and entertainment are playing an increasingly important factor in retailing. Technically advanced and high-quality products are not sufficient in order to differentiate yourself from other retailers and to be successful. Today’s highly competitive market where lifestyles and social values are changing rapidly demands something more.

Emotions are a powerful tool to influence customer-behaviour and need to be planned with great caution especially in India. Retail store environments assist in shaping shopper attitudes and the service quality of the merchandise. Other than the product and service provided by the retailer, a customer also looks for some kind of association when deciding to purchase. This can be ensured by a creative use of the store’s space, furniture, colours, lighting, mannequins and many other display materials, especially during festive seasons.

What matters is that, when customers walk in, it becomes necessary to ensure that they enjoy their first encounter with the store. A memorable first visit often determines and greatly encourages re-visits. In fact in-store atmosphere can play a significant role in store stay time, which gives more time for brand recognition and purchase decision-making.

Considering other factors like competition, it is essential for a retailer to differentiate himself from other retailers. As many retailers are selling same type of merchandise, visual merchandising can very well help them gain an edge in this competitive environment, hence gaining few loyal customers to the store.

It is very truly said that people believe in what they see, and if they like what they see, they make others also believe in them. Brownie points!

 

 
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(Who) Customer (What) Service

India is a land of shopkeepers. This is quoted as the reason for holding off FDI in retail. Isn’t it? So, ever thought about the service levels the neighbourhood shopkeeper offers? “A customer is the most important visitor on our premises. He is not dependent on us – we are dependent on him” – Unknown Does the neighbourhood guy lives by this statement? Or, the marketers of products and services in the organised sector. This isn’t a trick question! I am sure most of you would agree that organised sector has better service standards. And incidentally, this is not an article to sell my thoughts on FDI. Spare a thought for the affable retailer who is always willing to help Bhabhiji and has offer products hidden in the store room only for her. One who sends even one piece of your daily bread to your house only because he understands your LTV (life time value) without understanding technicality of the term. Contrast this with 4 examples that I have faced recently. I have a less than a year old European car. One day, I discovered a problem of coolant leakage. I had to send the car to the dealership at least 3 times before they even acknowledged the problem. For the first two times the effort on their part was to convince me that I was hallucinating and there was no problem with the car. In another instance relating to my DTH provider, I decided to upgrade one of the boxes from regular to HD. We wanted the regular box to be attached to another TV set. For some reason the first box got de-activated. We made 5 calls over 20 days for the activation and every time we were told that our request had not been registered and the issue will be resolved in 48 hours. One more. My bank decided to change my wealth management team for reasons best known to them.

One day a trainee lands up at my home to “help” me. He has no homework done as to who I was and details of my relationship. No briefing from the previous wealth manager or his boss. On speaking to his boss, he apologised and promised to meet me up. For over 2 months, no sign of his wanting to meet me. And the final example, from a MNC sports shoe brand who invites you to act. My young son’s shoe passed away within 3 months of purchase. Luckily, this time we had a bill of the purchase. So, we landed up at one of the brand stores for complaint hoping for a quick exchange as our case was genuine. We were in for a surprise as we were told that the purchase was made from another franchisee and therefore he just can’t do it. All the above examples are from large / MNC brands. These guys are clearly not in sync with, “Ask your customers to be part of the solution, and don’t view them as part of the problem”. They are thinking of the customers as the problem. So, will they succeed or even survive? They will, till the time demand supply gap exists. Unlike the neighbourhood guy who has high service standard and a niche for himself which will ensure that he weathers the storms and hands over a strong business to his future generations. My service horrors didn’t end as horrors. I luckily know some senior people around and can press the right buttons. So, the car dealer, the DTH provider and the Bank manager all fell in line with one phone call and my issues resolved in a matter of hours. What took multiple calls, visits or wait for months was solved in hours. How is that possible? Because with those phone calls the attitude changed. The same people were wanting to solve the problems and did so. The difference was not in what was possible but the intent!

Service is about the willingness to serve. It is easy to surprise (positively) the customer. (if you were wondering what happened to the sports shoe, answer is nothing. I don’t know the right people) On the other hand, what do successful brands do? Focus on complaint resolution or go beyond. Shift focus from complaint resolution to customer service to customer delight. One brand which attempts it is the iconic brand Apple. My son got an iPad bought in Canada exchanged in India without producing a bill. And my wife’s iPhone got exchanged without any questions asked. Apple agreed that the products belonged to them, they have a problem and the customer is right. Sounds simplistic. Have you noticed in McDonald’s they replace the coke or fries when a customer (esp a child) drops it whilst carrying it. Because a happy child will always remember it and keep coming back to them. In return enhancing the LTV (life time value) of the relationship. You are not in business for a day. The customer is not a transaction. If you can learn from Apple and McDonald’s. Look after the customer and they will look after you to survive and grow your business. It’s that simple.

- Sanjeev Agrawal

 
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5 Reasons why customers prefer Mom and Pop Store over a Supermarket.

The sudden boom in Retail sector has increased the number of Supermarkets in India. Even after Supermarkets being present almost everywhere now, it’s like people are addicted to mom and pop also called the Kirana stores.

Retail

haaram.com

5 reasons why we think Kirana stores are more popular than Supermarkets.

1). Kirana stores are very accessible.

2). If you are a daily customer at a Kirana store, you can easily bargain on almost all purchases you make.

3). More likely to provide services like free home delivery.

4). The customer-trust ratio is very high.

5). There are no lengthy billing queues in Kirana stores like Supermarkets.

 
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To B or Not to B

Retail

retaildesignblog.net

Just about a decade ago as department stores like Lifestyle and Shoppers’ stop began their expansion to spread across India, they faced a problem – finding the right brands to partner them. The inadequacy and the non-availability of a wide choice of brands in India to retail restricted them from having their own desired brand mix. These multi-brand stores almost housed the same brands save a very few to express each one’s differentiation besides their humbly commissioned in-house brands. Active followers of retailing in India may remember the degree of brazenness a few brands exercised: a particular brand dictated such terms that it would supply to the department stores only on consignment basis at very restricted margins and the choice of SKUs was purely at the brand’s whim. The brand offered a slim extra margin linked to a hefty quantum of sales. Another organization which had the rights to sell a set of men’s brands, fought with a reputed retailer only to part ways for a few years until relationship was restored. In the meantime the retailer considered it a golden opportunity to build own brands – christening one even with a name boisterously sounding Italian! This has now become history as retailers have now learnt the trick to excel and brands came into the country soon through whatever route available them to explore and succeed. Whatever one may call it – retailer power or brand’s desperation, the situation is different now. Alternatives are available so much in the food and grocery sector that many retailers are said to charge a listing fee!

A friend of mine recently threw a poser to me – as FDI in single brand retailing is allowed upto 100%, many brands may explore to enter the Indian retail market soon and this may give rise to the establishment of new multi-brand department stores that may house these international brands alone sidelining the natively nurtured ones. A department store may have only global brands. They have also learnt the trick to exist in the Indian market – a UK based retailer operating in India has slashed prices as a strategy to grow here. And the company sources garments from India for their international markets as well. Re-strategizing their business, many brands like this retailer have adapted to the needs of domestic customers. The products sourced from India are sold at almost double the price in the Asian markets, proving that a penetration pricing strategy is adopted in India. The mid segment of customers is quite affluent too and these brands with their adjusted price points have become the mainstay in customers’ wardrobes now! Products like Axe and Pringles in the convenience goods segment are typical examples of adopting a steadily collapsing pricing strategy for India over the last decade and becoming successful. Today’s news scorns the high import duties on imported luxury brands in India citing the example of China, which has been bringing down duties on luxury brands. But China is a manufacturing country and it exports a great deal to other countries. The strategic approach of India is right to the extent that it encourages domestic sourcing and domestic consumption. As customers gain exposure in all the market tiers, brands may assume larger significance and luxury brands may fall within the reach of the common man soon. Yesterday’s luxury brands may become today’s run-of-the-mill ones in India!

The brand mix of multi-brand retailers may soon change in the apparel segment with many more global brands trying to find their way to India. On the other hand one may find very ‘desi’ department stores in the tier two and tier three towns and the same department stores may have an additional brand portfolio for the urban consumers – more like a differential merchandising strategy! Or we may see a different genre of department stores emerging with a global brand mix in India –a version similar to Macy’s or Robinson’s!

The other extreme trend in India could be a new ‘swadeshi’ brand movement, given the high degree of patriotism in India. We have seen in the USA customers boycotting stores like Walmart for importing majority of merchandise it sells. An acquaintance does not wear a garment if it visibly carries any logo. His argument stands on the premise that no brand pays him to carry its logo but instead he pays to carry it! But some need to sport a logo – for various reasons!

Dr. Gibson G. Vedamani

 
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Bridging the Gap!

Retail

foodandbeverageindia.com

Sitting in a restaurant in Raffles Boulevard in Singapore this afternoon, as we took a break from a business meeting, we were exuberantly discussing the standards of retailing in India. Before the batting of an eyelid we appreciated the good job some of our mall developers have done in creating shopping infrastructure of world-class standards. We compared instantly some good malls we have in India with a few of those in Singapore with respect to design, zoning, standards of common area utilization, signage and communication, maintenance and facilities management, etc. and we could find no gaps to conclude that Indian malls are in any way inferior to those in Singapore. We in India have been able to create retailing and shopping infrastructure of great quality. We juxtaposed our thoughts with the hospitality sector in India. Haven’t we come a long way to offer the best standards of hospitality infrastructure and service in India? And the answer was a bold yes. Our rack rates are on par with any developed nation though, we offer world-class standards of rooms, cuisines of international flavors and the best of service. The maintenance of every star hotel in India is meticulously done. Our service standards are far superior to those rendered in developed economies because we bow down to almost every customer in our hotels to serve without even letting a guest touch his own luggage while checking-in or checking-out. Guests are Gods for us.Atithi Devo Bhava! So, in the hospitality sector we have gone even a step ahead of international standards!

But the malls in Singapore seem to be radiantly different. They look better. What makes the difference? We were trying to find answers. The retail stores within the malls make a big difference. Every store in a mall is merchandised right with its planograms intact. We checked a few stores along our way after our discussions when the stores were becoming busy with greater footfalls towards the evening. The stacking of merchandise and the ‘turnaround’ of the shelves back to order are instantaneously done on the floors. Even in a supermarket or a convenience store, the floor staff walks around to organize the merchandise back to its shelved glory. As every hanger goes to the right groove in the display fixture, one rarely finds an additional one jutting out of the browser or one short in the browser’s arm and as every fresh produce in a supermarket is sold, it is replenished during any part of the day! So the stores look well maintained and as all of them uniformly maintain the array of their merchandise in proper order, the whole mall looks magnificent. Retailing partners in a mall make all the difference. Both have to go hand in hand to create the grandeur and greatness of the mall for delighting customers.

It is not impossible to arrive there. All that it needs are following the required discipline and the right attitude. When we can have everything in order in our own homes and hotels, why can’t we do the same thing on our retail floors? Often we give many excuses for running a disorderly store – sometimes we even say that ‘value stores’ could be merchandised any way as customers may want to see the products in bins to have the pleasure of ‘picking up’ bargains! What lame excuses we have been giving, if at all! An airhostess on our flight to Singapore in a relatively new native no-frills airline, which has even bagged many awards recently, told my colleague who bought his lunch, that they serve everything they sell onboard cold and she said that very politely and with a service oriented smile. He was left thinking how one could eat cold parathas and before he could take any offence to the bad service, the way she presented herself politely made no difference to our decision not to fly the same airline again on an international trip! Sometimes service suffers in retailing as well, even if our sales people are trained. It’s time we checked our attitudes and disciplines.

We’ll surely but steadily surpass international standards in retailing in India but a larger share of responsibility reposes with our retailers!

Dr. Gibson G. Vedamani

 
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Think Twice before You Speak Once

Seven things Retailers should never say.

Retail store

bloomberg.com

It’s Over There

Every customer wants to be treated like a guest and a little pampering always helps.

Instead say “Follow me, I’ll show you right where it is.”

 

 I Can’t Do That

Customer don’t want to hear what you can’t do they want to know what you can do for them.

Instead say “What I can do is ___.”

 

That’s Not My Department

Every salesperson should be like a guide well versed with every corner of the store. By this he can guide the customer to the right person who can help the customers.

Instead say “I’ll be happy to get you to the person who knows more about that department.”

 

I Don’t Know

Customers expect the salesperson to know everything. So when you are not sure of anything always ask for some time and figure out the solution.

Instead say “That’s a good question. Let me find out for you.”

 

Salesperson

picturescolourlibrary.co.uk

We’re out of that

Always say when you will have the stock back.

Instead say “That item is currently out of stock but will be back in on ___. Can I get your name/number and call you when it comes in?”

 

You’re Wrong

Never challenge your customers. No one likes to be called wrong, it’s an indirect insult.

Instead say  “I think there has been a misunderstanding.”

 

We’re Closed

Always give the timings of the store opening and shutting. Just mentioning ‘closed’ makes the customer assume that the store is closed forever.

Instead say “We close at __ o’clock and reopen at _ o’clock. Is there something I can quickly help you with now?”


 
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Store Layouts

The Grid layout:

Grocery Store

curbly.com

The grid layout has parallel aisles with merchandise and shelves on both sides of the aisles.  Cash registers are located at the entrance or exit of a store.
This type of layout is used for grocery stores.

 

The Racetrack layout:

Deparmental stores

gisparis.com

Also known as a ‘loop’, this store layout provides a major aisle that loops around the store to guide customer traffic around different departments within the store. Cash register stations are typically located in each department bordering the racetrack.
This is generally noticed in Departmental stores.

 

The Free form layout:

Specialty store

teenvogue.com

A free- form layout arranges fixtures and aisles in an asymmetric pattern. This layout is typically used in small specialty stores or within the departments of large stores.

 

The Spine layout:

Planet M

whereincity.com

Spine is a type of store layout in which a single main aisle runs from the front to the back of the store, transporting customers in both directions, for example, Staples, Planet M.

 
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“Build A positive attitude”

Take a pause and put the last five years of consumption trend in retrospect. It’s a fact that we are better off now than we were as consuming classes just about half a decade back, despite a blip in 2008. The consumption graph is showing an upward trend.

Probably no salaried individual is earning less than what he/she did five years ago. Though inflation is up and consumer sentiment discussions have re-surfaced, we continue to register healthy GDP growth rates compared to the Western developed economies. The latest retail data shows no signs of downgrading till now versus 2008 which did witness some down trading, and many categories like food and FMCG are continuing to grow. It’s time to put in a lot of hard work, to creating great ideas and engage even more with the consumer.

We all believe that the India growth story is here to stay and the future looks bright 10 years down the line. What we are experiencing is a temporary blip and the long-term trajectory is upwards.

Do not let media plays on downturn/slowdown take your focus away. By nature, negative news makes bigger news. Worrying about the economy or participating in the doomsday scenario is not going to help. Be aware but don’t ‘participate’ in the slowdown. A positive attitude on the part of an organisation will work better in these times.

Also, in such times, while consumers temporarily hold or tread cautiously when it comes to high-value purchases like homes, cars etc, FMCGs and consumer products that offer the right value-price equations find preference with consumers. Here are some lessons we have learnt from the slowdown of 2008:

Offer solutions and increase your focus on customer needs: The important thing you can do is listening to your consumers as they will always tell you what they need and how they want you to deliver it to them. It’s the retail theatre where imagination and buying experience can be fired up. Every usage occasion in the life of the consumer involves the interplay of many product categories. For example, tea time involves tea, biscuits, sugar, snacks and crockery. This multi-category consumption lens comes naturally to us as a retailer.
Take a fresh look at your partner insights and strengths: It’s important that there’s a lot of communication flow among all stakeholders who are channel partners to consumer deliveries. It helps to increase responsiveness and bettering delivery of results.
Don’t cut back on quality, focus on low unit packs: During these times, consumers look for re-assurance and brands that have succeeded during these times have stayed relevant to the consumers with increased levels of trust and loyalty. Cutting quality may hurt brand equity; focus on lower unit pack sizes instead.
Communicate value: Cutting prices comes naturally during such times but it leads to erosion of margins. First try to communicate value to consumers, only then resort to price cuts.
Engage with consumers outside traditional advertising channels: Social media could play an important role to connect with consumers. At this stage social media is an extremely-low or no-cost option for marketers. Brands like Airtel have done it effectively on the social media, attracting lot of young consumers.
Share of mind is more important than share of voice: It is important to take some chances and come up with path breaking ideas.

Devendra Chawla -president, food & FMCG, Future Group.

 
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Societal crossroads with the lens of advertising

In my readings yesterday, I came across two points. First a tweet by Shabana Azmi, being critical of recent Vodafone advertising and second an article on Americanisation of India in New York times opinions. And it set off a chain of thoughts. Culturally, where is our society heading? Is it in the direction that we want it to? And, what is the role of advertising in relation to the society and the changes. I am tempted to say that one’s reality is often determined by one’s perception. Does advertising shape one’s perception, and therefore his or her reality, or is one’s perception simply integrating advertising messages into his or her “own” reality? Eventually advertising is having little or no effect on persuading the viewer?
Is advertising a reflection of society? Some say that advertising does not sell but increases awareness and encourages trial. The idea that advertising somehow forces people to buy things they don’t need is doubtful. Therefore, a good advertiser knows the target audience well, including their hopes, desires and values. Advertisers find their target audience and use their existing perceptions that shape their reality to tailor an advertisement for them. Advertising not only reflects what a society is, but often what it desires to be.
Two recent ads and societal changes: In this context of advertising and social changes I used two ads as mirrors. These ads are a sharp contrast to each other and effectively showcase how the Indian society is at crossroads. How we are traditional to the extent of being parochial and at the same time getting “Americanised”. This leads to an entire generation being continuously torn with these contrasts.
1. Communitymatrimony.com: Have a look:
Are you saying, “parochial”? Wait!! Doesn’t this commercial reflect the reality of our society. Isnt community the strongest reason to fix marriages? To criticise this ad is to turn a blind eye to the time warp that the Indian society is caught into. The advertiser is merely recognising the social issue and capitalising on the same to sell his services. Brilliant. Caste equations are so important even for the politics that the development agenda takes a back seat. Even the National or Right wing parties in our country are playing this game. Honour killings are the reality in our society. A lot of soaps on TV unabashedly portray the caste issues with no qualms.
2. Vodafone: Have a look at the commercial
What is your first reaction? Cute? In this case also, I believe, your first reaction is possibly not the right one. Do you have a ten year old kid? If yes, you would be worried. This commercial is picking up the trend of growing fondness between kids of different sexes at an early age. Is it only picking the trend or going beyond to even encouraging the trend as a “cool thing”? Quite akin to the Americanisation of India kind of stories? Is the commercial doing its job of picking up the societal trend and making the brand endearing. Quite truthfully, the answer to this question is a resounding, “Yes”.
To be at the cross roads is not only the prerogative of an individual, it is also the natural right of a society. The Indian society, with its varied shades of cultural contours, civilization, colours, beliefs, faith, cannot remain immune to the influences that are either indigenous or imported. Earlier, the march of events and their impact on the Indian psyche was slow, but with globalization, satellite television and internet, the changes in the Indian society are highly perceptible.
There are two issue here:
Firstly - what does this mean for us? All of us who were born in the shortage economy as the “middle class” and have been part of liberalisation moving towards, “upper class”! We don’t understand how to deal with this dichotomy because we are alien to both the situations portrayed in these ads. We want India to progress and therefore move beyond the caste issues but cannot fathom pre-teen romance. It is not just me but a large section of urban society at crossroads.
Secondly - as an “ethical” advertiser it hurts to see the commercial “exploitation” of such societal nuances. As members of any society, we know culture and values are matters of identity of a race and civilization and not matters of commerce. As the advertising is based on societal truth and the trends the advertiser is well within his rights to rubbish my thoughts.
For argument sake, the social changes relating to castes may not happen till the time politicians continue to stoke the fire of the community vote bank. And meanwhile should we be expecting the advertiser to behave more responsibly and shun such “insights” into delivering business building advertising? Such calls need to be taken by an individual only!
 
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Budget 2012: No big deal for modern retailing in India!

As part of the economic reforms, the Finance Minister Mr. Pranab Mukherjee said in the budget session this morning that the efforts are on for achieving retail FDI consensus to allow 49% in multi-brand retail with as many as 35 conditions! That’s however a serious message in the budget presentation today to expressly announce the fact that the proposal of FDI in multi-brand retailing is not shelved or forgotten. At the outset the budget speech reverberated with a positive sentiment for FDI in retail.

It is critical for the government to take aggressive efforts to bring down inflation that will have a direct impact on generating the much-needed augmentation of internal demand resulting in increased consumer buying. No adequate efforts have been seen to contain spiraling prices. The standard rate of excise duty has been increased form 10% to 12%, which will result in a general increase in prices. Similarly the increase in the rate of service tax from 10% to 12% also will result in the increase in prices of products and services as retailers now have to shell out more as service tax on the premises they rent for running the retail business. The basic import duty on gold and platinum has been increased to 4% from the earlier 2% and jewellery retailers will pass on the price increase to customers. The increase in the taxable income slab to Rs 2 lakhs a year and the revised taxation of 10% tax from Rs 2 lakhs to 5 lakhs income, 20% from Rs 5lakhs to 10 lakhs and 30% from over Rs. 10 lakhs income per annum will offer some respite for the mid-segment consumer masses with some disposable income to spend at retail.

Implementation of the Direct Taxes Code (Goods and Services Tax – GST) is deferred without any idea on the implementation date yet. The finance minister has not put any timeline on the implementation of GST and he has come under heavy criticism for that. GST will bring a complete taxation discipline in the entire supply chain, which will benefit retailers and consumers. Under the structure of GST, tax will be collected by the states where the goods or services are actually consumed. GST is a part of the proposed tax reforms in India that would evolve an efficient and harmonized consumption tax system in the country. Presently, there are parallel systems of indirect taxation at the central and state levels. Each of the systems needs to be reformed to eventually harmonize them. In the Union Budget for the year 2006-2007, it was proposed that India should move towards national level Goods and Services Tax that should be shared between the Centre and the States. It was proposed that GST will come into effect from April 1, 2010, but the implementation is yet delayed. The good news though, is the approval of the structure of GST network by the state finance ministers, which opens up feasibility of its implementation by perhaps August 2012.

As almost 40% of modern retailing sells readymade garments, the reduction in excise duty in readymade garments may push prices down and this may create more demand. Similarly the demand for processed raw food too may go up with this marginal reduction in excise duty. The waiver of excise duty totally on silver jewellery may help ornamental jewellery retailers gain more momentum to create a very attractive fashion product mix for the youth who may love to sport such jewellery as fashion wear. The excise duty on mobile phones has been retained at 1% and this is a welcome gesture that will keep the mobile market booming even in the rural areas of India.

The budget also announced an infusion of a further Rs. 1000 crores to the National Skill Development Council (NSDC) taking its total corpus to Rs. 2500 crores. This talent development effort will see many vocational training initiatives established to skill millions of people in India and retail training is a major focus area of NSDC.

This budget is no big deal for modern retailing in India!

- Dr. Gibson G. Vedamani

 
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