The Hindu Business Line : `Indian consumers deserve better'

Why do people buy what they do, when they do and where they do ... ? The Rs 1 lakh crore Indian retail industry would love answers to these questions, but like most things Indian, the consumer's shopping behaviour here too speaks different languages in different places and times. "In fact, one of the biggest challenges for the Indian retailer would be how to react to these differences," says Paco Underhill, Founder and Managing Director of Envirosell, a New York-based behavioural market research and consulting company.

Envirosell, which recently partnered with Technopak, a retail and consumer insights consulting firm, will help Indian retailers understand what drives shoppers and shopping behaviour. Underhill, who has authored the largest selling book on retail, Why we Buy and the more recent Call of the Mall, will be driving this new partnership and help Indian merchants understand their markets and consumers better. "We anticipate that roughly half our work would come from working with merchants to test and help them better define prototype stores and help them roll out stores and malls in the country," he told BrandLine. Excerpts from an interview:

How do you see the Indian retail sector evolving? Is it too fast, considering that the infrastructure and service levels have to catch up with global standards?

No, on the other hand, it is moving too slow. As the world shrinks in size and more middle-class Indians visit other countries and come back, they have every reason to get angry about the quality of products, the quality of service and the quality of stores they get. It is not what it should be in a country like India.

An Indian CEO said very clearly that we can no longer measure ourselves by Indian standards, but by global standards.

What would the Technopak-Envirosell combine offer the Indian market? Could you give some specific instances?

Technopak is an Envirosell licensee. It joins the series of relationships we have with innovative firms across the world which are dedicated to serving the interests of merchants, marketers and consumers. We anticipate that half of our work will be working with merchants in testing and helping them better define prototype stores and help them roll out stores or shopping malls across India. We'll also work with our global consumer product firms which are interested in emerging markets across the world.

Globally, Unilever is one of our biggest clients. They are interested in how Indians purchase personal care products, in different channels of distribution of personal care products, how people buy small amounts of shampoo, how they are buying a laundry soap ... in a grocery store or the corner store or in a hypermarket.

How do you think your experience in global markets will help retailers in an emerging market like India?

Last year, we worked in 26 countries, including Brazil, Mexico City, Milan, Tokyo and China. We come to you with a lot of experience in the emerging markets. Last week I was at the headquarters of PepsiCo where we have done a number of projects in Central America involving mom-and-pop stores. We have had a great deal of success in these markets.

One of the reasons we picked Technopak to partner with is that for the last four years, we have been having enquiries from several Indian firms asking us if they can be our Indian representatives. Technopak met all the criteria. They have the money to invest in people and many of their exiting clients could also purchase Envirosell services.

And that would be ...?

We are offering India the same package of services that we offer in different markets of the world. No one would come to us asking for back office work or supply chain management issues. But if someone wants us to do observational work, research work or consulting work, development of shopping malls and points of service, we are there. We have worked with airlines, post offices, mobile service providers across the globe. Last year in the US, we worked with a public library on how to manage space. We have historically had a large practice with a banking industry, looking at bank branches from the installation of ATMs to the running of niche banks to the operation of a business bank in several parts of the world.

Which are the sectors that could be looking for professional help in consumer behavioural insights?

We will meet with more than 100 Indian companies here. But it's very clear that retail is looking for this kind of service. We work for mobile phone service providers and hardware manufacturers. Nokia and Motorola are our clients globally. Last year, we worked with shopping malls in Sweden, Norway, Brazil, the Philippines, Mexico, Australia and South Africa. We have looked at malls in very developed markets and in extremely poor markets.

So how does shopping behaviour change with each country? Your comments on India?

In shopping behaviour, what is constant tends to be biological. For instance, we see the same way, our eyes age in the same way, most of us are right-handed, the way we carry things is the same. Therefore, the signage is the same here. Visual language is all evolving in the same direction across the world by watching TV and the Internet.

The things that are different ... one is the climate. Therefore, shopping malls in Stockholm have to deal with the cold and in India with the heat. The second is the price of real estate, which is cheap in the US and Mexico and very expensive in Japan and relatively expensive in India.

Then the next question — density of population. How many people do you have living within a certain prescribed space and what people's transportation systems are in the region ... In Japan, for instance, they have a highly developed public transportation system. In India, there's no real transportation system, you have to deal with providing different means with which somebody arrives at your doorstep. The relative level of economic prosperity and the cultural issues come last.

Yes, there are things that makes the Indian consumers different. People have an appetite for bargains, but they do have an appetite for bargains everywhere. We are all faced with the economic pressure, though the pressures here are somewhat different. There are demographic issues that we have to sensitive about here.

I would like to say in no uncertain terms that Envirosell does not function in the globe to offer American solutions to local problems. Yes, for us the biggest growth market is the US and we witnessed a 50 per cent growth there last year. Every week that I don't spend in the US is the week the company could be making much more money. In the long term, the exposure to the market here is the critical part of the equity that I bring to global clients in other places.

Can you talk about the different formats that could suit Indian retail industry?

I think what is interesting is the degree to which Indians can reinvent the formats to suit their culture. Reliance has strength in petroleum and therefore they may design a shopping mall based on the distribution of petroleum products. You are an extremely creative culture and it's time to turn that creativity into your distribution systems and finance systems.

Of course, I'm sympathetic to the mom-and-pop network and it is not going to disappear ... if India is going to be a part of the larger global community, she has to join the move to engineer cost out of the distribution chain.

I think you have successfully put off certain parts in the globalisation process allowing protectionism in some areas. The problem is not that H&M or Carrefour is waiting at your doors and saying `let us in'. The issue is that Indian consumers deserve better than what they are getting now, better concentration of goods, better quality and better prices of goods.

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