Business Daily from THE HINDU group of publications Thursday, Jun 12, 2008 ePaper | Mobile/PDA Version | Audio |
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Marketing
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Retailing Columns - Ask Harish Bijoor The sin of retail
The growth of modern retail is knotted up with a string of issues economic and ethical. What are the sins of modern organised retail as we see it ramping up today? - Jyothi Rudra, Hyderabad Jyothi, modern retail is growing at a rapid pace. Worldwide, this industry is a $6.9-trillion industry. In India, this is a $340-billion business. Only, here it is different. A whopping 96.6 per cent of Indian retail is in the hands of small mom-and-pop stores. The model at play: Small is beautiful! Over the last six years, organised retail has been growing. The big malls are coming up all over in our lives, bringing variety to the shopping experience. The shopping experience is morphing. Never mind whether you are shopping for patent leather boots, stockings or a ripe papaya, you can now do it in style. You can shop at a UB Mall or at a Reliance Fresh. What a far cry from the rustic marketplace of an Afzalgunj or Malkajgiri Market! Even as the shopping experience morphs from hot old Hyderabad to the totally cool environs of a retail outlet on the high streets in our lives or a mall, for that matter, the issues of right and wrong spring up. Shopping is seen as therapy. Shopping is seen as sin as well. Two different sets of people and two different sets of views altogether. Here is a small list that talks of the sin-side. Many of us don’t talk this. Many of us in business are just too politically correct. I will not be … for the purpose of this column! Shopping is a form of commercial escapism! Retail is all about high prices! It’s big brands gobbling up small! It’s all about standardisation. At the end, all of us will be wearing and eating high-end ration-shop brands! Retail is all about brand-hype! Modern retail is divorced from the market reality of millions of our real people living below the poverty line! Modern retail makes us salivate for things we don’t need but want! What is your view on the discounting strategy that many marketers use for their brands to make an impact in the market? - Ravi Pattanayak, Mumbai Ravi, firstly, discount is not a strategy. It is a tactic. The marketer today uses many avatars of these. Some work, and some don’t. The Discount Dhamaka is the marketer’s first line of defence. Offer the discount that will lure in the consumer to buy. Discounts that offer the appeal of cut prices as a lure and bait. Here, an error is being made. The marketer is boosting his temporary sales volume, but denting his brand image. Discounts have never built brands, and never will. There is enough evidence in consumer space that discounts are like a canker on a brand. More overt the discount, bigger the canker. Brand managers, however, are transient passengers on brands. They are out there for those six years. ‘Short-termism’ in brand thinking spurs on the discount culture, at the cost of the brand at hand. Discounts can operate at the level of trade, to load the shelf and at the level of the consumer to enhance offtake. Marketers could use either or both of it. Both harm equally. If discounts are to be passed on, there is a better way of doing it. Offer more of product: This is the classic way of reaching out to the consumer. Buy a 500 gm packet of Taj Mahal Tea and take home 600 gm! You get more than you bargained for. Brands don’t get devalued when they adopt the more stock on stock way to discounts. Try it. There is a downside to this as well. On more occasions than not, these kind of add-ons get hardly noticed by the consumer. Offtake levels perk up a wee bit, but home consumption continues to remain what it was. You will return to buy the next pack many days later than before, as people in your home continue to drink the same amount of tea they used to before. Nobody is drinking more of your tea just because their favourite brand gave them more this month. Apple Inc is all set to enter the Indian market with its I-Phone, which will be offered by two players, Vodafone and Airtel. What’s the impact of such a move? - Shashi K., Thiruvananthapuram Shashi, for the consumer this means a wide plank to choose from. Airtel and Vodafone are the lead players in this space. They occupy a large chunk of the current user base. Upgrade from the existing hand-set to the I-Phone and its allure is going to be that much easier. It is users of niche telecom service providers such as Spice and everyone else who is small and regional who will suffer. Number-portability is not yet a reality. Till such time, users of such TSPs’ services will see their provider to be a hurdle to an upgrade of handset. I do believe the user base of existing TSPs that take on the I-Phone is likely to grow. This is, however, related to number portability making an entrance. The high-end user of the niche players in telecom space in India, who is already salivating about the prospect of an I-Phone in his hand, will wait for such a possibility. Till then, the niche provider can hold on to his on-the-fence customer. In addition to all this, the grey market for unlocked phones will thrive. This will not benefit Vodafone or Airtel for that matter. Unless a serious campaign is run against such actions, and unless there is a mechanism to lock out such grey market users at the level of transmission code itself. The winner in all of this is Apple Inc, for sure. They enter the Indian market on the strong backbone of two strong service providers. Very unique to any country of their entry. We grow at 8.3 million handsets a month. Even a nanofraction of this going towards the Apple Inc offering is a big number to salivate about and on which to build mega business plans. (Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc.) askharishbijoor@thehindu.co.inWhy organised retail is good Manufacturers upset over retail discounts All the world’s your turf More Stories on : Retailing | Branding | Ask Harish Bijoor
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