The Hindu Business Line : The melting market

Rama, Indian retail is nascent retail. This segment has not yet scratched the tip of the iceberg of potential. Penetration itself is low compared to the commodity category in every segment. Keeping this fact in mind, the effect on Indian retail is not going to be even across categories.

Some will feel the pinch of this meltdown. These will be brands that lie somewhere near the top of the pyramid of consumption. Not the ones right on top, but those that are just below the real top.

Premium brands will continue to have a good run. Brands that are just below them will suffer for a while. Categories most prone to this are auto retail, durables retail and in some manner, cosmetics retail.

This is bound to last for the next 18 months for sure, going by the global cues as seen today. The meltdown has just begun. Its cascading impact is yet to be felt. First will come the pulse and then the real big wave. And then it will all subside. Give it 18 months and give or take a few months this way or that.

The real-estate marketing and branding space is getting very difficult to be in. As a new player here, I am suddenly faced with the problem of falling value. How is the trend all around? How do you believe the government, realtors and everyone else involved must intervene and act?

- Gopinath Sarvate, Pune

Gopinath-ji, yes, real estate price corrections are already occurring. This is to the tune of 25-30 per cent in markets such as Bangalore/Pune and is lower in Delhi at 18-20 per cent and even lower in Mumbai at 6-7 per cent. But the trend is clear. These are based on actual physical transactions that have occurred in these cities over the last 45 days. A big change from the good old days!

The story is all about over-supply. There is an over-supply of malls in the market. An over-supply of office space and in some cities an over-supply of residential space as well. This is bound to keep the real estate sentiment bearish in the short to medium term.

My suggestion is simply this: The Government needs to just stay out of this. The mess is not of its making. Commerce will find a way of its own out of this mess. If the Government intervenes, it intervenes with the precious taxpayer’s money which actually needs to be applied to other arenas of real development.

Realtors need to bite the bullet on this and need to be real. They must not wait on the wall waiting for something magical to happen. Nothing will. This is a brick-and-mortar market, not a stock market of paper and electronic commerce. Realtors must become transparent in their costing and must be ready to take cuts, ready to put on hold projects that have become prestige enhancement points rather than money-enhancing deals.

The consumer has a role to play as well. Consumers need to really think and spend. Spend on stuff that you can actually afford. Avoid borrowing at all costs. Avoid the credit card route to your life. Believe in cash. Spend it, but believe in cash. Do not over-stretch.

Why do brands go for a re-branding campaign? What’s the logic behind the process and when must one do it?

- S. S. Raghavendra, Bangalore

Raghavendra, a makeover is all about a need, want, desire and aspiration for an existing image to look different and deliver different. Look different to a whole new generation of customers who want something contemporary in their brands and their image. Deliver different to the expectation-requirements of new consumers altogether.

Brand promise is a perennial trait. It must not change. Good brands hold on to the original brand promise, and yet contemporise.

Brand-tweaking can be a one-off process that happens once in twenty years, or it can be a gradual process that keeps happening all the time. The ideal way to be is to do it gradually over time. This way, the brand never loses touch with customers. The problem, however, in modern-day marketing is that consumers change faster than brands do. Suddenly when brands realise that they have become totally obsolete if not fuddy-duddy with their consumer sets, they sit up and go for re-branding. This is really a reactive step. A good image change and brand makeover should be gradual. So gradual that the consumer does not even notice it.

The logic of all re-branding exercises is based on the need to look relevant, original and innovative to the changing consumer.

askharishbijoor@thehindu.co.in
(Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc.)

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