question hour. There’s room for every shop

There’s room for every shop

Many retailers are closing down small-format stores and concentrating on large-format stores such as hypermarkets. What makes large-format stores a viable model in India?

Bangalore

Preeti, large-format stores bring in the aspect of aggregation in a more focused manner. Larger-format stores mean fewer of them in number. They also mean that customers will travel a radius that is larger to buy stock from. This also means that customers who walk in will bring in deeper bill-cuts.

The idea of a retail format is to ensure regular walk-ins that cut deep bill sizes. Larger-format stores help in this. In many ways smaller format stores just replace the corner kirana and most of the time are unable to compete with the local grocer in terms of margins. Lager formats, therefore, work better, except for fruits and vegetables, of course. Collective bargaining, larger buys and focused back-end work help ease margin pressures due to the supply chain inefficiency that smaller formats face.

The hypermarket format is a scalable one in India, over time. Every economy has a phase it goes through in retail. The first is the one that focuses on mom-and-pop stores in small format. This yields slowly and gives way to a mix of the mom-and-pop store and the supermarket. This then gives way to an even more healthy and symbiotic mix of the small mom-and-pop stores, the supermarket and the hypermarket.

Horlicks is a very old brand. What is its perception in the Indian market?

Ahmedabad

Navneet, my definition of a brand is a simple one. “The brand is a thought. A thought that lives in people’s minds”.

Horlicks is, therefore, a thought. A perception. The brand is today perceived to be an old-timer. Not yet a heritage brand, but an old-timer that offers solutions related to good health. Of the pre-emptive kind. Kids’ health, recuperative health and health pertaining to the aged are three big thoughts Horlicks enjoys.

To an extent, despite successive re-banding exercises, and successive tweaking the brand’s positioning has received over the decades, the brand runs the risk of being categorised as an old-solution to a new-age problem. The re-branding exercise is an essential one. If not for this, the brand runs the risk of being categorised as an “old fogey” solution. It is, however, important that re-branding solutions go beyond the skin-deep level of logo and colour and font. The Indian market is about to witness a take-off in the healthy and fun foods and beverages category.

The future is about a generation that is very aware of health issues. India has emerged as the capital of lifestyle diseases such as diabetes, heart ailments and more. The young and their mentors in this country are going to be very concerned about pre-emptive healthcare. Companies that offer the otherwise bitter pill of health coated with the sugar coating of “good taste” will win. Taste comes first to the Indian. Everything else later.

Even health. And that is an insight to remember in this exercise as the company enters the space of being a more broad-spectrum food and beverages company. GSK needs to tread softly. While embarking on this shift, the mother brand equity of Horlicks needs to be preserved. The company needs to do all this without resorting to the temptation of brand extension. While brand extensions make eminent financial sense, it is not a wise thing to do with a brand like Horlicks. It is important for companies to understand one basic fact of the Indian market. Taste comes first. Health comes later. Brands that understand this do well.

Harish Bijoor is a business strategy expert and CEO of Harish Bijoor Consults Inc. Mail your questions to cat.a.lyst@thehindu.co.in

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