How 'mouth-watering deals' help retailers & marketers attract the Indian shopper
Shoppers may be keen to sniff out mouth-watering deals at a time when a dampened economic sentiment is nudging them towards being conservative with their purse strings. But the steady headway being made by modern trade coupled with the arrival of a confident, aware and fast-evolving young consumer augurs well for smart marketers and retailers
Focus groups typically throw up great findings, once the people in them have stopped being polite. At one such series of sessions initiated by HyperCITY across Thane, Bhopal and Hyderabad in end-2011 when the economic slowdown had well and truly set in consumers were liberal in their praise for the retailer's stores. They were happy with the product basket, store ambience and service standards. It was only towards the end of a conversation that, softly, and almost shyly, that more than a few let on that the store seems to be a bit expensive.
While in many other categories and in better economic climes HyperCITY's premiumness could be worn like a crown, the sombre consumer mood coupled with his traditional sensitiveness to price at once became a steeplechase-like hurdle. "Hypermarkets have to be seen as providing value, and we are accordingly re-jigging our strategy," informs Mark Ashman, CEO, HyperCITY Retail, "without compromising on our other core strengths."
A recently released 'Shopper Trends Study' by Nielsen India which covers the top eight metros and six other cities with populations of over 20 lakh reinforces what the Indian shopper is looking for: deals. The proportion of shoppers actively seeking promotions has shot up from 54% from 39% a year ago. So, yes, saliva-inducing offers work like a charm in these times but they have to tie into the entire shopper experience. Says Suyash Chauhan, general manager, customer marketing, at Hindustan Unilever Ltd: "Deals and promotions are important elements in purchase decisions but not the only ones. Shoppers (also) derive value from the product offerings, ease of access to the brands and in-store shopping experience.
Promotions add value if all these are taken care of." Adds Rob Cissell, CEO - value formats, Reliance Retail: "The 'body language' of the key deals needs to be strong; customers appreciate shopping in an exciting environment that changes with the seasons and gives them something new to experience. At Diwali you must be 'dressed for Diwali'."
Deal-seeking is now combined with a growing preference for bulk packs to neutralise the impact of rising prices. "People understand grammage better in times of recession," says a marketer on the condition of anonymity. According to Nielsen's findings, "35% of modern trade shoppers today cite buying bulk as their response to rising food prices."
It's such shopper behaviour that is nudging retailers towards creating 'deal-weeks' as annual events that cater to a growing breed of bargain seekers throughout the year. Future group's hypermarket chain Big Bazaar and similar modern trade formats have transformed secular public holidays like the 15th of August and the 26th of January into giant sale occasions. India is a fabulous market for "upping the ante" quarter on quarter and year and year.
Deals ultimately help retailers in selling more than shoppers would have otherwise intended to buy. Says Rahul Saigal, vice president - retail, OgilvyAction India, a brand activation agency: "Retailers and brands are constantly looking to create more occasions that incentivise shoppers to trade-up." Since retailers cannot sustain a 24/7 buying euphoria among shoppers, they create properties to stimulate large-scale buying.
Example: Big Bazaar's Sabse Saste 5 Din, five days with Republic Day squeezed in between of "mega discounts and huge savings." Such shopping orgies are doubtless a great way to woo shoppers, but to stand out in the clutter of bargains on offer, marketers have to get their product and packaging mix right. Says Sumanta Datta, VP, customer & commercial for Coca-Cola India & South West Asia: "While pricing & promotions will continue to play a critical role in the context of the value-conscious Indian shopper, promoting the right brand, in the right package, in the right channel and targeting the right shopper will make all the difference to driving profitable sustainable growth."
Slowdowns will come and, hopefully, this one will go too. And in a country where the young middle class shopper with disposable income in his pocket is coming into his own along with modern trade outlets like convenience stores and supermarkets, the question marketers are grappling with is: who is the quintessential Indian shopper anyway?
Piyush Kumar Sinha, professor in retailing and marketing, and chairperson at IIM-A's Centre for Retailing, lists down some of his key characteristics: "He is younger, innovative and a risk-taker, is comfortable with technology, has a higher disposable income but a shorter attention span and a shortened and divided loyalty." Sinha believes the Indian shopper (and indeed shoppers in other developing markets) is undergoing an accelerated evolution, eager to embrace new formats and ideas.
He seeks utilitarian as well as hedonistic value, making it a tough call for the brands selling to him. The new-age shopper knows his brands and their attributes. "The newage shopper is well-informed and, thanks to the digital medium, brands can no more make claims that are not authentic", believes Satyaki Ghosh, director, consumer products division, L'Oreal. The brand currently reaches nearly 1.1 million outlets (combined across modern and traditional formats) and is looking at increasing its presence in the former. It has a three pronged strategy: a rise in the number of footfalls, ensuring there a better conversion rate and widening the basket size of the footfall. Generalisations of the Indian shopper in a diverse market where each region has its own quirks can be disastrous for marketers. Depending on where they are based, shoppers have their own preference for products, brands and stores.
For instance, in the national capital region, online retail purchases score high. And the mall culture is more prevalent in the south and the west than in the east and the north. Economic sentiment matters more for people from some backgrounds than others. Vinay Bhatia, customer care associate and VP for marketing & loyalty at Shoppers Stop, delved deep into the database of the Shoppers Stop Loyalty Club to figure if the movements of the Sensex had had an impact on shopper behaviour. Sure enough, it did but the impact was higher on Gujarati shoppers across the country. When the Sensex a crucial stock market barometer of business confidence is up, they tend to be gung-ho shoppers; however, when the benchmark index is headed southward or is listless as it is now shopping activity is muted.
The millions of mom-and-pop stores or kiranas that dot the landscape notwithstanding, Nielsen's study points towards a tipping point in modern trade. Whilst density of modern trade stores is still woefully low six stores as against 7,000 kiranas per million consumers organised retailers aren't losing sleep.
Says HyperCITY's Ashman: "I have long gone past bothering to agree or not agree on how many million customers are there I know it's a big enough number. The challenge is how to turn that potential into an opportunity." Agrees Sameer Satpathy, executive vice president and head of marketing for consumer products at Marico India: "The Indian shopper has taken to modern trade like a duck to water he is seamlessly comfortable being in a crowded bazaar as also the air-conditioned supermarket."
To be sure, Nielsen points to the arrival of the 'Crossover Shopper," one who is as much at ease in traditional formats as she is in modern ones. In calendar year 2011, modern trade grew 28% over a year ago and garnered a share of 9.2% a jump of a percentage point over a year ago.
Says Adrian Terron, executive director, retailer and shopper, Nielsen India: "A stabilisation of shoppers who spend a majority of their money within modern trade at this level indicates that this format is a part of the regular buying cycle for India's new breed of urban shoppers." Certain categories that were languishing by the way side have modern trade to thank for making it to the consideration set. Says Coke's Datta: "If you look at any emerging categories within beverages, modern trade plays a critical role in building trial for these new segments." Cases in point: the dairy, fruit juice, and energy drinks segments.
So are there any magic recipes for the new age Indian shopper? IIM-A's Sinha recommends a re-jigging of the hoariest formula in the marketing book: "While the four Ps (Product, price, promotion and place) are just the tools that need to be manifested depending on the segment and market condition, retailers may do well to remember the other Ps perseverance, persistence, patient and profits."
This article was originally published in the Economic Times dated 29th August, 2012, written by Amit Bapna, associated with the Economic Times Bureau.