Monday, November 29, 2010

Enhance Customer Loyalty at the Final moment of truth

Store is the final frontier where products are given equal opportunities to see, evaluate and choose the brand.

Brands can be made or broken in these last few minutes of life span a shopper will give to your brand. It is then highly imperative for the brands to make best use of these last few minutes and ensure that the customers stay loyal.

Kirthi S Subramanian suggests 3 basic strategies, Retailers and CPG companies can look at to enhance customer loyalty;

1. Know (Insights into shopper and merchandize activity, shopper insights)
2. Inform (Shopper engagement)
3. Engage (Shopper marketing, mobile marketing)

"Enough already!" - Too much variety, too much data but no insight.

Consumers aren’t the only ones that may suffer from “item variety overload.” Grocery category managers and IT executives are straining under the weight of all the data that this “variety” is causing.

The future of FMCG

Fast moving consumer goods will become a Rs 400,000-crore industry by 2020. A Booz & Company study finds out the trends that will shape its future. Read the full report here. Following was one of the key take outs from the report and worth quoting here as under;

Accelerating ‘premiumisation’
The rising income of Indian consumers has accelerated the trend towards ‘premiumisation’ or up-trading. The trend can be observed prominently in the top two income groups — the rich with annual income exceeding Rs 10 lakh, and the upper middle class with annual income ranging between Rs 5 lakh and Rs 10 lakh. The reports says, the rich are willing to spend on premium products for their ‘emotional value’ and ‘exclusive feel’, and their behaviour is close to consumers in developed economies. They are well-informed about various product options, and want to buy products which suit their style. The upper middle class wants to emulate the rich and up-trade towards higher-priced products which offer greater functional benefits and experience compared to products for mass consumption.

While these two income groups account for only 3 per cent of the population, the report estimates that by 2020 their numbers will double to 7 per cent of the total population. The rich will grow to approximately 30 million in 2020, which is more than the total population of Sweden, Norway and Finland put together. Similarly, the upper middle segment will be a population of about 70 million in 2020, which is more than the population of the UK.
Over the next ten years, these groups will constitute large enough numbers to merit a dedicated strategy by FMCG companies. “We have seen companies focused on selling primarily to the mid segments. Often, there is no clear segmentation being offered. Players will do well to clearly separate their offerings for the upper and mid segments,” says Malhotra and adds that the two should be treated as separate businesses with a dedicated team and strategy for each.


Understanding shopper behaviour is increasingly becoming the difference between success and failure in a rapidly changing world. In fact, companies who make this effort successfully, show a growth that is 25 – 50% more than their competitors in the same category (2008 Deloitte study).
But how do companies navigate this tricky landscape which probably has more variables than the best marketer can imagine? How does one deconstruct the mind of the shopper?
Unplanned Buying at Traditional Retail in India is a research study that tests the oft quoted and blindly followed ‘70% of all purchase decisions are made at the point of purchase’ tenet.
The report is based on a study of over 2500 shoppers across 200 traditional retail outlets in India. It conclusively proves that the 70% rule is not valid in this format in India. It draws out a number of findings that offer a better understanding of traditional retail in India and also explain why the incidence of unplanned buying is significantly different.
Not just a factual document, the study report goes on to interpret the implications of the insights and suggests a potential roadmap that can be followed. Special sections on Shopper Marketing at retail with a special focus on the Indian context offer a view on this rapidly emerging branch of marketing.
The report is useful for brands, retailers, agencies, designers and any other enthusiast of shopper behaviour who seek insights into this relatively unexplored field.

Sunday, November 28, 2010

Mom & pop stores shall rule 84% of retail till ’13

Allaying fears of mom & pop store owners, a study by the Indian Council for Research on International Economic Relations (Icrier) has found that the unorganised sector will retain around 84% of the retail market till the year 2013.
The share of the unorganised sector will come down with the advent of large-format stores, but any negative impact will wear off with time, the think tank has indicated in the largest study so far on retail sector in India.
Read the full report here.

Saturday, November 27, 2010

Traditional Trade Shopper Insights

Only 5% of the shoppers who had made impulse purchases on that day (self-reported and validated by our observation) say that they indulged in impulse purchases in general is the insight of a research conducted by Insightinstore.

From a brand manager's perspective, who spends a lot of monies in creating the awareness and the desire, this might be the way to go.

Read & download the full report here

Thursday, November 25, 2010

Why Packaged-Goods Players Are Bullish on E-Commerce

Marketers Hope to Regain Touch Ceded to Retailers and 'Lost' With End Consumer

By number of shoppers and sales, packaged-goods e-commerce remains decidedly tiny. But Amazon's acquisition Nov. 8 of Quidsi-owner of, and the newer for a reported $545 million in cash and debt has given the space some big-money validation. It also reflects outsize interest in the channel by packaged-goods marketers, dozens of which have opened their own e-stores or increased focus and spending on e-commerce in the past year.
"This is an emerging trend for branded manufacturers in particular because they believe, rightfully so, that they've lost touch with their end customer, kind of ceded that to the retailer," said Pat Conroy, vice chairman and U.S. consumer products leader of Deloitte.
The same desire to overcome or manage the separation of CPG brands from their end consumers is fueling interest in the other fastest-growing areas of marketing outlays-shopper and social-media marketing. Indeed, e-commerce, shopper, search and social-media marketing increasingly are fused in many programs, such as Procter & Gamble Co.'s move in September to open e-commerce for several brands via its Pampers Facebook fan page with fulfillment of orders from
Read the full article here.

What's Hot for This Retail Season

Smart retailers will be layering plenty of digital and social media into this year's holiday campaigns, as they should. Major retailers now boast hundreds of thousands -- if not millions -- of likes on Facebook; one-third of consumers never leave home without their smartphone; Read the full article here.

Indian Traditional Retail (Local Kirana) in the Age of Wal Mart

Read the full article here

However, what is remarkable is what Rakesh says in the following section;

Retail in India - Status Check

According to the report, "Retail in India: Getting Organized to Drive Growth," by global consultant A.T. Kearney and the CII, India's retail industry is growing with a 5% compounded annual growth rate (CAGR) and has $ 320 billion in annual revenue. Interestingly, Wal-Mart's $ 315.6 billion in global sales last year is about the same size of the whole Indian retail industry.

Organized retail in India which stands at around 3% of the total retail is showing signs of bigger and better growth of around 30% CAGR.
Source: CEIC, CSO, AC Nielsen, Morgan Stanley Research (FY 2010 and FY 2015 are estimated figures)
(PFCE - Private Final Consumption Expenditure)

He also goes on to say "Sustainable business model for the organized players must include collaboration instead of competition with these kiranas, as they are the last mile store connection with the consuming class. Age-old strategy of the kiranas for short-term credits is well-received by the large chunk of buyers, in the value retail segment. A blended model is all set to emerge in the fast-changing business environment."

Every Day Low Price (EDLP) most prevailing strategy of large formats is again cause of worry. This has also given the kiranas a shot in the arm, in terms of improving their own image. The kiranas are getting more organized coupled with more customer friendly environment.

Local Kirana is here to stay for ever, in its new avatar!

India features at the 3rd position.

The 2010 Global Retail Development Index of AT Kearney, India is featured at the 3rd position. 

China & India remain the leading markets which offer opportunities for expansion of retail, and as per the report they will be for "decades to come"

Sunday, November 7, 2010

The Presidential visit & my visit to Croma.

Two interesting things happened today as we create this blog - and thankfully completely unrelated (or are they);

1. President Obama mentioned in his speeches that India needed to open up and give opportunities to American companies to operate in India and the NDTV reporter impatiently equated that reference to retail and again stated the fact that the entry of the retail giants is going to mean the end of "mom & pop" stores.

2. My wife was planning to gift a DVD player and we walked into a Croma store to buy a SONY DVD can came out with Croma DVD - I smiled when the sales girl explained to us that "because we do not advertise we are able to give you better or same quality product for a lower value". My thoughts are with the brand manager of SONY.