Sunday, January 30, 2011

The mom & pop fight back!!

In 2001, Alex Marshall wrote a book called How Cities Work, in which he predicted the death of small retail stores:
The history of retail is one of prices getting lower in exchange for fewer and fewer steps between producer and consumer. The end result of this may be all of us going to one huge store located in some midpoint of the country, say Kansas City.

It seems to be the case with more and more music and books being picked up online and with the increasing foot print of the few big retailers - the change has been very pronounced in the last 5 years, however, the traditional independent retailer is not hanging up his boots without a fight, in fact they seem to be on the rebound in many of the geos, and reasons for the same are diverse, however centered around pillars of "personalized service" & "proximity".

Here are some additional write-ups on this fight-back;

Why Big Business Will Never Win Over Mom and Pop Shops

Related articles

The views of a mom - from the classic mom & pop.

Interesting to note that the work and life balance of retail outlet owners tend to be the same across the world, as do their concerns.

Brazil and its unorganized retail sector's success story!

Brazilian retailing was protected from foreign competition during the 1980s because of the high environmental turbulence in Brazil resulting from hyperinflation, recession and government policies. To survive in such an environment, companies were forced to adapt their strategies and practices to specific local conditions.

During the 1990s, however, the Brazilian retailing environment changed substantially. Economic stabilization and the lowering of tariffs reduced entry barriers stimulating foreign competitors to enter. Such changes happened at the same time the world retailing industry was moving towards concentration and internationalization.

A market of 182 million people whose economy is recovering and average disposable income is on the rise, is attracting the interest of foreign retailers.

Since its market entry in 1994, Wal-Mart has had a steep learning curve in Brazil. In the early years it was ridiculed for selling golf kits in superstores located in low-income areas. In the past three years, however, it has rapidly become Brazil’s third largest retailer.

Read more here;

Saturday, January 29, 2011

Private labels - pricing advantage.

One of the strengths of private labels is of course that they are cheaper, on average 31% less than manufacturer brands. Emerging markets showed the biggest discount, with PL-goods costing 41% less on average. Europe wasn't lagging in this respect either, with an average price difference of -37%. On a country level, Greece, Australia, and Germany were taking the lead with, respectively, -48%, -47%, and -46% discounts (compared to manufacturer brands).

Data chart: Price differential of private label by category (source: ACNielsen, 2005)

Again, concentrating on food-categories, the products that received the biggest discounts were Sports Energy Drinks (-55%), carbonated beverages (-43%), cereals (-40%), wine (-38%), and tea (-37%). Food-categories taking the least in discounts, included chewing gum (+7%), wet soup (no difference), meat (-2%), and ready meals(-5% <- I guess that explains their high market-share).

Private label in various categories.

Category-wise, refrigerated foods have the largest overall share of private labels, namely 32%. Complete ready meals take the lead here, with an average of 47% private label-share. In the UK, 97% of ready-meal sales are in fact private label. Another significant private label food, or rather drink, was milk, of which private labels make up 43% of sales.

Data table ; Value shares of private label by category (source: ACNielsen, 2005)

Other high private label food-products include frozen meat (39%), fish (39%), andvegetables (38%), and 37% for shelved vegetables. Frozen pizza is at number 27, with 17%, tea and coffee at numbers 37 and 38, with 14% and 13% respectively. Wine is at number 44, with 12%. And Beer is all the way at the bottom, at number 74 with 3% !

Among the fastest growing foods are drinking yoghurt (28% growth), baby food(20%), chocolate (13%), and water (13%).

The growth in Private Label market share.

According to this vintage ACNielsen report (download the pdf report), the global market-share for private brands was 17% in 2005 (* global meaning 38 countries and 80 categories), and had grown 6% that year.

Figure 1: Share & growth rates of private label by region (based on value sales) (source: ACNielsen, 2005)

Europe has the largest market-share with 23%, and Latin America the smallest, with 2%. Top countries included Switzerland, with 45%, Germany, with 30%, and the UK, with 28%. The largest Private Label growth happened, unsurprisingly, in emerging markets (11%) like Croatia (77%), Greece (24%), and Thailand (18%).

One big growth-contributor in Europe is the strong growth of hard discounters, such as Aldi or Lidl (both German chains), who are present in every European country and expanding rapidly. With Aldi, for instance, private labels make up 95% of sales.

In the emerging market like India, the impact is a lot lower at the moment due to the limited market share of modern trade, however, the trend is catching on in India as well.

Friday, January 28, 2011

Recessionary dynamics boost private label soft drink sales

This is a rather old article, however, its relevance is high keeping in mind the trend of "private labels" that we have been closely following on over the last few days. While some of the brand owners are almost dismissive of the impact of private labels in emerging retail markets, the trend can not be ignored. The concern that national brands need to have is highlighted by the fact that sales of private label soft drinks are accelerating as consumers go out less and therefore drink more at home, according to a new report.

With less excess cash to spend people are going out to fewer bars and restaurants, where branded drinks dominate the menus. Instead, Canadean said they are drinking at home which means spending more on soft drinks at the supermarket where private label alternatives line the shelves.

Grocery shopping trends in US.

Example of an American grocery store aisle.Image via Wikipedia
There’s new consumer research that may dispel the oft-stated notion that people don’t like to shop for groceries. A new Nielsen report finds that the majority of U.S. consumers (53%) really enjoy or like grocery shopping and nearly one of every five of these consumers regularly browse the entire store when shopping.

Nearly four of every ten shoppers (38%) told Nielsen that they think grocery shopping is a chore, but not a difficult one. These consumers know which parts of the store have the items they want. Planning is key with a large percentage of U.S. households using shopping lists (58%), store circulars (47%) or coupons (37%) and comparing prices (50%) on most grocery store trips.

The research also found that about 30% of grocery items are purchased on deal, with deal rates up nearly 11% for high-income households, nearly 10% for middle-income households and 7% for low-income households.

Only 9% of consumers purchase from end-aisle displays on most grocery trips, and three-quarters of consumers never ask for assistance in the meat or produce department.

Thursday, January 27, 2011

National Brands vs. Private Label Brands

Consumer spending see a shift in favor of "private labels"

Consumer purchasing habits are changing in today’s economy. One such shift is that consumers are moving away from national brands to private label brands. It appears that consumers will stay loyal to store brands even when the economy improves. Private Label Manufacturers Association (PLMA) and GfK Custom Research North America have been conducting ongoing research to find that "91% of respondents will keep buying store brand products after the recession ends, while only 8% say they will stop buying these products once the economy turns around." This is due to consumer perception that private label brands are just as good, or even better than, national brand products.

New-Age Shopaholics turn to the Internet for Collective Bargains!

This Content of online shopping taken from htt...Image via Wikipedia
ViziSense latest India centric data reveals that & are witnessing a huge ramp-up of users indicating a new-emerging pattern in online buying behavior.

ViziSense, India's leading online audience and ad measurement platform has revealed some interesting insights and trends around the dynamic online shopping habits of Indian consumers. The data reveals a sporadic growth in the number of shoppers who prefer new-age ecommerce formats during September. and have displayed great popularity over the past few months, attracting more than 10 lakh users each in September. With this surge in traffic, both these sites have quickly moved into the ViziSense top 200 Indian websites.

The consistent growth in traffic on these new e-commerce formats (collective buying, group discounts, private clubs) indicate consumer preference over conventional e-commerce juggernauts like ebay and amazon and the local ecommerce giant infibeam, which continue to show a consistent pattern of jumps and dips indicating seasonality and other related trends over the past few months.

Interestingly, these new sites have smartly gained considerable traction by leveraging the social media sites effectively. One can see these sites creating a great buzz on sites like Facebook and Orkut by way of unique campaigns or trial-inducing applications.

Read the full report here.

5 things that the Organized retailers can learn from Kirana and vice-versa

Here is a good and an insightful post that we came across at Retail Rise by Bhanu.
"It's a world of cut throat competition and more of often than not it results in a very narrow view of the world for most of the companies. As the objective is focused on beating the competitors, benchmarking studies starts replacing consumer studies. The situation worsen if your view of competition is limited to only company X or Y.

Talking about retail, why can't the retail biggies learn something from the Kirana format? In fact the stores that have learnt a few things(like Big Bazaar) are a lot more successful than the copy-paste versions of western formats.

Here are my views on this:

Things that Modern format stores need to learn from kirana stores:

Consumers Don’t Strongly Identify with Brands

The pain felt by the national brands on account of "Private Labels", while in its early stages in India, has been profound in the mature / modern trade dependent markets.

To make matters worse the recent Neilsen study reports that Although consumer demand for quality brands and products remains strong, consumers generally do not strongly identify with brands, according to interviews conducted by consumer insights firm Among other findings from field interviews with global consumers are that consumers do not think brands love them, many consumers think loving a brand is strange, most consumers cannot name the brand of their cell phone, and consumers generally hate brands which engage in practices such as using child or cheap foreign labor.

Wednesday, January 26, 2011

The future of impact of "private labels"

Private label describes products manufactured for sale under a specific retailer‘s brand. They are often designed to compete against branded products, offering customers a cheaper alternative to national brands. Though the public generally used to see them as low-cost imitations of branded products, private labels have overcome this reputation and achieved significant growth in recent years. The most commonly known private label goods are the “store brands” sold by food retailers, though this is just one example of many. Department stores, electronics stores, and office supply retailers all offer private label products or services.

Private labels offer several benefits to both retailers and customers, driving the segment's rising popularity. For retailers, margins on private label goods are an average of 10% higher than those on similar branded products. Customers benefit from private labels' lower prices, which are often significantly less than those of national brands. This combination, while beneficial to retailers and consumers, can put substantial pressure on the manufacturers of branded goods, who have to compete against their own customers (the retailers) for market share.

Read more on the impact and who will loose out and who will gain here.

Impact of organized retailing on our economy

Here is a another insightful article by Retail Rise Team.

""While there is a lot of debate going on the impact of organized retailing on unorganized sector, there is little we know of how it will impact our economy in general. Common sense says that perhaps it will help the economy (every better looking thing is good for the economy..swanky Call centers that brought outsourcing to us helped in fueling the feel good factor.. same is for IT/BT similar should be the case with these retailers)

Surprisingly there are not enough reasons to contest this belief. No matter what communists say or Mayawati does in UP, or what short term glitches we witness on Sensex or in US economy, organized retailing is here to stay and grow at a breathtaking place.

read the full article here

Where is the organized trade focusing?

F&G (FMCG but restricted to F&G) and CDIT categories are expected to see significant growth within the organized retail sector in India as per a recent Technopak report.

Tuesday, January 25, 2011

A More Evolved Consumer, at the Upper Income Strata

Following info-graphic is as per a recent study by Technopak on the "Evolving Indian Consumer" and the consumer’s evolution with regards retail behavior over time, esp at the upper Income strata. At AaramShop we believe that this maturity indicates towards a trends where-in the shopping of essentials would move on-line subject to the eco-system being supportive.

Private Labels and their increasing importance for Indian retailers

Came across this comprehensive and well written article about private labels, their importance, a comparison of global and Indian scenario and the trend that we are likely to see in India. Private label products are typically manufactured or provided by one company for offer under another company's brand. In retail world it usually means a manufacturer (which can be the retailer itself) making products exclusively for a retailer, which are to be sold under retailer’s own brand name.

Indian Palate: Changing Food Habits & Consumer Behavior

Following info-graphic is as per a recent study by Technopak on the "Evolving Indian Consumer" and the consumer’s needs from processed food.

Monday, January 24, 2011

India consumer spends

The three product categories which would be available on AaramShop are ranked as under in terms of overall spends.

In the healthcare category, on the OTC products and that too a few restricted sub-categories would be available.

Private labels seeing strong growth in popularity

Big BazaarImage via Wikipedia
If you need it, here is the latest proof of the rising popularity of big retailers’ own brands: private labels accounted for almost 6% of total modern trade sales in urban India in the year to September last, says The Nielsen Company.

Private labels, or retailers’ in-house brands, such as Tasty Treat breakfast cereals, Clean Home household products and Sudz detergent contributed 5.7% to the total sales of retail chains such as Big Bazaar, Spencers and Reliance Fresh between October 2009 and September 2010, according to the latest Nielsen Shopper Trend study.

“Private labels are offering the product at comparatively lower price without compromising on quality and that prompts the shoppers to buy private label brands,” says The Nielsen Company director (retailer services) Siddharthan Sundaram.

E-Mail, Search and Social Networking Top the Charts for Indian Women

ViziSense custom report reveals online behavior of Indian women

  • North Indian women are more active on social networking sites as compared to their counterparts in South India.
  • Women spend more time on Social Networking as compared to E-Mail; Social Networking sees high usage from women between the ages of 15 - 24 years
  • Maximum women are checking E-Mail between 11AM - 12PM everyday
Read the full report here

"Social Networking getting more Page Views than E-Mail categories is a great insight indicating the shift of Email conversations to Social Networking sites in form of internal messages, chats and wall postings. The findings in this report are based on the actual behavior of a sample of 2,200 women panelists that form part of the ViziSense India panel, which makes it unique and extremely fascinating.", said Amit Bhartiya, GM - ViziSense.

Thursday, January 6, 2011

An update on the launch date of Aaram Shop

We do not have a finalized date as yet. Various aspects of Aaram Shop are being beta tested at the moment and we are ironing out all issues to ensure ease of usage all around.

Needless to add, we are not putting too much of pressure on ourself - afterall life needs a little aaram. Please await for the announcements on the more detailed roll-out schedule and coverage updates. Please subscribe to Aaram Shop Pro updates so that you can be upto speed on the developments.

AaramShop beta rollout will commence in the NCR region and will be open to residents of specific localities. To receive an invitation to beta test the AaramShop, please log-in to AaramShop and request for an invite.

Wednesday, January 5, 2011

Indian Consumer's Share of Wallet.

Below is the evolving Share of Wallet of the Indian Consumer.

Changing consumer behavior is catalyzing change in spending patterns, freeing up income for discretionary expenditure. Interesting to see the spends on Food and Grocery is expected to dip a little but it still commands about 35% of the spends as of now.

Technopak sees organised retail growing 30% this year

Little dated but relevant;
(click on the picture or here to see the video report)

Tuesday, January 4, 2011

Rates, bills dampen Christmas Retail down-under.

MELBOURNE, AUSTRALIA - DECEMBER 16:  Christmas...Image by Getty Images via @daylife
Interest rates, rising utility bills and even the weather have been blamed for sluggish Christmas sales.  

Retail sales nationally are down on forecasts, and most retailers are doing worse than this time last year, reports AAP.

In Victoria the cash registers are tracking better than the national average, but only just.

Australian Retailers Association (ARA) executive director Russell Zimmerman said Victorian retailers were hoping for a last-minute shopping bonanza to ring up the $9.7 billion in Christmas sales predicted earlier in the year.

Asia’s hip new consumers...

A composite image of icons of Kuala Lumpur and...Image via Wikipedia
Meet Meimei and her cousin Mei Lyn: they represent a sophisticated new Chinese retail consumer...

Meimei is a typical late 20-something Shanghai woman. She’s one of the new generation of consumers growing at an unprecedented pace in a nation with a 30 year average annual economic growth rate nudging 10 per cent.

Meimei is, for the purposes of this article, a composite of consumer profiles described by no less than five presenters on the Westfield Asian Express Retail Study Tour - presenters experienced in market conditions throughout the Asian continent, presenters based in Shanghai, Singapore, Kuala Lumpur and Hong Kong.

Meimei and her friends are getting richer faster than consumers in any other part of the world - and certainly faster than her parents, and their parents, who can now but marvel at the freedom and choice Meimei’s generation has in 2010. 

Shanghai’s new retail temple

It’s without question the best shopping mall in China - yet it isn’t complete.  

IFC Mall in Pudong, the city’s financial district across the river from downtown Shanghai, has just been named the International Council of Shopping Centres’ best shopping centre in Asia.

With name tenants already trading, IFC Mall in Pudong lifts the bar (at last) for shopping centre design in China.

It’s grand, luxurious, functional and welcoming. It is home to end luxury brands such as Cartier, Prada, Gucci, Chanel, Hermes, Tiffany, Dunhill, Louis Vuitton, Burberry, Bulgari, Ermenegildo Zegna, Salvatore Ferragamo, Giorgio Armani and and Dolce & Gabbana - along with burgeoning lifestyle brands from home and abroad including Nike, New Balance and Apple.

SHENZHEN, CHINA - OCTOBER 14:  The Household C...Image by Getty Images via @daylife
Car sharing, being kind and being green will be on trend in 2011 while warp-speed development of smart technology will continue to transform our lives.

It's kind of hippie-meet-hi-tech, writes Chi Tranter of AAP

Meat is also predicted to make a comeback as people eschew fad diets, smartphone s will have more apps aimed at selling products and online culture will have a crossover influence to offline.

Those are the predictions for next year of futurist David McKinna and the researchers behind the trend-spotting website, who spend a lot of time analysing fads, fashions and consumer trends.

2011 CPG prediction

LONDON, ENGLAND - NOVEMBER 02:  A young boy lo...Image by Getty Images via @daylife
Mintel, known for market and consumer intelligence, has predicted the worldwide consumer packaged goods (CPG) trends set to make an impact in 2011.

“These annual predictions represent continuations of current big-picture trends, rather than major changes in the marketplace and what companies are doing,” notes Lynn Dornblaser, director of innovation and insight at Mintel. “Understanding the major trend areas and how they change from year to year is essential for companies to be successful when developing and launching new products.”

Read more here.

Monday, January 3, 2011

Google Product Search Bridges Online-to-Offline Shopping

Image representing NearbyNow as depicted in Cr...Image via CrunchBase
Google has been telling anyone that will listen just how bullish it is on local/mobile commerce, and it has backed the bombast with a series of initiatives (Places, Place Search and Tags just to name three recent, relevant examples) to aggressively court SMBs and better connect with consumers at a neighborhood level. The latest is the formal rollout of Google Product Search, which will provide searchable and categorizable online product inventory for local branches of more than 70 retailers.
Product Search extends what began in March with the beta trial of Blue Dots, which charted product stock at selected retailers. Now several additional sellers are joining the program, including Best Buy and Williams-Sonoma.
Google joins a host of companies trying to connect online product search to offline purchase, including Milo, Krillion, ShopLocal and NearbyNow. But the Mountain View, California, search giant isn’t worried about the numbers game. Its focus lies on two other numbers:
1) The U.S. online-research-to-offline-buying market is estimated at $917 billion in 2010, swelling to $1 trillion next year. It accounts for the lion’s share of spending, with online e-commerce spending commanding only 7 percent of total U.S. sales.
2) Of the 93 percent of retail purchases occurring in-store, almost half are driven by online research.
Related articles