Modern Trade has carved out a share of 6 to percent the overall market size, but its share in the top 55 cities is much higher at 7-17 percent. Its growth can also be gauged by the fact that it has clocked an impressive growth of 31 percent over last year to become a new driver for these cities’ economies. Today, 55 percent of packaged rice in the country is sold in consumer packs at modern stores; which is also behind sales of 47percent of liquid toilet soaps, 43 percent of floor cleaners and 40 percent of breakfast cereals. As per a Neilsen study, two out of five Modern Retail customers are ‘first time buyers. About 30-40 percent buying is impulsive due to the opportunity to have an interface with the new brands in a well merchandised store.
Currently, Modern Retail is at a consolidation stage, where most of the leading players are fine tuning their business models to improve their topline and bottomlines to expand further in tier 2 and 3 cities, which are growing and giving better returns at lower costs. Course correction is also necessary in view of the nascent stage of this industry and changes in policies of the government encouraging FDI in retail.
In such a dynamic scenario, grocers have to devise and perfect new means of generating regular income at their stores to achieve profits. Most of the time, there is little space to increase the selling prices of the skus to improve margins due to severe competition. So, we have to look at other venues such as visual merchandising for enhancing display and visibility of the merchandise, live kitchen, wet sampling, consumer feedback initiatives, innovative concept testing sessions, and new product launches.
In today’s scenario, when the Indian economy is growing consistently in spite of hiccups in most countries, it’s time to devise smart options for further growth. New concepts and product launches offer big opportunities to stores that enjoy the status of being bracketed under Modern Retail, which enjoys a captive consumer base and garners high footfalls. New brand launches can cost Rs 5 to 7 cr to start with. The new brand can be expected to be placed at the shelves of general retailers and some trial or consumer offer is usually worked out to induce customer interest Launch of new brands and concepts can happen much more effectively and at one tenth the cost in important cities and locations. Here, showcasing and field trials can happen side by side, and initial consumer feedback canbe factored immediately to fine tune the marketing and sales strategy to get the best Results.
In the 80s and 90s, many food and nonfood brands were launched successfully across the country at Modern Retail stores, which had just started to come up on a co-operate model in some cities. In fact, many of today’s leading brands have been launched through Modern Trade, for instance, Charminar basmati rice, Hello basmati, Tilda rice, Tata premium tea, Tetley tea bags, Priya Gold biscuits, and many other confectionery brands. These were launched through Super Bazar and Kendriya Bhandar in north India, and similar chains in other parts of the country.
The benefit of launching in such format modern stores is that it can give conclusive feedback about the brand, concept or product within a 6 to 8 week cycle, and can help in scaling up or down depending upon the feedback of the trial users. As it is, there are 15 percent of consumers called ‘fence sitters’ who will go for a brand if there is a good promotion at the time of launch. Repeat purchases, if duly tracked, can give an accurate feedback on the acceptability and future prospect of the product launched.
For grocers, there is a need to create a launch zone in their stores where concepts or products can be professionally placed or merchandised and launched with the support of AV and BTL activities. The brand owners would be only too glad to spend money at the stores where the cost of the launch would be just 10 percent of other alternatives. For grocers, it would benefit them by attracting more and better footfalls due to the perceived heightened activity, which would result in better overall sales.