The ongoing financial crisis in the world has resulted in a slowdown in the retail market in India. Though India did not face a full blown recession, the modern retailers are clearly in its grip and very few retailers will escape unscathed. Here are our 10 to improve performance and increase efficiency in a difficult marketplace.
1. Take higher margins in less price-sensitive categories – Items that have higher price sensitivity include those with frequent purchase cycles. Whereas items that have high unit prices, longer purchase cycles have comparatively lower price sensitivity.
2. Tie discounts to large or frequent trips – Promotions have to be offered in such a way that they promote frequent purchase visits. Rather than offering flat discount on product categories, retailers can consider offering attractive prices to shoppers with a specific purchase.
3. Maintain competitive pricing in most frequently-shopped categories – Shoppers can recognise a high price on the products they frequently purchase. To give the appearance of low prices and create loyalty, retailers need to keep high-velocity items priced competitively, even if prices are subsidised by less price-sensitive items.
4. Expand beyond your channel’s traditional product mix – This practice will not only help to increase sales and space productivity but will also provide an opportunity to serve diverse needs of the existing as well as new customer base. For example, grocers can take higher margins on “non-grocery” items, since shoppers buying electronics or clothes in supermarkets are looking for convenience and fewer trips and not always the lowest prices.
5. Disguise store brands – Rather than restricting to the traditional, generic, and me-too copycat store brands, retailers should now become savvier and develop premium, multi-tiered store brands that provide something extra ranging from quality to packaging to promotion.
6. Make a good impression on new shoppers – It should be ensured that store environment, product assortment along with service standards are dedicated to ensure wonderful shopping experience. Maintaining high standards in customer service, and treating every shopper like it’s their first time in the stores should be prioritised.
7. Get shoppers to try private label products – Focus on trial small pack size, featuring one private label product each week with a free unit to shoppers spending particular amount and consider product comparison/demonstrations in the store.
8. Develop trigger based marketing communications – New and innovative solutions in marketing communications must be invented to answer the current market slump. The communication program should be modified according to the changing market trends.
9. Keep a close eye on competition – It is very important to keep an eye on competitor’s actions, so that any possible changes to their overall proposition, pricing, products or promotion can be countered at the earliest.
10. Maintain unique value proposition – Don’t just focus on discounting – add value. In the current economic conditions the term “value” also includes the “experience” and the “extra” that customers receive while shopping.
This will not only enhance the current positioning but will also facilitate to bounce back with loyal customers when the market gets back on the growth trajectory.
For a detailed version of the article, please read IMAGES Retail magazine’s July 2009 issue.