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Retailers formatting their way to success

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The concept of retail began with the evolution of human civilisation. It started with barter system and took the form of commodities being sold over the counter. However, over the last 100 years as modern retail came into being, different formats of retail got developed and new ways were found to make retail as convenient and efficient as possible for retailers and consumers alike.

The modern age has seen a complete 360 degree in the way retail is conducted, the way retailers treat consumers whose lifestyles are continuously evolving, and who are becoming more demanding and selective in terms of products as well as services. Retailers are bowing to the shift, fine-tuning their existing formats to serve consumers better.

The result – Indian consumers today have a variety of formats that serve them, from hypermarkets and department stores to exclusive brand outlets, kiosks and shop-in-shops to name a few. All these formats vary in terms of size, location, assortment, prices, types of merchandise and the level of customer service offered, and these concepts sometimes do more for a brand than simply improve the customer experience. New store formats can help retailers build buzz around their businesses and test out new ideas.

Different Store Formats

Various retail formats co-exist in India to match ever-increasing consumer needs:

EXCLUSIVE BRAND OUTLETS (EBOS): Exclusive Brand Outlets are retail outlets that sell merchandise exclusively of one brand, normally having the store name as the brand name itself. They are located either on high-streets or within malls. Products are priced at full-price except during the clearance sale period.

They offer extensive and complete range of products ensuring enhanced brand visibility.

“EBOs assist a customer to develop a connect with the brand, something s/he will associate with the brand,” states Rajinder Mattoo, Head – Sales and Business Development, Vajor.

“They give the brand a distinct identity. Merging with MBOs or departmental category formats can rob the brand of its exclusivity which the brand is trying to showcase in line with the needs of the community,” he adds.

One of the major advantages that an EBO offers to a brand is that it can get direct feedback,accurately and promptly from its customers, leading to better product innovation and higher sales in the long run.

DEPARTMENT STORES: Department Stores are large stores ranging from 15,000 to 1,00,000 sq.ft. that sell a wide variety and deep assortment of merchandise ranging from apparel, cosmetics, toys to footwear, jewellery, furniture and household goods. These stores are sectioned into separate departments such as kidswear, ladieswear, menswear and toys and so on, with each section attended to by a separate set of trained and knowledgeable sales staff.

The industry is currently witnessing rapid change in trends, customer preferences and disposable income. Today, customers know more and hence, want more. Therefore, large format department stores are contributing to the overall growth by providing discerning consumers with a better selection of brands, latest trends and fresh fashion.

“Being a multi-brand format department store enables us to offer fresh fashion with a wide variety of national and international brands and trends across categories,” says Vasanth Kumar, Managing Director – Lifestyle International Pvt. Ltd.

“This format allows us to provide consumers with the power of choice. With fashion consumption increasing across markets, our stores ensure that consumers have a memorable retail experience with fashion discovery at their fingertips,” he explains further.

Department stores give brands exclusive spaces in the store to display their merchandise separately. Higher quality, selective merchandise, higher levels of service, smart displays of merchandise and store fronts represent the basic components of a department store.

“At department stores, multiple categories of products are provided under various brands, all at a price that is easy on the pocket but high on quality. This eases the purchasing procedure for the customer as they get various options to choose and weigh down upon,” says Sharad Venkta, MD and CEO, Toonz Retail.

Apart from this, by developing unique, private label merchandise, the retailer can generate a huge pull on the customer, and its competitive pricing can give the retailer better profit margins.
Most department stores these days have separate sections such as optical, luggage, cosmetic brands, health & fitness, apparel brands and jewellery brands etc, that are located in-store but are leased out to separate companies at fixed rentals or on profit sharing basis called shop-in shops.

HYPERMARKETS: A hypermarket is a very large retail store offering a massive range of products at low prices. It is a combination of a discount store and a supermarket. The size of hypermarket varies between 50,000 to 1,50,000 sq.ft.
They carry a wide variety of food as well as non-food items such as fresh produce, groceries, apparel, consumer durables, electrical equipment, home improvement etc, and generally, the store layout is designed like a warehouse.

Hypermarkets work on the principle of providing their customer a one-stop shopping experience.

Some examples of some of the best known Hypermarkets in India are Spar, Trent and Spencer’s to name a few.

SUPERMARKETS: A conventional supermarket is a self-service store of size 5,000 to 15,000 sq.ft, offering mainly food items like groceries, fresh & frozen produce along with non-food items like toiletries, household articles, health & beauty products, stationery and gift items.

They are generally located close to residential localities in local shopping centres where consumers can walk down or
drive over for a quick purchase. Supermarket chains offer in-store promotions and schemes that attract footfalls. They purchase in bulk and are able to negotiate competitive prices from the manufacturers and traders, which in turn they are able to pass on to their customers.

Features of Super Markets
– Supermarkets operate on a large scale basis and are the self-service kind of stores which may be entirely operated by the owner or may lease some of the departments on concessional rates.
– These stores are usually located in prime shopping locations where facilities for the parking are available.
– The key hallmarks of supermarkets are the availability of a variety of merchandise and branded products, affordable prices and availability of parking facility.
– Some examples of Supermarkets in India are Ratnadeep, Magsons, Miraj Supermarket, N Supermarket, Parivar Supermarket.

KIOSKS: With the opening of a large number of malls and multiplexes in India, this retail format is increasingly gaining popularity with both retailers and customers. Kiosks are generally 100 sq.ft. in size or smaller, have niche offerings and are positioned strategically in mall pathways, aisle spaces or located centrally in the malls atrium.

“Kiosks are an asset light format, enabling brands to offer quality products at aggressively competitive prices,” explains Aharnish Mishra, Founder & CEO, Bizibean Café.

Continuing on the same lines, Prabhash Sharma, Senior Manager – Retail, EBO & E-Commerce, Revlon says, “Financially, this format has an edge over other formats and as colour cosmetics is an impulse buying category, we are able to address a wider audience when we are in the atrium.”

For the real estate developer, kiosks mean additional revenue, as they provide the developer with an opportunity to utilise every inch of available space in the mall, to gain some additional revenue.

Kiosks also give the retailer a cost-effective opportunity to retail in a world-class environment with ready footfalls – an option that is cheaper in rental and one that allows flexibility – since a kiosk space can be rented for a limited period, sometimes even a day or two going up to a year.

POP-UPS: This store format is almost the complete opposite of the flagship store. Pop Ups are stores that come up in malls or high streets for a short time-frame – which can range between just a few days and up to a year.

Core Features of Pop Up Stores
– They present many products in a small space
– Set Up costs are completely minimal
– A high sales volume is usually expected

“The pop-up stores gives us the opportunity to converse with our buyers, present products in person, allowing consumers to discover products as complete collections, and to try them before purchasing. It is an experiment for us to see how people react to our products and get real time feedback,” states Priyanka Gill – Founder & CEO, Luxeva Ltd. (POPxo, Plixxo & Luxeva).

SPECIALTY STORES: This is a retail chain-store format which is dominant in its product category. This type of store generally offers an extensive selection of merchandise at prices so low that smaller stores cannot compete. These stores are larger in physical space and try to ‘own’ the category of merchandise they sell. In India, brands like Chumbak, GO Sport, Decathalon, Food Bazaar are prime examples of Specialty Stores.

Internationally, Lululemon– specialised yoga-wear store – is a great example of a specialty store.

CONVENIENCE STORES: A convenience store is a retail outlet that sells a limited range of prepared and ready-to-eat foods, bottled and fountain beverages, household staples, tobacco products and periodicals. Convenience stores are typically small in size, are open extended hours.

These stores usually charge significantly higher prices than conventional grocery stores or supermarkets, as these stores order smaller quantities of inventory at higher per-unit prices from wholesalers.

Convenience store like 24-Seven offer Indian consumers a completely international shopping experience with a wide range of products from ready-to-eat food, beverages, groceries provisions, various convenient services and a lot more 24 hours a day, seven days a week.

VALUE FORMAT: Value retailing is a big format store concept, where branded products and accessories are sold under best deals. This concept is mainly planned mainly for Tier II and III cities with the promotion of mega savings offer.

Indian consumers in Tier II and beyond are aspirational but value-conscious at the same time. New-age consumers, especially the youth, are experimenting with their choices keeping a vigilant eye on the prices of the products.

“The USP of value format stores is a price-value equation that puts customers first, and consistently delivers or exceeds their expectations on both quality and price,” says Lalit Agarwal, Chairman and Managing Director, V-Mart Retail.

Multi-Format Retailing

Some retailers prefer having presence in different retail formats to target consumers at different stages of their buyer’s journey and leverage the power of different mediums.

“Since we enjoy pan-India presence of both multi-brand store presence and exclusive brand outlets, it helps the customer establish a relationship with the brand by helping them understand and appreciate the product while increasing brand recall and reinforcing positive customer behavior,” say Shivani Poddar and Tanvi Malik, Co- Founders & CEOs, Faballey.

“We first forayed into the offline retail space with LFS (Large Format Stores) as it served as a litmus test for the offline market with minimum capital expenditure. Post a great response in this format, we saw it fit to spread our wings and venture into an EBO format so as to give more personalised service to the customers,” they add.

Which Store Format Suits The Needs Of Indian Consumers?

India has an extremely heterogeneous population in terms of socio-economics and culture, there is no one mold in which all Indian consumers can fit. Indians buy things that fit into their lifestyle

“Considering the lifestyle and mindset of the modern consumers, they are looking for more customized and tech-led shopping experience. The same can be facilitated more via the EBO format rather than the other retail formats,” say Shivani Poddar and Tanvi Malik.

“Stores which cater to a customer’s exclusivity are the way to go today. Customers today want the brands to customise according to the needs of the buyer. All those formats which are able to identify their needs and deliver them quickly within their product or services are borne to succeed,” adds Mattoo.

Experiential stores provide a different environment to the customers which isn’t much available in India right now. Not a lot of stores are product, content and design driven which is ‘new and needed’.

Emerging Retail Formats

Retail is moving towards becoming Omnichannel – a format which provides customers a seamless shopping experience that is simple, hassle-free and personalised. This retail format identifies and removes all friction from the shopping journey of customers while redefining their retail experience with a frictionless journey from discovery to purchase.

“A true Omnichannel retail format provides a hassle-free, unique shopping experience to customers,” states Kumar.

“The way ahead is definitely an Omnichannel store format. This format will enjoy single view feature for inventory, both online and offline where the customer can checkout the product availability and order online or offline and get the same experience across all channels,” add Shivani Poddar and Tanvi Malik.

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