I walked in to a Food Bazzar yesterday and was greatly impressed (not for the first time) by their most recent marketing gimmick, a recreation of a Sabzi-Mandi. The green-clad youngsters were calling out from various make-shift stalls just like hawkers do in a typical Mandi. In the past as well Future Group has displayed great insight into the Indian consumer behaviour by running the "Exchange" scheme where old clothes could be exchanged for store-credit. Later this scheme was stretched to almost every "Kabad" item.
Social Activists have reviled it and even gone on hunger strikes. Enraged masses even broke into some and ransacked the property. Industry experts have crooned in equal measure on both the ultimate opportunity it is made out to be or the horrible mistake it is. Most units in the business are either shutting out or making a loss. But somehow Retail seems to be clawing its way deeper and deeper into the country.
The economy and the viability of the business is obvious. Supply chain efficiency, the option of creating own brands (thus promising a minimum denominator of quality and benefit of price at the same time), the freedom from a having to shop in a disorganized market-place, which are unclean, inconvenient. And of-course traditional retail does not offer the satisfaction of "feeling and thus experiencing the product" that a consumer gets before actually buying it in modern trade. But the Indian market is slightly different and Retail has faced challenges. The number of footfalls, average ticket-size remained lower while losses owing to shrinkage and D&D stock-loss remained high. The traditional Indian markets (particularly fresh-foods) on the other hand had mastered the art of targeting their products beautifully apart from providing a holistic buying experience to their consumer.
Lets look at the back-end first. When fresh vegetables /fruits come to market, they go through a grading exercise at each node. Before the farm releases stocks grading occurs and multiple agents, large scale food-produce manufacturers and government agencies grade stocks and buy out. The remaining stocks are then brought to small-town mega-mandis (Raver in Maharashtra for example is India's largest market for bananas, Baran in Rajasthan boasts of being the food-grains market of reckoning). Here again fresh produce is graded, auctioned and dispatched for the cities. In the city, main mandis host further auctions every morning before dawn and the goods are bought by the wholesalers once again based on the quality and state of goods. Finally the local vendors buy out these stocks, take it door to door or smaller mandis for retail. While this process adds a lot of middle-men and their margins, since the "at-risk" stocks at each of these stages is sold away so as to ensure optimum utilization. While the freshest grades of stocks come to retail, restaurants, local ketchup, pickle and other food industries gulp up the second tier, followed by road-side eateries and so on. This process in fact explores the efficiencies far more effectively than what modern trade might offer, owing to their cost of wastage.
On the front end, local vendors often form a very close relationship with their customers. The entire process of haggling for a rupee or two, which both could let go off easily adds spice to the exercise. I have actually seen a lot of young and old vendors flirt with their customers or update them on the latest gossip. Discussions of what is good and bad with the world and other shared experiences make this a very important exercise. The vendors also find traditional ways of keeping their stocks fresh (or at least make them look fresh), apart from knowing an appropriate time for discounting.
The earlier examples of Big Bazzar's expertise show that they have started reading these signs. There latest gimmick solves a lot of problems. It makes the customers aware of the latest offers, discounts and schemes in an active manner. It also ensures that people at least have an opportunity to immediately spot what they came looking for (sometimes finding home in the maze of a zillion identical boxes and racks is one of the most difficult tasks). This is where posters, placards or banners or other inactive engagement tools leave a lot to be desired. It also ensures that active selling takes place instead of inactive selling, which means there are people actually trying to sell you stuff and would therefore be willing to tell you about the product, interact with you. A lot of us now have faced the anal and unresponsive attitude of people manning some of the stores. Most are simply rude and don't care what the customer is looking for. From an employee point of view, it gives them a lot more to do with their time, rather than inactively waiting for a customer sleepily (and being personally experienced in doing it on a few occasions, raucous selling can be amazing fun). Apart from that, it provides an easy pedestal to create a competitive environment (for examples, in-store branding competitions could be organized where the best branded stalls or the best looking stalls could be rewarded, stalls with maximum number of tickets and maximum ticket-size could be rewarded - which means both "up-selling and customer acquisition" concepts could be explored). Moreover, it will replicate the environment which the consumer is used to and perhaps would feel at home in. All this in the air-conditioned environment and the impeccable order of modern retail.
Perhaps there is one more step which can make this a master-stroke. A thought which will play the role of being a Corporate Social Responsibility, an operations efficiency initiative, an effective selling exercise and a good marketing tactic all at the same time. There are multiple small-time hawkers who are effective sellers but have to operate on very thin earnings because of lack of capital. Also a lot of factors result in there businesses becoming cyclical, margins and income being variable. If organizations like big bazzar were to hire these hawkers instead of the people working as of now, it would mean a regular and promised income for these hawkers. It would also mean that their immensely long working hours (which begin with early morning buying exercise to hawking in the streets and generally stretch well into the night) could be condensed into a regular work schedule.
For the Retailers it brings the expertise of these people to the table. Not only the hawkers are experts at engaging the customer, up-selling products, enriching the buyer experience in many ways, they will also know the traditional methods of making stocks look/ feel good and fresh. Experienced hawkers will help the retailers grade stocks and therefore create better value for money for the customers and better realization for themselves. It will also help reduce losses because experienced hands would spot the stocks that are about to go bad if stored and would therefore effect an early sale. For all we know, the Big Bazzars might be able to bring in that quint-essential element of buying behavior into play: Bargaining. The promise of a minimum quality will hold, but the buyer experience maintained.
Just a thought.
Social Activists have reviled it and even gone on hunger strikes. Enraged masses even broke into some and ransacked the property. Industry experts have crooned in equal measure on both the ultimate opportunity it is made out to be or the horrible mistake it is. Most units in the business are either shutting out or making a loss. But somehow Retail seems to be clawing its way deeper and deeper into the country.
The economy and the viability of the business is obvious. Supply chain efficiency, the option of creating own brands (thus promising a minimum denominator of quality and benefit of price at the same time), the freedom from a having to shop in a disorganized market-place, which are unclean, inconvenient. And of-course traditional retail does not offer the satisfaction of "feeling and thus experiencing the product" that a consumer gets before actually buying it in modern trade. But the Indian market is slightly different and Retail has faced challenges. The number of footfalls, average ticket-size remained lower while losses owing to shrinkage and D&D stock-loss remained high. The traditional Indian markets (particularly fresh-foods) on the other hand had mastered the art of targeting their products beautifully apart from providing a holistic buying experience to their consumer.
Lets look at the back-end first. When fresh vegetables /fruits come to market, they go through a grading exercise at each node. Before the farm releases stocks grading occurs and multiple agents, large scale food-produce manufacturers and government agencies grade stocks and buy out. The remaining stocks are then brought to small-town mega-mandis (Raver in Maharashtra for example is India's largest market for bananas, Baran in Rajasthan boasts of being the food-grains market of reckoning). Here again fresh produce is graded, auctioned and dispatched for the cities. In the city, main mandis host further auctions every morning before dawn and the goods are bought by the wholesalers once again based on the quality and state of goods. Finally the local vendors buy out these stocks, take it door to door or smaller mandis for retail. While this process adds a lot of middle-men and their margins, since the "at-risk" stocks at each of these stages is sold away so as to ensure optimum utilization. While the freshest grades of stocks come to retail, restaurants, local ketchup, pickle and other food industries gulp up the second tier, followed by road-side eateries and so on. This process in fact explores the efficiencies far more effectively than what modern trade might offer, owing to their cost of wastage.
On the front end, local vendors often form a very close relationship with their customers. The entire process of haggling for a rupee or two, which both could let go off easily adds spice to the exercise. I have actually seen a lot of young and old vendors flirt with their customers or update them on the latest gossip. Discussions of what is good and bad with the world and other shared experiences make this a very important exercise. The vendors also find traditional ways of keeping their stocks fresh (or at least make them look fresh), apart from knowing an appropriate time for discounting.
The earlier examples of Big Bazzar's expertise show that they have started reading these signs. There latest gimmick solves a lot of problems. It makes the customers aware of the latest offers, discounts and schemes in an active manner. It also ensures that people at least have an opportunity to immediately spot what they came looking for (sometimes finding home in the maze of a zillion identical boxes and racks is one of the most difficult tasks). This is where posters, placards or banners or other inactive engagement tools leave a lot to be desired. It also ensures that active selling takes place instead of inactive selling, which means there are people actually trying to sell you stuff and would therefore be willing to tell you about the product, interact with you. A lot of us now have faced the anal and unresponsive attitude of people manning some of the stores. Most are simply rude and don't care what the customer is looking for. From an employee point of view, it gives them a lot more to do with their time, rather than inactively waiting for a customer sleepily (and being personally experienced in doing it on a few occasions, raucous selling can be amazing fun). Apart from that, it provides an easy pedestal to create a competitive environment (for examples, in-store branding competitions could be organized where the best branded stalls or the best looking stalls could be rewarded, stalls with maximum number of tickets and maximum ticket-size could be rewarded - which means both "up-selling and customer acquisition" concepts could be explored). Moreover, it will replicate the environment which the consumer is used to and perhaps would feel at home in. All this in the air-conditioned environment and the impeccable order of modern retail.
Perhaps there is one more step which can make this a master-stroke. A thought which will play the role of being a Corporate Social Responsibility, an operations efficiency initiative, an effective selling exercise and a good marketing tactic all at the same time. There are multiple small-time hawkers who are effective sellers but have to operate on very thin earnings because of lack of capital. Also a lot of factors result in there businesses becoming cyclical, margins and income being variable. If organizations like big bazzar were to hire these hawkers instead of the people working as of now, it would mean a regular and promised income for these hawkers. It would also mean that their immensely long working hours (which begin with early morning buying exercise to hawking in the streets and generally stretch well into the night) could be condensed into a regular work schedule.
For the Retailers it brings the expertise of these people to the table. Not only the hawkers are experts at engaging the customer, up-selling products, enriching the buyer experience in many ways, they will also know the traditional methods of making stocks look/ feel good and fresh. Experienced hawkers will help the retailers grade stocks and therefore create better value for money for the customers and better realization for themselves. It will also help reduce losses because experienced hands would spot the stocks that are about to go bad if stored and would therefore effect an early sale. For all we know, the Big Bazzars might be able to bring in that quint-essential element of buying behavior into play: Bargaining. The promise of a minimum quality will hold, but the buyer experience maintained.
Just a thought.
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