Retailer seek discounted rentals as prices of real estate decline
With realty prices sliding, retailers are looking to renegotiate rentals signed in better times. In some cases, they are even shutting and relocating stores to offset the drag on profitability. Kishore Biyani, managing director of Pantaloon Retail (India) Ltd, India’s biggest publicly traded retailer, said store rentals are down by 25-50%. “We are renegotiating the rentals in some cases,” he said, but declined to elaborate.
However, Thomas Varghese, chief executive officer of Aditya Birla Retail Ltd, which operates the More retail chain, said while rentals have softened for big stores, they remain unchanged for smaller shops.
How to create an Effective Brand Message in Retail
Contributed by Charu Gupta
Markets have been flooded with lots of brands these days but there are only few who are able to register a presence in the consumer’s mind. The Retail organizations should take utmost care of what their target segment is and create a brand message which does not create any ambiguity and is easily understood by their target audience. To create an effective brand message, Retail organizations should follow the concept of Brand Prism. Brand Prism mainly comprises of six attributes and is an effective tool to create a brand message which matches the company’s ideologies and persona and helps it communicate to its consumers. Following are those six attributes:
Brand Physique: What are the unique features and associations are you offering?
Factors that affect Merchandise Assortment
-Contributed by Richa Kapoor
The retailer has to act as a surrogate buyer for its customer. While shopping at a store, the customer in effect should say, "I like what you have to offer to me" then if the customer continues to shop at a store and starts to echo that phrase again and again. At that point, the retailer becomes the surrogate, a substitute purchasing agent of sorts who represents the customer while planning his merchandise assortment.
Thus, it is very important for retailers to carefully consider what they buy for selling in their store, because through this a retailer is seeking to win the loyalty of a customer and not just his money.
The retailer should take great care in planning this merchandise plan, He should choose compatible products, so that there is some degree of consistency and predictability for the consumer.
Some of the factors that a retailer should bear in mind while planning his merchandise mix are:
Some important terms:
Malls getting less lucrative for restaurateurs now
Ever since the mall culture crept in and malls presented themselves as lucrative retail environs, restaurant owners are divided on whether to set up shop within malls or to opt for high streets.
However, there are examples galore that increasingly, restaurants outside malls are pipping those within them in the revenue stakes. And if some players are to be believed, malls’ high operational costs (rentals and ancillary costs) are impacting feasibility of restaurants, driving them away.
According to industry estimates, there are up to 50-60% more expenses attached for restaurants in malls as compared to those in other retail locations. Take the case of the home grown brand Nirula’s which has only 15-20% of its outlets in malls. Their share to the company’s overall revenues is also the same.
Slowdown turns Ahmedabad into 'retail graveyard'
Once a darling of retailers and a hot new destination of modern retail, Ahmedabad is turning into a “retail graveyard”. Apart from glaring vacant spaces in the swanky city malls, the first visible downturn seems to be the closure of two Big Bazaar outlets.
Be it a heterogeneous product mix, inviting ambience or other cosmetic benefits of modern retail like air conditioning, all have failed to sustain the interest of Gujarati consumers looking for functional benefits from the retail experience. The result: closure of ambitious retail projects across the city. Brands like Nike, Tea Centre, Conizza, etc, have already closed shop.
Scattershot Strategy
The risk is the possible loss in the integrity of the original brand and inability to hold on to core consumers.
I’ve been a fan of Fabindia for many years now — for their furnishing fabric, their clothes — and the odd knick-knack. So, when it was time to redo our curtains I decided to abandon our usual practice of tailored curtains for Fabind ia’s delightful ready-made drapes. As a for-profit with the mission of providing sustainable employment for Indian craftsmen, Fabindia has grown steadily since it was set up in 1960 – from an exporter of home furnishings, it now retails apparel, home furnishings, organic food and body care products.
Retail keen on evaluating business structures with high-end cos
The slowdown in the economy and archaic rules on real estate may have affected the mainstream retail industry, but there is a flurry of activity on the high-end retail segment, as existing players actively explore business structures to tie up with global high-end retail majors.
Mandates with consulting firms, including those from the Big Four, show that players such as Reliance Retail, Aditya Birla Retail, Shoppers Stop and others are keen on evaluating business structures with high-end firms such as Marks & Spencer or Armani or a Moschino to tap demand from the growing number of HNIs (high-networth individuals).
According to sources, growth in demand for luxury items is pitched against a slowdown in mainstream retail as high inflation pushes back purchase decisions. The main driver is an increase in the number of individuals in India, who can afford to fly abroad to splurge on high-end accessories ranging from Rs 80,000 and above.
Inflation addressing strategies by Retailers
-Contributed by Richa Kapoor
Retail is one of the most badly affected industries in the current inflationary conditions, and is experimenting with various schemes and strategies to keep up the footfalls and sales graph.
Retailers are using these strategies in combination to make sure the consumer sees value in the offering and decides to visit the store in this lean time. In the recent past the retailers have been focusing on the following:
Flat Discounts: This is one of the most widely used promotions technique by the retailer, under this a retailer offers a flat percentage deduction of the price of a commodity.
Happy Hours shopping: is a period of time during which some restaurants offer discounts for alcoholic drinks for promotion of the venue in the quieter times. The same is being replicated by retailers some retailers are offering happy hours discounts during the day when all the merchandise is sold at rock-bottom prices
Story of Private Labels
-Contributed by Richa Kapoor
With India on the cusp of a retail revolution and discount stores riding high on the wave, the only way retailers can create moolah for themselves is having their "Private Labels".
But the only caution for retailers is that there should be a clear understanding of what a Private Label strategy mean and what are the different types of labels which can compete in the market:
Store brands – The goods produced by the retailer himself, to transfer the cost benefits to the consumer are called store brands. The retailer's name is very evident on the packaging. for eg: Shoppers' Stop : STOP
Store sub-brands - Products where the retailer's name is low-key on the packaging.
Umbrella branding - A generic brand, independent from the name of the retailer.
Individual brands - A name used in one category, this is only used to promote a "real" discount product line.
Loss Leader Strategy in Retailing
Contributed by Richa Kapoor
Loss leaders is a time honored pricing strategy adopted by retailers worldwide to attract consumers to the stores. The intent of this pricing strategy is to not only have the customer buy the (loss leader) sale item, but other products that are not discounted. The rate of success of this strategy has been enormous worldwide which is being replicated in the Indian Market too but with the Indian Retail market opening up, retailers introducing newer product categories and many retailers entering the market.
It has become crucial for retailers to adopt strategies like loss leaders. But, to be able to understand the concept thoroughly.
What is a loss leader?
A loss leader is a pricing strategy which involves selling a product at a low price (at cost or below cost) to stimulate other, profitable sales. It is a kind of sales promotion, in other words marketing concentrating on a pricing strategy. This is a commonly used technique to attract customers via bargain on necessities and sell to them products which they don't require; this will help in generation of profits.
