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IRF 2008: Lessons to learn for Indian retailers

By Khushboo Tanna , afaqs!, Mumbai | In Marketing | September 18, 2008
The second day of IRF 2008 stressed on what is lacking in the Indian retail segment and how these problems can be tackled

Day 2 & #BANNER1 & # of the Indian Retail Forum 2008 (IRF 2008) had Vivek Mehra, executive director, PricewaterhouseCoopers, anchoring the day's session on 'What Do Shoppers Really Want?' The session was conducted by Jonathan Banks, business insight director, The Nielsen Company, UK. IRF 2008 is being held at The Renaissance, Powai, Mumbai, over three days.

Banks started his session by telling the audience that Indian retailers might have a chance to learn from what is going on in the European market. He said there was a huge growth of aged population across the globe and retailers would be marketing the same products to different aged people in different ways.

He added that life expectancy was increasing throughout the world and research has shown substantial growth in "middle class people" all over the world. He explained how technological and political changes since the 1980s had led to a rise in the middle class segment.

Jonathan BanksBanks shared statistical data on shoppers across Europe, which showed that as GDP per capita increases, household expenditure on food decreases. The research study that threw up the data revealed that the two biggest concerns facing the consumer in the coming six months are work-life balance and parents' welfare and happiness, both important factors in India, too.

He said, "Retail trends across Europe show that people shop a lot in total hypermarkets as opposed to small stores. The popularity of small stores is decreasing."

Banks said another aspect of the study revealed what consumers had purchased online in the past three months. Top of the list was air tickets, followed by books and CDs. Online grocery shopping was not popular. He said that for people across Europe, a low priced item or brand was not the sole incentive to shop in a mall; the deciding factor was usually the availability of high quality, fresh food.

He added that European shoppers placed a lot of emphasis on branded products and not necessarily cheap products. That is the reason why retailers are spending so much on advertising branded products available at cheaper rates in the hope of attracting consumers.

Banks said the research study had thrown up four mega trends across categories: convenience or practical products; health and well being; indulgence or pleasure; and ethical marketing.

He said the four mega trends stem from the fact that global consumers are getting older and richer and, because they are worried about their money, health and ethics, they tend to reflect these qualities in their shopping behaviour as well. He ended his session by saying that the new global consumer wants the "cheapest of the cheapest" and the "best of the best".

D ShivakumarNext to speak was D Shivakumar, vice-president and managing director, Nokia India, who spoke about creating a winning retail strategy. He started by saying that the Indian market was still in the early growth stage of its life cycle and would stay in this stage till 2010. He said organised retail was expected to grow at 42 per cent in the next few years and it would overthrow telecom, which has the highest growth in the current market.

He continued, "The overall Indian retail landscape is becoming more sophisticated and organised. The consumer is changing significantly, moving from shopping for something to doing something."

Shivakumar revealed some facts about the Indian consumer and said a consumer would hold a brand accountable for what the brand promised. He also said that more than a third of all purchases are based on word of mouth publicity.

He said that as a market, India was moving from an era of independent growth to an era of developed growth. He specified that both single brand small stores and large format stores are likely to grow the fastest in the near future.

Shivakumar ended his session by highlighting the challenges faced by the Indian retail segment. According to him, the challenges are the type of branding, understanding the shopper, managing talent among the surplus labourers, and managing a store's supply chain. He ended by saying that the future growth of the segment would be dependent growth.

Steve GilmanThe next speaker was Steve Gilman, chairman, Big Idea, UK, which develops new markets, then develops brands and business in the new market, and creates value for the brand and the consumer. Gilman has worked extensively in the Chinese retail market and presented some learning points for Indian retailers based on his experiences in that market.

Gilman said India was widely recognised as the largest potential market in the world and is enjoying a very high level of "hype" globally. He compared the retail segments in India and China on the four parameters of politics, people, property and products. In all four parameters, China had more favourable conditions than India.

John A StrachanHe continued by saying that India was a great place for retailers to grow now and in the future, the number of customers with disposable income was rising, and the shopping environment was improving. He concluded by echoing Kishore Biyani's advice that India needed to learn some lessons from the Chinese, European and North American markets.

John A Strachan, head of global retail, Cushman & Wakefield, UK, was the observer for the session. In his summarisation, Strachan stressed the fact that online retail is slow to pick up growth because people go to a mall for the entire shopping experience and not just because of convenience.