With the Cabinet nod on 51 per cent FDI in multi-brand retail, and 100 per cent in single brand retail, several global retail chains are expected to enter the Indian retail arena. In an already cluttered Indian retail market, how will retail brand's communication strategy shape up? afaqs! finds out.
Consumers are often exposed to a surplus of offers from several retailers while chalking out a shopping list. A plethora of hoardings, pamphlets, newspaper supplements, as well as the radio communicate to the consumer the cheapest price for a product, or the best discounts on offer.
Given this scenario, the cabinet policy decision of 51 per cent FDI in multi-brand retail, and 100 per cent in single-brand retail will pave the way for several global retail chains to make their foray into India. Though, several top retailers from across the globe such as Walmart, Tesco, Carrefour, and Metro are already present in India through their JV partners.
The entry of new players will increase in competition in the Indian market. Apart from their local counterparts and kirana stores, the Indian retail chains will now have to fight for consumer attention against global giants. In such a scenario, what will be the best communication strategy for the retail chains to follow?
Over the years, it has been observed that the strategy for large retail stores and giant chains has been to promote offers, expressed in percentages off regular prices. Retailers found a common denominator to entice consumers, with offers such as 'A shampoo for Rs 10 less than the MRP', or a 'A toothpaste free with a toothbrush', or even 'Shop for Rs 1,000 and get a gift voucher of Rs 200 free'. With such discounts and promotional offers being the order of the day, retail chains seemed to have entered a price war against one another.
But, according to Viren Razdan, managing director, India, Interbrand, it is not the aggressive price strategy that consumers will recall, but the aggressive value addition. "Typically, all large format stores speak about price competitiveness. While the best price can be a brand's power for a cause, when it comes to a cluttered market, it is a brand's real value that will come to play," says Razdan.
"Retailers will need to change their approach in a cluttered market, and focus more on building brands," concurs Atishi Pradhan, vice-president and executive planning director, Contract Advertising. "The positioning has to be new, like Big Bazaar or Shoppers Stop have done."
Narayan Devanathan, national planning head, Dentsu Marcom makes an interesting observation. Comparing the communication strategy of two large global retail brand, Devanathan says, "Walmart speaks about deals, while Stargate speaks about value offered to the consumer. Both retailers have the same pricing, but what they communicate to the consumer is different. It is a comparison between pushing price and building image."
Organised retail is still at a nascent stage in India and many consumers are still hesitant to enter a large store, and prefer their friendly neighbourhood kirana store. "They feel that products available there will be expensive," says Amit Ajwani, managing director, Saatchi & Saatchi X India (Publicis Group's dedicated shopper marketing agency). And, this is precisely the reason why to communicate offers is the best way to attract consumers.
According to Razdan of Interbrand, big brands should not be intimidating, but be affable. "This will encourage consumers to accept the brand in a better way. Big Bazaar has been successful as it's intimidating for the normal consumer."
But, some industry experts also feel that price-based offers will continue to be lucrative. "In retail, price-based communication cannot cease to exist," states KS Chakravarthy (Chax), national creative director, Draftfcb ULKA. "You may have a brand-based communication once in a while, but offer-based advertising is synonymous with the category, and will continue to remain that way," he says.
Talking about the US market, Chax says, "Newspaper out there, carry several discount coupons and people drive several miles to avail the discounts."
Jitender Dabas, senior vice-president and head, planning, McCann Erickson, seconds Chakravarthy and says that price-led communication is a reality even abroad, and is likely to continue in India, as well. "Brands such as Shoppers Stop are all about high-end retail. They are also about the experience of shopping. Hence, they can afford to do brand-based advertising such as 'Start Something New.' Big brands will want to differentiate. Emotional advertising can be an option." But, on a daily basis, Dabas feels, they will continue with information dissemination form of communication, in terms of speaking about offers.
Sandeep Walunj, chief marketing officer, Value Retail (Big Bazaar) at Pantaloon Retail India, says, "As a retailer, I feel you need to keep your brand relevant. The trick will be to build a brand while communicating offers."
The retail boom in the country is also expected to give a great push to the shopper marketing industry. Internationally, major FMCG brands pump in around 25-30 per cent of their marketing spends on shopper marketing, but in India, it is a mere 3-4 per cent.
Ajwani concludes, "Shopper marketing agencies have to be active because brands like P&G will pump in a lot of money into chains such as Walmart.