Can a Lowly Tomato make you win the battle of retail? If it is sounding silly, let me explain, there is nothing silly about it.
Look at the two Photographs. These are tomatoes from two different stores in Chennai. One is a successful exclusive Fruits and Vegetables store (sells Rs100lakhs worth of produce a month from 3000 sft ! Is that successful enough?), and the other from a large Hyper market. Which one is likely to win the consumer's heart? The one on the right was Rs. 2 more expensive than the one on the left.
The one on the left though is less red is also a different variety, but is also bruised and cut. There is no doubt that the one on the right is the winner.
This speciality store is not cheap, but wins on quality and range.
Every retailer has to understand the right mix of Price and Quality.
I have seen retailing in India for over a decade now and I think the consumer is now maturing to pay for Value other than paying for Price. This is indeed good news for everyone - FMCG companies, and retailers alike, and of course farmers. Conversely, it is a wake up call - Wake Up you price mongers, here comes the time to be counted for the lip service that you have always rendered. Price reduction will no more have the same elasticity it had earlier. Consumer will pay as per value (Price x Attribute). The ones who are truly good in Relevant-Quality must rejoice, for they have lived through the difficult times; their time has arrived.
In retrospect, Modern trade must change what they are now. What in grocery terms have they done all these years that is different from the kirans? The main difference has been only 2 things - larger choice (transferring power from FMCG companies to the consumer to cast the vote on the brands), and air conditioned shopping. There has been little or no approach to Solutions for the consumer like supermarkets have provided abroad. Super markets and FMCG companies in India are very weak in the category level thinking. Let us take an example - bakery. What solutions have they provided for bakery? No supermarket carries a full range of breads and buns at reasonable prices. They have not taken the trouble to create categories - instead have continually dug deeper and deeper in the same Red-Ocean, by competing for a share of the milk bread market! There is no mind set to create a Blue-ocean in bakery. Meat and Fruits and vegetables are similar.
Retail competition just simply steal consumers from each other, and don't create new consumers! There may have come a time now when Blue Ocean can be created by not lowering differentiation when price is lowered!
Oh! What are you saying? Can a super market create consumers? Well now even Life seems to have been created, then why not new consumer?
Yes they can. Next blog!
I have seen retailing in India for over a decade now and I think the consumer is now maturing to pay for Value other than paying for Price. This is indeed good news for everyone - FMCG companies, and retailers alike, and of course farmers. Conversely, it is a wake up call - Wake Up you price mongers, here comes the time to be counted for the lip service that you have always rendered. Price reduction will no more have the same elasticity it had earlier. Consumer will pay as per value (Price x Attribute). The ones who are truly good in Relevant-Quality must rejoice, for they have lived through the difficult times; their time has arrived.
In retrospect, Modern trade must change what they are now. What in grocery terms have they done all these years that is different from the kirans? The main difference has been only 2 things - larger choice (transferring power from FMCG companies to the consumer to cast the vote on the brands), and air conditioned shopping. There has been little or no approach to Solutions for the consumer like supermarkets have provided abroad. Super markets and FMCG companies in India are very weak in the category level thinking. Let us take an example - bakery. What solutions have they provided for bakery? No supermarket carries a full range of breads and buns at reasonable prices. They have not taken the trouble to create categories - instead have continually dug deeper and deeper in the same Red-Ocean, by competing for a share of the milk bread market! There is no mind set to create a Blue-ocean in bakery. Meat and Fruits and vegetables are similar.
Retail competition just simply steal consumers from each other, and don't create new consumers! There may have come a time now when Blue Ocean can be created by not lowering differentiation when price is lowered!
Oh! What are you saying? Can a super market create consumers? Well now even Life seems to have been created, then why not new consumer?
Yes they can. Next blog!
I think you have put it very aptly ..understanding of what the consumers / customers want ie actually understanding of quality ...anyone who is in the hospitality industry knows...
ReplyDeletePeshwa. We have seen it on mulitple occassions, when the format definition are redone, to remain true to the Positioning, and you have seen that across the CDIT formats there is need to vary product quality offerings to meet various quality requirements of the consumers.
ReplyDeleteTo meet meal, health and emotional needs of the 21st-century food consumer, modern trade in India have to add value through product, process and system innovations in f&v retail.
ReplyDeleteRead more at http://bit.ly/cYVJr2
Superb article. However like your previous blog illustrates, it all boils down to the positioning the retailer wants to occupy. If marketshare is the goal then price will be the obvious leverage, if mindshare is the goal then quality will be the leverage. Question is can a retailer in india chase both marketshare and mindshare in such a competitive & dynamic environment?
ReplyDeleteDear Anil. I think the meal table will become more inmprtant than ever before. It is obvious that price of food stuffs has increased 3 times over 18 months. So better stuff willl have to be served out. wastage will have to be reduced to bring down prices.
ReplyDeleteAnonmous. Fair comments. but Mindshare and market share are not mutually exclusive. I believe the Blue ocean strategy will have to work, where cost and differetiation can co-exist.
I want to share a testimony on how mr benjamin helped me with loan of 2,000,000.00 USD to finance my marijuana farm project , I'm very grateful and i promised to share this legit funding company to anyone looking for way to expand his or her business project.the company is funding company. Anyone seeking for finance support should contact them on 247officedept@gmail.com Mr Benjamin is also on whatsapp +1-989-394-3740 to make things easy for any applicant.
ReplyDelete