Realty check at the check-out counters

No where is the maxim of retailing in India — location, location and location — better illustrated than the cash tills of modern formats. As retailers grapple with shortage of good retail space outside, the limited space near the check out counters is setting their cash tills on fire. It’s simple, limited supply, enormous demand for the space. The result — premium pricing charged by the retailers. “It’s after all real estate for the retailers and like any good location, it is getting the premium tag,” says Sameer Satpathy, head – marketing, Marico. Brands enter into either long term understanding with retailers where using space near the cash counters forms part of the deal. However, Ashutosh Chakradeo, business head – food & grocery, Hypercity says independent deals are also struck with brands for using only the cash till space. Typically the rates depend on the size of the format, whether it is hypermarket, supermarket or discount stores. Also the kind of SKUs/categories to be placed comes into consideration while negotiating the rate. “On an average, the premium earned near the POS could be 70-100 % more than the rate per sq feet on the shelves. It is also dependent on the catchment area of the store and the footfalls it accrues,” says Salil Sahu, MD, Home Stores India. While retailers are reluctant to reveal the price tag for POS, industry sources indicate that given the demand for the space, it is not uncommon of rates touching Rs 6000/cubic feet in major metros like Mumbai and Delhi. “The terms of trade also include providing for 0.5-1.5% extra margin, over and above the product line margin offered to retailers,” explains Himanshu Arora, VP- client management, In-Store consulting.
And if one thinks that long term deals involve brands locking in for months together with retailers, one is way off the mark. “No retailer will want to hand over the proverbial golden goose to brands on a platter,” remarks a senior marketing official from a FMCG company. So POS deals comprise of weekend special deals, festival days or special discount day deals, he reveals. “So if some special days have done well, then we are looking at another round of negotiations to decide on POS deals for the next special days,” he states.

Mall Mania: The Road Ahead

The state of two malls just outside the railway station in Navi Mumbai is indicative of the trend mall development in India is likely to witness. The first mall started years back and was the only shopping mall housing multitudes of brands inside it. It attracted thousands of footfalls as people thronged the destination to sample a taste of the new shopping experience. The going was smooth for the first mover till the time there was no competition. But competition soon came in, just a few hundred metres across the road. To its advantage, the second mall housed a multiplex which has become its biggest trump card to woo the audience. And within no time, the first mover has almost become a ghost town of sorts as both brands and customers have moved across the road to the new one.
The example indicates the scenario one will increasingly witness across India. The mall mania which has engulfed the country with as many as 400 malls estimated to come up, will definitely see a purge. Some will manage to survive the shakeout while some will bite the dust. Mall developers have simply forgotten the basic tenant of retailing that a catchment is needed for a mall to sustain. So simply building a mall just next to an existing one is unviable. Also the tenant mix has to be given due consideration depending on the demographics of the catchment. The formula of shopping-entertainment-eating out is the one that seems to be working. But the element of shopping while housing brands as tenants has to take into consideration the needs and requirement of the target audience and the benefit she will derive shopping in the format.

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Go Local

Ali Bhai isn't any different from other private vehicle drivers. But this Hyderabadi who has a penchant for speed is also an amazing resovoir of local information. Ask him about towns and villages enroute and he knows the route like the back of his hand. And it's not just the roads and towns Ali Bhai's familiar about, ask him about any people mover or passenger (both three wheeler and four wheeler) and he has an expert opinion about them the vehicles as well. "I have driven all vehicles in the last 10 years and seen how the entry of one brand has affected the incumbents," he says.

When commander came into the market, it ruled the roads, he says, but now with three wheeler brands like Ape, Bajaj and Alpha in the picture, the commanders are slowly getting wiped out, he says. Ali Bhai talks on how the local auto drivers are fixing LPG cylinders used for cooking in the engine. The result - it gives them more mileage and therefore more earnings, never mind the dangers.

It's people like Ali bhai who can become the one stop point for information for brands looking to tap the hinterland. Ask him about catchments, the professions of the locals and he tells you just like that. And 90 % of the time, he is correct. Maybe among the countless power point presentations, research and local promotions, if a marketer can catch hold of a person like Ali bhai, the task becomes that much more easier.

Fixing the Wheel: Rural Ground Level Innovations

If you think Tata Motors pulled every trick out of the innovation book to make Nano a reality, you just have to meet the auto drivers in rural Andhra. A simple Bajaj three-wheeler , with 3+1 capacity, is modified to accommodate 10 passengers .

A long foam below the back rest of the driver’s seat collapses into a small seat to accommodate three people, facing the three already seated in the auto. The metallic side bars on both sides of the auto have small cushions to seat a passenger apiece. In the front, on both sides of the driver’s seat, there are speaker boxes. While some have speakers, most of them are hollow, and are used to seat two more passengers in front. And in case there are some more passengers, the cover of the rear engine is opened for them to stand on, holding on to the sides.

In Tata Magic, the leaf spring (shock absorbers) are modified by the drivers. An additional absorber is added to the existing two to make the vehicle sturdier. And once the showroom tyres wear out, bigger tyres are fitted to take more weight. The side bars are cushioned to provide seating space. And in the tiny room behind the back seat, two plastic seats are placed. The Magic is now ready to take 16 passengers , compared to official capacity of 6+1.

http://economictimes.indiatimes.com/Features/Brand_Equity_/Tatas_magic_being_sold_in_Andhra_Pradesh/articleshow/msid-3409636,curpg-4.cms

Agri Retailing in the Hinterland

It’s a 3,000-sq ft space, and houses various brands neatly categorised with displays and price charts. It’s a mall — at least the name says so. The ruse of passing off a supermarket space as ‘a mall’ is quite common in big cities, but JKS Agrimall is 70 kilometers away from Hyderabad , in a small town called Jangaon. But one can forgive the owners simply because of the genesis of JKS Agrimall. ‘JKS’ stands for ‘Jantha’ , ‘Kishore’ and ‘Santosh’ , three friends who have come together to start this supermarket retailing pesticides, fertilisers, seeds, sprayers and cement.

The three friends, who operated individual shops selling fertilisers, got together to start JKS Agrimall in May 2008. “Not that we were doing badly individually , but we wanted to compete with bigger organised players who are coming into the market,” explains Pajjuri Kishore, one of the owners. The preparations started by visiting modern formats and looking as to how they do business. The lessons have been applied here, with computerised inventory management, display, competitive pricing and prompt service, says Kishore.

Today, JKS Agrimall services a radius of 50 kilometers, and Kishore says that the aim is to acquire a huge volume business by pricing lesser than the market. On expansion plans, Kishore says they have no plans to expand and instead, want to consolidate within the same market, so that when competition arrives they are ready. Kishore and his friends plan to touch a turnover of Rs 25 crore in the first year. Maybe some of the ‘mall owners’ in the big cities can pick up a trick or two on retailing from JKS.

http://economictimes.indiatimes.com/Features/Brand_Equity_/JKS_Agrimall_a_mall_with_difference/articleshow/3409700.cms

Navratan Oil activation

Hi Friends,

It's been some time that I have posted new thoughts, ideas and trends. I have been travelling and am back with a bag ful of insights to share. Meanwhile Vivek Dwivedi of Rural Connect has shared the activation done for Navratan Oil from Emami. Please send in your feedback and also any new trends and ideas you have seen and witnessed in either the rural or urban markets.

Navratan Oil Backgrounder:

In small towns and villages there's a common meeting point for people to gather to gossip / share information / play cards / talk about the country and problems, gossip about films and movies / crack jokes / share even personal problems in some cases, political issues. Every thing under the sun is discussed. These common points are Addas or chaupal.

ADDA’s are identified to be the most interesting and common location where NRO(Navratan Oil) audience can be found and that’s where we planed to contact , engage & excite them with free Champi to all.

To implement this initiative we identified the location where 6-7 or more people can be contacted in a day. We were equipped with one champiwala(barber) along with a moderator( a graduate & well conversant in local language) and a sales supervisor in a branded van with ready stock.
In the case of women audience, the barber just puts the oil on their palm so that she herself can massage the oil on her head and feel the difference of NRO, however the job of sales supervisor was to ensure he availability of NRO and cool talc in the retail outlets of that village.
The activity covered 100-125 champi per day per van and 25% of sales growth especially in case of small packs and sachets showed very good response in eastern parts of UP and after the rains they are planning to replicate this initiative in other parts of UP and major parts of Bihar.