Three packs of juice because one came \u201cfree\u201d with two others (and all open because the family does not coordinate its consumption of flavours!)<\/li>\n<\/ul>\nAt other times, it is the semi-consumed half-loaf of bread that gets trashed half-way through its fossilization process. Or the new flavour of cheese spread, where the price offer may have been tastier than the spread itself.<\/p>\n
I sure there will be at least some among you who would have similar stories. (I would be shattered if I\u2019m told that I am the only one with these tales of inadvertent consumption!)<\/p>\n
In the normal course, we would not call ourselves excessive consumers. For the most part, we believe we display rational shopping behaviour. We make our lists before leaving for the market and we generally know which shop or shops we want to stop in at. So, why do we end up doubling or trebling our purchases, when we aren\u2019t actively \u201cconsuming\u201d double or triple the amount of food?<\/p>\n
Well, the lords of marketing spin have mapped their way into our minds. In a strategy that has been proven over centuries, we are offered things \u2018free\u2019 or at a significant discount. The very thought of getting something for free, or for less than what it is worth, is so seductive and irresistible.<\/p>\n
(As an aside, just look at what has happened during the last few years in the real estate market and the stock market \u2013 everyone thought that they were getting a good deal because the stuff was “worth actually more” than the amount they were paying. Not!)<\/p>\n
We believe we are being rational in buying the three packs of juice at the price of two \u2013 never mind the fact that juice wasn\u2019t on the shopping list in the first place. The danglers and end-caps jump out and ambush us, as we walk through the aisles. The samplers entice in their small voices: \u201ctry me\u201d.<\/p>\n
You might say that the really traditional kiranawala<\/em> is the customer\u2019s greatest friend and also a barrier against uncontrolled consumption.<\/p>\nBy keeping the merchandise behind the counter or in the back-room, he maintains a healthy distance between the addiction source and all us potential shopaholics. In fact, he goes beyond the call of duty, and even prevents us from stepping anywhere near the merchandise by delivering to our homes.<\/p>\n
The enticing deals and offers that you can\u2019t see won\u2019t hurt you. You won\u2019t call to get that new, exciting BOGO (buy one-get one) offer, because you don\u2019t know that it\u2019s there in the store.<\/p>\n
Unless, of course, the sneaky brand with its accomplice \u2013 the advertising agency \u2013 sidesteps him, and puts out the temptation in your morning newspaper.<\/p>\n
By now, surely, you\u2019re wondering whose side I am on.<\/p>\n
Well, as a consumer and a customer, I am only on one side \u2013 mine!<\/p>\n
As someone who is intensively involved with the retail sector, I\u2019m also on the side of the brands and the retailers.<\/p>\n
And believe me, we are all actually sitting on the same side of the table.<\/p>\n
The years in this decade, after the recovery from the minor blip of dot-com busts, have been like one mega party and most people have forgotten that parties seldom last forever. And the morning after the wild party can start with quite a headache.<\/p>\n
Retailers and brands have recently acted as if there is no end to multiplier annual growth rates, and consumers have been only to happy to prove them right. Until now.<\/p>\n
Currently, we are passing through a fairly serious global economic correction which started in 2007. But it has only really hit hard in the last couple of months, as the headlines have increasingly started talking about recessions and depressions. Naturally, there are some people who have really lost money, others may be looking at the possibility of lower income. But even those people who sustain their current incomes are \u201cfeeling poor\u201d, just as they were \u201cfeeling wealthy\u201d when the markets were booming.<\/p>\n
Of course, superfluous or discretionary expenditure such as movies in multiplexes, eating out etc. are the first to get hit. But should grocery retailers rest easy \u2013 after all, people still have to eat, right?<\/p>\n
And how about deals, and multi-buy discounts \u2013 isn\u2019t this the scenario where \u201cmore for less\u201d will be the strategy which will work?<\/p>\n
Well, I don\u2019t believe it is quite so cut-and-dried, or quite so simple. The grocery shopping lists will not only become tighter, but will also be more tightly adhered to. Anything that looks like it may be a wasteful expense will be unlikely.<\/p>\n
Remember the deals in the fridge? What you are throwing away now starts looking like money being put into the trash.<\/p>\n
Pardon the seemingly sexist remark, but men: your wives will not let you get away with driving your trolleys irresponsibly into aisles where you are not supposed to be!<\/p>\n
So how should retailers and brands respond?<\/p>\n
Well, a good starting point would be to understand what the real market is. Let us not infinitely extrapolate growth figures on a excel spreadsheet on the basis of the early-years of new businesses. Let us not extrapolate national demand numbers from the consumption patterns of select suburbs of Delhi and Mumbai.<\/p>\n
When we have the numbers right, let\u2019s look at the business fundamentals at those basic levels of consumption. Is there a viable business model?<\/p>\n
Is the business full of productive resources, or are we overstaffed with \u201ccheap Indian labour\u201d?<\/p>\n
Is your modern retail business or your food \/ FMCG brand really providing value to the Indian consumer? For instance, two very senior people from large retail companies were very vocal this last weekend in stating that the value provided by local business to the value-conscious consumer was grossly underestimated by the industry.<\/p>\n
I believe that best filter for business plans is the filter of business sustainability. How sustainable is the business over the next few years? What is the real demand? What are the true cost structures, and can these be supported on an inflationary basis year-on-year, or will you be squeezing the vendors for more margin at every stage until the relationship goes into a death spiral?<\/p>\n
Let\u2019s look at macro-economics. Are you actively looking at generating and spreading wealth and income around, or is your focus only on stuffing that third pack of juice into the fridge for it to go stale? If your strategy is the latter one then, to my mind, that is neither a sustainable economic model nor a sustainable business.<\/p>\n
There\u2019s more about the current and developing economic scenario, \u201crealistic retailing\u201d and other such issues, elsewhere on the Third Eyesight website and blog, including a presentation made at the CII National Retail Summit in November 2006 (download or read as a PDF<\/a>). (The article based on that presentation is here<\/a>.)<\/p>\nI really look forward to your thoughts and would welcome a dialogue on how you believe retailers and brands should work through the next few years as we unravel the excesses of the recent past.<\/p>\n","protected":false},"excerpt":{"rendered":"
Retailers and brands have recently acted as if there is no end to multiplier annual growth rates, and consumers have been only to happy to prove them right. Until now.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[389,274,215,60,37,43,46,1],"tags":[473,390,174,177,102,107,289,179,485,263,804,183,250,214,292,409,410,391,189,414,431,432,59,69,456,453,118,454,166,195,478,479,121,70,71,470,486,204,338,405,205,358,281,208,50,298,209,480],"class_list":["post-1867","post","type-post","status-publish","format-standard","hentry","category-progressive-grocer","category-csr","category-food-grocery","category-india","category-marketing","category-retail","category-strategy","category-uncategorized","tag-built-to-last","tag-column-progressive-grocer","tag-consumer","tag-consumer-behaviour","tag-consumer-markets","tag-consumerism","tag-consuming-classes","tag-corporate-social-responsibility","tag-development","tag-economy","tag-environmental-social-and-governance-esg","tag-ethical-consumer","tag-fmcg","tag-food","tag-food-and-grocery","tag-gini-coefficient","tag-gini-index","tag-grocery","tag-inclusive-growth","tag-independent-retailer","tag-independent-retailers","tag-independents","tag-india","tag-indian-retail-sector","tag-inflation","tag-kirana","tag-market-potential","tag-middle-class","tag-modern-retail","tag-modern-retailing","tag-mom-and-pop","tag-mom-n-pop","tag-organic-growth","tag-organised-retail","tag-organized-retail","tag-promotions","tag-reta-boom","tag-retail-revolution","tag-scale","tag-small-retail","tag-small-retailer","tag-small-retailers","tag-social-entrepreneurship","tag-sustainability","tag-third-eyesight","tag-traditional-retail","tag-unorganised-retail","tag-unorganized-retail"],"yoast_head":"\n
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