The Future is on the Shelves: Devendra Chawla

06 Sep,2011

As per Boston Consulting Group estimates, the size of the organized retail market is approximately $28 billion and is likely to grow nine times to $260 billion in 10 years. Modern retail is no longer testing the water but is all set to grow at a reasonable pace. And as is known, the Future group has played a key role in the growth of modern retail in India.

Mr Devendra Chawla, President, Food & FMCG Category, Future Group, reflects upon the increasing importance of retail in brand communication, consumer insights and trends among other things, in conversation with Ritu Midha of MXM India.

 

Customer engagement is the buzzword. What steps can a retailer take to keep the customer involved and engaged?

The landscape for brands is undergoing a transformation. While media is proliferating from one channel to multiple channels and one screen to multiple screens, brands need to shout louder to get consumers’ attention in this age of the addictive remote. Yet, the bigger challenge for marketers is not to get attention but to engage with this consumer. While the media is expanding, retail is converging in the sense that a brand can reach and interact with more consumers under the same roof. Though in a nascent stage, modern trade is contributing in a major way towards the growth of categories such as breakfast cereal, cheese, packaged rice, toilet cleaners, liquid soaps, air fresheners and hair conditioners, to name a few. A retail store in that sense is the new media vehicle to create awareness about new brands/products for a large number of consumers visiting the stores.

 

It is said that most purchase decisions are now made in the last leg  or seven minutes before the customer actually shops. Are marketersmaking specific point of sale strategies to influence customers?

Last mile marketing is about engaging the consumer and most decision by the consumers are taken at the final consumer touch point, the store, where given new information, brands may interrupt the decision-making process and enter the consideration set. One can activate last mile marketing by engaging in the following effectively in the retail theatre.

  • Celebrating new product launch
  • Sampling
  • Category Dressing
  • Knowledge to customers  usage, recipes
  • Break-the-routine promotions
  • Multi/Combi Pack
  • Cross promo
  • High customer engagement activities like lucky draw
  • Education & upgradation of Customer

 

 

As per a recent Forbes study in the US and Europe, customer retention is far more important now than gaining new customers  how true does it hold for India? And more specifically for modern retail?

Modern retail penetration is very high in case of Europe and the US. So more and more players are targeting the same set of customers. But in India, modern retail is still nascent (7-8 percent of total trade), penetration primarily limited to Metros and state capitals. For India there is huge opportunity particularly in the tier 2 and 3 towns. The pie is so large that acquiring new customers is as important as retaining them. Having said that, loyalty needs to be worked on to create customer stickiness.

 

Data and research seem to be gaining in importance; how do you track the customer behaviour? Can you give a few examples of learnings bringing change in your retail format?

Interestingly for us, the stores also double as a live research laboratory and a constant source of feedback . There is as much feedback as one wants to accept on behavior of categories, the way they are consumed, what need gap exists giving way to valuable consumer insights.

Some examples… Kids engagement with products is much higher in a supermarket environment where products are displayed at their eye level and are well within their reach. For example, in the ketchup category, we learnt how kids are dependent on grown-ups for usage, thanks to the heavy and breakable glass bottle. Consumers were indirectly asking for innovative solutions here as the bottle is consumer unfriendly for the primary consumer.

We worked around the issue and launched an easy-to-use standee pouch with spout for our ketchup brand, Tasty Treat. Mothers instantly loved it since it made them anxiety-free and their kids self-sufficient. This pack reduced packaging cost by 30 percent and supply chain cost by 40 percent due to lighter weight, providing even more value to the consumer.

We Indians are unique and unconventional in our own way. In a category like soups, speaking to consumers before the launch of our private brand regarding the ideal soup serving size brought to light the fact that 70 percent of them preferred drinking soups in mugs, in the comfort of their homes  while the form of consumption is in bowls under public gaze like in a restaurant!

Apart from insights , POS data is also a huge repository of consumer behavior, but still nascent in India. Plus we also work on

  • ACN reports
  • Kitchen Audit where we study in which catchment what consumers are consuming so we can stock them.
  • Catchment Studies within a given radius of the store.
  • Community Studies  Food habits, Festivals.

 

Experiential marketing is a much talked about phenomenon now  how important a role does a retail outlet play in it?

It’s the retail theatre where imagination and the buying experience can be fired up. We enable market development and driving consumption, as India is still under-branded and under-penetrated in most categories. We gave away mugs during our soup launch with a campaign ab soup ka mazaa mug mein, and saw category expansion of 25 percent. Traditionally, category expansion role was played by the advertised brands. Future group has rewritten some of those rules.

We follow a toolkit including a multi-sensorial engagement with the consumer in the retail theatre.

  • In food categories, where taste and palate play an important role in buying decisions, experience in terms of sampling is very effective.
  • We have sampling counters in all the family centres, live cooking/recipes.
  • In the non-food category, testers are provided to help customers with decision-making.
  • Promoters play an important role  eg, case of beauty products through demonstrations.

 

Talking specifically of the Future group, how do you distinguish in brand experience across your retail formats?

The focus obviously is on providing customer satisfaction  whichever food retail format store they shop in. We have segmented our formats keeping customer type and convenience in mind. We have KB’s Fairprice largely for the people who are looking for convenience. Store formats keeps limited assortment but we stock all the top brands and SKUs that consumers would require.

Then comes the Food Bazaar  which is mainstream and for the aspiring class. As it is now a food shopping destination for a large urban and semi-urban class, the focus is on making brands available at different price points, and ease of navigation. These have wide and deep assortment play.

Next is FoodRight, and the aim is to delight the customer by making available aspirational products. At the top of the pyramid is Foodhall  the new upmarket format we have introduced for the discerning customer. From layout to the products on the shelf, everything is for a specific customer  it is the outcome of a lot of research and consumer focus groups coupled with kitchen audits. The initial feedback tells us we are in the right direction.

 

Talking specifically of food and beverages, how do you strike a balance to keep both the customer and the brand happy?

The most important thing is driving consumption, working with national brands to upgrade consumers to more value-added categories , thereby giving choice and new status to the customer, and sales to the brand via category management .

  • Properties like Monthly Bachat Bazaar, Sabse Saste 3 din, Mahabachat, give an excellent opportunity to brands to interface with consumers.

 

Would you say retail has far more to offer in terms of PoS experience, and brands need to take advantage of it?

  • The moment of truth for the retailer is the PoS, a gold mine to understand behavior, data, money spending patterns like share of wallet on various categories. Though data is extremely perishable, brands need to capture pattern/behavior on a regular basis by tying up with the retailer in lieu of remuneration.

 

Any instances of Big Bazaar working together with a brand to make it a part of consideration set?

Quite a few, and just to give some examples…

  • Coffee Category project with Nestle, Coke fixture for CSD category, PoS data sharing with elect sambandhis.
  • Juices project in leading brands.
  • Solution Centre for Chinese with brands like Ching’s.

In the case of private labels, which are the categories where private brands are doing well?

Future Group has significant presence in the private brands fashion, electronics and general merchandise categories. In Food and FMCG, though we are a recent story, our brands are no 1 or no 2 in a dozen product categories including staple food, ready to cook and home care. Our entrenched brands are Tasty Treat, Clean Mate, Fresh & Pure, Premium Harvest and rising brands are Sach, Ektaa and John Miller. Tasty Treat now ranks as the 5th Brand in terms of sales in our stores from the 3000+ brands that we offer in Food and FMCG categories.


Has the customer mindset towards store brands changed for better?

A label on the shelf becomes a brand by covering the two-foot distance from the shelf to the trolley. After all it is the consumer’s choice, the rest is marketing terminology we marketers use. For consumers everything on the shelf is a choice and are all brands. The proof of the pudding is in the eating, and the leadership status of many private brands shows the acceptance of these brands. We are creating independent brands like John Miller, Tasty Treat, Clean Mate and Premium Harvest, and these are not store brands as store brands use the store’s name as the brand.

In many cases, our brands are manufactured by the same factories that produce for brands marketed by leading multinational and domestic companies. Our formulations are arrived at with rigorous development process. We work closely with our vendor partners for fostering high quality and long term relationships.

 

 

 

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