The emergence of retail giants that have converted shopping to a leisure outing, is poaching on customers of the traditional stores. An opening of a single hypermarket, where diverse varieties of products are offered under one roof, giving customers an opportunity to get entertained while shopping, engulfs a large pie of market share of small stores. Due to the huge financial muscle of these retail giants, small stores are not capable of giving tough competition in terms of conventional sales promotion strategies like discount, variety, shopping experience, etc. Under such circumstances, one of the promising and innovative tools that can be used to maintain the footfalls in retail stores is to come up with products (under private brand) capable of addressing the customers' demands unmet by national or international brand products.
The organized retail sector in India is evolving like never before with the entry of big business houses like Raymonds, Grasim, RPG, ITC, Tata, etc. in retail business with huge financial muscles to establish state-of-the-art shopping malls. New retail models like, departmental stores, supermarket, hypermarkets, shoppatainment etc. are enhancing the shopping experience of the customers who, till recently, were used to shopping in crowded malls. One-stop shops reduce the burden of the customers to go to different shops for different products by having everything under one roof. Strong networking to directly procure the merchandise from the production point and bargaining power enables retailers to pass on the benefits which, otherwise, would have gone to the intermediaries. For example, Pantaloons buys its dry staples from millers for its Food Bazaars. KSA Technopak, a retailing consultant, expects the share to increase to about 10% by 2010 (Venkataraman).
On the other hand, conversion of street corner Pan (Beetle leaf) shop into a small retail store, wherein, branded products from toiletries to cold drinks, biscuits, chocolates, snacks and wafers are available, have also diverted some of the customers of traditional provision stores to Pan shops. The competition in the marketplace is set to stiffen. While the retailers are fighting tooth and nail to increase, or at least maintain the average footfalls in their shops, there are hardly any tools to actually realize it. The problem is more so with the retailers dealing in national brand products. Helpless, as he cannot tweak quality, price, packaging and promotional strategy of the products as the same are the prerogative of the owner firm. The only option he is left with is to see the dwindling number of customers and his profit.
In this scenario, some of the strategies adopted by the retailers to keep their existing customers as well as to attract new customers are-to sell the products at a price less than Maximum Retail Price (MRP), thereby, passing on his part of the commission to customers; conducting a loyalty program by using appropriate sales promotion schemes making the customers shop from a particular store for an extended period; using tools of Customer Relationship Management (CRM) to give the experience of valued customers; giving credits; extending services like home delivery; improving the decor of the store to enhance the shopping experience of the customers; providing a wide range of products, etc. to attract and maintain customers. However, many a time, these strategies do not work. The reasons are obvious. Not much know-how is required to adopt the above listed strategies. Thus, maintaining a long-term differentiation for a retailer (keeping only manufacturer branded products) through these generic strategies to attract customers proves to be a difficult proposition in the time to come. All this has posed a big challenge to retailers to ensure customer loyalty. |
