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New retailing mantra: Think local act regional - Views on News from Equitymaster
 
 
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  • Mar 9, 2011

    New retailing mantra: Think local act regional

    The basic premise of business is identifying a need and satisfying it by providing products and/or services. In India, the retailers are unlikely to face a dearth of such consumer needs. India is a very diverse country and this diversity presents multiple opportunities. The diversity is on account of climatic conditions, culture, life styles and standard of living. Every state is different from the other and so are the tastes and preferences of the people residing in these. What sells in one part of the country might not sell in the other parts. While people in Kolkata have "cha" in "kulhars", those in Mumbai prefer their "cutting" in glasses.

    Retailers want to indulge the Indian consumer in shopping and are ready to do all that is needed to ensure that they head to the nearby malls/ high streets. Localization is one such strategy that is being adopted by the retail biggies. They celebrate regional festivals, undertake store designing and decide on product mix offerings based on the tastes of local consumers. For example, Shoppers Stop has undertaken localization beyond product mix to brand mix. The company exclusively sells two local brands in Kolkata "Moustache" and "Turtle" that are not sold elsewhere in India. Westside of Trent offers more number of larger sized clothes in North India to suit the body types of people there. Spencerís has recently revamped its strategy and will now focus on localizing the merchandise according to catchments. The company management states that it will maintain a healthy mix of standardized and customized products in its stores (75:25). If you happen to visit any retailing companyís store at the same time in two different cities, you would realize that the products on offer are very different.

    In India we celebrate many festivals and shopping is an integral part of our celebrations. This provides a very good opportunity for retailing companies. The retail biggies make the most of such events by organizing discount festivals during major festivals. These are also accompanied by fun activities, competitions and music/ dance. Retailers might lure customers during Diwali with Rangoli competition or during Christmas by giving away gifts to children.

    Retailers are not the only ones who have adopted localization as a means to grow their business. Companies selling FMCG and consumer durables have also been banking on this growing practice to boost sales. Godrej sells a green variant of its soap Godrej No. 1 in south India and Punjab as people are perceived to be more inclined to natural products. Luxury brand Montblanc adopts different marketing practices across all its stores. Even a letterhead is given a regional feel so as to appeal to the end consumer. LG is planning to introduce its range of microwaves with customized auto cook menus for different communities. So one model of ovens will have a one touch menu for Bengali fish curry while other for Idli and Upma.

    Conclusion

    We Indians are very emotional about our culture, our religion, our festivities. Discretionary shopping is mainly induced by feelings and if the consumer feels that you understand him - half the battle is won. The Indian retailers are in a better position to understand the Indian consumerís psyche. In future with FDI in multi brand retail being allowed, this localization strategy will help the Indian retailers get an upper hand over the foreign retailing companies. The opportunities exist but only time will decide how well have the retailers been able to exploit these.

     

     

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