India braces for a retail revolution

India's retail landscape, a sprawling jungle of family-run grocery stores, hawkers and pan shops, is changing as local chains expand and international players move in.

Popular domestic retailers like the Future Group, Shoppers's Stop and Reliance Fresh are hatching plans to pepper Indian cities with thousands of new stores. Similarly, The Aditya Birla Group and telecom major Bharti Enterprises are set to enter retail with a mix of formats, from hypermarkets to specialty shops. Meanwhile, heavyweights such as Wal-Mart and Tesco lobby for changes to laws restricting foreign ownership with increasing success.

'Organised retailers' as these companies like to be called, promise a reliable and consistent consumer experience. More importantly for marketers, they give consumers the chance to interact with a broader range of brands.

This, say industry wags, could spell the end of the 'push' (or, more accurately, 'shove' marketing formula familiar to India. "Although there is a perception (that organised retailers) are a threat to FMCG marketers in terms of margins, there is no doubting the opportunity, particularly for high-end brands,"says Saugata Gupta, head of marketing and sales, Marico Industries, a leading Indian consumer goods company.

"We can now run micro marketing campaigns, and target them locally to just a few outlets."

And more information about customers is helping fine-tune campaigns. Formats like Big Bazaar, Food Bazaar, Spencers and Hypercity are accumulating vast reservoirs of consumer buying data for more targeted strategies.

"Marketers need to be able to come up with more balanced strategies and segment consumers by channel,"says Gupta, who is quick to add: "local mom-and-pop stores still make up over 90 per cent of the total retail market (which is worth US$300 million, around 14 per cent of India? GDP)."

Marketers and retailers are now realising the importance of working together. For retailers, collaboration means shifting higher volumes. For marketers, a dominant share of shelf-space enables brands to expand their offerings. 

"Organised retailing is allowing brands to develop products specific to the channel,"says C K Ranganathan, MD, CavinKare, the hair and skin care manufacturer. "And retailers are inviting us to partner them to grow categories within these outlets."

Organised retailing is also prompting a fresh approach from  agencies. Josy Paul, chairman and MD, David, believes India'd new dawn of retailing requires advertising that is more localised and direct, "from eyeballs to footfalls"

His agency, which handles brands such as Spaces, a home improvement format, has prompted an internal re-assessment of what a creative agency should bring to the table for its clients, he argues. "If it's a shirt or trouser brand, I have to sell it for my client at the shop. If it's a multiplex, then our advertising has to reach media planners and persuade them that multiplexes are an important medium,"he says.

For media, brands face problems similar to any other fragmented medium, says Deepak Jayaram, director, D-mart, a retail specialist and part of GroupM. "Retail media, such as in-store TV and banners in malls and supermarkets are nothing but conventional media adapted to new channels. More brands will be built within a retail environment in the future and, as marketers, the question is how we engage consumers as environments change."