Setting the Age of Massophistication

While the Indian shopper embraces modern retail trade format, traditional grocery stores continue to dominate the Indian retail scene and are frequented more often by shoppers.

Convenience a strong driver: Shoppers are loyal to their regular mom-n-pop stores on account of the ease of credit facilities, discounts, extended shopping hours, odd hours home delivery, and personal attention to each customer. Such convenience is hard for modern convenience stores and mini supermarkets to match. Modern day Indian C-stores are somewhat befuddled between the convenience of a mom-n-pop store and experience of a supermarket. Neither are they offering the convenience of the local grocer nor the merchandise selection, display, quality, of a supermarket. Says Ram Kumar Singhal of Singhal Departmental Store, Faridabad “Our business has not been affected by the opening of modern convenience stores. But yes, big hypermarkets have their own charm and they offer a variety of products, so maybe people like going there on weekends for having a splendid shopping experience.”

Hypermarkets-What makes them special?

With the choice of several modern format C-stores, consumers have got more options to experiment with, resulting in shoppers flirting across modern store banners. Supermarket shoppers visit four or more stores in a month but there remain a question mark over their loyalty. The more the discounts, the more the customers and vice-versa have become more the norm than any form of loyalty.

On the other hand, Indians are just beginning to realize the joys of hypermarket where they do not have to go from shop to shop but get many things under one roof at a reasonable price!  “The greatest USP of a hypermart is the number of products that can be retailed under one roof thus increasing the salience for customers to visit them for all their shopping requirements,” says Mr Peshwa Acharya, Vice-President & Head - Marketing & Consumer Experience, Reliance Retail Ltd. “Reliance Mart offers customers products across categories like food and grocery, fruits and pulses, fashion apparels to cosmetics, electronics to furniture, footwear to homecare & décor besides many other value adds like car care accessories amongst many others,” adds Acharya.

The middle class consumer is increasingly patronizing hypermarkets. The shopper base spreads across socio-economic groups, with more than a quarter of customers today belonging to SEC C category. Hypermarkets are also the preferred destination for youth. Cherry picking customers whose buying decision comes more from the sops offered also find hypermarket a shopping haven due to basket sales and promotional offers. Many FMCG companies also prefer joining hands with hypermarkets for launching their new products thus giving demos, free trials etc to entice the customer.

A positive outlook for Hypermarkets: Indian cities have the potential to have over 300 new hypermarkets by 2011, mostly in tier-I and tier-II cities, according to a joint study by global auditor KPMG and the Associated Chamber of Commerce and Industry (Assocham). Assocham President, Mr. Sajjan Jindal said that given the expected growth in the number of households as well as in income and consumption per household in urban India, particularly in its leading 25 towns, 5 or more hypermarkets per city is feasible. The Assocham President, however, pointed out that after 2011, the organized retail would grow by 15 per cent as enough competition will have emerged by then and the Chamber expects that in most of the 400 good towns in India, the number of hypermarkets would have risen to 475.

The Mantra for Hypermarket: “In future, the successful retailers will be those who use this shopper information to target their growth via advertising, merchandising and promotional activities, and offer a product range that offers the best demographic fit with the shoppers who visit their stores,” says Mr Asitava Sen, Director, Retail Consulting, The Nielsen Company, India.  Store planning is correlative to any retailer’s success. Some customers prefer to purchase smaller quantities to meet their daily requirement while there are some customers who prefer shopping at regular intervals like weekly or fortnightly. They wouldn’t mind travelling a little distance for purchasing their daily consumables and household items. “Reliance meets requirements of such customers by having Reliance Super co-located closer to large societies or key junctions,” says Acharya.

A wide array of products is another factor driving store selection. Retailers must give the shoppers a complete shopping experience within hypermarkets and therefore it’s necessary to avoid stock-out situations and carry an assortment of product categories and brands. Keeping regular customers happy by stocking categories and brands that are important to them is a key mantra to avoid banner switching. Food and grocery is a low involvement category, so convenience and easy access to product categories is particularly important to today's grocery buyer.

“Internationally, many hypermarkets choose suburban or out-of-town locations that are easily accessible by automobile but in India because of poor infrastructure and low penetration of automobiles, they are located within city limits,” says Ms Esha Anand, Business Head (Marketing and Visual Merchandising), HyperCity Retail India Limited. Ms. Anand also added that due to their format, hypermarkets offers products which are insulated from recession like food and other essentials products. In boom times, these formats can also scale up by introducing aspirational categories. 

Hypermarket-The future beckons

As slowdown takes a back seat, the second wave of prosperity is on its way – and will radically change the structure of the needs of the people of India. Hypermarkets which promise a nicer quality of life, a promise to create the next big retail revolution and will be the biggest contributor in organizing retail.