Thriving on values

It's actually making the retail business dynamic and exciting. The strategies are crafted to suit the latest demands and at the same time, there is always an endeavour to provide some additional values that actually differentiate the brand from others. Ron Johnson, the former Senior VP-Retail of Apple and the present CEO of JC Penney, in his recent interview to Harvard Business Review has said that the legendary Apple stores have successfully tweaked the usual transaction mindset – “how do we sell more stuff”, of the sales persons to value creations mindset, “try before you buy”, wherein a buyer can test drive any product, loaded with applications and types of content that he or she wants and receives a demo on its usage. There is a provision for the customers to have training on the products, and assurance of fastest servicing. Thus, its systematic value additions are beyond transaction.

The art of myriad offerings

Value additions can be on offerings, one such can be done through what Americans call NBOs (Next Best Offers). Take an example of the myriad offerings by Hypercity, internationally reputed hypermarket which is fast gaining its footholds in the Western India. This large format store has come up with the tag line “Big Store, Big Savings”. The retailer has come up with some hit schemes like “Hyper Wednesday”. The purpose is to provide the customers, in the middle of the week, large discounts on fruits and vegetables and other food items. Another is “Hyper Friday”, as it suggests, at the beginning of the weekend, when the retailer offers discounts on electronic products and fitness equipments. Tying up with brands is a common practice among retailers for offering items at discounted rates. This helps both retailers and manufacturers to do a good business while enhancing customer retention. The Republic Day celebration for the world’s largest democratic country takes a leap with the freedom from money constraint as Big Bazaar’s “Sabse Sasta Din” offers items at throwaway prices.

Take a look at how Shoppers Stop has capitalised on the strategy of assembling the world famous cosmetics brands under one roof. The customers are obviously drawn by the tempting options for laying hands on cosmetic brands like Clinique, M.A.C and Estee Lauder at one go. This is the value creation by this popular premium department store which has exclusive tie-ups with these brands.

Tempting store designs pull customers

Customer engagement can be done through spectacular store ambience created through unusual store design. Last year, Swarovski came up with brilliant store design based on the concept “Crystal Forest” emphasising its merchandise, the crystal jewellery and accessories. This unique concept is created through stainless steel prisms. Swarovski especially lays importance on visual merchandising. The rapid changes of seasonal offerings by the brand get highlighted through nicely done thematic window graphics and showcases. The thematic pieces of the season are strategically positioned in the front area of the store.

The retail experience becomes pleasant and trustworthy when the customers get an opportunity to lay hand on the product and feel its benefits. It’s a defining experience of comfort and luxury once a customer steps into the experience zone at a Tempur retail outlet. The brand is the manufacturer of internationally acclaimed high-end mattresses. Their products are made of NASA developed pressure absorbing materials.

Innovative product mix tempts customers

Brands are now wringing their every nerve to stay ahead in competition. That’s another means for value creation. Take for an example, how Adidas made the brilliant application of technology to meet the advanced requirements of the soccer players.  The brand, which has been making soccer shoes since the 1920s, has unveiled a shoe that uses an embedded chip to collect and wirelessly transmit information to players so that they can step up their performance by working on the key metrics captured by the technology. Value quotients for retailers rise with innovative product mix. One of the key focus points for the brands today is the innovation of products. R&D departments are put on hard grinding to come up with products with outstanding features. The trend is so conspicuous lately That it is mind blowing to see how the products have evolved! The refrigerator with built-in radio by Godrej, the luxurious sofa with built-in stereos from the house of Natuzzi to complete the theatre experience have the qualities of eliciting the customers’ interest in the brand and customers’ engagement at the stores as the salesmen get prepared to be bombarded by queries from the customers. This is across product categories. Products with feasibility of uses quickly entice consumers. If we go back to some basic items, we can see how products have evolved over time. Cosmetics brands had introduced some smart products like no-smudge, waterproof kajals and long-lasting lipsticks, which are a hit in the market.  Their popularity shows how much does convenience matter.

COD: a value for e-retailers

Once in an interview, Sundeep Malhotra, the founding CEO of HomeShop18, revealed that for e-retailers, generating trust amongst cutomers is the biggest challenge. And to do so, e-retailers are going the extra mile to bear the cost of delivery before receiving the payment for the item ordered. Today, COD or Cash On Delivery has opened up the mental block that consumers have towards e-retailers. This payment option actually makes up for what a virtual store lacks – the touch & feel of merchandise in a physical store before the payment is made. It is risky but that’s one value the e-retailers need to add for the business growth.

Cutting costs through transparent SCM

Modern age supply chain management operates on technology. Today, corporate houses are happy with 3 PL services. But, in the process, what is ignored is inside-out understanding of the business direction because of too much reliance on outsourcing. However, through technology, a lot of streamlining has been done in order to add value to the company in terms of less loss or wastage, ultimately increasing the savings. 

A study by two American experts, Thomas Choi and Tom Linton, has revealed that a company should have control over the basic levels of supply chain. Coming to the big organisations, the common practice is to have a tailor-made solution from the supply chain service provider, which in order has the link with other smaller vendors or suppliers who are at the lower tier of the supply chain. These experts suggest that direct communications with these smaller vendors can produce quality and innovation with better hold over cost control. They cited an example of Apple and LG Electronics (Linton himself was Chief Procurement Officer of LG Electronics) who worked directly with OEMs (Original Equipment Manufacturers) to develop new, innovative technology. At the same time, the direct touch with OEMs means better monitoring of cost.  Also, these vendors, who are positioned at the lower rung of the supply chain, are great resource for understanding the market shift as they work with multiple numbers of big companies.  

Retailers cannot ignore the practice of creating values. For the sake of their own good and customers’, their maximum effort goes into inventing new avenues for adding values, and the coming days will be a lot more interesting to see how tough challenges  smoothen through value creations.