Training_passion
Zonal Training Manager
Naharkatia
Manager-hr
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COMBATTING COMPETITION IN RETAIL

As Indian retail gets more organized and more stores open up to tap the still unrealized potential of the huge market that is Indian retail, it will become imperative for the retailers to develop specific strategies to protect their market share. The competition is coming from the ever increasing number of retailers who are also trying to win the share of the Indian retail pie.

The key to sustaining a competitive edge and winning over the customers, while retaining the existing customers would determine the survival of the retailer in this competitive world.

As we see the continued entry of global giants in India, the existing retailers will have to innovate, experiment & take risks to stop the erosion of their market share to these MNCís. Most of the retailers are thus gearing up to meet this challenge by investing hugely in their supply chain management & developing a competitive & compatible relationship with their vendors & suppliers. The key for the retailer here is not only to avoid the erosion of its customer base, but also to generate more customers for its products & services so as to maximize the business & survive in the market by achieving economies of scale.

As the business will grow, organizations will become stronger and would be in a better position to insulate themselves from the competitive onslaught of these new entrants as well as the existing ones. A retail chain which could successfully withstand this competitive pressure would see itself growing in stature & would be able to fortify its business in the years to come.

In order to remain competitive & customer friendly a retailer has to develop strategies which are in sync with its organizational objectives. An organization can achieve & maintain the competitive advantage by developing certain success factors. Once these success factors are identified, the retailer needs to assess itself and the competition on these factors & see where it stands against the competition. If the retailer stands fairly strong on these success factors compared to the competition than its good, otherwise the retailer will have to prepare a comprehensive strategy to put itself on the top on these success factors to remain competitive and thrive in the market. Once the assessment is done, the retailer will also become aware of the areas where it has an edge over the competition & areas where it need to improve to remain competitive. Some of these key factors are;

1. Customer Loyalty :

It sound very clichť, however it still is & may remain an area where every retailer have continuously found themselves lacking. Whatever is the strategy adopted by the retailer, they should be aligned with an aim to gain customer loyalty. Customer loyalty happens when a customer patronize a particular store even though there is not much to differentiate between that store & its competitor. E.g. When a customer has to visit a departmental store and say both Lifestyle & Shoppers Stop are located within the same distance from his home. Here, the choice of the store by the customer will totally depend upon which store the customer is more loyal to. There are other things like a friend forcing to choose a particular store are also possible, however, majority of the decisions will be based on the strength of loyalty that a customer exhibits for a particular store.

Customer loyalty is difficult to achieve, however itís not an impossible task to accomplish. Tending to the small requests of the customer, treating every customer as an individual & trying to anticipate the unique needs of the customer even before the customer realizes it, helps in creating customer loyalty.

When a retailer can create an emotional bond with the customer & the customer feel attached to the brand, customer loyalty is created. At times loyalty is also created by default. E.g. Suppose a young boy gets a wrist watch of a particular brand on his 7th birthday as a gift by his father, the child will become emotionally attached to that brand and might become a loyal customer of the brand when he grows up and have enough money to buy that product on his own. A customer entering a store with young kids, expects his kids to be pampered or given attention. Even if you do not give proper attention to the customer, but could make his children happy, you would be able to create customer loyalty. However, it doesnít mean to stop listening to the customers and just pouncing on their childrenís, the moment they enter the store! However, creating an emotional attachment with the customer helps in gaining their lifelong loyalty.

Here one thing more needs a bit of attention. A retailer needs to understand what kind of image it wishes to create in the customerís mind & whether that image is consistent with the image that the customers have in their mind. If the image is consistent, the retailer has been able to position itself properly in the customerís mind, however, if there is a deviation in the image, the retailer has to bring about changes in the way he reaches out to its customer. A change in the marketing strategy, training the staff or rationally looking at the storeís location will help in understanding the weak areas and preparing an action plan to plug the loopholes.

2. Managing the People :

Effective management of human resources is and will always remain the most critical success factor for any retailer irrespective of the place it is located in. To manage people effectively, it is very important that we keep them busy. Employees who do not find anything to do will be the first to get de-motivated and think negatively of their jobs. The employees need to clear about their goals. The management should also prepare a plan as to how the employee can go about achieving those goals. To reach a destination, we have to walk or drive in a particular direction, if we are unaware of the direction, we can never reach the destination. Thus, it becomes very important that we give specific individual as well as team goals to the employees which can help the organization in keeping employees motivated and inspired towards their jobs.

Most of the people who are working in the retail industry are youngsters, especially those who are working as frontliners. To motivate these young minds and keep them excited about their job is something which has been a big challenge for the retailers. As most of these people are also studying in addition to working, it becomes very important that the retailer understand their needs and schedule their rosters accordingly. This might not be possible in all the cases and thus its important to create an environment where they feel that there needs are also kept in mind by the superiors while formulating storeís policies will act as a positive reinforcer while they perform on their jobs.

As most of these people treat their job in the retail industry as a stop gap arrangement, if the retailer can chart a career path for them in the organization and make them feel that they can make a career in the organization they have started working in, they would be much more positive and enthusiastic about their job and would put in their cent percent effort to achieve the organizationís objectives.

Employees who are involved in a continuous training programme are more motivated and committed to their jobs. The organization should continuously try to improve the skills & competencies of its employees by involving them in training. The training will act as an incentive for the employees who are seeking more responsibilities or want to move up the organization ladder. They would feel that the organization wants them to improve and promote and that is why they are being trained. With the help of training the retailer will also have multi-skilled people and thus everyone would become a replacement for each other.

As, the growing retail industry faces manpower crunch retaining and attracting the right manpower will become a key competitive advantage for the retailers that would be very hard to dent by the competitors.

3. Location :

Where the retail store is located goes a long way in deciding the success or failure of the store. A store with good location gives competitive advantage to the retailer which is difficult to duplicate. The right location can be the deciding factor in the success or failure of a store. As the space becomes a premium commodity, more & more retailers are realizing its strategic importance & are on the lookout to get more of it not only in metros & but even in class II & III cities. As more and more retailers decide to open more stores, the place where they will be located will also assume significance.

As retailers open new stores to add on to their existing base of stores, they will act as an advertisement of their retail brand. E.g. Cafť Coffee Day in India doesnít spend on advertising, instead they are dependent on the number of stores that they have opened and customers coming to their stores for advertisement of their brand. As more and more store are opened people become exposed to the brandís name & its peculiar logo thus reducing the spending on advertisement. Cafť Coffee Dayís concept is similar to the strategy adopted by Starbucks wherein they keep opening stores in a particular location, till that market become saturated at times even going in for kiosks, to expose the brand to a large number of customers. The large number of stores give the brand necessary exposure and publicity which in turn helps in attracting more customers. E.g. On Brigade Road in Bangalore the Cafť Coffee Day stores are located on both the sides of the street, thus when a customer finds it as an easily available option to hang out and have coffee, they choose it and gradually become frequent customers. As the number of stores are so large in numbers & present in almost locality the customer inadvertently starts frequenting them and become loyal customers.

Multiple location presence of stores also helps the retailer in frequent deliveries, which helps in retaining the freshness of the merchandise. Also, as the retailer opens store in multiple locations, products not selling well in one store can be sent to other store where the demand is good for that particular line of merchandise. This will ultimately help the retailer in achieving the overall growth of the retail chain.

The location selected also contributes towards the image of the store. If a high end store opens its store in a mall where mostly discount retailers are present, then the image of the retailer gets diluted in the customerís mind. The location of a store not only determines the success or failure of that store but also affects the overall brand image of the company in the customerís mind in the short as well as long run.

4. Unique Merchandise :

The organised retail industry is witnessing a huge influx of imported as well as further developed indigenous products, this has made it difficult for the customers to distinguish between any two retailers on the basis of products that they are carrying. In fact every retailer is seems to become a substitute for one another. So, how does retailers offer the right product to the customer and at the same time also be able to distinguish itself from others? As brands become difficult to distinguish, retailers are now developing in-house or ďprivate labelsĒ. Private labels helps the retailer in presenting a product to the customer which will not be available anywhere else. As customer become loyal to the brands, they will also become loyal store customers, thus increasing loyalty for the retail chain.

Many of the big Indian retailers like Globus, Shoppers Stop, Lifestyle and also supermarket chains like Food Bazaar, Sabka Bazaar etc have developed private labels to be sold exclusively in their own stores. These labels are quite successful and contributing a major part of their overall sales. Encouraged by the success of private labels, the retailers are now working vigorously on their further development to establish the uniqueness of their brand.

One more way of offering unique merchandise would be to enter into a strategic tie-up with few leading designers who can be asked to design only for their retail chain. This will not only reinforce the image of the retailer as fashion forward but will also provide the designers with an easy platform to reach a vast number of customers. The customer who are designer patrons will also start patronizing the store.

Besides, this anticipating customerís expectations and assessing their needs will also help in developing labels which cater to specific needs of the customer. This will help not only in gaining their loyalty but also the loyalty of their family and peers.

5. Technology :

The world today moves on technology. What is new today would be obsolete tomorrow. Thus to remain competitive, itís imperative to keep oneself updated with the latest technology & innovations. Whichever company has first embraced technology for further development of its operations has been able to develop & gain competitive advantage in the long run. Wal-mart in the retailing industry was a pioneer in implementation of the latest available technology. Wal-mart used technology not only to optimize its inventory but also to maintain and sustain its workforce.

Latest technology in terms of billing softwares, lighting, maintaining an efficient supply chain, logistics etc help the retailer to gain competitive advantage over its rivals who are still continuing with the old technology. The technological supremacy helps the retailer to remain ahead of the competitors and also helps in attracting more customers towards the brand. In India e.g. there are few retailers like Reliance & Future Group which are contemplating the implementation of RFIDís. This once done will give them a competitive advantage in various functions of retail operations like merchandising, shrinkage control, costs as well as time by reducing the manual operations.

Thus, it is quite important for the retailer to remain technologically updated to avoid giving away the initiative which might have been developed because of early entry in the market.

6. Relationship with the vendors :

Relationships with the vendors will be critical for any retailer to remain successful in the business. By developing good & strong relation with the vendors, the retailer can derive various advantages which wonít be available to the competitor, thus developing a competitive advantage over them. The retailer can get the exclusive rights to sell the merchandise in a particular region, or gain merchandise at a special price or terms. The retailer can also work in a better way to reduce the lead time and moreover get merchandise which is moving fast even at a short notice.

The retailer can either pass on these benefits to the customers or add more value to its offering to attract more customers. However, to establish strong relations with the vendors, the retailer has to work out a relationship which is mutually beneficial for both. Thus instead of thinking only about oneís profits, both have to work towards maximizing the profits of each other. The negotiations should be based on a win-win approach where nobody feels lost when the deal is finalized.

Establishing good relations with the vendor goes a long way for a retailer to establish supremacy in the industry. Moreover, when a reputation is established that the retailer is interested not only about his but also his vendorís profitability, you will have people who will be willing to work with you in the long term and tend to your requests in case you wish to buy more or return merchandise when it is not selling well. Getting the vendorís approval in this case will help the retailer to buy merchandise which is selling well and thus realise the necessary cash to further the business.

Thus, good vendor relations act as a source of strategic competitive advantage which are very tough to be replicated by the competitors and provide the retailer with long term competitive advantage.

7. Customer Service :

Successful retail business is built on the foundations of good customer service. There is no substitute to good customer service and the sooner retailer realizes the better. There has been so much written about the importance of providing good customer service, that retailer just think of conducting a short training programme in customer service for their employees and feel that they have discharged their responsibility. However, customer service is not only about providing good service as also about accepting the mistake when the customer is not provided with one. A retailer can train its entire workforce in providing good customer service and still fails to tend to small requests of the customer like exchanges or returns is not doing any favor to him or his business.

Tending to the small requests of the customer and understanding their needs are few basics that retail business should be working upon. Also, whenever any mistake is committed which make the customer unhappy, it is important to take the responsibility and taking an action to avoid a similar happening in the future. E.g. even if you have sold say a pair of shoes to the customer, the heel of which has broken off the next day and when the customer comes in, instead of apologizing straightaway, you assume the role of a investigating officer and spew a barrage of questions towards the customer, he is bound to get annoyed and angry. No, matter what wrong has been committed, if a sincere effort is made by the retailer to make things right, customer appreciated and is even willing to forgive for him for the past incidents.

Customer service is all about active listening and making appreciative inquiries. Appreciative inquiries are those which focus on the positive side of even the most pessimist situations.

Training people to be good listeners and action oriented will help in gaining the loyalty of the customers in the long run. Also, sensitizing the employees towards the customer needs will be automatically reflected in their behavior on the shop floor.

Here, it is also important that the top management also participates actively in these activities and create an example in from of the whole team to encourage them to provide the best of service to their customers.

8. Price :

The price is not the only factor in the success or failure of a retail business, though itís quite important. Itís important not to mimic the competition and try to beat the price with even a lower as it is not a feasible solution in the long run and would dilute the brand image of the retailer. The competition on the price front can be beaten by providing the customer with value for money and an experience which is unique to the brand. However, it does not mean that the price in your stores is un-necessarily higher than those of similar competitors providing a similar level of service, as that will also affect the image of the store in a negative way.

As far as the price is concerned, the customer needs to be sensitized towards the value that he will be getting when he is doing business with you than the competitor. Like, you can have more liberal return policies, in house tailoring facilities, sending gifts and cards on birthdays, keeping a record of the important dates in the customerís life and reminding them of the occasion even before they realize it will help in earning their loyalty which will be difficult for the competitor to match.

9. Advertising & Promotions :

The important thing is to make the store an exciting place to visit & shop. This can be done by running good quality & unusual promotions which are pre-planned with marketing tools to be used already decided & ready for implementation.

Giving special attention to the store windows as they are responsible for generating close to 25% of the customer footfalls in the store. Store windows help in creating a distinctive character of the store which can set it apart from the competition. Thus, windows should be given high priority as a competitive weapon.

The dťcor, the lighting, the merchandise, the service needs to be in tune with the brand image and thus suiting the likes of customer profile. Changing displays often will help in giving a fresh look to the store every time a customer visits the store.

10. Training :

This is one area where the retailer can focus a bit in order to improve the level of interaction that is taking place between the customer & people who are responsible for providing the right solutions to the customers. This can be a part of human resource management, however as this function ahs assumed huge significance owing to the lack of skilled manpower in the industry, it is important that the retailer understands this and create a workforce which fiercely loyal and trained in all aspects of its business.

This will not only give the retailer that competitive advantage but also dent the entire competition the hard way and take the business altogether to a different level.

Use public relations & donít wait for news to happen; make store news happen. For example send the local media write ups on fashion trends, product details, use care instructions, tips on fittings, highlights of the industry. Attend as many shows or seminars, read as many periodicals, visit as many retail hubs to keep pace with the latest lines, new merchandise, new services, style trends. Talk shop with other retailers to understand the practices outside your company. Always keep a tab on the competition but never be afraid of it. Competition will enhance your performance.

And finally, think from the customerís perspective and you will know what the customer is exactly looking for. This will give the business that competitive advantage.

Hi,
Thanks for a very good article on retail industry. I am working in the HRD dept of a retail company. We are dealing into perfumes & cosmetics having about 80 stores across india. As an HR, i am facing a problem regarding the attendance of the counter sales people and business development people who are based outside Mumbai. It is not possible to call each and every employee and enquire whether they are in the store in time. We also thought of giving swipe cards to each of our employee based outside mumbai so that we can track their in and out time. But again we thought that the swipe cards can be misused as 2 counter sales people working in the same store can help each other in swiping each other's cards.
What to do in this situation? Can software or policy help solving this problem.
Would require help from all cite HR members
Regards
Deep

i think u can go for a new technolog called RFID. by this u can moniter things/people without being in direct contact. This concept is very popular in SCM and logistics. hope u will find it useful
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