Perk-onomics!

By Cleofe Maceda, Staff Reporter Published: April 27, 2009, 23:16

Dubai: At a Babyshop outlet in Oasis Centre, shopping with the little ones need not be a hassle. Inside its sprawling 25,000 square-feet store, there's a full-fledged mother's room where babies can be fed, have their nappies changed and even be left to sleep. A dedicated play area, equipped with mini homes, slides and video games, also ensures that children are engaged in play and edutainment. The good thing is, all of these are free. The retailer of children's toys, fashion clothing and nursery furniture believes that by giving privileges like these to their customers, they are able to win consumer loyalty and attract new clients. "We work towards finding ways of making [the shopping] experience as comfortable as we can," Rahul Saxena, marketing manager at Babyshop, told Gulf News. Babyshop's new strategy falls in the category of "perkonomics," a term coined by analysts at trendwatching.com to describe a "new breed of perks and privileges, added to a brand's regular offerings." According to Colin Beaton, managing director at Watt International, a retail design and strategy consultancy, "perkonomics" is highly relevant to today's retail landscape in the region and could help retailers beat the financial turmoil. In fact, compared to slashing prices, giving perks is seen as a more effective tool to keep shoppers coming back. He noted that consumers don't just buy on price alone. They rely more on their perception of value when deciding which brands stay loyal to during the recession. In fact, consumer expectations regarding brand value went up 20 per cent, according to the 2009 Brand Keys Customer Loyalty Engagement Index. "At the moment there are people who have lost their job and are slashing spending. There are people who are fearful of losing their job and are cutting back as a precaution. Then there are the independently wealthy who are largely unaffected, but may cut back as conspicuous consumption becomes unfashionable for a while. Understanding consumer behaviour and how to respond to it is key to success in a downturn," Beaton added. Beaton said there are a lot of great examples of companies using perks to win consumer loyalty, and they range from simple moves to demonstrate consideration and care, to extravagant ones to demonstrate alignment with the customer. Some of the good examples, Beaton said, is Nokia's promotional campaign in the Philippines. The brand has installed handset charging stations for all Nokia users throughout Metro Manila to use at no cost. Babies "R" Us stores also introduced reserved parking spaces for expectant mothers years ago. The program now covers 250 stores across the United States. "The easiest way to see how perkonomics work is to look at early examples with loyalty programmes, which 80 per cent of UK and US adults participate in to some degree. Research shows that offering savings and having a strong partner network has a significant impact on increasing share of wallet, whereas higher discounts do not produce the same result," he said. Beaton explained the idea of perks is inspired by incentives employers offer their staff. Studies have shown that employees offered cash rewards for performance don't remember what they did with it almost 20 per cent of the time, while 32 per cent say it does not improve their performance. "In fact, cash rewards often present the risk of being perceived as not big enough, whereas alternate tangible benefits are viewed as a gift, are more memorable, and have a great impact on performance. There's plenty of evidence that perks work, but the key is to keep them current and relevant," he added. In order for perks to work, Beaton encouraged shops and stores to understand how consumers behave during a recession and invest in their brand, instead of simply cutting prices to lure customers. "Research shows that retailers who continue to invest in their brand during downturns reap the benefits in the short and long term. With less money to spend, consumers go for brands that represent values that are important to them and that they have some kind of emotional connection with. Think about what values your brand represents and promote them aggressively," he added. Saxena agreed that giving perks to customers indeed works for retailers especially in these tough times, when every shopper is on the lookout for value additions. "We believe in rewarding our patrons with our own services, for which there is no added expense to our dear customers. We also have a system to process customer feedback that has been helping us evolve and improve these services," said Saxena. Ali Hussain Cheaito, retail sales manager at luxury shoe brand store Valencia, said they also offer perks to their customers - although a bit different from what other retailers are offering - which include sneak previews of their latest collection, invites to special events and functions, among others. "Any strategy aimed at improving customer service always works and is very effective. Customers these days are looking at getting little more than just a product, but the overall shopping experience," Cheaito said.

Women think of shopping as frequently as men think about sex!

Wednesday, 11 June , 2008, 15:45
London: Whether it is that new pair of Manolo Blahnik heels or that must-have H&M skirt, thoughts of indulging in ‘retail therapy’ dominate young women's waking hours as much as thoughts of sex dominate young men’s minds.
The findings is quite evident from the study, which has shown that 75 per cent of young women think about shopping almost as often as young men think about sex.
Thoughts of buying that new dress or a much sought-after pair of shoes pop into their heads every 60 seconds, while men are believed to think of sex every 52 seconds, according to a survey by fashion website cosmopolitan.co.uk.
Most worryingly for some of those sex-obsessed men, 50 per cent of the women surveyed said they preferred shopping to spending time with their partner. Assuming eight hours of sleep a night means shopping trips consume womens’ thoughts an astonishing 960 times a day and 6,720 times a week. The survey interviewed 778 women between 19 and 45, and 74 per cent admitted to thinking about shopping every minute. Almost 50 per cent respondents said that they did not wear everything in their wardrobe and 40 per cent described themselves as bag or shoe ‘addicts’. Even the threat of a credit crunch will not stand in the way of a shopping spree, with 62 per cent saying they will put the damage on their credit card. Nearly a quarter said they would think nothing of spending 200 pounds or more on an item they particularly wanted.
"So many women displaying this level of preoccupation would indicate widespread addictive behaviour," the Telegraph quoted psychologist Dr Jane Prince, of the University of Glamorgan, as saying.

Indian Retail can leap from 19th to 22nd century: Retail Guru Paco Underhill

Apr 30, 2008
Paco Underhill, Retail anthropologist, Founder & MD, Envirosell Inc. believes that time is right for organised retail in India to blossom.
Addressing a marketing forum in New Delhi, he stated, “India has terrific opportunity of jumping from 19th to 22nd century – question is how to do it and how to do it right”.
Underhill was speaking at Technopak’s 2nd Indian Consumer Mindscapes 2008: Powering Business through Foresight conference in the capital on April 29, 2008.As per Underhill, organised retail provides better product at a better price. And there is no reason why organised retail cannot coexist with mom n pops stores. “It does not kill family businesses. It gives them opportunity to reinvent themselves”.
Underhill also discussed the challenges of Indian market – namely diversity, logistical issues and convergence. As per him, Diversity of Indian market presents a challenge to the retailers as consumers in various parts of the country – say Delhi, Calcutta and Bangalore are a little different. Logistics is another major concern area for retailers– it takes more time and money to move a product from Mumbai to Delhi than it takes to move it from New York to Tokyo.
Underhill recommends that Indian retail sector should learn from other emerging markets like Brazil and Mexico, which have more similarity with Indian markets, rather then “copy” the more mature western markets. As per Underhill roadmap for retail in India is obvious. He recommended five points for the organised retail in India: a) Leap from 19th to 22nd centuryb) Europe and North America are interesting but irrelevantc) Look for new modelsd) Look to Brazil, South Africa, Dubai, Korea and Mexico for idease) Getting goods from Mumbai to Calcutta should become cheaper
Combining traditional market research techniques, anthropological observation methodologies and videotaping, Underhill’s company Envirosell has established its reputation as an innovator in commercial research and as an advocate for consumer friendly packaging and shopping environments.
Underhill has spent more than 25 years conducting research on the different aspects of shopping behavior, earning his status as a leading expert and pioneer in the field. Paco helps companies understand what motivates the behaviors of today’s consumer. His research shows how today’s retail world is ruled by factors such as gender, “trial and touch” and human anatomy.

Indian Retail - An Update:Arvind Singhal / New Delhi April 24, 2008

In recent weeks, the attention of the nation seems to be largely riveted on issues such as inflation, political realignments and posturing in the backdrop of impending state and general elections, meltdown in equity and real estate markets, and the Indian Premier League. In this din, the media, the politicians, and a motley group of rabble rousers have almost overlooked the extraordinary developments that have been taking place in the Indian retail sector in the last few months.
After the entirely inexplicable sound and fury of 2006 and 2007, when even the rumours of a mid-level manager appointment at Reliance Retail made headline news, when spokespersons of the Left (and a few other parties) routinely frothed venom at the danger of modern, organised retail, and when a report from ICRIER on the impact of modern retail was being awaited with greater anticipation than J K Rowling’s latest Harry Potter tome, the near silence at the much-awaited debut of Bharti Retail’s (and Wal*Mart’s?) Easy Day supermarket at Ludhiana recently is deafening. Aditya Birla Retail successfully launched its first hypermarket a few weeks ago and again, the event was hardly taken note of. Shopper’s Stop won the prestigious “emerging market retailer of the year” award at a recent international retail forum and its managing director, BS Nagesh, was inducted into the World Retail Congress hall of fame (in the august company this year of Sir Phillip Green of the UK, Amancio Ortega of Inditex, and Mike Drexler of Gap fame) and yet, the media entirely ignored this very creditable international recognition of India’s (arguably) first home-grown organised retailer. Shoppers Stop, incidentally, has also been the first to launch (a few weeks ago), the first really serious catalog shopping venture in India in partnership with Argos of the UK. Finally, it has been a pleasant surprise that the recent announcements from Reliance regarding their joint ventures with a few leading global iconic retailers including Marks & Spencer have so far been taken in their stride by the traditional strident opponents of modern and international retail.
It may be yet premature to believe that India has matured as far as modern retail is concerned. However, it is certainly maturing in its acceptance of the right of modern retail to coexist with the traditional one. Despite many modern retailers clocking monthly revenues (or poised to clock very shortly) that will make each of them a billion US dollars or bigger business in the current or the next fiscal year, there is no sign of the massive socio-economic disruption the Cassandras and Don Quixotes were fearing. If at all, the spectre of rising inflation has made the need and the relevance of strong, organised national and regional retail chains even more obvious and especially of those whose business models are based on discounting/every day low prices. At the same time, it is also very heartening to see the maturing of the Indian media, which is now getting out of the “breaking news” syndrome about announcing entries and partnerships of major global retailers even when there was no basis for such reporting.
Hopefully, the media will now start focusing on the actual performance of the many large retail businesses already operating in India and even perform the role of unofficial ombudsmen in the absence of any cohesive government policy or regulator relating to the retail sector.
The next 24 months will see heightened activity in the Indian retail sector. At the recently concluded World Retail Congress at Barcelona, while the official theme was “sustainability”, the unofficial theme was “surviving slowdown in the developed markets by focusing on the developing ones”. This time, India again was the star attraction and more than one global mega-retail CEO talked seriously about their interest in India. Hence, whether FDI is permitted or not, modern retail (of Indian and international origin) will continue to grow exponentially and is now well poised to hit the $100 billion (about Rs 400,000 crore) revenue mark in 2013 or 2014 and perhaps $200 billion (about Rs 800,000 crore) in revenues by 2018 or 2019. Of course, even at that level, it will just account for about 25 per cent of all retail consumption in India and hence the so-called traditional retail will have also grown by almost 50 per cent from the level in 2008. Rather than behaving like the ostrich in the sand, the government must now firmly accept the reality that India needs an efficient and organised retail sector to supplement the traditional retail system especially when it comes to categories such as food and other basic needs. The government must facilitate this by formulating a holistic, inclusive policy framework that allows the coexistence and growth of both the large and the small in a pragmatic way. Unrestricted access to capital will be a major need for both Indian and international retailers, and hence any dogmatic restriction on the origin of this capital will be counter-productive for India itself and especially for Indian retailers who now need much more capital to compete with the global giants.

Definition : Organized Retail(ers)

Defined as those companies engaged in retailing which have a network of retail outlets, compared to the stand alone format characterized by the traditional sector, and those who adopt professional management for day to day operations.

Book Review : It Happened in India -Kishore Biyani & Dipayan Baishya

Its Scary..!At this juncture when an optimist about the retail sector in India reads this book, he would hate it(both the book & retail). Cause this book begs to prove that the largest retail company in the country was formed by...fluke. The book is full of tales of Biyani's hits and misses vouching for his anarchist approach in the whole gamble. People like Rama Bijapurkar, Ushir Bhatt, Sameer Sain have been penned as mere bystanders to the whole roulette. From a literary perspective, this would go down as an Indian take on - Made in America- Sam Walton. But as Biyani writes about his denial of regret for the premature listing of the company on the stock exchange, i feel even the book is a little premature. Biyani talks about the concept of Sabse Sasta Din and you would think he invented it, but actually ask any large format retailer and the would say Biyani just discovered it. (Anyways, he's the first to pen it down). The book gives you a sneak peek into varied subjects like Memetics, Observational Research, Jonathan Livingston Seagull which sounds very clichéd of this genre of Business auto/biography. Biyani has tried to invent new concepts like India One,India Two which to me are very abstract, irrational and blur. At a certain point during the end somewhere the book looks like a PR initiative for the National Institute of Design and a certain design firm called Idiom Design. Biyani takes a dig at his critics in the press as well as the competition in terms of Shoppers Stop, The Piramals, Westside. But in his mention of FDI and about the FDI entrants in 1997 he mentions Dairy Farm-RPG, Nanz-Marsh Supermarkets-Escorts, but conveniently ignores the mention of the 3rd major entrant, Lifestyle which looks intentional. Overall the book is a good read for a person who's new to Indian Retail, its also at a good price point of Rs 99, which i feel is a good tactic. But comes no where close to Made in America, which IHII tries to emulate. i feel as though i just heard Anu Malik's take on Pink Floyd.

Share of Organized Retail in India

There are 12 million retail outlets in India, of which only 900,000 or 7.5% are in the organised segment. This is expected to surge by 40% in ’08.
Naval Bir Kumar
Managing Director, Standard Chartered Mutual Fund