Leveraging Retail Formats

The evolution of retail formats in India have been driven largely by the critical need for an optimal location and therefore visibility, a critical mass of consumers, and ultimately profitability. When you

connect a good location which then leads to a higher visibility, which in turn drives greater traffic to a store, you have optimal opportunity to drive sales through higher conversion. Therefore a retail format that supports the brand and provides a platform of visibility is critical to its success.

In the heightened clutter of retail spaces today, achieving brand saliency and greater visibility continues to pose a serious challenge for retailers. An overwhelming part of retailing continues to happen on crowded high streets where retail stores compete with not only each other but a plethora of small disorganized stores and street vendors all jostling with each other and vying for the consumers attention. Brand signages struggle to keep afloat in the sea of advertisments, hoardings and neon signs all peddling services of auto parts shops to tailors to the local sweet shop. In such an environment, the task for a marketer is to ensure that his brand logo and identity is communicated overtly to the consumers on the street. This cluttered retail environment drives a brand to adopt a large frontage retail format to enhance brand visibility.

Leading brands operating in niche segments or premium product categories often follow a distribution strategy of multiple retail formats ranging from flagship stores of 1500 – 4000 sq ft , mid sized retail stores with a size of 600- 1200 sq ft, boutique stores which could be as small as 300 sq ft. as in the case of mobile phones and shop in shop corners in leading multi brand stores. While the flagship stores play the role of image drivers and offer visibility to the brand in prime shopping destinations, the boutique store and the shop in shop concepts are usually tactical measure formats to extend the reach and visibility of the brand where a critical mass of the target consumer is not available to set up a large store and make it profitable.

The second factor that drives brands to explore possibilities of leveraging retail formats is distribution and the need to reach out effectively to its target consumers spread across the country in cities where populations stretch from the hundred thousands to millions. Since in India, organized retailing is still developing there are large parts of urban India where organized retailing is still nascent. In these cities or retailing areas applying the model of a large retail store typically present in an upscale high street location, may not deliver the desired ROI to the company or the franchisee. In such a case, the brand may consider partnering with a complementing and non competing brand and share space. This delivers a dual advantage. It assures the brand of a retail domain in a targeted shopping destination and gives it visibility and hence builds awareness and equity. Secondly, it is a low risk business proposition for the franchisee. One brand that applied this strategy successfully in the mid 1990s was Levi’s. As part of its expansion strategy into potential B class towns ( but until then deemed to be less profitable in the short term), the brand partnered with many brands and got franchisees to open lifestyle driven stores. So, a youth brand like Levi’s found itself partnering with Benetton , Nike amongst many other brands. This format allowed the brand to enter hithertho smaller markets like Amritsar, Aurangabad etc. with a presentable model in its early days in India and gain brand visibility and awareness at a lower risk to itself and its franchisee. A similar model was then adopted by other brands.

Combining retailing activity with fun and entertainment is another innovative of leveraging a format to occupy consumer mind space and build emotional linkages. A brand in Mumbai, retail products at day and converts itself into a hip and happening lounge at night. Then there are brands that have begun to leverage their retail spaces to offer an opportunity to relax over coffee and snacks and showcase designer wear through fashion shows, exhibit art etc. This kind of fusion between shopping and leisure driven activities in such a retail format proves to be an enduring experience for the consumer.

Thus by exploiting the multiple possibilities that exist through the adoption of numerous retail format strategies a brand can maximize visibility and seduce the customer. The adoption & application of the right retail format becomes by itself a sound value proposition.

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