Haggling Happiness!

Haggling Happiness – Hey, this is like ‘hunting dogs’ and ‘flying planes’, which have the syntactic ambiguity (hunting dogs could mean both dogs that hunt and the act of hunting for dogs!).  'Haggling Happiness' is even different, as it can have one more meaning than just two – it’s not only about the happiness that haggles with one threatening to give the ‘miss’ or about one bargaining to buy happiness, but also about the happiness one gets through the act of haggling!   

We become awfully excited often to bargain while buying anything from the marketplace.   The high streets of Linking Road, Fashion Street, Ranganathan Street, OPH Road, Gariahat Market, Janpath, Khan Market, etc. are the havens (or should I say heavens?) of bargain hunting in India. 

Even some of the organized jewelry retail outfits in India (I worked for one of them recently!) are not able to think out of the box and get out of giving customers the opportunity to bargain, strongly fearing loss of sales. Except ‘truly’ organized retailers like Tanishq, others even quote prices in different levels – Quote 1, Quote 2, Quote 3, etc. The smarter customers with the skill and capability to push retailers down to Quote 3, could always emerge as winners! Repeated efforts to convince store personnel (and even the top brass) about the long-term benefit of having fixed price (that would lead to having a positive quality fix in the minds of customers) could often go futile. 

I feel sorry for customers who visit stores that encourage bargaining – different customers may get the same merchandise and services at different prices!  If a store encourages bargaining, as it cannot go below its planned margins, its pricing structure is undoubtedly an unhealthy one.   As long as customers enjoy the act of bargaining, trying to have the satisfaction of having ‘won’ a bargain, retailers too may encourage haggling in their stores.

The price of petrol in India has been hiked by a whopping Rs.7.50 per litre since yesterday and the subsequent ‘morchas’ and ‘hartals’ by the public and the opposition parties may bring it down by a few rupees soon.  After all it’s haggling of a different kind that works well with the masses! 

But, retailing in India should become a transparent affair – of course, even unlike an English expression of syntactic ambiguity!!!

- Dr. Gibson G. Vedamani

The flea market fun…

As schoolteachers, both my grandfather and grandmother spent the maximum part of their career in rural areas. It was often fun and mirth for me to go with my grandfather for shopping and a lot of excitement to go with him on hunting. Clipping a BSA double barrel rifle to his bicycle he used to give me a lift too as he went about hunting. It was quite a thrill to see him hunt. More interesting it was for me when he took me shopping in the village weekly market. I could get my instant gratification from the sweets and eats he used to buy for me. The market was an open place and it was fun to see him bargaining and later boasting with my grandmother how he managed to win good bargains!

I was driving through the highway from Pune to Bangalore recently and in a village near Satara I came across a similar weekly open market that caught my attention. There it was, the same kind of market with open shops under shanties selling various kinds of merchandise. My car automatically slowed down to catch a glimpse of the market (more like Nirad Chaudhury’s car that is driven by sheer will power!). I realized that shanty markets are still commonplace in India.  It has temporary structures erected every week in a marketplace to enable the farmers and other small retailers to spread their wares and retail in a street retail format. A weekly market covering many catchment villages from where customers would come and shop their weekly needs, the shops would range from small appliances, garments, masalas, and vegetables to selling cattle and fodder too. ‘Bargaining’ is an integral part of the shanty market where retailers quote their prices for commodities and wares and customers seek the pleasure of having hunted for good bargains. In these markets even cows, buffaloes, sheep and goats are sold. Prices are negotiated symbolically using a system of the buyer asking for the price by touching the fingers of the seller under a cloth cover so that the negotiation is kept confidential in the open market. Similarly Fairs and Melas in villages are an annual phenomenon and they are usually organized during religious and temple festivals. Shopping, eating out and entertainment are the key components of the annual rural fairs. Many shops are set up for crowds could come from distant places as well. More often relatives and families meet during these significant occasions annually. Fairs have various categories of small temporary shops and they are punctuated with many snack shops of the local flavours and tastes. A merry-go-round and a giant wheel would always entertain kids and youth among many other attractions like an instant photo booth, magic show, circus show, film show, etc. and even a ‘well of death’ or a motorcycle ‘globe of death’ where speeding motorcycles would cross paths.

Come September, even Mumbai is not spared from the fever of the fair. The Mount Mary fair in Bandra in September is a famous one, where crowds from various places would throng the place. In addition to its religious fervor, the whole place would reverberate with many street shops selling all kinds of merchandise. Shopping, eating out and buying souvenirs during that time would be a good deal of fun!

The shanty market is very similar to what is referred to as flea markets globally, which originated in the 1800s in developed economies. Shanty market retailing takes place as large crowds of people visit this open-air market under shacks temporarily erected for the purpose. The shanty markets also provide a platform for many rural entrepreneurs to explore their retailing skills and grow and expand their business. The flea market sets itself as a different format from such a street market, as it follows self imposed governance and code of conduct followed such as controlled zoning, pricing discipline, etc. among the vendors. The flea market has now found place in modern retailing across the world. The shanty market too may come in a new ‘avatar’ to modern retailing in India.

Are we going to see flea markets in many of our malls soon?

- Dr. Gibson G. Vedamani

Is it all about sweet-talking?

The power of communication is so high that it can work wonders in retailing. Many customers too like sales people talk about products and clarify product features before they buy. In the process, sales personnel understand consumer psychology well. Using the flattering technique, for instance, they may use phrases like “You look slimmer in this dress”, when a lady customer tries out a garment, which may elate her ego a great deal and induce her to buy. “One does not know when we’ll have this in our store again. This is the last piece in our current fast selling collection” may further hasten the customer to buy. This may successfully create a sense of scarcity so that the customer may not want to miss an opportunity to buy. The third psychological tool that retailers may use is the technique of ‘fulfilling an obligation through reciprocity”. This means that a customer may feel obligated to buy for a ‘favor’ received from the sales floor personnel or the retailer, in the buying process. For instance, when the sales person has offered the customer multiple alternatives digging through the stocks for long, the customer may be obligated to buy or for that matter it is commonplace in jewellery stores and saree shops in South India to offer snacks and beverages to customers as they go through the salesperson’s product range presentation and the customers may become hugely obligated to make a purchase. Automobile retailers may adopt the ploy of talking about the “difficulty that they face in holding on to the ‘old’ prices for a long time” that may do the trick with customers often. Traditional retailers understand consumer behavior like the back of their palms and better than their modern counterparts often. So, every customer interaction may result in the achievement of big sales.

Understanding consumer behavioural insights and patterns can help retailers a great deal in the matter of sustaining a long-term relationship with customers while truly helping them buy. Emerging markets like India have a significant growth in consumption and consumers in India are from diverse cultures and behaviours.  They also show different tastes and preferences. In developed economies they may show similar purchase behaviours in larger regions and so various large consumer clusters can show similar behavior. But in India consumer purchasing patterns and behviours are seen to be very diverse. Marketing and retailing organizations cannot operate with the assumed premise that consumers are the same everywhere. While on the aspect of assumption, I am reminded of a story that a Christian writer Bill Bright narrates in one of his articles “There once was a man who was very fond of the famous general Robert E. Lee. Every day the man would take his four-year-old son for a stroll through a nearby park, which had a statue of the general mounted atop his beautiful horse, Traveler. And as they walked, he would say to his little lad, ‘Say good morning to General Lee.’ And they would say good morning each time they walked by. As the days and weeks passed, the boy got used to the ritual of waving his chubby hand and saying, ‘Good morning, General Lee.’ Then one day as they walked past the statue, the boy asked his father, ‘Daddy, who is that man riding General Lee?”

According to recent news reports, Hindustan Unilever, the world’s third largest consumer product marketing firm has established its Consumer Insight and Innovation Center at its Mumbai headquarters recently. The center will facilitate the study of how consumers shop for Fast Moving Consumer Goods (FMCG) in India. The center is Unilever’s first consumer insight study hub in India and its seventh one in the world. It is reported that the center will serve several of its group companies with an understanding of how consumers shop in various formats of traditional and modern retail stores. Shopper insights would be provided by the center to both general stores as well as retail chains. The insight center also will simulate retail environments of supermarkets and neighborhood stores inviting customers to shop the virtual stores. Technical devices are used to track their in-store movements and even the movement of their eyes to map and display spots that attract consumer attention. The center will help retailers especially the neighborhood ones to attain product displays and consumer off-take efficiencies based on a scientific purchase behavior study approach. Based on the center’s insights the company can advise its retailers on how category growth and margin improvements can be achieved. The group companies of Hindustan Unilever will use the shopper insights and data even to plan product packaging and facings for the future. It is said that virtual reality platforms may be used by the center to study the patters of consumer purchases of new products and to study the effect of new in-store promotions. A scientific study of consumer behavior by retailers can go a long way to help customers buy and increase sales in retail at large! As many of us are aware, Paco Underhill studies consumer behavior from a spatial perspective too. In India, my friend Biju Dominic of Finalmile studies consumer behavior from a neurological angle. He says, “Marketers can use neuromarketing to better measure a consumer's preference, as the verbal response given to the question, ‘Do you like this product?’ may not always be the true answer due to cognitive bias.”

The long and short of retailing is surely not about sweet-talking but about truly understanding consumers!

- Dr. Gibson G. Vedamani

Coexistence, virtually!

The uniqueness of retail evolution in India need not baffle any researcher, as it is a no-brainer to say that every form of retailing existing from time immemorial in the country coexists even today. One may argue that the exchange of goods in the ancient barter system may have vanished but yet we see it back in its full form when exchange deals are announced! Exchange of goods and services or rather exchange of services for goods and goods for services online are seen and experienced widely nowadays. Such coexistence only shows that there is enough and more space for everyone in retailing in India. The burgeoning consumption in India is another growth story one cannot repudiate or deny. The attitudinal changes in the ever-growing youth population (or should I say, the growing population ever going down in its average age!) continue to facilitate promising trends of consumption. I remember I was stuck with the ‘hmt’ watch my dad bought for me when I passed my eighth standard examination (amidst all fury from my mother who opined that it was too early for me to sport a wrist watch!) for over a decade. I did not have the attitude to trash it after all, even after a ‘thin Titan’ adorned my wrist later! Now, when I see my kids I find them having a number of watches to go with every occasion or attire! Lightning is the speed at which many youth change their mobile handsets! Everything is in its promising trajectory of growth. Many high involvement purchases of those days where the whole family unit used to play different buying roles, have dwindled in mindsets to be categorized impulsive or casual, in the least!

A fortnight ago, as I was preparing to deliver the keynote at the conception of a Special Interest Group (SIG) in Retail under the Bangalore chapter of The Indus Entrepreneurs (TiE), many thoughts on successful strategies of retailing in modern times crossed my mind. In yesteryears we witnessed the fall of ecommerce and many websites established with expectations to make good business sense, failed. They stood by themselves as individual business entities and waged a lone battle. Separate entities were burdened with the management of a completely independent merchandise mix for each retail format. There was a need to hold high inventory levels. It also became an operational handicap for these organizations that finally faced business viability issues. These individually managed entities demanded exclusive warehouses and distribution systems. Separation between online and real retail operations also led to business practices and policies that failed to deliver unified product delivery and service image ultimately confusing customers. Adding to their woe, laptop penetration was low. We did not have those many gadgets like tablets and smart phones to use. Many customers were scared of using credit cards on the net. The business valuation game was played based on a ‘build-show-transfer’ model where entrepreneurs were motivated to build ecommerce sites with the sole objective of increasing valuation to palm them off at profits. During the days when the economy was growing at breakneck speed in the United States, new online businesses had great valuation-building opportunities. We experienced its rub-off in India too, but for a short while, luckily! Many hard format retailers too established separate ecommerce companies, which were closed later with the same speed at which they opened!

The online ‘game’ is on again now. Ecommerce is back in action. Many ecommerce sites have opened and are said to be doing good business. We see reports of huge funding deployed in many ecommerce organizations.  Ecommerce business models have changed. The opening of user-friendly websites to book railway and air-tickets gave rise to many first time users of ecommerce sites in India in a big way in the recent years. The use of technology/applications in computers, laptops, handheld tablets and mobile phones has changed the way people buy. Secure payment gateways have helped or rather customers now have the confidence to use credit cards on the net.

Successful ecommerce initiatives currently are the ones not hijacked by quick-buck-minded investors to drive the valuation game alone. They are the ones focused on having a good strategy. They are bottom-line driven to achieve sustainable scale. They cannot fall easily. Redbus.in first wrote the code for the software that would be required to run the operations of the bus operators and they still stay on ground anchored with the base of their operating alliances – a strategy to handhold and grow for a long time to come. Many brick and mortar retailers have forgotten standalone ecommerce now. They are now adopting a multichannel strategy to become successful. Cross-channel optimization is being done in multichannel retailing as a multichannel retailing organization has the opportunity to use each one efficiently to promote the other. With reference to developed economies, it is said that 65% to 75% of consumers have researched a product online and purchased that product offline. Of those people, a figure ranging from 50% to 60% are said to have cross-channel shopped in the past. That’s happening fast in India too. As online businesses take off, they only need a grounding strategy to integrate with other channels and alliances efficiently to reach customers.

All said, this nation of retailers would always see eras of coexistence!

Dr. Gibson G. Vedamani