Branding in retail: myths and realities

The other day, I was chatting with a senior professional in the retail industry when he mentioned that the year so far hasn't been too kind to the sector. The first quarter has seen poor footfalls all across - apparently Indians would rather stay home in the evenings and watch the IPL rather than go out shopping - and the tight monetary situation and spiralling inflation has done the rest.

The industry hasn't helped itself by going on discounting sprees like never before - the sales have come early, thick and fast - with the result that both top and bottom lines are under immense pressure.

I sympathize, but as a practicing brand consultant, could not help thinking that quite a lot of the damage has been self-inflicted. It is the retail industry's fundamental inability to adopt - and adapt - a clear branding paradigm that has left it with no alternative to ever-increasing tactical quick-fixes for generating customer footfalls. To put it simply, the only reasons for visiting a store these days are discounts and bargains.
 
So what has gone wrong with the Indian retail story? After talking to many brand marketers and retailers, I believe that the manifold reasons can be distilled down into several misconceptions, or "myths" that characterize brand thinking for most Indian retailers. Unless this pervasive anomaly in thinking is corrected and Indian retailers start thinking about how to create "brands" out of their retail stores that are meaningful and relevant to target customers, no lasting improvement in the situation can be expected.

The Infrastructure myth

Most Indian retailers still believe that all that is needed to get customers to start trooping in is an attractive store with great ambience and visible signage. That might be true in the middle of a forest or a desert, but most of our city high streets now have a plethora of attractive storefronts, all of which have comparable ambience and signage. So how does a customer decide to walk into your store? You need to give her a reason, and that reason is what a retail brand is. If retailers were to earmark a fraction of the investment that they routinely make in physical infrastructure for creating a retail brand, they would be far better off.

The Location Myth

We have all heard of this one, haven't we? About how location makes, or breaks, a retail store? I have never been able to figure out why, if location were all that it takes, it is that of the two adjoining grocery stores selling practically the same products, one always has a crowd of people, while the other has one glum-faced proprietor swatting away flies. Or why it is that Ikea is able to sell the way it does from one location tucked away on the outskirts of a city. Or why you are prepared to wait in a queue for hours in a street with no parking to eat at MTR. The truth is, if you have a brand with a relevant and valuable offering, your target customer will seek you out, regardless of where you are located. The best location in the world cannot rescue a retailer whose customers do not find value in his brand proposition - just ask the brands who regularly drop out of the best malls in the country.

The Advertising Myth

At this point in my presentation, I usually get a brand owner who bangs the table and says, "That's it, I need to up my advertising budgets." Well, perhaps you do and perhaps you don't, Sir, but that is not what I have been talking about. Advertising without a clear idea of what your brand stands for and what it offers is a beautifully-crafted book with white unwritten pages. Before we start talking, should we not figure out what we should talk about? Or whether we need to talk at all? Perhaps it would be better to show things, or do things, or perform, rather than talk. Perhaps we should have a quiet, private conversation, rather than a high-decibel PowerPoint presentation. The bottom-line is that branding is a lot more than advertising - so don't be in too much of a hurry to call your agency, just yet.

The Product Myth

Many retailers believe that the product brands they carry are enough to create a retail brand for their store. Everyone knows Gucci and Calvin Klein, don't they? Once they are on my shelves, and on my store front what more do I need? Great but unfortunately, just not enough in these days of ultra-competitive modern retail, where your neighbour has got the same, or equally alluring brand options on h]s shelves. So how do you differentiate when everyone has the same product on their shelves? You brand the retail experience, that's how. Retail branding is experience branding - the science of creating a brand proposition by offering a differentiated delivery at every service touchpoint that your customer interacts with your brand. For this, you need to map these touchpoints, categorize them, create opportunities of service delivery and differentiation at each of them, and then brand this overall differentiated experience. It's not easy, but think Disneyland - it can be done.

The Footfall Myth

If your customer doesn't walk in, he can't buy - which is true, as far as it goes. Unfortunately, the interpretation of this by retailers has been all too literal, and all too overwhelming, at times. Which is why you now have malls overcrowded to bursting capacities on weekends - but retailers, oddly enough, complain that revenues aren't keeping pace at all. If you are a resident of Bangalore, then like me, you have probably decided to stay put on Saturday rather than brave the bumper-to-bumper traffic and jostling crowds in malls who make the shopping process an experience to utterly forget. The truth is that only the relevant footfalls matter - the ones that have a certain threshold probability of converting into a purchase. Our retail managers need to start developing metrics for measuring and benchmarking performance on these relevant footfalls, and developing methods to ensure that random footfalls don't end up keeping away potential customers.

The Anchor Myth

This one's specially for our mall owners and operators, who nurse the fond delusion that the "right" anchor store would automatically, and almost magically, transform the fortunes of their mall. Why did mall X belly-up? Oh, they didn't have the right anchor, that's all. And how come that same anchor brand is doing very well on its own, thank you? Well, that's how it goes, sometimes. If you look closely, you will find nine times out often that the mall X in question did precious little to create a brand identity for itself - it behaved as a pure builder that provided space to tenant brands and trusted to its "anchor" brand to pull in the crowds. Even in small-town USA, shopping complexes and malls spend large budgets on organizing local events, community activities and promotions to draw in the traffic, but we Indians are too smart for that. So smart that we don't have second thoughts even when our trusty anchor brand has become a millstone round our necks, and is dragging us down with it, simply because its target customer profile doesn't quite match that of our mall.

The Valuation Myth

Let's face it - till recently, retail in India was a valuation game with the stock markets giving the sector impressive multiples based primarily on turnover. Retail became very attractive indeed as it was perceived to be zero-risk: even if the business didn't quite work out, the real- estate investment would fetch the valuation in a booming economy. The sectoral corrections are very much on right now, but the correction in attitude is proving somewhat more obstinate. The painful lesson to be learnt is that the valuation of a retail brand is like all brand valuations - it is based on the mental real-estate the brand occupies in the customer's mind. And the way that real estate is created is by building robust brand relationships with the customer through a rigorous, well thought out, sustained brand building process.

As is painfully obvious, the points I have made here are pretty basic, and most Indian retailers are very much aware of them. However, we have here a sector that is still quite nascent in India, and where people are still getting the basic building blocks in place. Sometimes, the business imperatives of getting a retail business up and running, in a physical sense, overwhelm the somewhat less apparent, more "strategic," concerns of branding and differentiation. This is understandable, but unfortunately not tenable, even so early in the life cycle of the sector, as the economic environment is very unforgiving and getting more so, and the cost of failure is mounting. After all, as my friend observed, the IPL will be back, bigger and better next year, and Indian retail had better wake up.

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