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| Tuesday, 5 October 2004 |
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Dramatic change in retail business in Lanka by Prasanna Perera, Marketing and Management Consultant, Chartered Marketer, CIM, UK
The business of retailing has changed dramatically over the last few years in Sri Lanka, across many industries. Retailers such as supermarkets, clothing stores and accessory outlets are all endeavouring to upgrade standards and provide greater value to customers, in order to retain them. In this article, I will endeavour to examine the developments across several retail sectors. Supermarkets Undoubtedly supermarkets are here to stay in Sri Lanka and the expansion pace is commendable. Many manufacturers and traders are acknowledging the fact that the supermarket sector is contributing a sizeable percentage of their sales. The market leader is Food City, with Keells Super now starting to offer a major challenge. The other players are Arpico Supercentres, Laugfs, Sathosa, Kings and Park n'Shop. The concerning factor about these supermarkets is the customer service and care. The major reason for average customer service is the staff, who are mainly trainees and lack experience. (Specially at check-out counters). Supermarket staff also lack product knowledge and shy away from communicating with customers due to langauge barriers and self confidence. Therefore supermarket operators would do well to concentrate on developing the skills of their staff and not only on outlet expansions. What purpose does an outlet serve, if the staff are inexperienced. poorly trained and demotivated? Loyalty schemes Loyalty schemes would provide a competitive edge, only if they are administered well. It is better not to run a loyalty program than creating customer dissatisfaction. If a loyalty program is offered, it needs to be marketed and progress monitored. Customers must feel that they are getting greater value for money through a loyalty program. In a competitive environment, supermarkets should endeavour to position their brands in a unique way, in order to differentiate from other players. The question that comes into mind, is to what extent these supermarkets differentiate themselves? The development of Retailer of Private Labels do not seem to be as prominent as in the international arena. However, begin to notice the gradual increase of Retailer brands on supermarket shelves. This will be a major challenge for manufacturer brands in the future. Clothing chains/retailers Again a rapidly growing segment, with several stand-alone and chain stores opening up, not only in Colombo, but also in the suburbs. The main players are French Corner Parade, French Corner, Odel, Arena, House of Fashions, Fashion Bug and Dilshey, Deshanee. The heartening development common to all these stores, is the enhancement at the retailing experience (shopping) of the customer. Excellent product displays, spacious isles for movement, greater variety of merchandise and friendly staff. This has resulted in customers patronising their favourite stores more regularly not only purchase, but also to browse around. In many instances, customers demonstrate divided loyalty, adopting two or more clothing outlets to satisfy their needs. This in turn means that the customer compares the total shopping experience among different players. The result is a more educated and demanding customer. From my perspective, clothing stores would do well to focus on what they offer. More the merrier may not always be the recipe to success!! By diluting their focus, clothing stores could loose their identity and essence in the market. The ability to offer a complete clothing solution would also be important, which includes more than just clothes. Personal accessory outlets These outlets merchandise costume jewellery, belts, handbags, hair accessories, wallets, fashion watches and footwear and many more. The main players are Stone n"String, Lover, Fancy Point, Leather Collection and others. These personal accessory outlets, draw in customers, looking for novel items to accentuate their personality and also for gifting purposes. Stone n' String have positioned themselves as "the" costume jewellery store, whilst Leather Collection has the honour of being the Leather specialist. This shows that it pays to be a focused player, which provides ample opportunities for differentiation. Consumer durable outlets Another fast expanding industry segment is within the retailing gamut. Consumer durable outlets and chains are growing across the country and a range of well-known brands are on offer. The main players are Singer, Abans, Hayleys, Singhagiri and Siedles. Walk into any of these showrooms and you are provided with the world's best brands and modern designs/technology. In an endeavour to penetrate the market, major retailers have tied-up with banks and provide totally interest free instalment payment schemes. Hence, by paying a few thousand rupees, a customer can take home a audio/visual product or home appliance. An area where consumer durable stores could improve is selling skills. in most instances, passive salesman merely provide what the customer asks for. No attempt is made to up sell, cross sell and entice the buyer to enhance purchases. Hence, opportunities for revenue enhancement are lost. Product demonstrations also needs to be improved in order to help the consumer experience the product/brand. In most instances, consumers make purchases once they are given a good demonstration. Staff in these outlets should be well educated about product/brand features and benefits. The key to success in consumer durable marketing, is after sales service. Customers have a distinct preference for brands that are well serviced. Hence, availability of islandwide service centres, ample spare parts, trained technicians and guarantees are important. In this article, I have examined four types of retailers, namely Supermarkets, Clothing Stores, Personal Accessory Stores and Consumer Durable outlets. The key learnings would be as follows: * The need for a greater degree of focus, in the business model is apparent. * Staff need to be trained and motivated, to provide the shopper a more rewarding experience. * Selling skills of staff needs to be improved in order to enhance revenue. * A sustainable form of differentiation is a pre-requisite for success. |
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