Retail communication and promotion strategies in emerging markets

Abstract

The organized retail industry globally is slowing down, with the western markets reaching saturation levels – along with the impact of the current economic slump. At the same time, the emerging markets such as Eastern Europe, India and China are showing steep growth. Due to these unique conditions where traditional markets are slowing down and new markets with huge potential due to large consumer base, and rising incomes – market leaders from across the globe are making a move towards entering these markets. We also see that buoyed by the market conditions, many indigenous business houses are also entering the retail space. A case in point is India where Wal-Mart, Carrefour, Woolworth etc are tying up with local business houses to enter the market and at the same time, local players such as Reliance, Aditya Birla, RPG etc are entering the space on their own. However, to target these markets, there are a number of retail formats aiming to cater to the needs of the several types of customers. Each of the formats – hypermarket, supermarket, departmental store, etc cater to different target segments and thus need different communication tools and strategies. Along with the growth in retail industry in India, there has been shift in communication media with the advent of new technologies. The digital space is continuously attracting the customer and provides a new array of interactive and digital communication media to the marketer which is know as “new media”. This primarily includes communication through websites, user generated contents, online videos, Mobile, OOH media, interactive billboards etc. It is important as a marketer to evaluate the reach and cost of the new media while deciding communication strategy. Currently there is no specific literature discussing framework for developing communication strategy for retail stores, and thus our endeavor is to study the communication strategies currently being followed in India, the tools being used, and the change in communication media to develop a framework to come up with recommendations for a particular store of a particular format. We have studied the communication strategies being followed by 4 stores: Big Bazaar, Food Bazaar, Shopper’s Stop and Landmark, each representing a different format, to understand what is suitable to a particular format. It also helped us understand the relative usefulness of various media in different situations and how it varied with changing customers, retailer requirements and objectives. Based on the analysis of the strategies followed and the rational of the management behind each, we have designed a framework for developing the communication strategy. The framework gives us the decisions that need to be taken before devising the strategy for each communication need. The decisions involve the customer, the retail analysis and its environment, competitor analysis, market environment, media analysis, and past communication. As part of the study, we have analyzed Westside, a leading Tata’s departmental store, current communication strategy. We have devised communication strategies for 6 different management decisions of the Store. For each decision, the company has a management objective (which is sales, brand building, etc) and also a communication objective (what must the message convey). These decisions are namely Mahasale, red apple day sale, fresh stock, old stock clearance, introduction of new brand etc; we have devised communication strategies that the company should follow applying the proposed framework and compare it with the current strategy followed by Westside. Apart from communication strategies, we have also come up with specific recommendations for Westside such as the fact that they must more actively use the new media (SMS, OOH) which is currently being ignored by almost all retailers in India. It must also do a competitor analysis while determining its strategies. It is currently missing out on direct mailing which Shopper’s Stop is using effectively. It also must not depend on analyzing effectiveness of past communications only as the competitive environment, media available and customer profiles are continuously changing.