Wednesday, October 24, 2007

How to beat proximity?

Retail strategy in India seems to be mostly around proximity. Which means that if there is store near you (that is where the catch is), that is the store that you will go to when you want to buy stuff. Unless the store really blows it by cheating you or by offering poor customer service or not offering discounts you will keep going to that store. What happens if there are many such stores in a certain "catchment area"? Then, they compete to capture customers - either by discount pricing or by offering value added services. If they dont, they will fall into the trap of the commodity model.

But, what is a catchment area? You can catch customers near their homes, which is the obvious strategy.

But you can also catch customers at other areas - notably the internet. The internet delivery model, using the existing physical network has a lot of potential in India. It is barely being touched upon by the existing grocers, but it has the advantage of being able to ride on the existing proximity. So, a smart retailer could offer home delivery off the internet on all days except weekends when he could get more customers into his store anyway. Of course, there are a zillion ways of doing it, but this is a model that can help break through the clutter.

Then there are the offices and IT parks and campuses. Build a store there and you will have the officegoers buying their immediate needs atleast. How about parks? Temples? Old markets?

Expect more action in this space as catchment areas get redefined...

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