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Jan 2017 Trends

Published on: 2017-01-20 14:28:08     756 times read    0  Comments
S-Mart Business : Push in the Right Direction

If left as it is, this narrow market line will not expand. As a result, supermarkets will simply only exist for a limited niche market. 
 

--BY DWAIPAYAN REGMI

To a certain degree, Nepal is directly influenced by the western world, be it in music or fashion, parties or shopping style. One clear proof of this, in relation to shopping, can be seen in the big city’s mushrooming marts. We can see at least one of them, a Big Mart, a Stuti Mart, a Non Stop 365, a CG Mart or a Yeti Group in every corner of the capital these days. Stores like Saleways or Bluebird mart do have their own brand name in Nepal. The opening of more BhatBhateni stores from Pokhara to Dharan, and plans to go to Biratnagar indicates the craze among Nepalis to shop at one stop points. It doesn’t end with the large supermarkets; there are equally other smaller local marts throughout the country trying to gain a piece of the pie. 

When prominent department stores like the American Wal-Marts have pros and cons, Nepali department stores can’t expect to have the best of both worlds, and how could they? Firstly, supermarkets provide a wide variety of options and provide information regarding the existence of certain brand or product as well. A customer gets to know that a certain Nepali brand of coffee exists by visiting the Tea/Coffee section of the market. These types of spaces give the customer awareness and information. Secondly, it provides enough time and space for customers to make a decision. They get to compare products in their own time before making a purchase.

Once again, the one stop solution is the next aspect as to why people shop at marts. They no longer have to go from a butchers to buy sausages to an off-license to purchase wine and then to a neighbourhood store to buy a bag of chips. It's all available in this one space, under one roof. Subconsciously, it's the weather effect that counts as well. The large supermarkets are air-conditioned in the summer and heated during the winter. Finally, it's not necessary to carry cash to make a purchase- you can buy anything with one swipe of a credit card.

Again, despite having a lot of pros, even Wal Mart has had a list of cons going against it ranging from bad healthcare coverage to its anti employee policies. It's obvious, then, for Nepali supermarkets to have negative aspects as well. Only last year the Department of Commerce and Supplies (DoCSM) labeled some products in the stores as unhealthy and expired, or "Not Fit for Sale: Buy at Your Own Risk". This has clearly put question marks over the quality of the products these stores sell. Apart from this, there is a disparity in prices. Do these supermarkets provide a fair price? Obviously, they don't exceed the maximum retail price, but there are good prices offered outside as well. What they charge can be expensive if compared to the traders nearby.

Also, when retail stores outside create a personal relationship with customers, customers are confident that they can return or exchange a product in case of any dissatisfaction, which is clearly not the case for supermarkets as they have signs saying "No Exchange, No Return". So despite the world wide craze over marts, they do have some drawbacks too. Other minor problems may range from finding a parking space to location feasibility.

This in no way means that the supermarket business is a flop idea in Nepal, as the levels of opportunity are limitless. The first thing that has to be determined by marts in Nepal is the target customer. Are they foreigners residing in Nepal? Or, are they for the well off families? Or, simply, the youth? Or, office going people? It seems that marts in Nepal are focusing on only these groups of people- ignoring the fact like there are a higher number of students, more than office going people; a higher number of house wives than well off families; a larger number of price sensitive customers than people looking for a sense of status in Nepal. Hence, marts certainly have huge potential if they concentrate on those areas as well. The price concerned bunch will find other stores cheaper than marts in Nepal- giving them enough reason to boycott shopping at marts. It's important for marts to find out the prices that other local shops are offering. If a mart manages to decrease its distribution channel, and gets access directly to the manufacturer, the entire distribution cost can be reduced to give the customer the best fair price throughout. When I was in India, we used to travel to a supermarket even though it was 15 km away because it had the best price for everything.

If there’s fair quality and fair price, people will visit marts. Therefore, market identification is the primary challenge that marts need to overcome and it seems like marts have specialised their market focusing on only a few segments. Unlike abroad, where marts are meant for all groups, from school going kids to grandparents, from housewives to full time working women, Nepali supermarkets are only after a small section of society.

Similarly, in order to prove that marts are the best option for the consumer, they have to be as friendly as they can. Supermarkets can come up with new mobile applications highlighting their prices through different advertisements. One of the country’s large chains also did customers a favour by staying open during Dashain and Tihar when other stores were closed. There are a lot of other ways in which they can stay in the minds of customers. Customers in Nepal are emotional, and once impressed, they can be retained for a pretty long time. Meanwhile, the dimensions of service quality- the tangibility, empathy, assurance, reliability and responsiveness- need to be carefully addressed with timely revision.

Customer retention is the next important aspect that marts in Nepal seriously seem to be lagging behind in. One prominent store had this scheme for price discounts on purchases over a certain amount; but it turned out messy in the end. Neither the ending date was mentioned in the coupon, nor did the sales person know about the ending date of the scheme. As a result, customers ended up throwing the coupons away once they were told it had expired. On the other hand, another store has brought out a card based cash back scheme which will not only keep customers coming back but will also help to find out the buying behaviour of individual customers. The store can easily find out if the customer has continued buying alcohol.  If not, they can analyse the reasons why. So, these cards can create a customer database too. However, how they look after the database is up to them. And again, large spending customers seem to be the target of the cash back scheme. For a store it would be foolhardy to expect a normal customer, in order to take advantage of the cash back offer, to make purchases worth Rs 60,000 annually (Rs 5000 monthly) when the per capita income stated by the World Bank and Nepal Economic Survey itself is Rs 79,370 annually (Rs 6615 monthly). Therefore, it's important for the marts to have a database showing the amount of total purchases an individual customer makes throughout the month and create promotional schemes accordingly.

These types of schemes and others like bike or car lucky draws contribute to boost sales, but again, isn’t the Rs 6615 monthly wage earners the target group of marts? That has to be the important question. There are free deliveries offered, but again that is for purchases above a certain amount. These ignored factors have to be considered for supermarkets to ultimately gain further prospects. Or else, there are online shopping websites quickly coming up which will definitely challenge the supermarkets in the upcoming days. 

For supermarkets to thrive, they need to be the first choice for the general consumer who also must feel comfortable. Shopping in one should not be a matter of prestige. It should allow both the business operator and customer to experience profit and satisfaction. It's possible, maybe difficult, but not impossible.

Regmi is a freelance writer and a blogger. He can be reached at dwaipayan.regmi@gmail.com


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