Let us take the case of a liquor store which offers customers the quintessential, leisurely self-service experience: rows upon rows of neatly stacked beer and alcohol bottles. Touch them, read the fine print, remember an important anniversary or occasion that’s round the corner, and pick one of the bottles up and head for the counter.
A far cry from the liquor shops where you push and shove your way to the counter, thrust a handful of cash out to the seller for a favorite tipple and hope like hell that the callous salesman catches your eye from amid a sea of parched and expectant faces.
Now imagine a garage — spanking clean, with courteous staff. A garage where you are not constantly keeping one eye out for grubby grease and oil stains, while you keep the other trained on the shifty mechanic who’s likely to spring a nasty surprise on you in the form of some cost or the other.
Now before you banish the two scenarios detailed above as being delightful but highly utopian concepts. It would do well to remember that both could well be the shape of things to come at your neighborhood wine shop or garage. Put simply, these are both trade marketing initiatives at work, where non-FMCG marketers are trying to revamp their trade channels to make things more customer-friendly.
Across business segments like alcohol, automobiles and ancillaries, trade channels and brands are joining hands to give their respective customers a different experience with branding, self-service counters and glossy signs. Be it JW Select from Diageo, UB’s World of Spirits, Castrol’s Car Cares and Bike Points or Ceat’s Fitter program, all are not merely facelifts, but concerted efforts to upgrade the service offering by channel partners.
Players like UB and Diageo have initiated trade marketing activities with the alcobev channel. Diageo, for example, has helped revamp local wine shops and re-branded them as JW Select outlets. Similarly, UB rolled out the UB World of Spirits concept last year, and currently has 16 stores across Indian cities. From a push effect earlier, initiatives like JW Select create the pull effect. Once the experience is created, off take happens.
A similar change is taking place in the automobiles and ancillaries space. Castrol has the Castrol Bike Points and Car Care programs, under which a comprehensive revamp package where training modules on improving the look and feel of the outlet, its visibility and its signages is imparted to small mechanics and work shops in two- and four-wheeler category is offered by the company.
On the other hand, for tire maker Ceat, the fitter who changes tires, tubes and flaps, and pumps in the right quantity of air is a critical channel. Three months back, the company started a pilot program to work with fitters to help them upgrade their service offering. Ceat Ltd.’s program starts as basic as providing a permanent base for fitters to providing them with the latest tools and equipment to service customers better.
Ceat has also created Ceat Hubs to target the emerging radial tire market in the truck category, with service as the key element. These Hubs, situated at national highways and transport blocks will assimilate data on tire purchases and make recommendations to buyers. They have the expertise and therefore can offer advice. And once they have the data at the time of purchase, they can track the performance and make suggestions accordingly. And in the time to come, as both offerings evolve, Ceat Hub and the Fitter program will merge to provide a more comprehensive offering to end users.
The reason for the increased impetus on trade by non-FMCG companies comes as the market is undergoing a sea change, even in segments like alcohol and tires. Marketers realize the importance of helping the trade upgrade as it not only gives their brands visibility, but also leads to increased off take. The fitter program enables the company to tap the channel to understand customer buying patterns. The data that the fitter takes at the time of transaction is useful for data mining. As a company, they can set standards which no other company has done.
Customers then don’t have to go to any third party. Rising disposable incomes and the growing social acceptance to drinking have necessitated UB’s channel segmentation exercise. Customers are looking for an experience that large-format stores like Food World and Spencers offer in the basic sense of touch-and-feel with browsing.
The benefits come as the average ticket sizes increase within the trade as a result of programs like JW Select. Through touch screen kiosks and category management, one works towards widening the shopper basket and increasing the size of purchases. There has been a 50% increase in sales in the premium category within JW Select outlets, with brands like Johnnie Walker, Smirnoff Black, malts and wines flying off the shelves.
On the other hand, for tire maker Ceat, the fitter who changes tires, tubes and flaps, and pumps in the right quantity of air is a critical channel. Three months back, the company started a pilot program to work with fitters to help them upgrade their service offering. The program starts as basic as providing a permanent base for fitters to providing them with the latest tools and equipment to service customers better.
These initiatives go much beyond the traditional effort of cleaning a shop window and installing a new product range. It’s a complete revamp of the store in partnership with the shop owner. There are no freebies on offer to the trade, and the store owner has to bear 50% of the costs incurred in the revamp. Non-FMCG companies bring branding, display and shopper management, and share the costs of fixtures and fittings. If there is no price attached, it’s not considered ‘valuable’.
The joint venture between the local liquor vendor and the company entails providing anywhere from just management advice to complete investment. The shelf space and stock space that United Spirits’ products occupy is pre-determined and so is the visibility on the shelves.
Players are learning the rules of the game and what works and what doesn’t as they go along initiating trade marketing activities. For JW Select, only outlets in high street areas are now being targeted as increasing footfalls is critical. Even for the general trade, we have to look at what is the maximum return-per-sq-foot one can derive. Understanding shopper behavior and tweaking replenishment cycles according to the buying and consumption patterns is an important learning.