The world’s biggest company has no factories and doesn’t manufacture a thing. US-headquartered Wal-Mart Inc is the largest global chain of shops selling the basic stuff of everyday life. More than 200 million customers visit its 8,000 stores every week.
At the nano end of the scale, your favourite kirana shop sells goods identical to 10 near by. Yet, you prefer it. Obviously, Wal-Mart and the kirana shop have us hooked. Their secret: they understand how we shop.
And given the number of padlocked departmental stores these days, this magic ingredient may be the key to success. ET helps you join the dots.
Understanding how we shop starts with a basic insight: we are bargain-hunters at heart. Rich or poor, we hate being ripped off. We become devoted loyalists of any shop that guarantees a good deal. (Until a better one comes along, of course). But a bargain is not about reading price tags.
Its pleasure lies in comparing them. That’s why for a successful shop, offering the lowest prices is never enough. It must actively encourage customers to compare prices at rival outlets. They will anyway. Price transparency is the game.
British retail chain Asda, now a Wal-Mart subsidiary, has lifted bargain-hunting to a new level. Under the world’s first automated price guarantee, if you punch in your Asda receipt number at a website, it scans the day’s prices at rival chains for that basket of goods. If you paid more at Asda, you get instant refund. It’s been an amazing success.
We hate being disappointed by quality. This is especially true for the unbranded food and meat we buy. Private-label goods — so called because they are selected and packaged by the retailer himself — are about shelf-edge trust and consistent quality.
That’s not easy when he usually has little control over standards in wholesale markets. Get it right and you don’t need loyalty
cards. For everyday products, we are creatures of habit.
So, when your kirana owner recommends an alternative he thinks we might like, it can be a delightful and wonderfully bonding experience. Insightful and confident shopkeepers thrive on it. They expand our boundaries by helping us try new things. The downside: if we don’t like their recommendation once too often, we start questioning their discernment.
Going Green is the new buzzword. From LED bulbs and solar panels to save energy, to less packaging and recyclable bags are all excellent moves.
But guess what — these efforts genuinely touch us only when they help reduce grocery bills. It’s not enough to save energy. To win brownie points, smart retailers have to pass on those savings to us.
Customers are invariably in a hurry. Whether quick bicycle home delivery or efficient billing, we want shopping over fast. Since stores are getting larger, navigating the cart, reading the list, spotting the shelf, the right brand and size, comparing prices, while tracking the kids is more multi-tasking than we need.
At that point, a clueless/nervous/inept shop-assistant can kill the proverbial shopping experience. Wal-Mart knows this well. It has put its two million store assistants, called associates, at the helm of global growth.
Most senior managers have shopfloor experience. As associates physically create the atmosphere (friendly/efficient/honest) and generate $405 billion in annual sales, Wal-Mart has a new rallying cry, ‘We are merchants’. The idea is to make each associate behave as if he owns the place.
Finally, we all hate wasted trips. Petrol is expensive. Parking is hellish. To discover our items are out of stock can be exasperating. A rival better-stocked, albeit more expensive, shop starts appearing like a better option.
For any shop, managing inventories is critical. If you overstock, you exhaust working capital. If you don’t, you lose customers.
That’s why Wal-Mart and other leading retailers are spending top dollar on technology and suppliers for just-in-time delivery. It’s their most important investment in these cash-strapped times. Consumers everywhere like to shop in efficient, attractive, wellstocked stores where they can be sure of a bargain and discover something new.
Our favourite kirana shop may need to get right only a few of these. But we are not so forgiving of modern retail. Indian chains that did not understand us are folding up.
They forgot that only a clever mix of marketing, intuition, transparency, technology, merchandising, imagination and convenience can keep us returning for more. Wal-Mart Inc is the world’s biggest factory for this formula. It’s just not sold in any store.