The Retail Lab was honoured to have Mr Sandeep Pal in our esteemed college who delivered an insightful lecture on the 4p’s of the retail industry and gave an overview of the current happenings and future trends of the ever booming retail industry.
Mr Pal, an alumnus of IIM Ahmedabad, had very informal interactions with our students and from the very beginning made the session more participative than informative. He spoke about the 4p’s ie product, price, place and promotion in the perspective of the retail sector. Speaking about the product factor, he was of the opinion that the retail outlets could either sell a brand or sell value to the customer. Some of the companies that indulge in value selling are ZARA, Reliance Trends, Maxx, Forever21 etc. These retailers have a single brand to offer and they believe in selling their core value to the end consumers. Big lifestyle retailers such as Shoppers Stop, Lifestyle, Westside, Pantaloons etc have an umbrella of brands under them and thus they believe in core brand selling than value selling. Mr Pal was also of the opinion that the retailers either indulge in core selling, (sales that are concurrent and demanded in all seasons) or in fashion (which the retailer updates on a regular basis as an when the fashion outdates). There are also catalogue stores like AMWAY and Tupperware which do not display their products in the outlet, but do their selling by providing all the information that a customer needs.
The next P that Mr Pal touched upon was Place. Place is an important aspect that retailers have to look at for their target audience as well as the potential customers. The retail outlets can have their place of selling in high street avenues, they can have standalone stores, they can lease shops in the malls and the newest entrant to the place of operations is the online marketplace. The retailers, according to their strategies and business plans can select any of the above place of operation for their business. They also look at the strategic location and position of their outlet as it has an impact on the influx of the consumer.
The 3rd P that was discussed by Mr Pal was Promotion. He categorized promotion into two, ATL which means “above the line” and BTL which means “below the line”. Retailers adopting ATL go all out with their promotions and they use all the advertising and marketing mix available to them. On the other hand, retailers adopting BTL do not believe in promotion to a large extent. They may come up with an Ad or two in the newspaper or magazine, but their core promotion strategy is retaining customers through loyalty programs such as membership reward cards, frequent shopping points, additional discounts to privileged members etc. Shoppers Stop, Westside, Lifestyle adopt BTL promotion strategy whereas Adidas, Nike adopt ATL strategy.
The last P that was discussed was Price. According to Mr Pal, the price factor of the product is determined on various aspects such as real estate rates, rent expenditure, ambience of the store, warehousing, transportation and logistics and other expenditures. There were questions from the audience regarding the practice of E-tailers jacking up prices over and above the MRP and then give a discount on the same. Mr Pal categorically stated that this practice cannot be undertaken by any retailer as this goes against the MRP act established by the Law and any retailer found doing so is heavily penalized. Mr Pal also explained some retail concepts such as “Sell Breakthrough” which means the quantity of goods that are sold by the retailer from a particular batch of goods that are dispatched to them. Higher the sales, higher the breakthrough, which is a good sign for the retailer. Pantaloons has sale periods in the seasons of spring and summer and they also have their End of Season Sale which typically attracts a lot of customers. If there is unsold inventory after the season sale, Pantaloons ships all its stock to its Factory Outlets where they are in a position to liquidate it.
Mr Pal ended his discussion with the 4P’s of retailing and then opened up the interaction by inviting questions from the audience. The audience asked some pretty relevant and interesting questions, most important being the viability of the Ecommerce model of Business. Mr Pal had a very straight forward answer to it. He believes that the model will not last very long as they are incurring heavy losses in the name of expansion and rapid growth. Also they are being heavily funded by Venture Capitalists, which is not the case in retail. Ecommerce companies can afford to invest and spend heavily by making use of the funds available, but at one point the investor would demand returns on their investment, which is why they invest in the place. Also Ecommerce companies do not provide the experience of shopping that a retailer can provide. Mr Pal also believes that the exchange or return schemes offered by these companies are not consumer friendly and are often haphazard. A question on the future of retail was asked by a student in the audience. Mr Pal said that the demographics of this country are favourable, purchasing power of citizens is unmatched and also the ever changing fashion statements and the adoption of new fashion by Indians, even in Tier 2 and 3 cities is a good sign for the industry to grow exponentially.