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While there may be no one-fit, universal answer to countering retail competition, hyper-localisation provides the much-needed breakthrough approach to help retail chain stores get their businesses established in new localities and neighbourhoods. This blog explains in detail how hyper-localisation can and is helping retail brands and businesses stay ahead of local and regional competitors.

Resonate and Position as Good as a Local Brand

Unless we are talking about any supergiant global retail brand that even kids know of, it is difficult for retail brands and businesses to receive the recognition and acceptance of a local customer base. It takes time and the right set of strategies to get there. It is not easy to win the confidence and change the buying behaviour of customers and divert them to a brand they are not well aware of.

Retail hyper-localisation is the broad answer to resonate and position as a local brand. It helps retail brands and businesses resonate more profoundly with customers in local neighbourhoods. Resonance is a term with extensive scope and there are various ways in which this resonance could be created. However, once this resonance and positioning is set in motion in the right direction, the hesitance of customers to try out a new purchasing destination begins to decline.

For example, the use of local language(s) in the elements of brand communication like signboards, advertisements, social media content, websites, and smartphone applications helps form an implicit connection with local customers. Such practices also align with the idea of promoting local cultures and traditions.

Merchandising Based on Local Demand and Preferences

Out of experience and improvisations over time, successful local or regional retail businesses have a strong understanding of the dynamics of the local demand and customer tastes and preferences. It takes time for new retailers to find the right alignment of merchandising strategies to suit the local demand. While they can take off with any safe approach that would not be sustainable for long. Merchandising is a critical component of value proposition. Incorrect merchandising ruins the efforts of branding, advertising, and promotions. It fails to reflect actions with talks. It shows a lack of understanding of consumer behaviour ending up hurting customer experience which is not a desirable situation for any new retail business.

Hyper-localisation calls for the alignment of merchandising strategies with the local demand and tastes and preferences of customers. It gets new retailers to focus and get precise with merchandising instead of having to figure things out as an outcome of general learning and experience. Fashion apparel serves as a perfect example here.

When this is achieved, it is natural for customers to turn to such businesses on a simple psychological premise that people go where they find what they want and possibly want.

Getting Effective at Advertising and Promotions

Stable retailers do not have to spend too much on promotions to achieve their routine turnover. They are well-known to the local customers. Customers have a fair idea of what to expect from such stores in terms of merchandising, pricing, and other value-added services. However, advertising and promotions at a fairly extensive level are critical for new businesses to start building their customer base in new markets. The challenge here is achieving accuracy of targeting and high levels of effectiveness of the advertising and promotional efforts. It gets more difficult with larger target audiences and greater variations within it. For example, if the target segment is defined as people who use a particular social media application for more than one hour every day in a given geography, there is no assurance that the ads won’t show up on the feeds of hundreds or thousands of users with no present or potential interest.

However, things are a bit different with hyperlocal marketing. In hyperlocal marketing, the stress is on a relatively small and specific base of customers covering a smaller number of localities or neighbourhoods. It is easier to identify and define target segments from a small base of customers. It also helps focus better on improving the accuracy of advertising and promotional campaigns.

Brings Global Elements to Local Markets

A big problem with most new retail businesses is creating a brand distinction. With the homogeneity of goods and services, it is challenging for new players to create a unique brand positioning in a local market. It leads them to focus elsewhere like deep discounts, extravagant infrastructure, heavy spending on advertising and promotions, etc. Existing local and regional players, who already are on stable grounds, can easily counter these efforts with slight enhancements in their value propositions.

Non-local retail brands have a distinctive advantage over local brands in the form of possible novelty in business ideas and business models. This is no ordinary leverage and new retailers can add it to their arsenal of countering competition with something unique – better if it is also not easily replicable. They can use the already existing uniqueness in their business ideas and models in improvised, hyper-localised versions.

For example, what Starbucks does by writing the names of customers on their coffee cups is something so characteristic (of Starbucks) that not only it helps create a personalised experience but also deters local coffee shops from adopting it.

Agility in Pricing Strategies

Pricing is one of the critical factors for capturing and holding market shares. Local and regional retail businesses that understand how pricing affects their sales and prospects of sales always have an upper hand over new players in markets. Because of this understanding, they can price their products more effectively. They can also read better if and when their pricing strategies need a change or the kind of change. For example, a new retail store with better discounts for a similar set of value propositions will be immediately responded to with steeper discounts. They are willing to sacrifice margins to hold their market shares and retain customers.

Hyper-localisation requires new players to consider local factors like target segments, buying behaviour, demand and sales projections, price sensitivity, competition (probable response to competition), value propositions, supply chain elements, and promotional efforts in framing their pricing strategies. The inclusion of these factors in pricing strategies lends agility to businesses. For one, pricing is more accurate in the context of local market conditions. Two, the range of price re-adjustments is known. Hyper-localised pricing paves the way for competing with local and regional players with greater agility.

Winning at Personalisation

Personalisation is a potent ground for healthy competition. It helps build a deeper connection with customers at the individual level. It may include notification of personalised offers and discounts, asking for ratings and feedback, communicating reassurances, compensating appropriately for delayed deliveries, etc. The challenge with personalisation is that the efforts look generalised. Even brands like Amazon or Walmart do not get it right most of the time. The content of messages/communications often looks like it might have been sent to others as well. The essence of personalisation is to stick to the specifics of consumer behaviour and customer experience to provide solutions and improvisations without being intrusive. For example, a departmental store can follow up with customers if the home delivery of their orders was on point.

In hyper-localised retailing, personalisation becomes a tad easier as the extent of study is reduced to local neighbourhoods. As the focus is on a small segment of customers, hyper-localisation creates the scope to execute a detailed analysis of consumer behaviour, customer experience, and other marketing parameters. The use of automation and analytics makes it further sharper. Getting better at personalisation gives new retailers an edge over local and regional players.

Operational Efficiency

Operations are another critical ground for gaining a competitive advantage. It not only has direct implications on profitability but also affects customer experience towards the end of the value chain. When we say operations, it includes all areas of business operations concerning procurement, inventory management, warehousing solutions, logistics, communication, technology, HR, marketing, finance, etc. To compete effectively with local and regional players, new retailers cannot afford to have any slack in these business processes and operations.

New players need to make the necessary localised adjustments in their business processes for better alignment with the local market conditions. These adjustments concern both operations planning and execution. Retail hyper-localisation in operations management is what these efforts are called. Retail store SOPs are a potent instrument to convert such strategic adjustments into operational reality. For example, if certain products (of a store) sell like hotcakes in one locality, the concerned operations of that store must be hyper-localised accordingly. The storing requirements involved in offering such goods can be slightly different or the reorder levels must be set on higher marks to compensate for the longer time required for suppliers to replenish.

Responsiveness to Changes in Local Markets

The ability of a retail store to respond quickly and effectively to changes in the local market conditions speaks volumes of its agility. The changes referred to here are not ones of a drastic nature but those that help maintain the flow of business. For example, there could be a sudden drop in the availability of logistical solutions affecting procurement and home delivery operations. This can easily happen if better commercial or employment opportunities emerge in a market stemming even from another industry. Hyper-localisation demands that new players assess such risks/changes and look into how existing businesses are shielding themselves from such risks. It allows them to altogether avoid such risks, manage them strategically, or stay prepared with the right action plan. In the event of such changes, it would remain feasible to quickly mould, keep business unaffected, and not lose any competitive edge.

Recap

Retail hyper-localisation is the broad answer to how a new retail business can resonate and position itself as a local brand in the face of competition from existing local and regional players. It helps new players resonate quickly and more profoundly with customers in local neighbourhoods.

Hyper-localisation demands the alignment of merchandising strategies with the local demand reflecting the tastes and preferences of customers helping stay as relevant as the other good players in the market in terms of offerings.

While the stable, existing players in a market do not have to spend heavily on promotions, new retailers not only have to invest relatively more in advertising and promotions but they also need to be effective and accurate at it.

Because in hyperlocal marketing, the emphasis is on a relatively small and specific base of customers, it is easier to identify and define target segments. This helps improve the accuracy of targeting and enhance the effectiveness of advertising and promotional campaigns.

Hyper-localisation leads to possible competitive leverage in the form of the novelty of business ideas, value propositions, and customer experience. It lets global or domestic retail brands ‘glocalise’ their offerings serving as an instant competitive edge.

Localised pricing and awareness of the range of flexibility in it, allow new players to compete with local and regional businesses with greater agility.

Done right, hyper-localised retailing makes personalisation easier with enhanced effectiveness. As the focus is on a small segment of customers, it creates the scope to deeply analyse consumer behaviour, customer experience, and other marketing parameters. This helps create strong and competitive personalisation strategies and campaigns.

New players cannot afford to have any loose ends with their business processes and operations if they want to compete effectively with strong local and regional players. In addition to localised strategies, the use of retail store SOPs is highly recommended for accuracy in execution.

Hyper-localisation demands an assessment of the dynamics of the local market environment affecting the value chain and staying prepared for such changes or risks to the extent feasible. This lends agility in responding to such changes in local market environments.

For enquiries on retail business solutions or to speak to one of our expert retail consultants, please drop us a message and we will reach out to you.

FAQs

How to counter competition in retail?

There is no one, simple answer to countering competition in retail or any other form of business. But if you can find the areas that need attention, you can think of devising a strategy. Here are some of the areas of strategic significance for consideration:

  • Merchandising – Meeting the tastes and preferences of the target segments
  • Pricing – Setting the right and competitive prices
  • Advertising and promotion to reach the target audiences
  • Channel of distribution
  • Value-added services for enhancement to value addition and as additional revenue streams
  • Efficiency in retail operations management (e.g. use of retail Standard Operating Procedures or retail SOPs)
  • Customer Experience

Hyper-Localisation: Hyper-localised retail or retail hyper-localisation is a retail business strategy in which stores of a retail brand are aligned with the market conditions of the locality or neighbourhood from where it operates or will operate. Hyper-localised retail involves customising merchandising, in-store experience, operations and other key components of the value chain to cater more accurately to the needs and expectations of the local customer base in question. Hyper-localised retail crosses the bounds of traditional localisation by underscoring localities and neighbourhoods.

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Author Bio

 Nikhil Agarwal

Nikhil Agarwal

Chief Growth Officer

Nikhil is a calm and composed individual who has a master’s degree in international business and finance from the United Kingdom. Nikhil Agarwal has worked with 300+ retail e-commerce brands and companies from various sectors, since 2012, to define their growth strategy and achieve operational excellence. Nikhil & his team have remarkable success stories of helping brands achieve 10X growth.

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    PROCESS AUTOMATION

    The idea of having Ecommerce Consultants on-board from the beginning itself points towards reducing the involvement of the promoters in daily operations. Ecommerce Businesses willing to be a brand reaping profits & sustaining the competition must ensure that most of their processes should be automated. The more the manual intervention, the more would be the errors.

    In Ecommerce business, you get only 1 chance to impress the customer & if you mess up there, you lose the customer for long.

    Process automation in respect to all the activities pertaining to customers from order receiving to order fulfilment is a must for a seamless experience for the customers.

    Task Management is another grey area where most deadlines fail as 90% of the tasks are assigned manually & are forgotten, unheard, misunderstood or mistaken.

    YRC Team of Ecommerce Management Consultants helps to make maximum of the processes system-driven to ensure minimalistic manual intervention.

    VIDEOGRAPHY & PHOTOGRAPHY

    No matter how good your product is, the customer would know only if it looks good.

    Photography includes the following steps:

    • Cataloguing your products
    • Cataloguing your images
    • Backup your images (A few cloud storage solutions include Dropbox, Google Drive, Bitcasa, Apple’s Cloud Storage etc.)
    • Choose the right camera & lens (You may also outsource the photography to a third party agency)

    DIGITAL MARKETING

    Digital Marketing includes SEO & SMM. SEO i.e. Search Engine Optimization includes activities like back-linking, meta tags, blog-writing etc. to ensure your website ranks on the 1st page on Google Search.

    Next comes SMM i.e. “Social Media Marketing” which as the name suggests including promoting your products on all the social media sites, email marketing, influencer marketing & several other BTL activities.

    These activities are going to be recurring & would decide the traffic on the website, the conversions, whether the right target market is tapped, the likes, the views, the orders, the reviews & much more. YRCs Ecommerce Consultants create a budget for digital marketing right from pre-launch to launch & for each month thereafter.

    Building digital marketing strategies in coordination with the agency, selecting them to signing them off would be the role of YRC.

    This ensures seamless coordination, detailed interactions & desired execution as it is always advisable to work with a single agency than multiple of them.

    IT INTEGRATION

    Selection of the right software for smooth functioning of back-end operations right from production to webstore display would be suggested and integrated by YRC Team.

    YRC’s Team defines SOPs of Product Movement, maps it with the locations & people. They then create a blueprint of all the features required in the software & help in shortlisting & selection.

    IT Integration involves connecting your offline inventories with real-time online webstore so when a sale occurs, inventories get deducted real time across offline as well as online platforms.

    This helps in accurate inventory management, maintaining the MOQs, re-order levels & achieving the optimum inventory levels.

    Some popular software include unicommerce, viniculum for your front-end website management & Genisys for your entire back-end Purchase, Production, Accounting, Invoicing etc. management.

    WAREHOUSE & LOGISTICS PLANNING

    • How many cities or countries you wish to sell in?
    • Where should your Warehouse be located?
    • Should you have one warehouse in each country or city?
    • Should you be having your own delivery team in your base city?
    • Would the 3rd party vendors be reliable? What happens when they lose or misplace your product during delivery?
    • How should I manage the logistics if my goods are coming from different countries?
    • How should the goods be stored and barcoded?
    • How much space do I require for warehouse?
    • I am sure several such questions must be haunting you while you think of starting your own fashion ecommerce brand.

     

    At YRC, our warehousing and logistics experts can help you devise a strategy for all of the above mentioned queries and much more.

    We design the layout of the Warehouse considering the inward, goods processing, software entry, barcoding, outward, goods return, scrap storage, goods stacking & much more.

    Logistics route plan is devised considering the manufacturer to your warehouse and from there to last mile delivery locations.

    UI & UX DESIGNING

    This Step involves 03 distinct parts:

    Part 1: Choosing the right Platform:

    From several platforms available in the market right from Shopify to magento, woocommerce, prestoshop, wordpress etc. you must choose the one that fits best for your business

    Part 2: UX Designing:

    “UX” denotes User Experience, which if put in simple language is building the functional requirements of the website.

    UX Designing includes designing the features required in the website, customer journey map, website features, the browsing features, navigation features, ecommerce order management process flow, checkout cart features, catalogue management, ecommerce payment system, cross selling features & much more.

    “As per statistics, 68% of the customers abandon the carts before payment”

    An interesting UX ensures the customer sticks on to the website for a longer time.

    Part 3: UI Designing:

    UI stands for User Interface, which means designing the look and feel of the website. UI includes using the right colours, elements and the entire aesthetics of the website.

    A good User Interface ensures the user completes the task that he has come for. It navigates the user through the journey of the brand in the simplest but most effective way.

    The UX designer maps out the bare bones of the user journey; the UI designer then fills it in with visual and interactive elements.

    If User experience is the bare bone, user interface wraps it up with an attractive cape.

    At YRC, our team if experts can help you develop the entire User Journey to ensure it is engaging!

    SAMPLING & PRODUCTION

    This step follows the “Designing” Phase, whether you have an in-house design team, freelance designers or an outsourced design company. It is one of the most exciting phases, as here you see your designs turning into products & your ideas turning into reality.

    In most start-up cases, production is outsourced i.e. brands tie-up with the established manufacturers/ job-workers to get their products manufactured.

    Sampling involves multiple 04 Stages, Fit-Sample, Prototype Sample, Pre-Production Sample & the Production Sample.

    Prototype Sample is the first sample provided to the buyer. It can be in any fabric/ colour. This sample is just to understand whether the product design looks equally great in reality.

    Fit Sample, as the name suggests is prepared to check the fit of the garment i.e. the various sizes, length, width etc.

    Pre-production is made by the actual production line. Here the stitching quality and other aspects related to manufacturing are checked. This is the last stage where rejection can be accepted.

    Production Sample is made before the production which is the replica of what is going to be finally produced.

    Once you are through with all this, you are good to go ahead & get your goods manufactured.

    PRODUCT DESIGNING / SOURCING

    Product Designing or Sourcing is the heart of the Ecommerce Fashion Brand.

    Product Designing / Sourcing can be done in several ways, as follows:

    • In-house Design Team
    • Freelance Designers
    • Outsourced Design Team
    • Ready Product Sourcing (From Manufacturer or Wholesaler)

    At YRC, we evaluate your business strategy & business model to arrive at the decision, which of the above ways would be best-fit for your business. In certain cases, product sourcing may be a combination of the above.

    These are the people who are going to build your brand! Whether they are the designers or merchandiser, your brand look is going to be in their hands.

    If you are designing each garment from the scratch, the sourcing would play crucial role in developing design identity of your brand.

    Sourcing includes fabric, trims, lining & all the raw material required to build the garment.

    BRANDING

    Branding is the “Look of the Brand”, right from logo to tagline, the colours used, the brand story, the brand communications on social media, the packaging & all the other aspects which speak directly or indirectly to the customers. Branding constitutes the look & feel of the brand & hence must be thoughtfully planned to match with the product that we are selling.

    Branding must appeal to our target audience. Example : A golden colour logo depicting finesse, art, richness, premium, however beautiful it may be individually cannot go with a brand selling affordable kids wear products. So, your logo must be in-line with your brand positioning, whether you are an expensive brand or a luxury brand or a value for money brand, it must be depicted from your “Branding”.

    It is an integral part to attract the target audience.

    ORGANOGRAMS & SOP’s

    Organogram is the “HR Blueprint” of the business which is created at the onset, to map out the team required across each function at various stages of the business. At the launch, only key people need to be got on board to ensure the project gets started & at this stage, all of them need to multi-task. Similarly, certain financial as well as operational goals are set for addition of the further team. Example, for the operations team, we hire 1 operations manager during the pre-launch phase & we add 1 more only when the business kicks-off & we reach a volume of selling more than 1000 pcs/ month or a turnover of more than 0.1 million USD.

    SOPs are Standard Operating Procedures, a bible to run the entire organization right from Sales, Purchase, HR, Order receiving to Order fulfilment, Inventory Management, Accounts, Warehouse, Logistics, Supply Chain, Production & all the other relevant functions for the business. Business must be organized from its first day of operations; only then the tasks can be delegated.

    At YRC, we design the organization structure, the processes, and approximate time taken to execute each process, job profile of every member within the organization, their KRAs, KPIs & the Reporting Structure.

    CRITICAL PATHWAY

    Critical Pathway Analysis (CPA), is a project management technique which cannot be overlooked while launching an ecommerce fashion brand. Brand launch process is cumbersome with multiple inter-dependent & time-bound tasks involved, which need to be tracked to ensure the project remains on track.

    CPA outlines key tasks across the project, their turnaround time (TAT) & the dependencies of tasks upon each other. It identifies the sequence of tasks, their interdependent steps from inception to completion, their criticalities, and their dates of onset, target dates of completion along with the key responsible person for the respective activities. Critical Pathway helps in understanding the unimportant & not urgent tasks which may jeopardize the execution of the project because of an unexpected snag! It also maps out the potential bottlenecks which might be posed because of the dependencies of tasks upon each other & cases where the next task cannot be commenced before the completion of the previous one.

    CPA detects the minimum & the maximum time involvement of a particular individual or team to execute the task, thereby arriving at the overall deadlines associated with the project.

    At Your Retail Coach, we design the Critical Pathway & review it periodically to ensure the project is on track & the progress is measurable.

    BUSINESS STRATEGY & BUSINESS PLAN

    Business Strategy includes the vision, mission, goals, business model, business plan & strategy for all the functions within the organization.

    Business Strategy is a well-defined plan that outlines who, what, where, why, how & when for the company; for example, who would be the target market, how to attract the target audience, when to launch new products, where to operate from, how to handle competitors, what would be the USP, what would be long term goal of the organization & several other answers to the 5Ws of Strategy.

    Business Strategy aligns the organization towards a common goal. Business SWOT helps company to identify & overcome their weaknesses & focus to sharpen the strengths. Business strategy forecasts future risks and helps business in building skillsets to overcome the potential threats.

    YRC’s Business Plan focuses on creating a “Blueprint” of the business, thereby deriving the feasibility of the concept & gauge whether the opportunity is lucrative to invest time, energy & effort. Business Plan creates cash flow understanding i.e. building inflow & outflow cash projections from Week zero to week 60 i.e. 05 year projection. Business Plan calculates the capital investment, operating costs, one-time costs, recurring costs & all the other numbers relevant to obtain the breakeven sales, return on investment, return on capital, internal rate of return & several other ratios. Business Plan is also one of the important requirements if you are targeting the “Investor Route”. Fund raising becomes extremely transparent & channelized. With business plan panned out clearly, the business will know until what point must it be stretched & where to stop, which reduces the probability of unplanned investments.

    MARKET RESEARCH

    Starting the concept of Ecommerce Fashion brand with Market Research ensures we get detailed understanding of the industry & this research report also acts as a social confirmation for your concept. Market Research helps in understanding the target locations, their population, potential online buyers for your product, competitors for each category, and top selling products of the competitors, competitors’ price range, offers & their responses & much more. Market Research helps in thorough understanding of your brand position as compared to our competitors. It helps in identifying gaps in the market, in your category along with the scope of the said product in the desired market. This will help in validation of your concept & prevents you from making the same mistakes as your fellow brands, eventually saving your time, energy & efforts. This phase is also a make or a break phase, as the market research study may at-times come up with some eye-popping numbers & statistics which might compel you to re-think on your product or category that you are planning to sell or alter your entire concept itself!! Market Research Reports analyse the competitors’ webstore for their traffic, conversion & sales. This is extremely valuable information to derive our inventory budgets & projections, which takes us to our next phase.