How can Hyper-Localisation Increase Retail Sales

We have seen how politicians use slightly altered speeches and narratives depending upon whom they are addressing. For national audiences, they cover issues of national importance. At state levels, it is more about issues concerning the state in question. The same principle is applied when they address audiences at city or municipality levels. What they are broadly doing here is localisation. So, what is hyper-localisation in retail?

Retail hyper-localisation is the act of fine-tuning business strategies to suit the needs and expectations of a very specific local, neighbourhood base of customers. These adjustments or variations help foster a deep connection with customers that keeps the potential of sustaining and improving footfall and turnover. This blog showcases how hyper-localisation plays a role in sustaining and improving sales in retail.

High Customer Resonance

Every new retailer goes through a hard time attracting customers and generating footfall. New value oppositions are adapted and improvised by existing businesses to prevent losing market share making things more difficult for new retailers. Even if competition is minimal, it is not easy to change the buying behaviour of customers and divert them to a new store. Retail hyper-localisation with value propositions that cannot be easily replicated or adopted by competitors comes to the rescue here. Hyper-localisation helps retailers resonate more profoundly with customers in the local neighbourhood. Resonance is a term with broad scope and hence, there are numerous ways in which this resonance could be created. Customers prefer buying from businesses that they resonate with in one or more meaningful ways leading to increased footfall and the possibility of increased sales. For example, decorating a store reflecting the essence of any local festival immediately echoes a resonance. However, this effort should not look like a marketing gimmick but a genuine attempt at celebrating the spirit of a festival.

Precision in Merchandising

What is on the shelves of stores must have value to customers. Generic merchandising strategies and decisions are a safe approach to begin with but it is not sustainable for long. It reflects a lack in the understanding of consumer behaviour which is not a good sign if a retailer sees merchandising as a critical component of value proposition. Alternatively, hyper-localisation demands merchandising to be aligned with the needs and expectations of local customers. 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.

More Effective Advertising and Promotions

The accuracy of targeting and effectiveness of advertising and promotional campaigns is always a challenge. It applies to digital marketing as well. This challenge compounds with the increasing size of the target audience and variations within it. For example, if a segment is defined as people who use a social media application for more than two hours every day in a given geography, the ads still end up on the feeds of thousands of users with no interest in the promoted product service. Both advertisers and platforms know that nothing much can be done about this. The targeting of advertisements cannot be done beyond a certain extent. However, things take a different turn with hyperlocal marketing. In hyperlocal marketing, the emphasis is on a small and specific base of customers. This makes it easier to define the target segment and improve the accuracy of advertising and promotional campaigns. A narrowed scope of study allows in-depth and extensive analysis of consumer behaviour within a short time. This improves the effectiveness of brand communication via advertisements and promotions leading to increased scope of retail sales.

More Effective Pricing

Retail pricing strategies have profound implications on sales. Retailers often flex their prices, sacrificing their margins to attract and retain customers. This is a common practice among local retailers. Now, when any retail business wants to open a store in a locality, their prices also must be competitive. This is nothing but the application of hyper-localised pricing strategies. It brings new retailers on the same level playing field as that of the existing retailers in a locality. With these price adjustments in place, brand distinction is no longer possible on the grounds of pricing. New retailers can also charge lower than the prevailing price levels as a part of a market penetration strategy. Hyper-localised pricing strategies pave the way for achieving higher sales by allowing retailers to price their products differently in different localities as per the applicable factors.

Better Personalisation

Personalisation is hard to succeed at. Even retail giants like Amazon or Reliance do not get it right most of the time. Personalisation in retail often ends up being vague. A dearth of sufficient and relevant data and flaws in predictive analysis are the two biggest causes for failing at personalisation. In hyper-localised retail, the extent of study is reduced to local neighbourhoods. Human judgement combined with the use of analytics allows retailers to formulate more accurate personalisation strategies and offerings. As the emphasis is on a micro base of customers, hyper-localisation creates the scope to carry out an in-depth analysis of consumer behaviour and other marketing parameters. An improved understanding of consumer behaviour lets create better personalised offerings leading to improved chances of sales.

Focused and Tailored Operations

Retail operations management also can affect sales in retail. When we say operations, it includes the entire gamut of business functions like purchase, inventory management, warehousing, logistics, HR, marketing, finance, technology, etc. Every store needs some localised adjustment in these functional strategies to align better with the local market conditions. For example, if certain products (of a store) are sold more in one locality, the functional strategies must also be adjusted (hyper-localised) accordingly. The storing requirements of such goods can be slightly different or it might take suppliers longer to replenish stock levels due to the store being located in a traffic-busy locality. The outcome of such retail hyper-localisation is that the store in the example here will be able to ensure that the required inventory levels are consistently maintained leading (aided by retail store SOPs) to no loss of sales (products in question) and reinforcing the prospects of increased sales of other goods as well.

Sustained Loyalty

Consistency is closely related to loyalty. Customers seek consistency in the value proposition offered and delivered to them. This value could be in the form of resonance in merchandising, in-store experience, home-delivery discounts, staffing, store layout planning, technology, local sourcing, etc. Done right and consistently followed in the long run, hyper-localised retail helps maintain consistency in the delivery of value propositions relevant to the local customer base. This consistency makes it easier for customers to decide if they should stick to a store or a brand. Thus, over longer periods, hyper-localisation helps sustain customer loyalty. This loyalty shows up in footfall and turnover.

Community Engagement

A strong community engagement by brands and businesses is often perceived as a positive gesture in societies. It helps retailers fulfil their social responsibilities at the local level pushing it into the confines of hyper-localisation. It gives an opportunity to foster customer loyalty and create positive word-of-mouth. Community engagement can take place in several ways. Partnering with prominent local dignitaries in their social work activities is one of them. Hosting or sponsoring local events shows the involvement in promoting social and cultural norms. Cause-related marketing like sharing portions of sale proceeds towards charity or any other social cause is also common. Retailers can also think of hiring local students as interns while adhering to the applicable laws.

All these engagements help customers see a brand or a business in a responsible shade. Positive implications of community engagement on business should be perceived only as its by-products and not objectives.

Recap

The hidden truth is that competition has become hyper-local. If it has not yet arrived, it will be there soon. It is already difficult for retailers to woo customers for so many reasons like increasing competition, changing needs, and online buying options. In the face of these challenges, hyper-localisation helps create and sustain the much-needed resonance with customers in the local neighbourhood. It not only helps hold market shares but also increase sales. For creating this resonance, it is critical to understand consumer behaviour at the local level without which stores end up shelving goods that do not reflect the current and potential needs of the local customer base. This ultimately hurts turnovers. Even with the right goods with the right price tags on the shelves, advertising and promotion must be on point. Hyper-localisation is helpful in this context as the emphasis is on a small base of customers allowing the scope of better analysis and better personalisation. When it comes to operations, hyper-localisation demands that local factors are taken into consideration to align the functional strategies that best serve the local market conditions. These alignments are critical to achieving consistency and improvements in footfall and sales. Sustained over time, hyper-localisation helps maintain consistency in value delivery that contributes to building brand trust, customer loyalty, and continued purchase. Community engagement further helps build a strong brand persona at the local level which has many indirect but positive business implications.

Hyper-localisation is the new line of distinction between good and poor sales performance.

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Dive Deeper

Explore YRC Resource Library for more information on retail and ecommerce management challenges, solutions and more:

• What is Hyper-Localisation and how it is Helping Retailers
• How is Hyper-Localization Helping Retail Chain Stores Stay Ahead of Regional Competitors?
• How can Hyper-Localisation Increase Retail Sales
• How Retailers are Enhancing Customer Experience (CX) with Hyper-Localisation