How is Hyper-Localization Helping Retail Chain Stores Stay Ahead of Regional Competitors?

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.

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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 can Hyper-Localisation Increase Retail Sales
• How Retailers are Enhancing Customer Experience (CX) with Hyper-Localisation