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What is Hyper-Localisation and how it is Helping Retailers

What is Hyper-Localisation and how it is Helping Retailers

What is Hyper-Localisation in Retail?

A Distant Draw

Everyone is conscious of politicians using slightly different speech content and narratives depending on where they are or the audience they are addressing to. For example, a member of parliament addresses developments and issues of their constituency but a state-level politician highlights issues relevant to their state. Similarly, the head of a country focuses on matters of national importance. All these three could be one person and yet their speeches may vary depending on the target audience. Even if these are three different individuals and they happen to belong to the same political party, the undertone of their speeches must toe the party line while incorporating the variations in their speech content. The act of making these variations or adjustments to suit the very specific local requirements or local conditions is the essence of hyper-localisation.

Say HyLo in Business

Businesses also apply the strategy of localisation or hyper-localisation. We all have noticed how brands like KFC or Domino’s Pizza customise their menu from country to country to suit local tastes and preferences. Brands like Nike, Amazon, Costco, Target, Starbucks, Walmart, and many others also apply hyper-localisation in different forms. These forms include product decisions, marketing and promotions, in-store experience, use of data analytics, community engagement, and more. There may be different opinions about localisation and hyper-localisation but the point of mentioning these examples is to highlight how businesses adapt themselves to suit the target market conditions and requirements.

Coming to the point, is there a definition?

Hyper-localisation is a retail business strategy to align with a locality-based market environment. It helps businesses to cater their offerings and experiences to meet the needs and expectations of highly specific, local market segments. Hyper-localisation transcends the boundaries of traditional localisation by emphasising cities, neighbourhoods, and sometimes even stores. So, the two keywords with hyper-localisation are locality and neighbourhood. Let us get this with a next-door example. Suppose that you are a business owner of a departmental store. Now you want to open another branch on the other side of the city where the demographics are slightly different. Hyper-localisation tells that you should customise your new store and its marketing and operations and other aspects to fit into the specific requirements of the new physical marketplace where you intend to open your store.

Getting There

Hyper-localisation in retail can come up in different ways. Mentioned below are some of the steps or expressions of retail hyper-localisation.

The study of local market conditions includes the analysis of key demographic factors, socio-cultural footprints, buying behaviour, recent past and emerging trends, major local developments and issues, traffic conditions, web and social media activities, political factors, etc. It is highly recommended to study competition. All these are nothing but a kind of market research on a small scale.

In merchandising strategy, we are talking about offering goods that are relevant to local demand. For example, if there are schools and colleges in proximity, a departmental store may want to emphasise its stationery supplies.

Once you understand the local market conditions and you have the value propositions in place, you must also advertise and promote your brand along the same lines. The relevant question here is how you catch the attention of your target audience and make them walk into your store.

A critical consideration in hyper-localisation is the in-store experience. This engulfs multiple elements like brand sign boards, store layout planning, lighting, signages, music, staff behaviour, use of technology, etc. Just to show the relevance of this point, it is not difficult to comprehend that different localities even within one city can have different requirements on the parameter of the quality of front staffing solutions. Hiring local artists or designers is a great way to build the right connection.

The So and Not-So-Everyday Instances

Something we all have witnessed on YouTube is the use of local or regional languages as the dubbing language of the advertisements shown to users. If you are a part of the targeted audience, it is highly likely that certain advertisements are shown to you in your regional or local language. This is nothing but a more directed attempt by brands to communicate more effectively with their targeted local audiences. This is not about the effectiveness of the ads or the targeting but the quantum of effort to hyper-localise.

Hyper-localisation is also reflected in how businesses like restaurants choose their store location. For example, in many parts of the world, there is a line drawn between vegan and non-vegetarian foods. In localities where such distinctions exist, restaurant owners may choose to exercise their locational options as per their business prerogatives. Opening a store in such a location and offering a relevant menu counts as hyper-localisation.

The same retailer can sometimes stock merchandise or price slightly differently depending upon which part of the city or state one of its stores is located. Because hyper-localisation is based on the boundaries of localities and neighbourhoods, it changes how businesses make variations in their merchandising or pricing strategies in different localities or neighbourhoods. For example, if direct competitors are giving a flat 5% discount on all items in a given locality, your store (targeting the same locality) may not have a choice to go anything lower than that provided everything else remains the same.

Hyper-localisation is not always a choice. However, at the same time, it is what makes hyper-localisation possible. Many times, there are external factors like suppliers, logistics, public infrastructure, and ease of workforce mobility that put constraints on businesses to adapt themselves. The constraints pave the reason and way for hyper-localisation. For example, suppliers charge more to supply goods to remote areas which makes businesses focus on other areas of customer experience to remain competitive. One such area is extensive merchandising. While a retailer may not be able to provide heavy discounts they can have a competitive leverage by the size and extent of their merchandising.

Need for and Benefits of Hyper-Localisation in Retail

High Customer Resonance

Every new business goes through a tough time attracting customers and generating footfall. This gets more challenging with the increasing intensity of competition. Value oppositions offered by new businesses are often adapted by existing players to prevent losing customers. Even if competition is not strong, it is not easy to break the buying behaviour of customers and draw them to a new store. This is where hyper-localisation chips in. One of the most important reasons and benefits of hyper-localisation is that it helps retailers resonate with the specific customer base of the locality or neighbourhood where their store is located. The stronger the factor of resonance is, the higher the chances of grabbing the attention of customers and drawing them to a new store.

Precision in Merchandising

Generic merchandising strategies and decisions are a good starting point for new retail stores. However, that approach does not help businesses form strong bonds with customers in terms of what is there on the shelves. The approach lacks depth in understanding consumer behaviour on the grounds of what products, brands, or variants they are looking for. The alternative to this is hyper-localisation. Hyper-localisation demands that merchandising is tuned to the needs and expectations of local customers. Once this is achieved, there is a natural inclination for customers to turn to such stores. For example, if there are a large number of students in a locality or a store is located on the road to one or more educational institutions, stocking stationery products used by students is a merchandising strategy worth further considering. In further consideration, other factors could be usage requirements, pricing, brands, quality, etc. Talking to important stakeholders like parents and teachers could provide many useful insights.

More Effective Advertising and Promotions

The accuracy of targeting is a problem with almost every advertising and promotional campaign. Even digital marketing is not immune from it. One of the inherent reasons for this is the size of the target audience and variations within it. For example, if a segment is defined as people in the age group of 20-35 years with less than two hours of app usage, the ads still end up showing to thousands of users who have no interest in the promoted product service. Advertisers know that nothing much could be done about this. Narrowing down beyond a certain level is just not possible.

Because of the emphasis on a very small base of customers, hyper-localisation makes it easier to improve the accuracy of advertising and promotional targeting. With the reduced scope for study and analysis, retailers can read consumer behaviour more deeply and comprehensively. And the better you know your customers, the better your chances of communicating effectively with them through your advertisements and other promotional campaigns.

Better Personalisation

Personalisation is easy to understand but difficult to succeed at. A significant majority of attempts for personalisation in retail are vague. Even brands like Amazon or Netflix do not get it right most of the time. Two big reasons for this are the lack of sufficient and relevant data and flaws in predictive analysis. When the scope of the study is reduced to neighbourhoods or small localities, these limitations are overcome by human judgement. The use of analytics makes it further sharper. For the reason of focusing on a smaller base of customers, hyper-localisation allows a more extensive and in-depth analysis of consumer behaviour and other marketing parameters. This is the same as how hyper-localisation helps make advertising and promotional campaigns more effective but for a different outcome which is getting better at personalisation.

Higher Operational Efficiency

Hyper-localisation is not confined to marketing-related aspects only; it touches operations planning as well. The broader idea is to align a business with its hyper-local environment and this can include marketing, HR, finance, technology, operations, and other business functions. Once this alignment is comprehended, retailers can eliminate waste and redundancies from business processes. For example, there are areas in every town or city that shut off a little earlier than areas dominant with the hustle-bustle. Business hours in such stores are shorter. This allows retailers to close such stores or branches a bit early. This helps save them resources like electricity and employees could also leave early giving them a slightly higher scope of maintaining work-life balance.

Sustained Loyalty

In the long run, hyper-localisation helps sustain customer loyalty. When hyper-localisation is consistently followed and maintained over longer periods, it also creates consistency in value delivery. When a positive experience is repeated and sustained, it becomes easier for customers to decide if they should continue buying from a store. This works because customers also seek consistency in the values offered and delivered to them. This value could be in the areas of merchandising, home delivery, in-store experience, discounts, staff behaviour, technology upgradation, local sourcing, etc. Hyper-localisation works at a deeper level of understanding of consumer behaviour. If it could be sustained, it would also sustain the return of customers which in the long run converts into loyalty.

Expertise at Hyper-Localisation

Like in any other practice, practising hyper-localisation helps understand its fundamentals curated for unique business situations. An understanding of these fundamentals proves to be handy in future expansion projects. If the observations and analyses made over time are correct, retailers can use their experience and insights to formulate better hyper-localisation strategies in starting new stores in other new neighbourhoods. Not only that, the expertise gained by retailers is also tuned to the unique nature of their businesses. With this expertise in hand, retailers can fine-tune the strategies and planning of their new stores with more confidence and accuracy.

Recap

Hyper-localisation is a retail business strategy to align with the market conditions of the locality or neighbourhood where a store operates. To understand it better, lines of similarities could be drawn from how politicians at different levels customise their speeches depending upon who their audiences are. Hyper-localisation can affect important business decisions (of individual stores) like value propositions, merchandising, pricing, promotion, in-store experience, use of data analytics, community engagement, etc. For example, if there are educational institutions in proximity, a departmental store may want to focus on offering stationery goods relevant to the usage requirements.

Hyper-localisation helps retailers resonate better with the customer base of a locality or neighbourhood. Hyper-localisation demands that goods and services offered are aligned with the needs and expectations of the specific local customer base. Since the focus is on a small base of customers, hyper-localisation also helps improve the accuracy of advertising and promotional targeting. For the same reason, hyper-localisation allows an in-depth and extensive analysis of consumer behaviour and other marketing parameters paving the way for more effective personalisation in retail. Hyper-localisation also helps optimise operational costs. Hyper-localisation combined with consistency in value delivery (aided by retail store SOPs) provides an impetus to sustain customer loyalty. The experience and insights gained could be used to formulate better hyper-localisation strategies when starting new stores in other neighbourhoods.

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

What does hyper-localisation mean in retail?
In retail, hyper-localisation is a business/marketing strategy to align a store with the market conditions of the locality or neighbourhood from where it operates or will operate. This strategy allows retailers to tailor their offerings, experiences, and other value chain elements to meet the needs and expectations of a highly specific, local market segment. It goes beyond the boundaries of traditional localisation by underscoring cities, localities, neighbourhoods, and sometimes even stores.
What is an example of hyper-localisation in retail?
Suppose that a business owner of a departmental store chain intends to open a new branch in another part of the city where the demographics are slightly different. Hyper-localisation demands that the new store and its marketing and operations and other aspects be customised to align with the specific requirements of the market conditions of the new store location.

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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.