In Indian retail, adaptation is the key to success

At our retail event on 9th April, Rakesh Biyani, Joint MD of the Future Group, shared some of his company’s unique strategies for success, which have consolidated the Group as a leader in India’s rapidly growing retail sector.

One of the key takeaways from his presentation was that adaptation is the key to success in the dynamic yet complex Indian market.

The Future Group, one of India’s largest retail conglomerates, were the pioneers of modern retail in in the country, spearheading an entirely new retail ecosystem the likes of which hadn’t been seen in India before. Prior to their launch, the Indian retail landscape was dominated by neighbourhood kirana (corner) shops and chaotic bazaars where people did their daily shopping. In this environment, the Future Group decided to invest in setting up the necessary support infrastructure, for example by introducing sophisticated training programmes to upskill staff at their organised retail stores. They quickly learned that they had to adopt a flexible and fluid business model to keep pace with the changing demands of the evolving Indian consumer.

The Group encourages their international business partners to follow the same best practice. When the Future Group forged a joint venture with Clarks in 2009, they advised Clarks to adapt their footwear products for Indian women customers with designs that would be better suited to the warmer weather in India. Clarks spent almost 18 months working on this customisation project but their efforts paid off as they exceeded their expected profits in only two years.

Kellogg’s, which entered the Indian market in 1994, is another good case in point. In its initial ads in India, Kellogg’s portrayed Indian breakfasts as unhealthy, hurting the sentiment of Indian mothers who had for long been serving traditional breakfasts to their children. As a result, Kellogg’s sales plummeted by 25% by the following year.

Kellogg’s quickly initiated an India-specific brand-building programme to endear itself to the Indian public, for instance by launching small-sized packs at Rs 10 to appeal to price-sensitive consumers; using Hindi words such as cornflakes with ‘iron shakti’ and ‘calcium shakti’; and introducing sweeter items to cater to the Indian palate. To make the brand more appealing to Indian women, Kellogg’s chose Bollywood actress Lara Dutta as the face of their Special K campaign. The company also focused on portraying itself as socially responsible, recycling and reusing materials, and improving access to health services in the local communities. All these initiatives taken by Kellogg’s to reposition its brand and tailor it for the Indian market helped it regain around 60 per cent market share of the breakfast cereals market by 2011.

Fast food giant McDonald’s also had to adapt its marketing to suit Indian tastes – not only did the global foodservice retailer expand its menu to offer bespoke options such as the ‘Maharaja Mac’, ‘Veggie McNuggetts’ and the new ‘Masala Grill Burger’, but it went further to completely discontinue beef products in its Indian stores and set up purely vegetarian stores to appeal to its Indian consumers. For a brand that has essentially marketed beef, lamb or chicken products worldwide, this was a major strategic move.

“As the market leader of the quick service restaurant category, McDonald’s is known for being innovative. After almost 18 months of product development, including quality assurance testing and many consumer trials, we know that we can wow Indians,” adds Rameet Arora, Senior Director, Menu Management and Marketing.

Another example is Dunkin’ Donuts, which has tweaked its offering to introduce Indian flavours like roasted coconut and pistachio saffron, and gift-wrapped editions around Diwali season for gift-giving.  Danone has also approached the market with localised marketing campaigns aiming to create an emotional connect with consumers, and reformulating its product range to offer lassi drinks.

India is a complex and diverse market where tastes differ from state to state and even between cities. Indian consumers themselves are highly price sensitive, value conscious and discerning. Foreign companies going to India can face disappointment if they try to replicate strategies used successfully in other markets.

Innovation including customization of products is a critical success factor, and even world- class brands need to rebuild their offering to Indian needs and blend with the local culture. Only then can they be truly successful.