Monday, August 20, 2012

GODREJ: RETAIL

Godrej Industries has suddenly become more enthusiastic about its retail plans, especially in new concepts of retailing (like gourmet food). Is there any radical plan we’re missing or is this it? by Angshuman Paul

Critically speaking, for years, there has been a critical ever present wedge within the Godrej group – and that almost always has been the lack of post haste speed to change within the organisation. Not that simply ‘changing’ is enough to give one market leadership (well, there’s only a thin line between dynamism and childish over-eagerness), but the fact remains that Godrej has suffered due to some of their static strategic models. The white goods segment is a classic example of how this message was evident to the collective psyche of the 23,000 strong Godrej family. Many years back, the Godrej name was enough to sell any item relevant to a family household, with products from Godrej & Boyce Mfg. Co. Ltd. (the appliances division of Godrej), ruling a psychological monopoly in the minds of the Indian consumer. And then dynamics changed. The biggest hits came from LG and Samsung, who sneaked into the show using a combination of pure marketing and advertising blitz and an exhaustive retail penetration that had the Indian consumer believing in Korean brands. Apparently, the possessing of a cost efficient manufacturing base (by Godrej) was not enough when confronted with such aggressive rivals who were dependent, perhaps rightly, more on marketing warfare than on ensuring backward integration.

The melee became more competitive during the last three years when arch-rival Videocon fiercely entered the retail arena. Still, Godrej – believing in their brand pedigree – were non-committal in recognising the tremendous business potential retailing offered. And although Godrej took the lead amongst Indian companies in forging strategic alliances with multinationals and brands like Sara Lee, Hershey, P&G and even the iconic GE, it still was not too eager to ramp up their feet-on-street plans. Senior Godrej officials accept that Godrej didn’t have any intentions to foray into retail then. But now, with changing times, the newer expansion model – of increasing retail presence – has gained better acceptance within the Godrej circles; one reason why there’s a reinvigorated enthusiasm to expand their retail ventures – Lifespace and Nature’s Basket.

Clearly, Godrej today has to reassess its response quotient to change. The brand is perhaps as respectable as it has been for many years. But the Indian consumer is not what he used to be years ago. Today, there are factors that are more critical to the typical Indian buyer – pricing, loan schemes, discount offers, service, product brand varieties, qualities and so on so forth – than a simple brand name. It’s not too late yet to change... but it soon will be...




Posted by at
Labels: , , , , , , , , , , ,