How brands beat slowdown

The hidden tale of modern retail's eventful successes

How the Republic shops
With an increasing number of shoppers actively looking for deals, Republic Day has emerged as the single non-festive created event which generates a shopping frenzy that few other urban events can match.

 A deep dive into the trends over the last two years indicates a surge in retail sales performance especially for FMCG in modern retail. Of the five most active markets, Delhi NCR and Mumbai contribute over 70 per cent to incremental sales versus the previous week and when compared to the same week in the previous year. With modern retail expanding in Delhi NCR in 2012, incremental sales (84 per cent) have grown faster than Mumbai on a year-on-year basis. Interestingly, a smaller market like Pune too is showing similar trends by generating strong growth versus the previous week and previous year.

The year 2013, however, revealed a different picture. Sales figures during the latest Republic Day show positive growth versus the previous week but was unable to match their 2012 forms during the same week. Surprisingly, Bangalore bucked the trend - the only market to do so, and managed a 30 per cent growth in 2013 compared to the same week in 2012.

Different events have a different impact on the composition of the shopping basket. On Republic Day 2012 for instance non-food products contributed the most to incremental sales. When you look at the total sales across all five markets and banners, the contribution of non-foods is double that of staples and is the leading category across markets. The food category comes in second followed by staples and items tracked only in modern trade.

It was a different story in 2013, with food taking precedence in terms of contribution to incremental sales.

Food in slowdown
A closer look at the shopping basket shows that amongst food products, soft drinks, biscuits, jams and salty snacks attracted greater shopper interest. Within non-food, deals on items of regular monthly usage like washing powders, toilet soaps, cleaners and detergents fared well while packaged rice and refined edible oils were staples that sold the most.

The evolving choices of the Indian shopper during event weeks also become clearer through weekly scanning analytics. While skin creams, utensil cleaners and olive oil were the fastest growing items during Republic Day in 2011, a different set of categories emerged in the subsequent years. Packaged tea, shampoo, liquid toilet soaps, packaged pure ghee and spices were some of the fastest growing categories in 2012 and 2013

Festival of lights means heavier shopping bags 
Diwali remains an important part of the shopper calendar as the key annual festival that shoppers look forward to. With an earmarked budget and the desire to gift and entertain guests, the focus lies on impulse category purchases. In 2012, the growth of sales versus the previous week outpaced that of 2011. Across locations, growth compared to the same week in the previous year has also been aggressive, growing from anywhere between a tenth (Hyderabad) to a third (Mumbai).

 Food sales during Diwali seem heavily weighted towards impulse items with soft drinks, chocolates and salty snacks contributing to nearly 80 per cent of incremental sales. Other categories which saw healthy growth included refined edible oils, pure ghee (clarified butter) as well as ready-to-eat snacks.

 Shoppers also chose additional categories: Biscuits, packaged tea, washing powders, rice, non-refined oils and frozen foods grew more incrementally in 2012 than they did in 2011. Skin creams, though an important category during occasions when shoppers are particularly keen on looking and feeling good, has shown higher incremental sales in 2011 during a time when there were more new launches than in 2012.

A specific set of categories and certain SKUs (Stock Keeping Units) within, appears to have had a brighter Diwali. Amongst biscuits for instance, the box pack of some brands observed a sharper rise during the Diwali week while in soft drinks, 2-litre plastic bottles, 4-pack energy drinks and the 1.2-litre pack of mango juice appear to have done better than the category aggregate for the same period. Within the non-food category too, shoppers flocked to some SKUs thanks to better in-store and promotional strategies by some brands.

A clearer view of what is happening in the shopping aisle and why it is happening is the first place business and marketing can start to craft a growth strategy. The smarter marketers, and the faster ones, know this better than anyone else.

The author is Executive Director, CR and BASES, Nielsen India