Case Analysis: Mass Versus Premium

The three most important elements for success in retail are — Location, Location, and Location. At the outset, this often used retail cliché seems to be at the core of the case study. However, some gentle tickling and more points spill out, right from habit insights of the category to retail tactics that brands like Volyoom or Gigil may need to adopt.

The biggest dilemma the team at StratNext seems to have is whether the brand should be regarded as ‘mass-market’ or ‘prestige’. Since there is no evidence of either of the two brands being in the luxury segment (a segment that I believe is yet to discover a consistent base in India), we can eliminate the need for Gigil to have a niche presence. In the two decades of retail infancy in India, the debate on whether a retail brand/service qualifies as a mass or prestige brand has incorrectly crept the planning rooms of Indian retailers. This debate earns its legacy from established segments of the FMCG and I feel it is ill-fitted for retail. A fast-food joint dishing out burgers at Rs 49 may be considered as a mass product to some but it is surely a satisfyingly premium option to the bulk of the country, which has a miniscule consumption of burgers and pizzas.

Our retail is still at the stage of evolution where premium cookies are nudged into trolleys by piling high in supermarket aisles, and where an eye liner can get into a home through a cross-promotion with daily essentials such as rice and sugar.

Hence the key task for a brand like Gigil is to disruptively grow the category of beauty and have many more consumers. In a retail category of spa and salons, where the overheads tend to be high and skilled manpower pushes up the staff costs, the more patrons the better. And should there still be a compelling need for a label (for the sake of my MBA brethren and sistren), it is best for Gigil to pursue another clichéd label of ‘masstige’ — being a brand that can think and deliver prestige and yet act mass-market on the ground. To my mind, brands like Dove, Samsung and IPL have found this masstige sweet spot — where a brand is reassured a consistent and profitable flow of patrons.

In the case study, Sanam and Mallika, who appear to differ on many points have one clear obsession — the consumer and her decision process; Angad could converge these energies and make brand Gigil to think category-captaincy first, brand salience second, and consequently give up the pursuit to “segment”. The Indian market at this stage offers a large opportunity for building penetration and riding the retail wave that could be a great speed booster in this process.

The second point in the case is the lens to use while assessing a mall and the location inside a mall. Angad is honest in accepting that he knows lesser about the mall dynamics and makes a simple yet impactful point — “And real estate is real estate finally…” There are retail brands that have spent months and years to assess the “potential” of a location and there are brands who have grown assertively with the flow. I tend to back the latter approach, which endorses the idea of ramping up to scale such that it adds to the mind-dominance and rise in consumption. Making such intuitive choices over retail locations are, however, like the spirit of a cricket batsman who believes: “not all innings will lead to scoring centuries”.

I am reminded of our Big Bazaar store at Chowringhee, Kolkata, which defies all rational logic by selling huge quantum apparels, oil, trolleys, chips et al from a heritage two-storeyed location with only a staircase, nil parking and all entries and exits opening into a busy footpath crowded by street vendors. The learning here is – ‘Have shoppers? Any location will do!

There are other retail brands that have invested ahead of their curve in catchments where new settlements are yet to happen. While they have had a slow start, they have reaped large benefits after a few years. A mall, if located within or near a good catchment, manages to build many shopping missions for the customers — some for monthly necessities, some for festive buys, some for impulsive indulgences and some for family outings too. These are benefits every mall tenant can derive, to grow their business. This vibrancy can be of a higher order if the mall is a destination mall within a city, or if the mall located in a small town becomes a regional shopping destination for the nearby centres.

A side point in the case is Mallika’s surprise that they, as brand advisors, were not consulted in the real estate decision. This could be a real issue where newer retail entrants are possibly still organising themselves in siloes of Operations, Marketing Activations, Properties, Brand Management, Finance Supply Chain, etc....

Still, I feel in retail, especially in the formative stages, there is a blurring of boundaries. Any retail player promising convenience through its brand — through fast cashiering, or a no-exchange policy — has to live up to it, and many more teams are bound to be involved to get this going. Also, ensuring that the mall’s security is sensitive to the needs of kids and senior citizens — would this be taken care of by the People Office or Operations? There will be several such functions that force convergence.

Hence Mallika’s feeling of being left out for this decision may be valid. However, she should also factor that in a market with fewer choices, it is always better to back the entrepreneurial gut (assuming the Gigil leadership took one on choosing this mall) on real estate, define some outer limits on financial outflow and then work towards growing the business to the desired levels. This is a vast area of discussion, which can be skipped in favour of the more immediate issues faced by Gigil.

So, let us assume Angad and his team decide to back the call (still unsure of the “batsman’s century”) and Gigil sets up a store in Quartz mall. Based on StratNext’s understanding, there seems to be two customer behaviours mentioned in the case. Mallika mentions brand loyalists who specially seek out their favourite salon and have a planned visit. Sanam, on the other hand, mentions a “destressor” visit to the mall that inspires an inner urge for some indulgence upon spotting a salon; here the shopper is likely to visit even if the salon brand is not known.

Hence patronage could be earned from both, more frequent visits of loyalists as well as impulsive unplanned visits. However, the unstated point made here is that for a salon, there is no other “marketing” other than a trial. If this is followed by consistent service, then a positive word-of-mouth will lead to stickiness. We know the Indian insight of women trusting on a select few salon experts tried and chosen by them and visiting the salon only after booking time with their favourite “expert”. Hence the key tactic for any new salon would be to encourage many trials in the early days of their launch and maintain consistency in the services. With the information provided in the case, it is quite likely that Volyoom would have relied more on the mall, the salon location and the surroundings to build brand salience. It would have spent lesser efforts on building trials and an initial set of patrons. For a category like this, the most impactful medium would always be satisfying trials and a positive word-of-mouth from happy users.

Surely you cannot depend on just the mall’s ambience to win business for you! Angad echoes this direction for the brand to engage directly to build customer base and not only rely on the mall to promote or build awareness.

It appears that the mall has attempted some layout zoning by adding women’s favourite categories of lingerie, cosmetics, etc., on the same floor. There is also a mention of eateries, which could keep kids engaged; and the addition of two mass brands on the floor that can add to the shopper traffic on the floor.

However, Mallika uses a harsh judgement – “breach of promise by the Quartz mall”. Did the mall really fail the brand? Didn’t it do enough to support Volyoom?

I believe that no mall owner would consciously do anything to hurt a tenant. We could perhaps bring up Mallika’s views for a discussion in the second edition of this case study.