A Tale of Two Stores

Have you ever wondered why a few stores close down within a few years of its opening? What makes a store profitable?

Have witnessed 2 stores change their fortunes in a span of few years in the recent past. A store in a locality frequented by the IT crowd and performing well closed down and the a store in a tier 3 city dominated by kirana stores which was supposed to be closed due to huge losses turned around and became profitable.

So what made this happen?

Firstly about the store in the IT crowd, it enjoyed monopoly in the locality. The catchment was high income, young generation cosmopolitan crowd. The customers being well travelled were exposed to the best cuisines, best brands and the best of the service. The store was a breather for the neighbourhood due to the absence of modern retailer. The customer could enjoy the mall ambience, could purchase most of their shopping basket and spend time with their family. The IT crowd had food coupons which helped them save on income tax. These could be exchanged only in select outlets was allowed at this retailer’s point.

All these factors led to the good performance of the store. The store enjoyed high sales and decent profitability. But the good times did not last long. Slowly things turned against it the service level reduced. Customer was no longer a king. The assortment was not as per customer requirement. Basic hygiene was not maintained. A bakery without good ventilation was opened. This led to suffocation for the customers. Many avoided getting their children to the store due to the suffocation. All this led to the disappointment of the customers though they shopped at the store.

One fine day the outlet had to stop accepting the food coupons as an organizational policy. The final nail in the coffin was the beginning of competition in the area. Thus the shutter came down for the store.

Though the last two reasons were behind the control of the outlet all other reasons were? Yet the store was complacent till the last two factors affected the store drastically. A retail store needs to be on its feet. It needs to be very customer centric and flexible.

Now the tale of the other store.

This was located in a tier 3 city where the people were not exposed to modern retail, had very little awareness of brands. They enjoyed shopping at the local mandi for their grocery and the normal vegetable market. Their needs were minimal and were being fulfilled.

Enter modern retail. People not excited and did not shop with the retailer. Thought the outlet was expensive as it had AC, English speaking staff (which all came at a cost). Hence sales were low. Having the right assortment was logistically challenging.  A year or 2 years down the line the management decided to close the store as it was loss making. Yet it decided to give the team some more time to turn around.

And voila! Few years later the store is one of the most profitable stores for the company. So what did the store do right?

The store benchmarked the local market for the products and categories sold.  This meant introduction of regional favourites in vegetables, rice, oil etc thereby giving a community connect. Ensured their presence on the retail shelves, even if it meant procuring it from the nearest metro city. Ensure the price of the basic grocery and fruits and vegetables was never higher than the local market but a better quality than the local market. Thereby making the customer see logic in buying from the store.

As the customer entry was low the staff would personally attend to each of the customers with their entire shopping trip in the store. Thereby showing and explaining them about the various products and the offers. This personal attention by the staff led to the store having the highest bill value per customer beating even the stores in metro cities.

The store also did a lot of activations to attract new customers, had the best offers in town. Thus the store gained the confidence of the town.

Slowly based on the store performance competition arrived. Yet this store performed better. It further improved its assortment, service, offers etc. After many years the profitability of the stores continues.

This is an example of how a store can either be built or destroyed.

Any such experiences? Any ideas as to what can make or mar a store?

Please share with me


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