varun dhawan and katrina kaif brand ambassadors for big bazaar

Brick-and-mortar chains step up promotions, refurbish stores Firmsofferbigdiscounts, redo stores to improve customer experience and push back competition from online retailers Sapna Agarwal 10 inShare 0 Comments Subscribe to: Daily Newsletter Breaking News However, as brick and mortar retailers raise spending on promotions and refurbishing stores, they could see increased pressure on profitability. Photo: Indranil Bhoumik/Mint Mumbai: Future Group, which runs Big Bazaar, FBB and Central chain stores, along with Shoppers Stop Ltd, operator of a department store by the same name, Crosswords bookstore and HyperCity hypermarket, are increasing advertising spends, offering bigger discounts and redoing stores to improve customer experience as they push back against competition from online retailers such as Flipkart, Snapdeal and Amazon. Starting this weekend, Big Bazaar and FBB have stepped up their promotion and advertising spends. "We have increased our advertising budget for the new fiscal by Rs.100 crore over last year," said Kishore Biyani, chairman and chief executive officer, Future Group. This, in effect, means the firm has doubled its advertising outlay for the two retail chains over the last year. Biyani added the group has launched a 52-week campaign called Crazy Weekends, where deals and discounts will be available at Big Bazaar stores every weekend. The firm has also hired actors Varun Dhawan and Katrina Kaif as brand ambassadors for FBB. The changes come in the wake of increased competition from online retailers. Last year, online retailers raised more than $3 billion as they looked for growth in India's nascent modern retail market. The money was used to fund their heavy discounting and promotions. In 2014, firms in the e-commerce space spent over Rs.1,000 crore on advertising across media, of which a majority was spent on television, said a report published by industry lobby Federation of Indian Chambers of Commerce and Industry (Ficci) and consulting firm KPMG in March. E-commerce firms were also the biggest spenders across digital mediums as they increased their spends by over 300% on the medium. Likewise, they invested heavily in print promotions to showcase their product catalogues, especially on special offer days, increasing their spend by 155% over the year-ago in 2014, said the report. Besides, portals also adopted a strategy of heavy discounting to wean away consumers from brick and mortar retailers even as they incurred losses. "The combined losses of top e-commerce firms was over Rs.1,000 crore in 2014," said a February report by consultancy firm PriceWaterhouseCoopers (PwC) India and Retailers Association of India (RAI). The heavy discounting and promotions by e-commerce companies are not expected to stop anytime soon. "This will continue for another 18-24 months," said Govind Shrikhande, managing director, Shoppers Stop. The retailer's like-to-like growth for the department store chain was at 0.8% in the December quarter, following stiff competition from online firms. Like-to-like same store sales growth is a measure of growth based on sales in stores that have been open for at least a year. Anil Talreja, a partner at consulting firm Deloitte Haskins and Sells, agreed. "We will see the heavy discounting and advertising continue in 2015 and 2016." However, he said, the way ahead for retailers"be it online or offline"will have to be innovations as discounts alone will fail to get consumers' attention. As a way to strengthen its offerings, Shoppers Stop is also looking at exclusive partnerships and has launched cricketer Virat Kohli's brand Wrogn as an exclusive off-line partner. Wrogn is available online on Jabong as well. India's oldest department store chain has also consolidated its in-house brands, introduced marriage-wear as a category with brands such as Manyavar and added new brands Next, Tommy Hilfiger kids and Tiny Girl to its kidswear section, besides expanding its casual wear and jeans collections. Shoppers Stop is also experimenting with a compact format of about 6,000 sq. ft, called HyperCity Express, where it sells fruits, vegetables, groceries and some of its top-selling items. Last month, Shoppers Stop unveiled a new look for its flagship department store at Inorbit mall in Mumbai's suburbs at Malad, increasing floor space by nearly 30,000 sq. ft, making it the largest store for the firm spanning across 150,000 sq. ft. However, as brick and mortar retailers raise spending on promotions and refurbishing stores, they could see increased pressure on profitability. "Refurbishing stores and advertising campaigns are all attached with costs. They have instant gratification, but are not sustainable in the long run," said Rachna Nath, leader (retail and consumer) at PwC. Brick and mortar retailers will have to go digital to increase sales as physical expansion has limitations with limited number of retail space, she said. To be sure, in the past year, brick and mortar retailers have also ventured online. Future Group has tied up with Amazon and has also launched its omni-channel strategy. Shoppers Stop, which has made all its private labels available across all online retailers, is also working on its omni-channel strategy, which will unfold in the next 18-24 months. In five years, the e-commerce market is expected to catch up with organized brick and mortar retail trade in India. "The share of e-commerce is expected to jump from 2% in 2014 to 11% in 2019, while the share of organized brick and modern retail is expected to fall from 17% to 13%," said a February report by property consultant Knight Frank India and lobby RAI.

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