In a dimly lit store in the Philippines, categories elbow one another out of the way on straining shelves as if part of a madcap game of retail Tetris. A woman is peering at a selection of shampoo bottles that she’s picked out, watched carefully by another, more elderly woman behind the counter. As the shopper seems to make her decision, picking up a bottle and moving towards the counter, the older lady holds up a finger, begging her attention. She happens to sell a bottle of conditioner that goes excellently with that particular brand of shampoo and would work wonderfully with the younger woman’s hair. The shopkeeper then rummages beneath the counter for a few seconds before emerging with the promised bottle. It’s all part of the personalised service that keeps her customers coming back to the shop – and besides there was no way she could fit this bottle on the shelf as well.
When you step into the world of traditional trade, the shopkeeper is always a key part of the picture. At an Indian railway station, he’s reaching into the fridge hidden behind him to find the perfectly sized water bottle to sit on a counter – and replace the one a hurrying commuter bought a second ago. In Vietnam, he waves to a couple of chairs perched outside his store on the street, where a mother and her daughter can sit and enjoy the crisps and drinks he’s selling them. These are the guardians of traditional trade. They are the gatekeepers for products in a world where there is often no direct contact between the shoppers themselves and products hidden away in the dimly lit, cluttered environment. They are the custodians of the shopping experience in an environment where often the role of shelves is to protect products from rodents rather than offer an enticing display, where agreed planograms are a rarity, and where product viability is a matter of chance. And they are the embodiment of the challenges and opportunities that the traditional trade channel represents for brands. The traditional shopkeeper controls the category context every time he or she selects which of the available products they will squeeze onto the shelves; the shopkeeper can act as brand spokesperson, sampling agent or endorser; or can just as easily condemn a brand to a future hidden in the back of the store.
You can’t win in traditional trade without understanding, engaging and influencing traditional shopkeepers – but faced with so many individuals making their own intuitive judgments about the best way to lure shoppers and close a deal, not to mention the wide variety of different relationships between shopkeepers, manufacturers and customers, where can you possibly begin?
Most brands operating in rapid-growth markets know that traditional trade matters. It represents the only shopping experience for many in emerging middle classes, and a preferred option for many shopping missions amongst wealthier demographics as well. For those at the Bottom of the Pyramid, it is the channel through which they will first encounter and start to form loyalty towards brands. Yet recognising the importance of a channel is one thing; developing a meaningful and manageable strategy for it is quite another. And if brands are to plan for growth in traditional trade, then they need to make sense of the myriad of individuals controlling it.
Building relationships with active intermediaries This involves brands moving beyond the modern trade mentality of dealing with invisible retailers who create consistent, conversion-friendly environments where products can speak directly to shoppers. Shopkeepers are active intermediaries, who will influence the shopping environment, the shopper’s psychology, and above all, the visibility and attractiveness of the products that he or she sells. They are also extremely individual intermediaries, with their own life needs, loyalties and aspirations that have a direct influence over the way they wield this influence. In traditional trade, understanding the shopkeeper’s needs is arguably as important as understanding those of the shopper.
This sounds intimidating, complex and confusing, but TNS’s work in traditional trade proves that it doesn’t have to be. The framework that we have developed for planning traditional trade strategies, includes a tried-and-tested approach for identifying the different types of shopkeeper, categorising their relationships to both products and shoppers, and understanding which of the levers of shopper choice brands need them to pull.
The shopkeeper’s influence is both psychological and physical. He or she designs the physical environment of the store, making decisions about which products are displayed where, and how to balance their own need to quickly access and dispense products with the need to draw shoppers’ attention. However, the shopkeeper also defines the store in terms of perceptions, permissions and emotions: everything from whether products feel accessible and shoppers feel invited to touch, through to the confidence with which they are able to make decisions, and the sense of fulfillment of the experience as a whole.
Individual – and intuitive
The minds making these decisions are finely tuned to the different levels of need that their shoppers experience, and often vastly experienced when it comes to marshalling limited, poorly lit space to address them effectively. Traditional shopkeepers are some of the most intuitive salespeople on the planet. The examples given at the start of this piece all show their radar in action. Our Filipino storekeeper knows that his is not an environment for seeking out and comparing packaging – and so a personal recommendation is a far more effective means of closing a sale than leaving the shopper to make their own mind up. At the Indian railway station, in contrast, our shopkeeper knows that harassed commuters will make instinctive, snap decisions about whether and what they need to buy before getting onto the train. A bottle of water is a proven draw, and will enable her to upsell quickly by recommending large-portioned snacks to hoard for a potentially unpredictable journey. Choose too large a bottle of water to sit on the counter though, and commuters will hurry straight past – it looks far too heavy to carry with them.
Those Indian commuters may be rushing, but traditional shopkeepers in other contexts know that time and space to enjoy snacks and drinks are an important part of the transaction. In modern trade, even spontaneous indulgence purchases are packed into bags and taken home to consume. In traditional trade, as in our Vietnam example, they are usually consumed then and there, on the premises.
Serving the shopkeepers
The individual needs that traditional shopkeepers address vary across cultures and between rural and urban environments – and so, therefore, do the strategies they may adopt to address them. Brands seeking to gain influence and share within the traditional channel must demonstrate that they understand these nuances: Are women expected to serve, shop or both? How far must shoppers travel on foot – and what basket size are they therefore prepared to fill? What is the influence of social norms on the range of categories that can be openly displayed? To take one example, it would be pointless to supply high-visibility POS displays and branded bags for alcohol brands in India, where discreet service under the counter is the only way to meet society’s expectations.
These variations in shopkeeper scenarios can appear bewildering – even within one market, let alone across regions or internationally. The key question is: can they be translated into a cohesive strategy that can enlist and engage traditional trade’s gatekeepers at scale?
A planning framework for traditional trade
TNS has used our two decades of experience researching traditional trade to develop a planning framework that captures the essential differences between the situations that traditional shopkeepers find themselves in. These variables, part of our larger planning framework for traditional trade strategies, help to identify the key needs and motivations for shopkeepers – and therefore the approaches that brands can take to aligning the gatekeepers’ interests with their own.
First there are the physical variables: the nature of the shop itself, from a chair and wares on the street side to more formal grocery stores; the question of whether shoppers can enter the store itself or must be served through a kiosk window; the location, with all its implications for competition, catchment area serviced and types of shopper targeted. Then come the psychological variables: the types of mission the shopkeeper’s customers tend to be engaged upon, and therefore the degree to which they prioritise saving time, money or angst. And finally, there are the cultural variables: what is the role of a store such as this in the community? Are shoppers predisposed to defer to the shopkeeper’s judgment and recommendation? Are brands an established currency for trust in their own right, or do they depend upon shopkeeper recommendation and endorsement?
The motivations of shopkeepers flow directly from these factors and we have identified three motivations at play – survival, identity and social equity. The owner of an informal (illegal) kiosk in a busy financial district is motivated by survival. He needs to transact quickly, preserving his goods and store from heat or rain and avoiding drawing too much attention from the authorities. For the owner of a more formal grocery store, it’s about standing out from the competition – and status within the community, which might require differentiation from rival stores nearby. When stores have become established as dominant community hubs, the motivation shifts again to the quest for social equity. Now the shopkeeper seeks to maintain his or her position in the community by providing services that move their interactions with shoppers beyond the purely transactional. Brands can become allies in the shopkeeper's endeavour to demonstrate their autonomy, their connections, and their unique grasp of local needs. Providing a social space for youngsters to gather and watch a football match, or one for factory workers to discuss the news over a cup of tea and a cigarette, perhaps even a private place with access to a phone for small-town romance to blossom: all demonstrate this essential alignment with the local community.
Each of these different sets of motivations suggests, in turn a different approach from brands. For our informal kiosk owner, we would consider smaller pack sizes with robust designs and accessible price points, but also branded, portable rain shelters or heat-resistant pack formats – approaches that trade meeting a shopkeeper need for greater brand visibility. Formal grocery owners seeking standout from the competition are likely to value a more collaborative approach built around co-branded advertising or collaboration on pack design that certifies their key partner status. Alternatively, competitive pricing or superior assortments could provide a valued advantage over neighbourhood rivals. Established community hubs need a brand approach that adds value to the community experience: co-branded seating or menus at the many shops that serve as social and dining centres.
These opportunities all have one thing in common: they represent applications of brand power that consciously and credibly address the shopkeeper need first and foremost. Sometimes this is implicit, in the development of formats for our informal kiosk, for example; on other occasions it involves active dialogue and a demonstration that the brand can and will adapt to the local needs that the shopkeeper has become the conduit for.
Delivering scalable insights through dialogue
The motivations of shopkeepers are one of many different aspects within the TNS traditional trade planning framework, which also covers areas like shopper motivation and merchandising success conditions. The nature of traditional trade though, ensures that shopkeeper motivations are one of the most significant. Understanding the context in which traditional shopkeepers operate helps both to identify opportunities – and to flag potential issues with distribution or service, which often lie behind a willingness to recommend rivals (the dreaded “push”). The great value of a planning framework for traditional trade is that it multiplies the value of these insights, revealing common themes in a brand’s relationship to retailers that can be adapted to other markets as well.
Traditional trade may appear intimidatingly varied, but the three-way relationship between shopkeeper, shopper and brand gives it a distinct, consistent pattern when it comes to the factors that influence success. By cataloguing the different factors that shape shopkeepers’ needs and relationships, we have created a tool for decoding traditional trade – and that’s the essential starting point for making brands a more active part of it.
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Intelligence Applied is the home of the latest thinking from TNS, where we discuss the issues impacting our clients, explore what makes people tick and spotlight how these insights can create opportunities for business growth. Please visit www.tnsglobal.com/intelligence-applied for more information.
TNS advises clients on specific growth strategies around new market entry, innovation, brand switching and customer and employee relationships, based on long-established expertise and market-leading solutions. With a presence in over 80 countries, TNS has more conversations with the world’s consumers than anyone else and understands individual human behaviours and attitudes across every cultural, economic and political region of the world.
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