Value for Money in Retail .....

1. 44IPitchIOctober 2010
The expression for value for money (VFM) varies across place,
location, time, date, calender and format. Peshwa Acharya of
Reliance Retail, highlights the VFM concept for Indian retail
“Value for Money does not mean
cheaper, nor does it mean popular”
Y
es, Value for Money (VFM) is
a defining trend for retail
sector. Let us get into details
and define each of the terms given
herewith:
1. “Value for Money “ - what is
that? Value is defined as
Performance/Price (Performance
divided by Price). In other words, are
you as a retailer providing the end
benefit of the product and service as
perceived by the customer or con-
sumer vis a vis the price he / she is
paying. Let us be very explicit that
Value for money (VFM) does not
mean cheap or cheaper, nor does it
mean popular or economy end of the
market.
2. “Retail sector” - think of it! Does
it mean all retail or only organized
retail? Does it mean products or
services or both? Does it include
offline or on line both? Is it just gro-
cery, food, fresh or other speciality
also?
3. “Defining trend “- it is just not a
fad, passing phenomenon, but a
trend which defines our present
times and possibly will stay for a
few years if not more.
In this context , I would like to
state that in terms of my under-
standing typically at a gut level all
consumers look at value for money ,
especially in the context of India.
Across all demographic and income
segments consumers seek value.
The expression of value for money
varies across place, location, time,
date, calendar and format.
Let us look at a context of a Small
Format Convenience driven grocery
store in India: The value for money
which the customer is seeking is as
follows:
A ) Presence of the correct mer-
chandise via fresh fruits, vegeta-
bles, dal, rice, banana, potato,
tomato, basmati rice, pickles etc.
B) Some customer segments
would like presence of bread, milk,
diary products, and sometime
impulse purchase products like bat-
tery, etc.
C) The pricing to the key items
should be competitive. Prices of
sugar , potato , tomato , dal , rice , oil
, butter etc can vary across location,
customer segment.
D) The way merchandise is
arranged in a regular manner make
it easy to pick and choose. This con-
venience is also “value for money”
which customers are seeking.
If one changes the context of for-
mat and moves into a larger store,
for example, hyper-market, the
customer would be looking for more
at over and above the first four
points
E) Deep pricing and promotions
for items like biscuits, noodles,
soaps, detergents etc. They might
even compare across other hyper-
markets.
F) In hyper markets, another fac-
tor driving value for the customers is
the depth and width of assortment -
the variety of chocolates, biscuits ,
bakery, thus making the shopping
trip worth it for the customers.
Similar is the consumer curiosity for
the product lines including non-
vegetarian items like meat, poultry,
ANNIVERSARY ISSUE
7
th
Peshwa Acharya
VP & Head-Marketing & Consumer Experience, Reliance Retail

2. fish etc. For some specific customer
segments, availability of special
sweets or ethnic sweets during fes-
tivals and possibly across the year
could be an attractive retail feature.
G) Finally the customer also
wants the value for her money
through a convenient shopping
experience with services such as
easy floor movement , broad aisles ,
shopping trolleys, trained assistance
if required, lifts or elevators, parking
services, ATM or Credit Card servic-
es . Usually the loyalty card is a top
up for consumers but it does not
really drive core value perception.
If we move away from the grocery
segment to other formats of retail-
ing like electronics and technology
retailing, VFM is key but expressed in
a different manner.
A consumer seeks value for money
via the following:
A) Does this large format store
have a wide enough assortment, and
brands and models?
B) Can someone recommend to
me the right product for my use?
C) Can I trust them to buy my high
ticket item from them?
D) Is the price competitive?
E) What about service like demon-
stration, installation, after- sales
and warranty?
F) Will I recommend this retailer
for any other purchase?
G) Are they running any special
promotions or offers?
So, when it comes to buying LCD
or a lap top, the value for money
which the customer would be seek-
ing would be a mix of the above men-
tioned factors.
Thus as retailers, servicing and ful-
filling end customer demand, it is
imperative that we build our business
vision , organisation in line with the
ability to continually provide value for
money to our customers.
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GUEST COLUMN
“Depth and width of assortment and a convenient
shopping experience drive VFM factor in retail”