Aparajita Basak
Associate Director – Micro Marketing & Economics – Neilsen India Ltd.

It’s true that many millennials now shop online, but for all those consumers who prefer to shop in the real world, jewellers know that the key to success in bricks-and-mortar retail is still location.

A good choice of location means that the right buyer can access the right outlet. This enables personal interaction between jeweller and customer, essential to building relationships in this trust-based industry.

Before the interpersonal dynamic kicks in, however, a jeweller must have a sound understanding of how its stores are faring, and be aware that it can improve performance by analysing customer data. And any experienced retailer will know that store performance and customer response depend to an extraordinary degree on location — good, bad or best.

In this session of the Retail Jeweller India Forum 2018, “Knowing All about the Right Location”, Aparajita Basak, associate director, micro marketing and economics, Nielsen India, spoke on how a brand can identify the most relevant retail locations so as to maximise its own potential.

Data marks the spot

A retailer can demarcate customers all the way down to the ward level, said Basak, on the basis of expenditure, preference, age and even recreational activity. Having this information makes it easier for a retailer to prepare its business plan.

The more information a jewellery retailer has about consumer behaviour, including product preference and points of purchase of other goods, the more effectively it will be able to target the right consumers at the right location with its brand.

Location has context as well as hierarchy, noted Basak. For a shopper, the ideal location is one that meets most of their requirements such as nearness to their residences, products and associated facilities. For a retailer, a busy marketplace is the ideal location. These sets of criteria do not always produce matching locations. Therefore, the most impactful way for a retailer to identify an ideal location is through analysis of catchment area, which is the territory generating business around the retail outlet concerned.

“The importance of location can never be overemphasised in retail,” she said. “You may know your customer profile and the product portfolio of your store, but without the right location and right touch point, everything is ineffective.”

Retailers can zero in on a location by applying insight to data including consumer economic profile and demographics. Stacked on a map, she said, such data reveals the “high-, medium- and low-potential wards”.

Basak cited a case study on ward prioritisation for a premium personal care brand. “The brand wanted to identify the top 100 wards in Delhi–NCR, to understand the gaps between potential markets and the existing distribution network.” The findings were disquieting because, with 23 stores in the region, the brand had no store in or near any of the 16 high-potential wards identified.

Methodology and insights

“Today’s urban market in India has 400 million consumers in 8,000 towns, serviced through 4 million stores,” said Basak. “Annually, these consumers spend Rs18 lakh crore. A recent study says that overall household expenditure accounts for 43 per cent of this spend; consumer durables, 52 per cent; and jewellery, 40 per cent.”

Retailers can use data, demographics and economic profiling to study how and what households spend on different product categories, by age, size, gender composition and income group. Combined with geospatial data, she said, retailers can locate potential customers’ footprints in nearby stores, facilitating sales. This also helps fix a marketing and sales budget.

Intelligent use of such data, Basak emphasised, can even help a retailer assess its competitors. “Trade characteristics, which are a part of this research, study the revenue potential of a catchment area in a location; whether perennial or temporary,” she said. “They also reveal whether a retailer is unintentionally cannibalising revenue from its other stores in a particular location.”

Identifying untapped high-potential regions

Using a city-based model, said Basak, Nielsen India identified locations for a client in Delhi. “Our study revealed that the retailer had multiple stores in posh areas of South and Central Delhi but was yet to open in high-potential areas far from the existing stores. It had just assumed that consumers would be drawn to the existing stores.” The client adjusted its business model.

Experts like Basak, therefore, can help a retailer identify hotspots within a geographical area, evaluate target groups and gauge revenue potential — all in relation to its investment budget. Accordingly it can open several stores in less-favourable locations or a few in key locations. The value of such analysis is self-evident.