The retail universe in Pakistan is estimated to consist of approximately 850,000 outlets which includes all formats, the most popular being kiryanas, corner general stores, discounters and supermarkets.

What we have seen emerge over the last two decades or so are more professional and sophisticated outlets, known as local modern trade and global modern trade by most companies in Pakistan. This evolution has completely transformed the shopper/consumer buying behaviour; shopper/consumers are now much more aware of what to buy and which brands/products live up to their delivery promise. This is primarily an urban phenomenon but I won’t be surprised if the same transformation starts to impact our rural shopper/consumer in the coming years.

This change in trade/retail dynamics has also forced present day marketers to invest a credible amount of their budget in trade management and seriously evaluate their existing methods of distribution. However, the big question remains: Is the money put in trade management being utilised effectively, or do we still see a gun-slinging cowboy approach? In this respect, companies are bound to face the following challenges:

• Putting in place the right level of investment at trade.

• Educating and train the trade as well as marketers about the importance of total quality management (TQM) and supply chain management (SCM).

• Evaluating the best method of distribution to reach all available retail formats; dealers, agents, business-to-business (B2B), etc.

• Realising the importance of making their brands more visible in the midst of the clutter from other products on the shelf; merchandising, shelf-share and category management.

• Conducting thorough relationship building marketing programmes to ensure a better and long term bond with the trade.

As in the West, trade will become much more demanding in category and shelf share management, yet I am still to see retail and consumer loyalty programmes put in place by companies in Pakistan. Although efforts are made, a method and clear budgets will have to be put behind relationship marketing, brand endorsement and merchandising. The right balance is also required between ATL, BTL, activation and other brand building exercises.

In my expert opinion, we will see a lot more discounters appear in trade, where brands will be sold below their recommended retail price, seriously jeopardising the brand equity of various key brands in the marketplace. My recommendation would be to put in a serious trade structure in companies and to have the best resources, with predefined competencies to manage a consistently changing market. One of the key competencies this trade marketing resource must have is an out of the box approach. This for a layman might be very simple, but once strategically looked into, can resolve a lot of issues companies face at trade level as the challenges one needs to overcome are imperative to achieve the above mentioned success factors.

Trade management is different compared to the typical brand marketing activities. Managing trade is less glamorous and requires a lot of different competencies and skill sets.

My advice to all marketers would be to focus more on watching the market and trade lifecycle rather than the product lifecycle. Presently, trade is best placed to provide companies with shopper/consumer insights and help them gain a future direction to strategise their brands. Some companies who have managed to excel in trade management in Pakistan are Salman’s, Shan Foods and Tapal. Although these companies are local, they have a very clear strategy on all fundamentals of retail including availability, visibility, shelf-share management, category management, promotions, brand conversion activations and finally, out of the box approaches.

The above fundamentals are self-explanatory, except the last one – the out of the box approach, which is also called ‘mindset’. In a lecture on Mindset Management*, here is an example which explains this fundamental:

“One guy was passing the elephants, he suddenly stopped, confused by the fact that these huge creatures were being held by only a small rope tied to their front leg. No chains, no cages. It was obvious that the elephants could, at anytime, break away from the ropes they were tied to but for some reason, they did saw a trainer nearby and asked why these beautiful, magnificent animals just stood there and made no attempt to get away.

“Well,” said the trainer, “when they are very young and much smaller we use the same size rope to tie them and, at that age, it’s enough to hold them. As they grow up, they are conditioned to believe they cannot break away. They believe the rope can still hold them, so they never try to break free.

He was amazed. These animals could at any time break free from their bonds but because they believed they couldn’t, they were stuck right where they were. Like the elephants, how many of us go through life hanging onto a belief that we cannot do something simply because we failed at it once before? How many of us refuse to attempt something new and challenging because of our so-called mindset?

Your attempt may fail, but never fail to make an attempt.”

Most marketers fall into a trap thinking that it is retail which needs them more than they need retail, which in many cases is not true. It is actually the marketer or the company who needs retail to act as an intermediary to get to consumers. The real trick is to get trade endorsement. Retailing in Pakistan is mostly unorganised and dominated by mom and pop stores which still contribute around 80% to the total retail sales. Whereas in the West, trade is more organised and over 60% of the sales comes from the organised sector.

In conclusion, relationship marketing is the key to facilitate all fundamentals of trade, and we need to understand the five different levels of investment in retail/trade relationship building:

1. Basic marketing: The salesman simply sells the product.

2. Reactive: The salesman sells the product and encourages the customer to call for questions, comments or complaints.

3. Accountable: The salesman phones the customer after some time to check whether the product is meeting expectations.

4. Proactive: Regular contacts with the customer for new uses or helpful new tips.

5. Partnership marketing: A company works continuously with customers to discover better ways of performance.

Everything in marketing starts from shopper/consumer insights. You must have heard the saying: “The customer is always right.”

As the famous marketer Philip Kotler said, “Good companies will meet needs; great companies will create markets.”

And: “Successful ‘go to market’ strategies require integrating retailers, wholesalers and logistical organisations.”

Let us all competent marketers come to one forum and ensure the retail evolution does not merely remain a phenomenon but it is actually implemented and becomes a key driver for all companies by understanding the levels of trade, its challenges and the importance of relationship management for all the products who want to become ‘star’ brands for their companies in the long run.

*http://everyonesworldisdifferent.blogspot.com

Sarim Alvi is Executive Director Strategy, Brand Activate. sarim@brandactivate.com.pk