Brands across categories are looking to tap tier II and tier III cities in the country, thanks to the increasing opportunities, growth and spending capacities in these markets.

A Boston Consulting Group report predicts that by 2025, tier II and III towns will account for 45% of India’s consumption and will add 30% of affluent households who will be a significant market for premium products.

Given the opportunity in these markets, Godrej Appliance, the home appliances entity of Mumbai-based Godrej Group, has decided to tap these markets with the new channel for growth – exclusive brand outlets (EBOs).

Going the EBO way

The company recently marked the launch of its 100th EBO in Bhopal. Spread over 1,800 sqft, the outlet is strategically located on Hoshangabad road in the city and will offer a wide range of premium home appliances such as refrigerators, washing machines, air conditioners, chest freezers and microwave ovens. 

For Godrej Appliance, EBOs help strengthen the brand’s already extensive network across the country and fulfil the premium product requirement of customers in tier II and III cities. The brand also endeavours to provide greater value through its EBOs, with extended warranty, exclusive discounts, frequent offers and promotion, as well as ace service.

So how does EBO help Godrej Appliance break clutter in the home appliances segment? Explains Swati Rathi, Marketing Head of Godrej Appliances, “EBOs form a niche channel within the larger trade network. While the larger network by nature of business imperatives drives the larger selling mass SKUs, EBOs allow the showcasing of a wider range – across categories and within categories covering both width and depth.”

As a channel, EBO is of course at a nascent stage in terms of contribution to overall business. However, the brand intends to take it up to 5% over the next few years. In term of sales contribution, the company is expecting a year-on-year growth rate of 25%-30% from this channel.

Connecting better with ‘Inspire Hub’

The new EBO in Bhopal is also the first to be rechristened Inspire Hub. “The rechristening was done foremost to drive home the consumer centricity that is at the heart of the brand and the EBO channel – reflected in the brand’s tag line of soch ke banaya hai or Things made thoughtfully,” Rathi emphasises.

The same thought is reflected in the design language across the store starting with the signage. Talking about the store signage design, Rathi says, “The two ‘I’s in INSPIRE are highlighted – the first as an ‘I’ in ruby red and the second ‘I’ as an exclamation mark in sky blue. This denotes the underlying thought process of ‘Insight made exciting’ – the first ‘I’ stands for consumer and the insights from our consumers’ lives, the second ‘I’ shaped like an exclamation, represents the insights converted to exciting products.”

The word HUB in citrus green has been chosen for its interpretation of being the centre of activity in the local areas – just as its EBOs are where they showcase their entire range of home appliances. “Hub instantly brings to mind the buzz and vibrancy of people and activity and that is how we imagine our exclusive outlets,” she elaborates.

Each colour in the tricolour Godrej Inspire Hub signage stands for something – blue denotes big ideas, technology and innovation. Ruby stands for dynamism and passion. Green stands for harmony with nature and renewed life.

All branding across the EBO have been redesigned to give a vibrant and inviting look. As Rathi points out, “The philosophy of ‘insights made exciting’ also translates itself into several branding elements that share the numerous ways in which Godrej has touched people’s lives.”

Keeping alive the in-store buzz

Apart from focusing on shop advisor trainings and special display led initiatives like screens to bring alive its products better, the brand also conducts multiple structured activities at the EBOs round the year. Care is also taken to ensure that the communication and activations at the shop level are in sync with the brand focus. The activities range from innovative, tactical promotions and consumer schemes supported by local PR and media to special product focused activations.

The brand also deployed VR led activations for ACs and washing machines this year using the latest technology to bring alive the product functionality in an engaging manner.

“A lot of possibilities exist today in the display space as well and the latest initiatives was a holographic display done exclusively at our EBO partners during the festive period,” Rathi informs.

The brand also reiterated its commitment to the environment through a special activity in association with an NGO, wherein the brand pledged to plant a tree in Rajasthan for every Green AC sold through the EBO channel. The trees planted were named after the customers who were provided with a unique identification code to track the tree as well.

According to Rathi, such initiatives are made more possible because of the EBO format, “EBO allows us to implement unique retail initiatives which are aligned to the various brand objectives, apart from catering to the local objectives.”

Executing this model of operation was obviously not easy. The brand faced challenges, particularly in the area of in-store experience. As Rathi says, “Store sizes are shrinking, while the portfolio is expanding, and as we penetrate tier II and tier III cities, the layout of stores is getting trickier to navigate. Being able to work around these scenarios to deliver the same in-store experience is one of the challenges. Lack of skilled workforce locally to maintain the store design and its fixtures is another.”

Despite the obstacles, however, the brand seems to have got it right. Says Rathi, “The proof of the pudding of the EBO is the revenue mix delivered by the channel. EBO network is a strategic brand initiative for the company – the channel is important, not just in terms of growing revenue and the quality of reach, but also in terms of offering a holistic brand experience to our customers.”

Betting big on tier II-III

Much of the EBO drive was fuelled by the tier II and III markets. As Rathi says , “What consumers needed was greater choice and hence we focused on making our complete range of products including high end offerings more accessible to people, especially in the smaller towns and cities where the brand enjoys high trust and faith.”

According to reports last year, Godrej Appliances has invested Rs 400 crore to ramp up production at its factories in Mohali in Punjab and Shirwal in Maharashtra. Explaining further, the company’s approach to tier II-III cities, Rathi says, “Today consumers want to experience choice and their desire does not end with the premium product experience, but extends to a premium purchase environment also – not just in metros but in the nooks and corners of our country as well, where the lifestyle change is happening at the fastest pace. Consumer appliances are not viewed as just utility products. Convenience and indulgence are the primacies of consumers today. This is evident in the increase in demand for premium products, even in tier II and tier III cities.”

But it is also a fact that in tier II and III cities, retail outlets typically stock multiple brands and hence there is limited potential for showcasing a single brand. This is where EBOs play a distinct role. As Rathi points out, “For the brand loyal customers, EBOs serve as a go-to destination where they can make a better choice and also enjoy a better experience.”

Consumer behaviour as the key driver

But whether it is tapping small town markets, going the EBO way or planning brand activations, almost all such approaches are driven by consumer behaviour, which in turn is influenced by multiple factors – overall consumer sentiments, triggers and barriers associated with the category, needs and expectations from the product, role of social media, brand association, other stores in the vicinity etc.
Talking about how consumer understanding translates into better brand communications, Rathi says, “By tapping into consumer behaviour, we have integrated technology enabled displays at the store, worked on ambient product messaging, put in place structured targeted activations at stores and so on.”

She further sumps up, elaborating on how consumer behaviour is mapped by the company, “We map consumer behaviour at various levels – starting with consumer home visits by senior management to get an intimate pulse of consumer needs and expectations and market visits to map consumer behaviour at stores, to continuous gathering of feedback from shop level sales force/ trade partners, service visits to gather insights on consumer usage patterns and structured research amongst intenders and recent purchasers to social listening – every tool is used to map consumer behaviour across the purchase and product life cycle.”