How to achieve organic growth
On the last day of the FMCG, Retail & Agribusiness Arena 2014 roundtable:"Trends in retail" was moderated by Melanie Seier Larsen, Director of Boston Consulting Group, a very effective presentation evoking the trends in Retail.
Speaking about the possible preparation of the retail industry for future growth, Andrey Dvoychenkov, director of Nielsen for the Adriatic region, pointed out how the latest trends in the industry focused on customer satisfaction. In this section, it is possible see an increase as consumers want to find everything they need in one place, and that their purchases are appropriate. "It is therefore necessary to adapt services to enthusiastic customers, with the obvious focus on private brands, along with promotional activities based on customer behaviour," says Dvoychenkov. High quality fresh food is the top line that always attracts customers. Realistically, customers like promotions and discounted rates. Interestingly, promotional packs are far more successful for food than for detergents, which are purchased
infrequently and consumers often forget the price. In addition, innovation as well as growth is very important," stated Dvoychenkov.
PRIVATE LABELS Most private label goods in the region are purchased in Slovenia, Croatia, Serbia and Bosnia. "There is no fear from big brands, as private labels may threaten some local produce rather than big brands. The consumer is an important factor in the price and/or quality of it, and we must be aware it not good to compromise between these two factors," explains Dvoychenkov.
Katarina Jaksic, Regional Marketing Director for Ipsos Adria (Serbia) assesses how private brands are growing and that they have the highest share in developed countries. "Consider the United Kingdom; that is so developed that consumers are buying more than 50% private branded goods. The share of private labels in the region is associated with the share of the five leading chains in each country. Private labels have an advantage as far as the relationship between price and quality, whilst the dominant brands are in packaging and innovation. Brands emerged from the needs of consumers to save money. Offers from private labels have changed and enriched the scene. Today, brands are moving towards innovation and creating a quality brand. The main disadvantage is the poor customer loyalty, as opposed to brands that have loyal customers, "said Katarina Jakšić.
For Krešimir Dominić, Planning & Development Director for Abrakadabra (Croatia), brands have a beautiful story to a wider area and there is an aggravating factor that cannot be controlled in retail. "They have the potential for growth in promotions in conjunction with retailers," says Dominic.
Jelena Doko Cetina, retail manager at Nielsen, noted that private label manufacturers invest more in research and development. "It is wrong to understand that private labels are copies of a brand," says Doko Cetina.
Maria Anargyrou Nikolic, commercial director of Coca-Cola HBC Serbia, added that manufacturers are increasingly associated with the brand, and that brands and retailers are increasingly working on mutual trust. "In private label, retail has to be careful in the case of local products in that in many cases they do not have the standards required by developed markets", warns Anargyrou Nikolic.
Private labels, opines Helmut Fenzl, CEO of Spar International Croatia, have several dimensions. "With an affordable price - an already known - its specificity is differentiation", quotes Fenzl. Martin Elling, director of Lenta and a member of the Council of Agribusiness at EBRD Switzerland, also pointed to some of the risks associated with private labels. "If Coca-Cola has a problem with the quality then it is their problem, and if a private brand has quality problems, then it is a problem throughout the chain. Also, traders are constantly thinking about margins and they more focus on brands at the lower range", says Martin Elling.
CREDIT CARD AND IT SERVICES Catalin Cretu, sub-manager of Visa Europe for Romania, Croatia and Slovenia, stressed the importance of a database within credit card companies. "Security, control and convenience of payment are very important to the customer, and that we can, based on evidence, differentiate bonus rewards. Because of the database we have, our retailers can implement a marketing campaign. We can see how consumers behave in-store and what happens in the store and outside it. We can see a portfolio of the consumer and where they buy, while in the case of cash payment you cannot see the cocoa buyer behaviour. It is on the basis of consumer behaviour that credit card companies can analyse purchases, and can lead to very good co-operation between retail and credit card companies", suggested Catalin Cretu.
Speaking of loyalty, Dejan Damnjanović, Head of Sales Manufacturing, Retail and Services, Atos (Serbia), believes it is crucial to have personalised offers. "Whatever channel you use, you always get the same information. The IT sector brings a wide range of novelty and innovation and to retailers the decision is how to use them", said Damjanovic.
Ivan Guzelj, Sales SE Europe, SymphonyEYC, pointed out the problem that the leading retail chains in the region have unique shopping centres. All sales of one chain are different as they were taken and not built. "The customer was so confused and did not know where anything was. Can their solutions help customers know where that product is at any time on the shelf", questions Guzej.
Dragan Munjiza, Founder&Owner of Viktor Jakov, found that a large retail chain for 15 years in Croatian and Serbian markets is planning to enter the markets of the region. As a good example, he noted that DM in their range, incorporates organic products from local manufacturers. Initiatives for e-commerce in the EU will make it a lot easier to supply and facilitate the work of retail chains, says Damir Plejić, director Respons Digitus. "The main challenge for retailers is how to create the experience and use information in order to maintain position", says Plejić.
Tone Stanovnik, president of Špica International, pointed out that some funds should be directed towards young people who have no money but have time to develop creative solutions to improve the business. "Young people know how to use new technologies and have the opportunity to work on innovation", pronounced Stanovnik.