The failure of customers to return to Nakamatt stores in big
numbers following its restocking of more than 13 key branches in
Nairobi, Nakuru and Mombasa, last week triggered a call by the
supermarket chain for support in rebuilding and rescuing its venture.
“The
chance of recovery for Nakumatt is fair and can be accelerated by the
support of specific stakeholders such as suppliers to fuel its engine,
the new legal frameworks provide a good platform for the administrator
to work for the benefit of all creditors,” said Peter Kahi, the Nakumatt
administrator.
“The management team is undertaking a
variety of integrated marketing programmes. Most importantly is an
ongoing effort to enlist the support of suppliers as we seek to get the
engine to gain more momentum. Some of our restocked branches include;
Nakumatt Mega, Nakumatt Prestige, Nakumatt Galleria, Nakumatt Village,
Nakumatt Nyali and Nakumatt Nakuru among other branches.”
The
retailer’s marketing efforts at the moment have been concentrated on
social media, updating its customers on the stores and products that
have been restocked. Plans are, however, underway to increase its
advertising on other platforms.
Still, in its current reduced marketing, away from traditional
media, it is underselling its brand thus risks losing potential
customers as they are already adapted to the fact that the store lacks
even the basic products.
In fact, a research by
cross-media research, measurement and analytics company, TiVo Research
and Analytics Inc, shows that in reducing advertising spend companies
reach only 25 per cent of their purchasers, leaving 75 per cent of those
customers as available to competitors.
“Companies are
trying to plan their media buys as efficiently as possible to increase
reach and eliminate waste. To do this, they are dispersing spend across
more platforms such as social media and are reallocating advertising
dollars to digital spend,” reported TiVo Research and Analytics.
“But
our research shows that for every dollar decline in ad spend, a company
loses three times that amount in sales; reduced spend resulted in reach
and frequency declines, which led to the drop in sales and return on
investment.”
“Therefore brands stand to lose more in
sales than they stand to gain in media savings. Hence, maintaining reach
to customers through various media platforms is a key driver of ROI,
and brands need to keep those factors in mind as they consider budget
allocations.”
In this, marketing for retailers in
different platforms instead of one is still important even during a
downturn because it can lead to a return on investment, keep a company
ahead of competitors and increase or maintain foot traffic in the store.
An
example of a retailer that cut its marketing budget and suffered losses
is American chain of department stores, Sears, Roebuck and Company. In
an attempt to save money, it cut down on advertising from two billion
dollars in 2010 to $850m in 2015 replacing traditional marketing with
digital and tailored advertisements.
Thus, consumers’ knowledge of what the retailer had stocked declined and so did its foot traffic as well as its sales.
They opted for its competitors that kept them informed on their latest offering through traditional media advertising.
As
a consequence, its shopper share dropped at least 40 per cent, its
shopper preference share dropped 53 per cent from January 2006 to
January 2016 and it was ranked 15th in stores that consumers prefer,
with US women apparel shoppers stating a preference for Goodwill, a
store that sells donated clothes, over Sears.
“Sears
has spent very little on capital expenditures compared to other
department stores. It also has reduced advertising spend significantly.
Thus, shoppers are less likely to go to Sears in the first place, and if
they do go, they may be put off by the store look, according to a case
study by a financial services company, Seeking Alpha, on the
consequences of underinvestment.
“The company has been
affected by the loss of store traffic leading to a decline in sales. Its
competitor, J.C. Penney spent nearly as much ($792m) on advertising in
2015, despite being half the size of Sears Holdings (based on revenue)
and trimming its less efficient advertising spend as well.”
- African Laughter
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