ACI’s retail arm Swapno is probably among the biggest ever marketing failures in the marketing history of Bangladesh. The only comparable event (in terms of investment and withdrawal) that comes in my mind is the launching and withdrawal of Rothmans of BATB. ACI spent huge money on infrastructure and branding and created a lot of buzz but awfully failed to attract traffic and generate fat.
The reasons for this less than expected performance fall in two categories– operational issues and theoretical issues. The operational issues are mostly known to people. Issues such as inappropriate site selection, absence of parking facilities, product assortment, inefficient supply chain management, and corrupt management are highly pronounced. This article sheds light on the theoretical aspects of this apparent fiasco.
Most people would agree that organized retailing of FMCGs in Bangladesh is at nascent stage of its industry life-cycle. We can trace back the launching of Agora flagship store in 2001. In the USA and all other developed markets, it’s a matured industry. A USP that works well in a matured industry might not work well for the same industry if the industry is at its introduction phase.
Swapno is an imitation of Walmart model. The USP is centered on low price (a benefit that Swapno management thought customers would value). Does a typical consumer of superstores in Bangladesh look for lower prices? Ask yourself or anyone who patronize(s) superstores somewhat regularly. The benefits most people would mention are convenience (one can get everything under the same roof), quality, and prestige or status. Low price is not on the top of this list!!! I know people feels ‘cheap’ going over there!!!
Nevertheless, low price is important but not as an effective differentiator at this point of industry life-cycle. Innovators and early adopters are not price sensitive. One may argue that Big Bazar andSubikhsha in India are huge successes with the same USP. Despite cultural difference of consumer perception about savings, Indian consumers are much more familiar with large format retail outlets. Try recalling the Subikhsha TVC claim “Bachat Mera Adhikar”. Look for the strength of this claim.
Probably Swapno management expected that apart from typical superstore customers (affluent and upper-middle) middle-class would patronize the Swapno stores. If this is the case, it was a decision against many odds. In Bangladesh, adoption and diffusion of innovation occurs somewhat slowly. Particularly for retailing, it should be evolutionary, not revolutionary. Did ACI count on it? Meena Bazar has followed an evolutionary approach and now is capitalizing on the same customers in many parts of Dhaka. ACI should have started with fewer outlets and expanded gradually. The communication was flawed as well. It never seemed that Swapno is trying to pull a different segment.
Another hurdle that Swapno management couldn’t win (though they didn’t probably try) is the brand name. Service intangibility poses special challenge for the service marketers to make their services tangible. An option is to select a brand name that gives some indication about the type of services rendered or functions performed. Consciously or unconsciously most service companies follow this suggestion.
Swapno is an abstract brand name; there is no clue about what the company does. Even someone might say that the company probably sends manpower to Middle East or Malaysia. “ACI Bazar/Mart”or “Swapno Bazar/Mart” would have been a much better selection.
Given the huge financial commitments already made and substandard market performance,“repositioning” seems mandatory.
