By Shubham Dasgupta, Features Editor
Jun 06, 2023 / 7 MIN READ
Legacy and new-age brands have one prominent differentiator that often becomes the bone of contention – to be or not to be digitally aggressive. Digital-first brands are coming up at an unprecedented rate, and legacy brands must not ignore the potential of digital commerce to cater to tech-savvy audiences.
For Pushkaraj Shenai, CEO, Lakme Lever, the brownie points earned by young brands for being digital-first today is a happenstance, because they are being founded in the digital age. Such brands consider digital platforms to be their best bets and usually acquire markets aggressively. Legacy brands, on the other hand, benefit from decades of experience with intricate insights not possible to acquire and execute at very short notice by digital-first counterparts. For instance, Lakme Lever is counted as a traditional company because it was founded during the 1980s when physical retail was the only way of trade. Therefore, the key to success for Shenai is differentiation and compelling products instead of the common emphasis on direct-to-consumer.
“Channels will change as technology advances. If your consumer has access to the information you provide, so generative AI seems to be life-changing in some parts. 3D printing becoming commercial will change a lot of things. With tools at our disposal to better understand consumer behavior, we are satiating customer convenience effectively. But all a brand needs are a differentiating product and a channel that gives the customer access to information about the brand and its services,” said Shenai, citing multiple examples of iconic fashion brands across India that continue to attract huge footfall despite being single-store, physical entities.
Lakme Dermalogica, a brand that was founded after Unilever acquired Dermalogica in 2013, is a physical-first brand created by a therapist involving advanced technology and yet hasn’t gone all out on its digital footprints. The brand appeals to customers who undergo the first stage of analysis online, then a deeper analysis by a trained therapist in-store, who suggests the appropriate treatment. The luxury skincare brand is growing at about 60% CAGR over the last six years except 2020 and has an average SKU of Rs 5,000 for 30 ml.
The brand is currently present across 700 prestige beauty retail outlets in India such as Nykaa Luxe, where therapists also use AI-backed tools to spot under-eye, dark spots, pigmentation, and a host of other issues to recommend the right products to buyers. However, to enable complete freedom of brand navigation, Dermalogica products are also present in third-party beauty verticals, and marketplaces and available through a direct delivery engine. With standalone stores coming up, Dermalogica will complete the customer journey.
However, there is room for every format to grow in an expanding, heterogeneous market landscape, and digital-first brands, according to Shenai, will be instrumental in gaining insights into the behavior of new-age consumers. “Legacy brands stand to benefit from such associations with digital-first brands if such tech-led projects can be outsourced to the latter to devise strategies for better conversion,” he remarked.
On the other hand, Dr Shashank Sinha, CEO, Drools Pet Food Pvt Ltd, a veterinarian himself, cited the challenges in the pet food or pet care industry, which is still at a nascent stage in India. “The challenge for pet care brands is that the consumer is different from the customer. For pet food, the suggestions come either from the NGO you adopted a puppy from, a veterinary doctor, or a pharmacist. The CAGR for Drools has been close to 50% since the last 3 years because we have utilized digital and the high internet and social media penetration in awareness generation on pet parenting and healthcare,” he said, underlining how the immense reach of digital media was empowering physical-first brands to adopt omnichannel and educate their target audience.
Even online, segmentation in brands helps reach unique audiences with platforms such as Amazon and Flipkart, which sell different Drools brands, Meetup and Active, respectively. Dr Sinha stated that a pet parent usually spends Rs 4000-5000 on the food of their pet monthly, which makes pet food costlier than human diets. This creates the twin problems of a high exit ratio and families resorting to human diets for pets to recoup costs, which doesn’t benefit the pet in any way. Understanding this pain point, Drools started Meetup in 2015 with a ‘Buy1 Get 1’ offer that brings down the cost of pet food, thus refraining from shifting to human diets.
However, customer acquisition is much more expensive online, because of the short attention span of users across apps and social media. “Even data connectivity of telecom brands plays a huge role in the in-app customer experience. So, be it physical-first or digital-first, each format has its merits and challenges for entrepreneurs to take up,” Dr Sinha concluded.
Legacy and new-age brands have one prominent differentiator that often becomes the bone of contention – to be or not to be digitally aggressive. Digital-first brands are coming up at an unprecedented rate, and legacy brands must not ignore the potential of digital commerce to cater to tech-savvy audiences.
For Pushkaraj Shenai, CEO, Lakme Lever, the brownie points earned by young brands for being digital-first today is a happenstance, because they are being founded in the digital age. Such brands consider digital platforms to be their best bets and usually acquire markets aggressively. Legacy brands, on the other hand, benefit from decades of experience with intricate insights not possible to acquire and execute at very short notice by digital-first counterparts. For instance, Lakme Lever is counted as a traditional company because it was founded during the 1980s when physical retail was the only way of trade. Therefore, the key to success for Shenai is differentiation and compelling products instead of the common emphasis on direct-to-consumer.
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