An Inside Look at RICH LTD.'s POP Display Business- Part III

Posted by Jim Hollen on Jun 25, 2014 6:14:51 PM

jim_hollenAn Interview with Jim Hollen, President

This is the third part of a 3-part series looking at RICH LTD.'s POP display business from the inside based on an interview with Jim Hollen.

1.  How do you view international opportunities for the point-of-purchase display business? What are the merchandising possibilities in a market like India, for example?

India is a market with enormous consumer potential. In the U.S., growth in retail square footage outpaced population growth for years, creating significant retail overcapacity that has only begun to rationalize in the last 2-3 years.

In contrast, India is adding retail square footage quickly in an effort to catch up to its population. Over the last 20-30 years in the U.S., regional and national chains began to form and eventually pushed the small independent stores out of business. For example, 50 years ago the hardware industry in the U.S. was dominated by small, independently owned stores. However, well capitalized companies like Home Depot grew into a national home improvement chain, forcing the independents, which could not compete on price or selection, out of business. The same thing will happen in India. Today the retail market is highly fragmented in India, but there will be continued consolidation and larger companies will begin to expand in India as the Indian consumer gains purchasing power as the standard of living continues to increase.

The net result is that merchandising opportunities will grow, and the requirements for effective merchandising will only increase over time. We know that consumers of all backgrounds can be influenced at the point of sale. This truth permeates all cultures. As the retail market in India matures, as competition accelerates, and as retailing sophistication in India increases, the POP display business will become an increasingly important part of the retail industry.

2.  Do you have any plans to enter India?

We are very intrigued by India. We believe that as the retail industry in the U.S. continues to decline, we will need to find international markets that are poised for growth. India is a market that is definitely on our radar screen. We believe retailers and brands in India could benefit from our experience. With the right partner, we believe we could be successful in India. 

3.  Do you see a new trend or change in the international market with regard to what brands are looking for at retail?

scaling is likely to occur across all international markets as wealth continues to trickle down in those economies. 

4.  What are your current challenges and how do you tackle them?

The U.S. economy is still quite challenging.  Recovery is happening very slowly, and I believe the environment in the U.S. will continue to be challenging for several years, particularly in retail, which is a very mature, declining industry. So on the demand side, securing business in a cautious environment is always difficult. The supply side of our business is equally difficult. Most of our production is still in China. China has experienced tremendous wage inflation in the last few years. China is also a full-employment economy, and there has been a clear shift in the attitudes of young workers. As more and more have become middle class, they no longer want to work in factories. They now prefer to work in a nice office building with a Starbucks on the bottom floor.  So the combination of demand-side and supply-side trends have created challenges for us and others in our industry.

Addressing these challenges means we have had to innovate and be extremely entrepreneurial. As a company, we have to get better at what we do faster than the market is declining. We try to stay open to the possibility of entering new markets and introducing new products. I try to hire the very best people I can and provide them with an opportunity to contribute and grow.

5.  Usually we see a trend among brands, where the same product is promoted on different quality displays in different countries. What do you think is the cause of such imbalances? 

I don’t view these as imbalances. I view this as smart merchandising. Great merchandising is all about understanding your audience and creating a way to make the brand appeal to that audience. Designing a display that takes into account cultural differences as well as differences in retail store environments is very important to an effective display program. For example, we might develop a display for the U.S. market that works great for a particular brand. However, that same display might never get placed in the smaller footprint stores in India. To be effective, we might have to reduce the size of the display and make the messaging culturally relevant to an Indian consumer. We believe it is extremely important to understand the local market in order to create an effective display and achieve the kinds of sales increases we seek.

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