By Ian Ortega
I have learned more business from my mothers. One of my mothers is a seasoned retailer. She is done retail for all the time I have known her. And she’s done it for over 20 years. She knows something about retail than most don’t.
Recently, she stressed me about finding one specific brand of mineral water – Ice Spring Water. I wondered why she was obsessed about this brand. First, the margins are razor thin. For every carton of Ice Spring Water, she makes just UGX 1000. So my mother has to sell twelve 1.5 litre bottles to make UGX 1000.
But I was naïve, it’s not even about the water. It’s about the foothold that the water commands. My mother understands one point – first get someone to buy something from your shop. Once someone has opened the wallet, they can open it to more products. Why? Ugandans also love to buy most of their things from one place. It’s almost like a trust issue.
Once I can buy water from you, then I remember that I also need some beers, I also need some groundnuts. And the sun is shining like it will never shine again. People need to hydrate. My mother needs that Ice Spring water.
It was so serious, that she was willing to look for ‘Hema Water’ the alternative or even that brand that has Spice Diana. But what’s special about Ice Spring Water? It’s the price-point. A bottle of 1.5 litres goes for UGX 1000. This means someone can stretch out their Ugandan shilling.
And Ugandan brands miss this, this emerging market is all about stretching the shilling further. I want my shilling to do more for me. It’s why the Chappati, rolex and kikomando continue to reign supreme. Why? They stretch the shilling. It’s the same case for local food. Not that Ugandans really love to eat healthy, but there’s more to be gotten with local food of UGX 20,000 than with KFC of UGX 20,000.
So the game that succeeds in this market must always address right distribution at the right price point.