India Thought Leadership | Retail Revolution
Retail winners will perfect omni-channel presence
By Rajan Zachariah
A complicated and worldwide shopping phenomenon is rapidly finding expression in India in ways that will impact Indian retailers and any brand sold at retail.
The combination of digital technologies, consumer expectations and socio-economic change is transforming the way we shop and what it means for suppliers, manufacturers and retailers alike. The balance of power has shifted in favor of the consumer who is now more in control than ever.
Retailers, on the other hand, are left trying to understand the consumer mindset in this new omni-channel world; how, when, why and where consumers buy, what influences and triggers the purchase decision. Retailers need to know what channels and media consumers are likely to use, and retailers also need to predict consumer demand.
Indian retailers and brands can get in front of these changes, which are inevitable because consumerism in India is experiencing unprescedented growth, driven by favorable demographics: a young and working population, rising income levels, urbanization and growing brand orientation.
This growth drives the rapid expansion of Indian retailing, a US$ 520 billion category expected to expand at a CAGR (Compounded Annual Growth Rate) of 13 percent to reach around US$ 950 billion by 2018. Meanwhile, modern retail sector is developing rapidly and should reach 10 percent of the retail market by 2018. The challenge is to devise a model that will help retailers and brands sharpen up their strategies in this challenging and rapidly changing environment.
Purchase path becomes more complicated
With the emergence of modern Indian retail, shopping and shoppers are becoming more complicated. The path to purchase no longer is a linear progression that goes from awareness to consideration, preference, purchase, loyalty and, finally, advocacy. Rather, shoppers move much more randomly among a complex combination of physical and virtual touch points that involve search, research and interaction with both the seller and peers.
As shopping changes, the shopper’s experience becomes more complex and harder for retailers and brand owners to manage. In other words, the customers want the retailer to manage their “3Ps” (profile, personal history and preferences) and let them have access to it whenever and wherever they want it. This demands that retailers become more smart, agile and clever.
Shopping decisions are now framed and managed by aggregators, deal sites, social media and social recommendations. Retailers are in a world where they serve as intermediaries. Finding new and imaginative ways to match shoppers’ desires for value, assurance, mental space, and quality will become priorities for all retailers.
Success requires new thinking and fast action
Indian retail is in a transition phase as digital technology disrupts shoppers’ expectations regarding how they interact with the world around them. Continued retail success requires rapidly adapting to the new wave and thinking beyond business as usual. For retailers to win in the new environment they must quickly take new initiatives such as these:
- Reinvent convenience: Understand what each customer needs to make shopping easier, everything from checkout to ease of pick-up.
- Redefine loyalty: Learn how the customer shops in a new non-linear way and engage at every point.
- Re-imagine experience: It’s a key to differentiating the brand.
- Reposition value: Price is only a starting point.
Analytics help achieve these initiatives. The advent of Big Data, captured from the gamut of information available on the shoppers, has thrown open multiple opportunities for the retailers to monitor customer behaviors much more closely, and in real time. By mining Big Data, retailers have a stronger platform to manage existing relationships better and start new ones. Because the shopping process has been diversified, the store needs to extend itself in time and space, beyond a physical location or website, with the aid of technology.
All of this new conversation is being shaped and enabled by a surge in personal, portable digital technologies, mostly smartphones, but also tablets. These are already widely used for shopper research and recommendation and are being used for purchase as well, especially by younger shoppers. This intersection between shoppers, retailers and technology has, for the first time, given shoppers the potential to access retailer’s management and information systems – if the retailer is willing to allow it. In the future, providing access will be a source of retail competitive advantage.
Leveraging online and bricks and mortar advantages
Online retailers can offer very disruptive, fast-moving price points to create more personalized and tailored propositions to woo shoppers. Shopping across all online platforms will be faster; it will be more aimed at the shopper’s personal preferences and choices.
Bricks and mortar retailers, on the other hand, need to do things that digital competitors can’t match. They can convert floor space to zones where customers can experience products and offerings. Demonstrations and promotions in these experience zones will enable customers to touch and feel or taste the offering prior to purchase.
Bricks and mortar retail businesses need to be backed by digital presence as well. This will involve rethinking strategies and making use of the digital presence beyond the walls of the store, and within them. Loyalty programs have to be redesigned and customized to suit preferences. Information flow has to be made more robust, transparent, and personalized.
In this complex shopping environment, brands have their work cut out. Devising strategies to influence reluctant shoppers to try the product, capturing their feedback and addressing their concerns, is equally important. While marketers spend millions trying to convince new customers to try their brands, they often end up ignoring the brand loyalists. Word-of-mouth publicity, and advocacy by these loyal customers, can help brands and retailers gain much-needed momentum.