Moving past tier I cities, the future of retail sector is said to be shining bright in the corners of tier II and tier III cities. In an interesting revelation, last year (between 2006 and 2017) these smaller cities received a whopping $6,192 million in investments, while the bigger tier I cities received as less as $1,295 million. Industry experts have announced that cities like Lucknow, Nagpur, Kochi and Jaipur will be the next retail hubs. But what does it take to make these cities retail ready? Shwetha Satyanarayan finds out.
For long, metro cities and tier I cities have been on the maps of retailers and mall developers looking to expand and grow. Over the decade, however, the scenario changed with increasing lease rentals in metro malls, lack of bigger spaces and even higher land prices playing major deterrents. If latest studies and reports are anything to go by, local and global brands in India have many reasons to cheer.
According to the report ‘Fuelling the Retail Revolution – The Paradigm of Emerging Cities’ by real estate and retail consulting agency JLL, the future of retail lies in tier II and tier III cities.
JLL India MD (Retail) Pankaj Renjhen says the retail sector will be among the top three employers in the country and its growth will drive the economy of our future cities.
He says, “Retailers and private equity firms have started taking an increased interest in Indian retail sector through investments in high-end retail malls in tier II and III cities because they are the next retail destinations.”
If Lucknow, Chandigarh, Kochi, Indore and Bhubaneshwar will be the next big retail hubs, how do these cities prepare to become the next retail destinations? And what needs to be done to ensure that the resources in these cities are ready for the surge in demand?
While low rentals, infrastructure and connectivity will play a key role, skilled staff and resources too will equally play a significant role in defining the success of these retail destinations. So how should the brands in tier II and tier III cities be future retail ready?
Smartphones are not exclusive to tier I cities anymore and due to the high penetration of technology, customers in even tier II and tier III cities have associated their enhanced shopping experiences to usage of technology at the stores. “When store assistants have product knowledge and are aware of what they are selling, whether within the store or through the app, we have noticed that the sales have been high and the customers were happy,” says Arshan Vakil, co-founder of Kings Learning, an agency that trains and conducts communication courses for retail employees. Vakil asserts that training programs in tier II cities are equally beneficial as they are in tier I cities.
Interestingly, Vakil reveals that the sales of brands which tech-empowered their employees grew by 30 per cent and close to 90 per cent of the brands wanted to come back for more tech training for their employees.
Considering that attrition rate is high in retail industry, building loyalty in staff to ensure that they stay at their jobs for a longer period will hugely impact the business. “When there is low attrition, a retailer always benefits and with technology making retail employees more tech savvy, the by-product is digital literacy. As a result, trained staff who have longer working period at a store make big impact on the business,” Vakil adds.
Ability to communicate
Communication is the core of retail industry whether it’s for a brick-and-mortar store or an e-commerce label. In an era where e-commerce is growing rapidly, retailershave to capitalize on customer experience to differentiate their offerings. This calls for a lot of verbal convincing which may not be possible through technology. Only trained staff can effectively communicate with customers to win the game.
For instance, Trent, the retail arm of Tata, trained its staff in tier II cities to ensure their personnel were capable to handle customers from all economic-class. “About 60 per cent of our staff was trained in various coaching centres for better communication skills and we could see that post training, it was as if we had hired new staff. They were confident, performed better and drove higher sales,” says Sanjay Rastogi, Corporate Head, Trent.
To be approachable for customers
Customer satisfaction is the ultimate goal of every brand. To achieve this satisfaction and drive loyalty in retail sector, it is important to assist customers at every step of their purchase journey and communicate to them in the language of their comfort. Also, with awareness of how to use technology and how to sell products in a polite manner, the brand popularity will build and once again the onus is on the trained staff to build this popularity.