Jesper Brodin, CEO Ikea said, “Like most retailers, we don’t know exactly where we will land at the end of it but our curiosity and willingness to create will be a guide for us.” In fact, with this pandemic becoming an inseparable part of our lives, we need to keep an ear to the ground and re-strategize as per the emerging shopper & consumer behavioral trends to ensure business continuity & relevance. Businesses in most sectors will need to maneuver operational and distribution strategies to survive in the new normal. One of the sectors which has got greatly impacted is the retail sector and is bound to make the retailers think differently.
For retail industries, this situation is bound to increase costs and lower capacity to deliver goods and services. The overall architecture of retail will change with social distancing as a key component & retailers will need to “Reinvent to be able to be relevant”. Customers will be reluctant to go to places where there isn’t enough social distancing, or the hygiene standards are not perceivably available. Schedule based appointment in stores will be a new reality - virtual queues are here to stay. Omni channel presence will become a necessity. For optimists, potential sources of innovation & newer value drivers will prove to be the new opportunities to explore in this adversity. Thus, to stay ahead in the game retail organizations will require a clear company strategy and more importantly a mindset shift.
The new normal for B2C
As we complete the first phase of unlock India and enter the next, there are some speculations that the consumer habits are likely to be changed significantly post COVID-19 and may never come back to normal. People have moved to digital spaces to make their purchases while a lot of them used to rely on physical experiences before the pandemic. As per a survey by Capgemini, 59% of consumers worldwide said they had high levels of interaction with physical stores before covid-19, but today less than a quarter i.e. 24% see themselves in that high-interaction. This change in behavior and attitude may give rise to an all new consumer who is ready to spend, but in the safest milieu.
Retailers will need to re-look at their business, going through every component, innovating on costs, innovating on items they sell, and innovating on technology to perform better. With consumers becoming more concerned about health, wellness and safety, retailers will need to be agile and provide a safer in-store environment to facilitate social distancing and last-mile practices that can offer non-touch based self-checkout system in a post-pandemic scenario. Digitization will play a critical role in reimagining company operations and fulfil the consumer demands swiftly, as market moves to omni channel, delivery-based models Contact less shopping and contact less serving experiences will be the new normal,” Some players are also working on evolving strong AR (Augmented Reality) and VR (Virtual Reality) tools to make the clients’ experience as authentic as possible.
Resurgence of Traditional Kirana stores
Our traditional neighborhood grocery & provision store or popularly known as Kirana stores have continued to stay relevant & proved their reliability for the Indian consumer during the testing times of COVID-19 pandemic. A whopping 90% of India’s retail market is unorganized and mostly made up of kiranas that have for years offered consistency and efficiency & evolved over the years with added features like home delivery / tele orders / WhatsApp orders. A lot of these Kirana stores did a great business during lockdown times and managed to attract back a lot of their old customers who had moved to modern retail. Large grocery retailers will now increasingly integrate the neighborhood stores for fetching goods for hyper-local delivery. New partnerships and collaborations will be forged, and new companies may spring up as e-commerce penetration is still low.
Digital first for B2B retailers
As per a report by Mckinsey published in 2109, B2B companies see digital interactions as two to three times more important to their customers as even the traditional sales interactions, acknowledging the fact that digital integration will play a greater role in the times to come. The report also highlighted that almost 90 percent of sales have moved to a videoconferencing (VC)/ phone / web sales model
Similar to the B2C environment, which has seen a major shift towards digital, the importance of digital channels for B2B companies has also grown manifold in the past few years and especially since the COVID-19 outbreak. The relevance of digital has increased with the consumer’s move towards digital interactions. When researching for newer products, customers’ preference for digitally enabled sales interactions has increased significantly - with suppliers’ mobile apps and social media & online communities indicating sharpest increase since 2019, again, as per Mckinsey.
Going more digital and online will help the retailers to come in contact with larger number of people which may be changing their ways to buy products. For the longer run, the consumer sentiments towards purchasing will not remain the same, however buying patterns may remain evolved and find an everlasting home in the online space.
Erik Nordstrom, President, Nordstrom Direct has rightly said, “Retail is a customer business. You’re trying to take care of the customer—solve something for the customer. And there’s no way to learn that in the classroom or in the corner office, or away from the customer. You’ve got to be in front of the customer”.
The article has been authored by -Unmesh Khambete, Sales Director, IPM India Wholesale Trading Private Limited, (country affiliate of Philip Morris International Inc.)