How Consumer Expectations Are Dictating Retail Industry's Trajectory

Major changes in consumer behaviour have led retailers to customize either their product or supply chain or their entire business model to cater to the changing demand
How Consumer Expectations Are Dictating Retail Industry’s Trajectory 

Given the retail sector has sort of gained a new normal (observable sales growth more than the pre-pandemic period), the industry needs to process any irreversible transformations that have happened along the way. Apparently, major changes in consumer behaviour have led retailers to customize either their product or supply chain or their entire business model to cater to the changing demands.

In the food sector, consumers are showing increased health consciousness in terms of the quality of food. For instance, there has been a higher consumption of organic food, which is expected to grow at a CAGR of 21 percent to reach Rs 182 billion by 2026 from Rs 60 billion currently. Also, consumers are now becoming aware of the safety of the food they consume and are concerned about how it is produced, packed, processed, and delivered.

Consequently, we are seeing a boom in the online grocery, meat and dairy sector where start-ups like FreshToHome, Licious, Zappfresh, Grubmarket, Farmdrop are seeing an uptick in their sales. The USP of these brands s that they source their products directly from the farmers and make them available to consumers. This removal of middlemen to make the supply chain more efficient is something the industry is likely to see more in the times ahead.

Resonating the same thoughts, Anand Ramanathan, Partner, Deloitte Touche Tohmatsu India LLP (Deloitte India), says: “India is at the cusp of a new food revolution - health-conscious, evolved consumers prefer to have something on their plates that will have a lower environmental footprint. In addition, they have also become more conscious than ever for the ecosystem, apart from their health.”

Influence Of Social Commerce

Fashion retail, the sector that had struggled with the cash flows for a long time, finally, businesses have started to observe increasing consumer demand around the festive period. Moreover, social commerce has gained a major presence with the fashion influencers having more say on the type of brands that consumers ask for. Consequently, the brands are compelled to focus on building multiple channels to maximize sales.

“We have been working relentlessly to strengthen our basic parameters starting from procurement to pay, which includes implementation of end-to-end ERP solutions. We are employing multiple channels to maximize sales, whether it is through a physical store, a pop-up store, a mobile phone, or a laptop/ PC,” says Shivendra Nigam, CFO, Cantabil Retail India.

Apparel companies have been working towards building sustainable long-term growth-enhancing and manufacturing capacities to sustain in the present scenario and prepare for any future worst-case scenarios like the pandemic.

Harsha Razdan, Partner and Head - Consumer Markets and Internet Business, KPMG India states, “Collaborations with different domestic and global brands will allow local fashion brands to become global superstars by expanding their reach and offering wider product choices. However, partnerships alone will not be a gamer changer. Partnerships, coupled with new-age technology tools like Virtual Trial Rooms, Digital Payment Channels, Chatbots, etc. could help deliver seamless and personalized customer experience and become omnipresent.”

The gold and jewelry segment’s major challenge has been to keep the consumers coming. As such, the brands are working to adopt and integrate emergent technologies to sustain the consumer base.

Suvankar Sen, CEO, Senco Gold and Diamonds says, “Using technology and human relationship, we have ensured that physically or virtually, all platforms are used to reach out to customers. Building stronger relationships and using tools like video calling and e-catalogs, our online platforms, we have been able to keep the customer happiness and interests for product on.”

Similar initiatives are undertaken by other online jewelry marketplaces like Melorra, Voylla, Bluestone, etc. 

What Lies Ahead For The Sector

Even though it may not be fully clear what the future holds for the retail sector, some trends are too obvious to not turn out to be the case for the sector. 

Of the 640 million Internet users in India, half are millennials who are actively engaging with D2C brands to order electronics, clothing, etc. They buy instantly and demand the spoils of their shopping even quickly - practically in a day or two, if not within hours. 

Such demand for faster deliveries has led to a boom of hyperlocal delivery start-ups like Dunzo, Milkbasket, LoveLocal, etc. servicing local pincodes. Hyper-localization of the supply chain is going to be a major element of the retail industry in the future. 

Moreover, retail chains like Trent, V-Mart, etc. that have shown significant growth in this year's second quarter have been working to improve their omnichannel experience to the customers.  

"Omnichannel is going to be larger and larger and so there is a lot of preparedness from our side to improve the same," Vineet Jain, Chief Operating Officer, V-Mart. 

Given the importance of having a strong presence across all platforms, it seems the 'victory belongs to the omnipresent' will be the major theme for the retail from here on. 

Harsha Razdan, Partner and Head - Consumer Markets and Internet Business, KPMG in India reiterates, “Brands are desiring to become omnipresent and expanding both domestically and internationally through multiple channels of consumer interaction. All signs suggest we are gradually witnessing the evolution of ‘retail’ into ‘consumer commerce’ where, increasingly, consumer expectations dictate the new retail model, demand shapes the value chain, and accordingly consumer-facing retailers offer products and services without first having proven themselves as a store-based retailer.”

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