Indian Retail Congress (IRC) 2014, an exclusive C-level dialogue show was recently held at the Hyatt Regency, Gurgaon (Haryana). Set in an out-of-the box retail themed stage, eminent speakers, moderators shared their vision on the upcoming and future retail trends, challenges, strategies, technology practices and importantly shared insights that can help shape the retail industry in the coming years. The following is a recap of the two-day extravaganza.
Innovation at the centre stage
With the changing rules of retailing, retailers are expected to adopt customer-centric approach to serve their audience better. The new age consumer expects seamless experience across channels. However, retailers today are lagging behind because they have built their delivery mechanism around a single channel as opposed to how the customer wanted to be fulfilled.
And, they are now expected to enhance customer experience via adopting new tools. For instance, US-based Papa John’s pizza chain has created efficiencies where they are serving customers online – customers sitting at home can place an order and once they go into the restaurant their order is ready.
Not only retailers but technology companies are also embracing this new world. To respond to this transformation, companies including Microsoft are developing mobile and cloud-based applications – that will enable anytime anywhere access, says Vijay Kasireddy, Senior Director, WW SMB Cloud Marketing, Microsoft.
Retailers also need to innovate to avoid real estate challenges. They can create ‘asset-like-models’ where business does not want the properties just like Tesco in US has taken out their whole real estate piece by offering virtual grocery shopping.
Consumers have evolved
Keeping pace with the changing time, consumers are now richer yet time poor thereby giving rise of reducing minimal labour and outsourcing less-skilled household work. Along with this, a similar trend of segmentation of products has come in. Consumers now categorise products as good, better and best. For example, if Lifebuoy is a good soap, Lux, which was premium soap, would be better and probably Dove would be the best. And there has been a rise of the best products. As Devendra Chawla, CEO at Food Bazaar observed, “Growth rate of the best products are increasing in the last six months”.
The almost lack of distinction between online and in-store retailing is a sprawling trend these days, ranging across the way people have come to research purchases online, the huge influence on buying decisions of social media recommendations, the rise of “showroom-ing,” the growing popularity of mobile payments services like PayPal Express Checkout and Square, the growth of the deal sites etc. Yet the fact is that 94 percent shopping is done in physical stores.
Moreover, online retailing has also brought ‘virtual modelling’ or ‘sampling’ with technologies that allow people to build customised, 3D mannequins of themselves so they can try on clothes virtually. Thereby offering shoppers a choice to skip the regular tiresome experience of taking clothes on and off in small trial rooms.
Creating a brand experience
Brand building is the long term exercise, and you cannot create brand overnight. Ashutosh Garg, Managing Director, Guardian Lifecare, rightly pointed out, “Brands are like your children, they need consistent nurturing to thrive and grow, and if you will ignore it will die.”
Also retailers need to make sure they are offering same brand experience across the stores and countries. Striking similar note, Shailesh Chaturvedi, CEO, Tommy Hilfiger Apparels said, “Across countries, all our consumer should get the same experience.”
Most importantly, fix the DNA of your brand and stick to it. For example, M&S is the middle class brand internationally, but when it was launched in India in 2004, it was considered as premium brand because of the low penetration of foreign brands. But that positioning of the brand was against the DNA of the brand hence they re-position it in 2008 to give it a global appeal.
Luxury gets a makeover
Several foreign fashion brands such as Victoria’s Secret and Pandora have recently opened airport stores in India. Even though rentals remain exceedingly high for airport shops, retailers do find the investment worth their while.
To beat the location challenges, Swarovski in the past few years has moved out of its previous focus of being located in five-star hotels and has focused on premium locations at mall properties. “This has resulted from our initiative to move into a more premium category and become acceptable to a wider range of customers,” said Sukanya Dutta Roy, MD – Consumer Goods Business, Swarovski India.
Echoing similar views, Vikram Raizada, Executive Director and CEO, Tara Jewels, said that in India we see large jewellery stores of 10,000 to 20,000 sq ft. But it was not a scalable format.
While some retailers are reducing their store size, others are betting big on e-commerce. For Kimaya ‘click to conversion’ is the future success mantra. The company currently is planning to open one store per month. “However, by 2017 we will not open a single store and will launch one e-commerce site per month,” says Pradeep Hirani, CMD, Kimaya Fashions.
While only one percent of retail in India is online, it is expected to be eight percent by 2020. “The challenge for us is to replicate the physical store experience online,” he added.
Some believes that people have money, but they don't know how to buy. Shabnam Singhal, Managing Partner and Owner, Sirius, said, "I believe that consumers need training in luxury goods and brands as much as sales-staff does."
Besides, luxury retailers need to plan out of the box marketing strategies and come up with products that are tailor-made to suit the whims and fancies of varied Indian customers.
Clearly, consumer is willing to pay more for luxury experience, but retailers should now learn to lure them.
M-commerce complementing e-retail
Indian e-commerce is already buzzing and penetration of mobile gadgets is setting new verticals in this space. Highlighting the same, Sundeep Malhotra, Founder and CEO HomeShop18, said, “Mobile is the next step for e-commerce. In the years to come, a good fraction of the e-commerce traffic shall be through mobiles.”
Android has the highest market occupancy in India in terms of operating systems among smartphones. HomeShop18 has around 4 lakh downloads in 10 Months and an impressive order rate from the Android app, informed Malhotra.
All the 1,800 Tesco stores in UK are enabled with ‘click and collect’ format. Customers can place and amend orders through their smartphones and can pick-up at the store later and worldwide Tesco receives 35 percent of its online sales through mobile.
Globally, e-Commerce players are investing heavily in this mobile potential. Amazon and eBay have succeeded in optimising their websites with mobile applications. And, Indian players like Flipkart and Snapdeal are also experimenting with this format.
Clearly, with growing number of android users the future of M-commerce seems quite bright in India. However, how M-commerce will match-up with this frequent change would be challenging for retailers as well as technology suppliers for sure.
Discounts in eCommerce
Online has advantage over offline over pricing and in-store maintenance. In the M-commerce world, everybody is sitting at one place; one click takes people from one website to another. So, instantly fetching customers’ attention is a key to success, and heavy discounting feeds the purpose quite rightly.
Moreover, impulsive buying is yet another factor that drives e-retail. Speaking on the same, Rahul Sethi, Co-Founder, LadyBlush.com, pointed out, “E-commerce is an open garden, and in a click you are on Myntra and in next click you are on other e-commerce site. As a result you get low conversions, hence you need strategy to create right preposition that can catch the impulsion.” He highlighted that conversion rate is highly 3 to 4 percent of overall website traffic. So, in this wishy washy world of e-commerce ‘discounting’ seems to be only panacea that every e-tailer wish to taste and tried.
But is this a fair practice for retailers in long run? And in doing so, are the e-tailers actually benefitted from discounts. BA Srinivasa, Director Viveks Electronics said, “Retailers who immediately list their products at the lowest price in order to beat competition may in fact be cheating themselves out of revenue.”
Therefore, un-necessary discounting is certainly not a viable choice and e-retailers can use other strategies to increase loyal customer base.
Retail Technology: Last mile connectivity
In a bid to emerge as leading amongst the other retail giants, modern retailers are adopting innovative techniques and focusing on making the overall shopping experience more friendlier and seamless in nature. And in this pursuit, technology helps retailers to be more connected, more empowered and more proactive.
IT helps retailers to connect to the consumers via omni channel – including fully integrated online, storefront, and mobile point of sale in order to deliver personalised convenience and being transparent in terms of visibility across different channels.
Prateek Mathur, Marketing Head, Microsoft Dynamics said, “P‘point of sale’ (POS) is now called ‘point of service’. He also said that ‘the focus of retailers is shifting from ‘mass merchandising’ to ‘personalised merchandising’.
Furthermore, technology helps retailers to empower the employees for providing customer with complete details of the product. In addition, it helps retailers to overcome challenges by reducing complexity, complications, and delivers all important insights needed for adopting latest trends.
With 70 speakers, 400 delegates, exhibitors, media persons and other distinguished attendees, the IRC 2014 could deliver many takeaways and networking opportunities to all.