By: Santosh Sagar Reddy
There are exciting developments in all areas of retail. Share of e-Commerce is growing steadily. Customers have an ever increasing choice of products at the lowest rates.
The access to products has suddenly shot up resulting in the remotest parts of the country having access to the same range of products as those in the biggest cities.
Customers now also have a wider choice of channels to purchase from, ranging from a mobile app to e-commerce websites, from a traditional brick and mortar stores to Virtual stores that can have endless aisles.
All of these developments will result in the retailers having both an opportunity and challenge in the coming years.
The role of e-commerce:
E-Commerce is probably creating the biggest disruption in the retail industry and this trend will continue in 2015. Almost everything is sold on the internet now and this means that pretty much all of the retail industry faces the challenge of either being a part of e-commerce or taking it head on.
There is also a growing concern over the role of the traditional small retailer in the e-commerce space.
Although technology reduces the entry barrier for e-commerce, the size of the existing players could pose problems.
None of the big e-commerce players including amazon.com are making profits and the business is currently focused more on getting a bigger customer base than making profits. For a small player to do the same for a sustained period of time will not just be challenging but borderline impossible. This would create an opportunity for retailers to come up with disruptive models themselves.
Traditional retailers are forming groups to make their purchases together thus allowing them to have similar bargain power as the big e-commerce players.
A good example for this is the brick and mortar mobile phone retailers. There are also digital tools and platforms being created to allow the smaller unorganised retailers to use the online channel and use their spread of physical stores to have a wider reach to customers and provide better customer experience.
All of this will form a big part of the brick and mortars fight back against e-commerce in 2015.
Now more than ever, the customer is the King. Today’s customers have a wide range of products available at very competitive prices.
Retailers would have to fight for customers on parameters other than the price. Although the Indian customer’s main decision point is price, they are beginning to demand better customer experience from all retailers.
Retailers will have a great opportunity to differentiate themselves from their competition by providing a better and unique customer experience.
Technology could help with this by providing retailers with the tools and platforms.
An example is use of iBeacons (low energy bluetooth devices) to create a platform that would allow retailers to Identify individual customers and connect with them without being very intrusive.
This could also be used to navigate shoppers through malls and also to provide customised experience and deals to them.
Lots of companies are making light weight innovative solutions for the retailers. These range from centrally hosted loyalty programmes that can be managed just based on the phone numbers of the customers to very light weight point of sale systems.
The ease with with retailers can adopt these solutions is also increasing. Cloud hosted applications will become available to a host of retailers and it will make information available to retailers over any device and from anywhere.
One common element amongst all retailers is the amount of data they create. While almost all of them have access to their data, very few actually make it count.
This was primarily because of the amount of computing power and technical capabilities that were required to make it feasible.
All these limitations have almost disappeared with the advent of cloud computing. Retailers no longer need expensive servers and large IT teams to get meaningful insights of their business.
Retailers in the west are already providing muchcustomised recommendations to their customers resulting in better overall sales and customer satisfaction.
How much Indian retailers follow suit depends on how much they capitalise on these technologies.
All of this means that today's retailer will have to keep up with the advances in technology and also the growing demands of today's customer.
There is lesser and lesser space for the incumbent retailer believing that they can continue to survive using traditional methods without having to innovate with technology and business models. 'Innovate or Die' will become the punchline for the Indian retail industry in 2015.
By: Santosh Sagar Reddy, Consultant Retail Practice, ThoughtWorks
Disclaimer: The opinions expressed in this article are the personal opinions of the author. IndianRetailer is not responsible for the accuracy, completeness, suitability, or validity of any information on this article. All information is provided on an as-is basis.