Decoding retail in the new decade

The buzzword in today’s social climate is “mobility” with consumers responding to rise in retail formats including online retail, which in turn are driving the sea change in the shopping habits pointing strongly to changes in the retail experience.

As the salary package of skilled professionals touching the new heights, the swelling double income middle class populace living in isolated nuclear families, have made the jump from ‘zero spending’ and ‘frugal living’ to one of fancying king size life with enough money to spend on. “Euphoric shopping” would be the key to reinvent and engage the consumer in today’s increasingly complex retail environment. In order to grasp this opportunity, the store retailers need to focus tightly on range of products, quality, and value for money he carries in his store, apart from creating a memorable shopping experience.

 

Craze for trendy fashion

“The ability to stay ahead of the curve, to translate trends into products that fit your target segment and communicate how relevant your product is to your customer will determine footfalls and sales, and this would be the biggest challenge in the coming times,” says Dilip Kapoor, MD, Hidesign. Pradeep Hirani, MD, Kimaya Fashions Pvt Ltd further adds, “The emphasis has changed from price consideration to design, quality and trendiness.”

 

Organic is the buzz

With “go green” buzz in the air, there is a natural drift in consumers’ purchase pattern showing an inclination towards eco-friendly products. Organic products across categories like apparels and beauty products are the latest offerings from the retailers, and consumers are responding well.  Shriti Malhotra, COO, Quest Retail shares, “Indian consumers are accepting modern practices of personal grooming, making cosmetics and toiletries brands to introduce more sophisticated products from their international portfolios to India.”

 

More co-ordinate fashion expected

“More co-ordination buying behaviour would get importance as shoppers are matching their consumption through lots of mix and match,” says Chetan Daruka, Owner, Vintage Earth.

Accessories ranges are increased in order to give more options to the shoppers. Retailers have understood the importance of accessories for upselling.  Merchandise assortment is done in a way so that a customer can easily pick up matching accessory for a dress that she chooses to buy.  For example, we notice a sweater is displayed with a cap, muffler and a jacket to give the complete look.

 

Increase in portfolios & range sizes

Brands are expanding their portfolio range in order to bring maximum products under one roof to their target group. Youth and kids’ brand Weekender transformed its new identity into a family brand; Lilliput is catering to all the needs of kids with the launching of Lilliput World; Blues Clothing Company (BCC), a vertically integrated fashion and retail company, has recently diversified into interiors and home furnishings. Brands are making attempt to tap wider target group. Number of SKUs is growing with more sizes available on the shelves.

 

Fast fashion comes along

Consumers would look at the stores as the happening place where new products are adding after every next visit. Daruka comments, “We make sure that we change a part of our products every three days. This is very important to bring freshness to the merchandise in the stores.”

 “The mobility of the inventory would bring lots of happenings in the stores. We would need to change the merchandise every 2-3 months to make the store look fresh”, says Vijay Kapoor, Founder & MD, Derby.

 

Entry of more international brands 

There’s a high influx of fashion brands in the Indian market. Varieties will dominate the scene with escalating competition.  The customers will experience the new types of products. Be it Murano glass jewellery of LuckyClover, outdoor sports lifestyle products from Quicksilver and Roxy, the Indian consumers are going to experience all of them. This will give a competitive push to the local brands to improvise on product, pricing, packaging etc.

Globalisation would bring the demand of more skilled designers. Experimentation activities would intensify in the buying space across all categories. Continuous thinking to make better merchandise would be a challenge and fusing fashion will become the trend setter.

Entry of new brands has also created better and systematic way of working, merchandise and advertisements. Demand for cleaner cuts, sophisticated merchandise and solution based products with an extra edge on aesthetics would rise.

 

Store preparations

Front-end staff would also play imperative role and would be the vital link along consumers, brands and shopping experience. Kapoor of Derby elaborates, “Good command on language and physical fitness is what the fashion ahead would demand. Trendy audience would prefer the stores which have well-groomed staff and can elaborate on the products and its benefits to strike the minds.”

Building experiential relationship with the clientele is what actually would drive and strengthen the loyalty, and retailers need to understand the matrix of customer satisfaction and its importance.

 

The way to increase sales

• Continuous thinking process-VM, store interiors, lighting, etc
• Spacious stores: allow the shoppers to decide on their own
• Need to change merchandise approximated every 2-3 months
• Continuous budgets assigned for R&D, shop interiors, staff grooming

 

Luxury goes Mainstream

“In the coming times fashion won’t come cheap. It will be priced high in order to stand out of the crowd. Also, consumer will consume the product even with bit of odd features attached to it,” views Kapoor. Luxury brands too are sensing the potential of the Indian consumers and joining the mainstream retail with aggressive expansion plans pan India. They are shedding off their secluded image with marketing strategies that connect with common people. Non-core products of a super premium brands at lower ticket sizes are gradually adorning the retail shelves and this will happen through licensing. 

 

More QSR and organic food

Cash rich, time poor consumers will demand for more quick service restaurants. The segment is growing   at a rate of 40 per cent per annum and there is immense potential of these destinations in the tier II and III cities too. Also new trends, such as organic food, are emerging in the Indian market also. The changing lifestyle of middle class is creating a huge demand for better packaging and quality retail infrastructure. The below traits will be predominant in the market:

• More quick service meals
• Introduction of innovative & new products options- (seasonal products available all through the year)
• Processed food items, ready to eat products, organic food items
• Energy drinks & better packaging products

 

In-store experience & special demos

Gourmet retailing has created a new set of customers with its unique quality products. Customers love shopping there. “Our staff is formally trained in hospitality, donning the role of a friend and advisor that help our consumers to pick the right products, pair ingredients, etc. Be it in-store sampling, shelf talkers, on ground food consultants or even social media, GNB identifies and taps each of these channels to make shopping in our stores a unique experience,” says Mohit Khattar, MD , Godrej Nature’s Basket.

 

Entry of Private labels

“The private labels could be the next big thing for retailers that are looking to create a strong food and beverage category. Being closer to customers, retailers are in the position to utilise their understanding to work on the consumer insight and provide them with best solutions,” says Lalit Agarwal, Founder, V Mart.

 

Changing traits in CDIT market

The consumer durable has shown a noticeable shift in the buying behaviour over the recent years. The CDIT market (including mobile phones) is INR 65,000 crore and above as per industry data and is growing at 15-20 per cent, and the same pace is also expected in the next two years.

Domestic consumer sentiments have turned buoyant due to changing demographics and preference for technologically upgraded products. Overall, the industry grew in double digits in 2010. Industry watchers and analysts note that while the premium category will continue to drive growth in the urban markets, there is remarkable upward market waiting to explode in semi-urban and rural India.

 

Big is Beautiful

The rage this year is ‘Big is beautiful’ for almost all consumer durables and electronics brands, with LCD, plasma and LED television screens getting bigger; refrigerators increasing in size and features; and washing machine capacities giving competition for every next model launch.

From offering garish utilitarian devices with zero aesthetics, the sector has moved on to become high on the purchase wish-list of consumers, waiting to splurge their newly-earned money on stylish gizmos and gadgets. Sunil Mehta, CEO, Next Retail India says, “Consumers come with very clear positioning of brand and product in his mind. He is also looking for value-add in terms of features or related products, and value for money and this aspect is going to increase in the coming time ahead.”

 

Widen the product lines

The sales of display category products such as Flat Panel Displays - LCDs, LEDs, PDPs -which rose phenomenally by 45 per cent in 2010, would accelerate making consumers’ important need for home entertainment, while the sales of air-conditioners and home appliances, which surged by nearly 12 per cent and 23 per cent respectively, are likely to have impactful business.

“More of smartphones, touch screen, Android phones and 3G would be seen in the market for 2011”, says Sunil Raina, Product Head, Lava.

 

3D is the rage for 2011

3D TVs would be the one of the most exciting electronic products in 2011 for the families who love entertainment.  It would also be extended to cameras, animations, games, etc filling the market with lots of 3D products for gen-next.

 

Advanced accessories

Stores would offer more range of accessories which would complement the product depending on the features incorporated in it. Be it mobiles, TVs, game consoles, retail stores, it would keep the inventories moving, encouraging upselling.

 

Larger retail formats & groomed staff

Consumers, on their part, demanded better experience, service, and environment-friendliness, besides aesthetics. Companies responded by getting closer to the customer through larger network of distributions and also more points of sale.

There would be spacious formats so that consumers can feel and touch the product. Talking on the same line, Mehta of Next Retail says, “The brands would be spending time with retail organisations in terms of training and educating the shop- floor team on feature- based selling skills. Also, ensuring return on investment would be a challenge.”

Adding some real-time experience in the store would give better picture of the product. Ajit Joshi, MD & CEO, Infiniti Retail says, “An interactive and demo (experience) oriented approach is appreciated and expected vis a vis the traditional push strategy.”

 

 

2010: Taking cautious steps

• Sustainability and Efficiency: Retailers will seek the sustainable path for growth. The mission is long term plans.
• Revamping the internal structure: The focus was on centralised retail eco-system with integrating data and streamlining administrative processes, relying more on technology to evade manual errors. This in turn has been enhancing productivity and efficiency both at the back-end and store level.
• Customer-centric business: To cope with competition, retail operations turned customer-centric with personalised offerings, be it shopping experience or marketing strategies. The need of the hour is accumulating customer-related data.
• Social media: Social media has been the latest rage for retailers to make brands more interactive. It’s definitely going to influence decision making and create more product awareness.
• Talent hunt: Job opportunities widened in retail sector with more hirings.
• Forecasts: On expansion spree 
• Expansion:  Retailers will roll out expansion plans.
• New store concepts: Touch and feel concepts will rule the shopping experience with retailers coming up with more concept stores. Understanding buying behaviour will be retailers’primary agenda.
• Technology upgradation: Expenditure will be increased on technology upgradation with various facets of operations depending more on IT.
• Improving economy:  Improving economy will boost up retail sentiment sending positive message among consumers.
• Talent:  Hiring in IT will continue.