“One of the biggest struggles retailers face is providing shoppers with a consistent experience across web, mobile and in-store channels,” says Christian Charlton, Director, Retail Solutions, Asia Pacific, HP. “HP has a broad portfolio of end-to-end solutions from traditional and mobile POS systems to interactive and self-service solutions that enable retailers to provide a seamless experience with maximum engagement across key customer touch points,” he adds.
In an exclusive interview with Nivedita Jayaram Pawar, Charlton talks about creating an ideal store environment and HP’s plans for India.
What are your plans for India?
The generic concept of Go to market, globally is very similar. But the size and volume of India is different and hence the cost efficiency differs. We have been to India multiple times in the past two years and signed up many local as well as international ISVs. After the new FDI regulation, we are now talking to the retail associations to better enable the smaller Indian retail organisations to be more competitive. As part of our larger strategy, we want to work with the existing retail community in India to upgrade capabilities. Right now we are devising plans to see how we can get the small pharmaceutical firms more organised and make them more stable and prepare them for moving ahead.
What kind of investments are you looking at in the Indian market?
We invest a lot in retail shows, ISV forums, educational forums with various retail associations as guest speakers. We are also investing continually in educating. We don’t really advertise as everyone in the retail world knows we exist. We are not a consumer brand for retail solutions, so you won’t see us in adverts. But we are already working with Reliance Group, Aditya Birla, Tata, Future Group and other big retailers of the country. That flows through very well – when the bigger guys are buying you, the smaller ones take notice, especially in the Indian environment. This way from tier 1 we are penetrating into tier 2 and 3 markets.
What is your distribution strategy for retail solutions?
HP has a partner centric model. We have dedicated HP sales representatives assigned to large tier 1 retailers such as Reliance, Future Group, Tata, etc. We also have direct sales representatives. At the same time we have channel partners and ISVs for different sub verticals. We tend to seek out partners who are specialists in different verticals like groceries, specialty stores and hospitality. Typically there is also a value added distributor who then serves the specialised ISV community. But this structure may vary from country to country. So in the United States we have four distributors and many ISV partners.
What does a retailer need to do today to be relevant five years from now?
Digital transformation is the next big thing. The effects of omnichannel retailing are here and retailers that don’t embrace this change are going to be fundamentally challenged. Retailers need to think of how they can make the shopping experience in their stores more interesting and entertaining. That’s a world wide trend. Early adoption is the key. The use of technology like digital signage and self service will be more about improving the customer experience and less about labour. The consumer today has more technology in his pocket than the retailer. No more so than in Asia. Singapore has the highest adoption of smart phones. The retailer has to change that. It’s not about how we want to serve the customer, the customer is now choosing how he wants to be served.
What is the next big thing in retail as far as technology is concerned?
I think it is mobility. We are going to see a lot of convergence in mobility. We will see a lot more of the interactive digital signage. Mobility, social media and cloud are the major driving forces.
From a retail perspective we are also seeing format blurring. Today’s grocery stores are not the same as they were five years ago. Today we see grocery stores that have restaurants or hyper markets as part of them. On the other hand, we see many large retailers going smaller. Like for instance Walmart and Tesco are deploying smaller format.
What changes are you seeing in customer behaviour?
They walk into a store with prior knowledge of the product. They have done their research, looked it up. So the consumer actually knows more than the shop assistant. Just buying and selling cheap is not going to work. Retailers need to raise the bar of technology and services. Online shopping, mobile shopping and in- store shopping don’t necessarily have to compete with each other. They can also complement one another.
Can technology create a more personalised shopping experience?
I think it all boils down to consumer looking for his own service. When I go shopping and I am in the mood of discovery I want to be left alone. I know that I may not be the sharpest and everyone else in the IT store knows more so I read up about the product first even before I enter the store, so I could ask intelligent questions. That’s a phase in the consumer behaviour that he doesn’t want anybody there. However, before I actually make the purchase, I want the confirmation that I made the right choice. So I actually go to the sales person and confirm what I already know about the product through my research. Just a nod from another expert means a lot to me. It’s the same whether you are buying shoes or dresses. That bit is the personal side. I believe technology should be there to assist in all the different phases of the consumer behaviour.
Secondly let’s also look at the identity of the brand. If a brand is advertising online, it makes sense to have the same colour on the screen online as are in the store. This will help people identify the online site with the physical store, through the colours, design, fonts and most of all price points. So the identity must be kept in tune and inline. It has to be a mixture of face to face contact aided by technology to offer the consumer what he wants.
What are your thoughts on e-commerce? How is it going to impact retail in the coming years?
The obvious answer is hugely. E-commerce is not coming, it’s already there. However, I don’t see it playing a solitary role. I believe it can only work in conjunction with the omni-channel approach. In Xmas market in the UK, stores that had both brick and mortar and online presence did well. Sales revenue dropped for stores that only did online as also for stores that only did brick and mortar. That’s a trend we will be seeing globally. In some countries, online or ecommerce is still hampered by the infrastructure but again that’s more a green field approach. It’s easier to implement the infrastructure. When I came to Asia ago 15 years the mobile phone was a big brick. Now we have taken the mobile technology for granted, but it’s not that old. I think the growth that we will see in the next four years is going to be absolutely phenomenal. Let’s face it, people are online 24×7, the information is online 24×7. Our biggest demographic of tech savy 45 years and below– they are all online. Ecommerce cannot be stopped. The challenge is ultimately with the payment – EMV regulation, chip regulations, NFC regulations, security, etc. Payment has to be secure. But all said and done ecommerce is going to get bigger.
What’s your observation on the retail market in India?
India has in the past 10 years undergone a phenomenal change in retail already. The retail market in India is hugely fragmented with 4-5 major players. These major players however still do not accomplish more than 10 percent of the Indian market. That’s why we are working with associations. Mumbai, Delhi or the various places within the country are not just multiple cities but multiple environments and ecostructures that we have to address separately. To have an ecosystem nationwide in India is extremely difficult. We are reaching out to retailers through ISVs and VSPs of those specific areas.
The other thing I am seeing is a lot of confusion with the FDI. There is a lot of instability. But at the same time, there is a lot of potential and perhaps a lot of time for things to go wrong for the individual retailers. This is where we believe we actually see the opportunity to consult and stabilise by putting a stable platform in place. The old adage “A stitch in time saves nine” is actually true here. I see so many entrepreneurs and small retailers come up with fantastic ideas. We want to support them. Reaching out to them and making sure they know about us is one of our biggest challenges right now. We want to grow as fast as we possibly can in India and especially in the tier II environment.
There are many Indian retailers who are reaching out from a tier 3 into a 2 or a tier 2 into a 1 environment. And they have based that on home grown software devices. They are now looking for more acceptable, standard approaches to their business. And that is where we can help – by offering a uniform platform, digital signage, point of sales, etc. That is gong to help them with their integration cost, warranty cost, maintenance cost, etc. From that perspective, the innovation that we can bring and the stability is advantageous to the Indian market right now.
Do you have a specific India strategy to achieve this?
We are approaching the market through the retail associations. We don’t want to be seen as HP – the big company that people can’t afford. I don’t think that will be the correct approach. The correct approach will be to work in association with the governing bodies that they already trust and have grown with. We can then educate the retailers that this isn’t just a box – it’s a part of how to succeed or stabilise your current business to be able to grow your business. That can’t be done by us alone but in partnership with the retail associations.
The small retailers are wary of the investment in such solutions. That’s why we have the HP financial services division that lease out the services. We have extended warranty and extended capex. We have a five year warranty and we can support the POS five years after that. The standard in consumer devices is six months to a year.
What is the biggest market for HP and what kind of market share are you looking at in India?
China has overtaken the United States as far PCs are concerned and they are still growing phenomenally. But in retail, China still has the highest growth rate (14 percent), India is very close with just a percent or two under. India is a little fragmented right now, but it will change within a year or two. But as far as potential is concerned for HP, it’s phenomenal in almost any market. The traditional players have been there for a long time. Many people are a bit frustrated with the traditional players. We are an internationally renowned household name relatively new to this industry going straight in at number two. We still have the wow effect on our side. So the potential is phenomenal in China and India. I wouldn’t want to put a number to it. It’s probably one of the most exciting times for me in my career to be riding on this growth wave right now.