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South Indian Retail Summit 2015

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The first-ever South India Retail Summit was held on December 10 at the ITC Gardenia in Bengaluru. Comprising a day-long conference and exhibition, the event’s mission was to focus on ‘Building Successful Retail Models And Growing The Retail Ecosystem In A Technology And Digitally-Enhanced Retail Atmosphere To Delight New Age Consumers’.

Understanding South Indian Customers

Changing consumer behaviour dynamics have retailers struggling to drive in more shoppers. Online innovations and enhancing consumer experiences at the store level are some of the interesting evolutions in the South Indian market. Rashmi Nair, Associate Director of Deals Strategy PwC gives a brief over view on the South Indian consumer’s various segments.

Segmenting consumers through various surveys and studying why they shop at certain places, Rashmi Nair, Associate Director, Deals Strategy PwC, revealed that most South Indian consumer behaviour varies across sectors and what maybe the shopping scenario in the apparel segment, may not be the same in jewellery. They are price conscious. According to her detailed views on consumer behavior in the South – including Kerala, Tamil Nadu, Karnataka, Telangana and Andhra Pradesh – consumers are willing to spend. “Brands are a way for consumers to tap into an aspirational lifestyle. They value variety,” she says.

There has been a significant increase in shopping in the jewellery as well as savoury segments, especially biscuits. Two upcoming segments are ethnic apparel and beauty and wellness.

The way consumers get segmented varies. There are consumers who are value conscious and price conscious. Then there is a large population of young shoppers who are educated and who most retailers refer to as the millennium generation. According to Nair, this is a very good segment but this is a customer who is very specific, not price sensitive and not loyal. These are mostly online shoppers who are located in tier 2 and tier 3 markets. According to Nair, people shop online because the return policies are getting better.

Another typical consumer uses their mobile phone to extensively check on-going deals and discounts. For these consumers, service counts and they tend to keep coming back to retailers who serve them well.

The fourth type is the aspirational customer for whom the brand plays a very crucial role. Brand consciousness is rising in India and Nair says the gap between famous brands and unknown brands is very high in India. The aspirational consumer is more willing to pay for an A brand. This person usually shares his experiences with his strong network of friends, thus becoming an influencer to an aspirational group.

Nair also says that six out of every 10 customers are style conscious and out of those six, three value variety on an average.

Indian Omni-Channel scenario on the rise

With digital media playing an important role in today’s retail industry, the Omni-Channel scenario has taken over most segments of the industry, with convenience being the main factor driving retailers into providing a seamless experience. Siddharth Jain, Principal, AT Kearney, presented his research at the South India Retail Summit, covering the play of Omni-Channel retailing in a country which now has the second largest computer internet users driven by smartphones.

Today, 45 per cent of the urban Indian youngsters shop online every month. According to Siddharth Jain, Principal, AT Kearney, consumers like to be continuously connected with a brand and also seek a personalised experience through a seamless interface. He feels retailers need to integrate consumers across all channels where they are able to discover, research, buy, fulfill and finally service their products.

Jain presented a detailed view of global brands that have embarked on the Omni-Channel experience, some of whom have seen an almost 425 per cent difference in growth. Jain’s survey reveals brands in India have created a separate team dedicated to handling digital business. The fact that today’s generation is a lot more Internet and mobile savvy has changed consumer trends drastically.

“At least 50 per cent of urban consumers are shopping online. Older consumers between 24 – 40 years of age are also catching up. Globally too, most consumers prefer to go through online channels.”

The main agenda that retailers face is to connect the consumers with the brand, which also means access to information on products. Businesses have to find various ways of driving more information about their products across digital media. Another important factor is operating with a seamless interface, which is where Omni-Channel comes in. People can research, transact and finish shopping.

“We have to make it imperative for all regional retailers in India to get digital, not just as an information channel, but also a seamless experience through an Omni-Channel,” says Jain.

The main challenge in Omni-Channeling for a retailer is to retain the same consumer to his physical retail outlet while the consumer is going through his journey from research and discovery on to shopping. This is where shopping experience and after service is a primary concern.

Use of apps has also contributed significantly to the increase in retail sales. According to Jain, when a retailer provides all relevant information on a digital platform, consumers have simple access and come off with a better experience. Customers deserve anytime anywhere shopping experiences

Innovations and technology have created a dynamic market in India bringing about change in consumer shopping and experiences. Panel discussions included BS Nagesh, Founder TRRAIN; Alok Dubey, CEO Lifestyle Brands;

Falguni Nayar, Founder and CEO Nykaa.com; Lavanya Nalli, President Nalli Group, Viney Singh, MD Max Hypermarket (Spar) and Neeraj Biyani, Director and Co-Founder Paper Boat.

The role of Omni-Channelling in the new retail eco-system has led to several growth opportunities. With the cost of technology down to nothing, consumers are now connected globally. The objective of technology is to perfect the whole retail process. The way information is given about the product and buying behavior has changed but the basic process of consumer behaviour is pretty much the same.

Many retailers at all levels are willing to adopt the changes. The group agreed that the young consumer had changed. He was more willing to experiment with newer ways of shopping and buying. E-commerce plays an enormous hand in the success of a brand and retailers do not have a choice but to follow the digital revolution.

The Retail Survival Guide

Understanding that shopping behaviour in South India is still primarily dependent on touch and feel, the online industry does not really threaten the offline store format. The panel included VP Harris, MD Witco; TP Pratap, Co-Founder and CMO QwikSilver and Woohoo.in; Sunil Sanklecha, Managing Partner Nuts n Spices; Lavanya Nalli, President Nalli Group; CK Kumaravel, CEO and Co- Founder Naturals Salon and Spa and Chandrima Pareek, Head of Business, Reliance Ecommerce. The panel was moderated by Gautam Kotamraju, SVP – New Initiatives Myntra.

Lavanya Nalli said that businesses were tuning in to the times. Though there are still several gaps in the industry, many are being bridged by innovation, she noted. “What consumers want hasn’t changed and everything else is the innovation around it,” she said.

Is there a need to align stores according to changing dynamics? According to VP Harris, in-store design paradigms have changed and are now increasingly influenced by online activity. Store aisles are growing smaller in size, he said, adding that consumers require space and time to research on what they intend to purchase and that can happen through online or offline store formats. There is more emphasis on the kind of mood lighting with the retail outlet. Creating a good service at the physical retail level can help consumers to connect with the online channel with the help of shared info on digital media.

Panel members were unanimous while stating that Indian brands have to grow to international standards, the same way international brands have grown into Indian market. The growth of the mobile app in 2015 had seen and changed the retail landscape so drastically that the way people use their mobile phones have changed. In fact retailers expect almost all consumers will be shopping on an iPhone pretty soon.

CK Kumaraval remained optimistic on offline formats. “Indian brands need to grow internationally and technology has become a great enabler in achieving this target,” he said. He also, however, expressed his excitement with the idea of online media creating new experiences for consumers who can now order haircuts at a click of a button.

Scalability Built on Market Insights Drives Intelligent Growth

Focused on defining appropriate and market-specific growth strategies, the South India Retail Summit brought together a panel discussing challenges and factors that enable retailers to scale up into different markets. Moderating the discussion, Kaushik Sriram, Consultant AT Kearney was joined by Manohar D Chatlani, Chairman MD Retail (Soch); Rahul Bhalchandra, CEO and Founder YLG Salon and Spa; CK Kumaravel, CEO and Co-Founder Naturals Salon and Spa and Ketan Pishe, Director and Partner PN Rao on the panel.

Referencing the hub-and-spoke model, Ketan Pishe, a third generation retailer at PN Rao elaborated on the company’s strategy, which rides on creating a hub within a city and spoke the model around it.

But how does one move to a different market and understand the dynamics of a new territory? Understanding distribution systems in a new region and the cultural perception of that market is important, panelists said, because scaling up too rapidly can also cost a retailer dearly.

According to Kumaravel, the Indian market is still evolving with traditional retailers turning into modern formats. Acknowledging that for a large-scale industry, it is difficult to customise for a section of consumers within a particular region, the panelists agreed that it would be easier to find target consumers through online marketing. Online marketing has enabled retailers to draw customers to their physical stores by connecting with them on social media channels such as Facebook or Twitter, they said.

The Technology Imperative: Converting an Influencer into an Enabler

There are several studies on what the consumer is buying and why he goes to a particular store to buy his products. A retailer can determine the kind of consumption made by a consumer. Going into more detail are panel members N Gopalakrishnan, Founder N Stores; Seshu Kumar, Head – Buying and Merchandising Bigbasket.com and Rohit Khetan, Head, Marketing and

Strategy Ginesys. The discussion was moderated by Bino George, Head of Business Consultant, Infor Indian SubContinent.

Retailers are trained to determine what a particular customer consumes. While 50 per cent of the consumption comes from food products, another 8 – 10 per cent comes from lifestyle products, while 5 – 6 per cent comes from electronics. There are customers who have stayed loyal to one particular supermarket and a lot of data derived from the store can tell the retailer the total consumption a customer makes during the month. Data can help retailers find out what a consumer buys and at the same time introduce more products to them which they feel a consumer is more likely to buy.

Retailers in India have invested and have made technology an integral part of their operations. The panelists were unanimous in the observation that converging commerce with technology is the key to enhancing a customer’s shopping experience.

According to Gopalakrishnan, while loyalty programs help in understanding consumer purchase patterns, data derived from retailers in India is not optimally leveraged to understand market shifts. “I know of shoppers who used to walk into stores, but are now leaning towards home delivery,” he said, referring to changes in consumer behaviour.

Seshu Kumar also noted that until recently, retailers and store owners used to be present in the store on a daily basis in order to minutely understand consumer buying patterns and requirements. “Traditionally, retailers want flexibility and control,” said Rohit Khetan, whose company Ginesys offers custom technology solutions for retailers to optimise merchandising and operational efficiencies. “Our customers are looking at controlling inventory and bringing certain aspects on to a mobile platform,” he said.

Panelists acknowledged the fact that technology can be used in better ways to deeply understand, pre-empt and service consumer requirements. Data analytics can be optimised to determine which add-ons a consumer could further purchase, and introduce such products on the store shelves, they said.

Staying Ahead of Trends, Consumers, Technology

During a session moderated by Juhi Santani, Creative Director & Founding

Partner, RETALE Design, the panel discussed issues on what a retailer needs to do in order to stay ahead of today ephemeral consumers. Joining the discussion were M Ramakrishnan, MD, Thulasi Pharmacies and Suraj Shantakumar, Director – Business Strategy, Kirtilals.

“Knowledge needs to be imparted on how retailers need to be sensitive to consumers’ needs and why they need to be tech-savvy. They need to be able to handle consumers who are more technologically advanced,” says B Venkatramana, President – Group HR, Landmark Group.

Retailers have now adopted several new technologies to understand what their customers are looking for. In the past few years, consumers have also become more aware.

In addition to the e-commerce and Omni-Channel, there is a concept of purchasing online and offline. This has led to consumers being very well informed about the product, even when it comes to quality, the make and finish. This gives the person over the counter a very short period of time to give the right information. Consumers are also very well exposed as they have seen how retail works abroad as well and this has made it difficult for the sales to be on the same lines. Retailers have found it paramount to have their information digitalized.

Retailers have to evolve to the times and meet the needs of the young consumer. Even the store layout has become important and the way the products are displayed has changed a great deal. Many stores have created interesting space within their retail outlets such as design lounges, which showcases the brand’s exclusive products. The store experience inevitably adds more value to customer experience.

Retailers have also come up with more innovative merchandising concepts that help the consumer, to some extent, discover new elements in the store. Apps have been invented to help enhance consumer experience. Of course, online presence is one of the basic requirements for a retailer today.

“With consumers gaining more knowledge and becoming better-informed about products, they also expect the sales person to know more than they do. Today’s consumers are well travelled and know more about different products and brands,” Ramakrishnan stated.

Venkatramana pointed out that apart from educating sales persons, a retailer also has to evolve existing in-store formats. “We need to be very close to the consumer,” he said.

With new consumer buying patterns emerging, store experiences have assumed much greater importance in the context of creating experiences.

Shantakumar elaborated on the kind of design lounge created within his store that provides consumers a highly differentiated ambience and experience. He felt consumers now are always scouring for elevated and out-of-the-box moments on their shopping trips.

How does a store layout influence the way a customer buys with the store? Some conscious decisions have to be made. It is important to take care of the people who work in the store. Drawing attention to HR element of retailing, Ramakrishnan said, “Nobody comes to retail to build a career.” He added that the retail sector has been characterised by high levels of attrition.

Venkatramana stressed on the importance of employee satisfaction, stating that every retailer must be able to take care of his/her employees and afford them valuable professional opportunities. “HR does play a crucial role in the online retail business as attrition rates in the Indian retail sector have risen sharply after the take-off of e-commerce,” he said.

The compelling need to integrate operations and marketing with technology enablers was also one of the major talking points of the session. Panelists pointed to tools such as mobile apps which also allow consumers to imbibe in-store experiences, as an important innovation. According to Shantakumar, there are many instances of overseas consumers wishing to first reach stores online before visiting a country like India. “So, a robust online presence is one of the basics in retailing today,” he said.

Creating a Blueprint for Experiential Retail Spaces

Arguing whether it is better to get brands that retail through Omni-Channel or to retain brands that have a hardcore physical presence in shopping centres, the panel which included Sanjeev Rao S, Director – Business Development Raymond Apparel Ltd., M A Mehaboob, Director HiLITE Builders, L Subhash Chandra, MD Sangeetha Mobiles and Bipin Gurnani, CEO Prozone.

According to Gurnani, a retailer with a strong brand identity is more capable of pulling more shoppers. “We try to get categories that are more experiential,” he said, adding that digital stores have a bright future. Over the years the size of the physical retail format has shrunk dramatically, some acting as a store-cum-distribution centre.

The number of employees manning the store has also reduced as well with more emphasis on consumer experience. Gurnani is certain that the number will continue to shrink as more and more brands focus on the online delivery channel.

There is clearly a need to elevate the scale and quality of experience for consumers in the form of what Gurnani termed ‘Gaminisation’.

How to Embed More Wow Moments In Customer Experience

The need for a compelling customer service is on the rise. CEOs at the SIRS discuss the growing relevance of perfecting customer experiences in India’s evolving retail industry. With Omni-Channelling and online commerce changing the landscape, retailers are left with little choice but to create superior customer experiences in order to retain shopper interest.

Present during the panel discussion, were S Raghunandhan, Co-Founder Next Practice Retail; Kabir Lumba, MD Lifestyle India; Abhishek Ganguly, MD Puma India; Vishal Mirchandani, CEO – Retail and Commercial Brigade Enterprises Limited; Viney Singh, MD Max Hypermarket (Spar) and Mohini Binepal, Co- Founder and Head Retail Ruosh. The Conclave Co- Chair, along with S Raghunandhan, was R Sriram, Co-Founder of Next Practice Retail.

According to Lumba, the next wave of customer experience is likely to be driven by convenience as most shoppers face high pressure on time. The more progressive retailers are the ones who really look into consumer needs. Today it is the way a customer discovers a products, whether online or with his friends and other platforms of media.

Progressive retailers are not with reference to online or offline retailers but the retailers who really understand the consumer’s journey and makes it convenient for them and make the information available in the store or outside the store on different platforms. This experience is no longer an offline or online thing and it works with food, grocery and fashion.

Having an efficient after service can leave a great impact on consumers. Brands now offer a no-questions-asked-returns policy. Retailers are constantly trying to uplift the level of customer engagement. Stores are going to great lengths to make their customer’s experience more personnel. Shoe brands like Ruosh have introduced swatch cards to match shoes with trouser colours. The product is king but service experience too is top priority.

Though brands like Puma, have taken the franchisee route, customer service have had its failures. One of the biggest challenges today arise when the brand expands, it requires visibility to all its consumers.

In fact some retailers have even gone forward by reducing the number of staff they have in a single outlet as they feel too many people in the store will not increase consumer engagement. Following this, consumers actually found it more comfortable to walk to an aisle.

Another thing that annoys customers most is the non availability of size.

Ganguly stressed that changes in retail are largely being affected by the consumer who is displaying a shift in terms of expectations. “Consumers are discovering what they want to buy and progressive retailers (retailers who really understand a consumer’s journey) know how customer experience works — be it on online or offline platforms,” he said.

Although Indian consumers have become more aspirational as reflected by higher sales of premium products, price is still a big deal, pointed out Mohini Binepal. “Customers really value what they get for a particular price. After sales services are also important in providing a seamless experience,” she added.

Vishal Mirchandani acknowledged that e-commerce has definitely grown into a significant threat to shopping centres. “The trend will inevitably grow, while shopping centre developers struggle to create better shopping experiences that feature an emotional touch. Here, uplifting of skills and standards of the staff becomes crucial,” he noted.

Ganguly felt that the major challenge for retailers lies in servicing scalability. “How and where can one hire staff when scaling up to a different region? Customer service cannot be mechanical,” he stressed.

The group concluded that hiring the right people and investing in and creating a future for the employee is paramount to build sustainable success for retailing in India.