Retail chains around the world are facing an increasing margin squeeze – from changing consumer behavior, new store formats, rising complexity, supplier consolidation, and other factors. Retailers need to take new approaches to improve operations and boost competitive advantage…
Over the past decade or so, the Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to the entry of several new players. India’s total retail market has grown at a CAGR of 14.7 percent since 2014 to reach the size of Rs 5,531,471 crore in 2016. It accounts for over 10 percent of the country’s GDP and around 8 percent of the employment.
India, currently is the world’s fifth-largest global destination in the retail space, surpassing China as the most promising and reliable market for the retail expansion. India’s high economic growth, strong positioning an investment hub, the stable government from the world perspective, economic and tax reforms, improving market sentiments, large earning and spending young population, burgeoning e-commerce, digitalisation at the domestic level will act as main driving factors in the retail market growth in days to come.
Mobile phones, Internet, data, shopping apps, Amazon, and Flipkart etc. have changed how consumers live, think and shop. And the changes are only going to accelerate in the coming years. Retail chains around the world are facing an increasing margin squeeze – from changing consumer behavior, new store formats, rising complexity, supplier consolidation, and other factors. Retailers need to take new approaches to improve operations and boost competitive advantage.
At an IRF 2017 session ‘The Future Telescope: Retail 2030: What It Will Take to Get There And Rule There’, Director & Country Head (Dynamics) Microsoft India, Samik Roy talked about empowering retailers, digital disruption and the Fourth Industrial Revolution.
He started with an example of a lady on holiday in Italy, and she wants to shop So, she asks the Microsoft Digital Assistant, Quotana, what tourists buy in Italy and where she can get it from. Quotana gives her options and then even fixes an appointment at a store for her when she makes up her mind. The store already knows she is coming, and the store assistant knows exactly what she is looking for. Meanwhile, Quotana also informs the store assistant that the particular SKU which the lady is buying is in demand, selling fast, and might be out of stock soon. The store assistant places an order with his warehouse to replenish his inventory. Everyone goes home satisfied!
Bridging the Online-Offline Divide
Today’s generation of consumers prefer going to the online space first for buying anything.
When the consumer comes to your online store, there are no timings. It’s not a 10am to 8pm shop. It is 24*7*365 shop. You can browse through any brand you like, at any time of the ay and even connect with people who have bought those brands before, find out about discounts, delivery times. In an offline store, only an in-store assistant is available at particular timings. So, how do you bridge this divide? And it’s very important that this divide be bridged.
The retail industry is going through a massive digital transformation – the Fourth Industrial Revolution. The revolution is changing the way consumers are behaving, their expectations and is forcing retail organsiations to think differently, and to change their processes to accommodate the consumer.
The first revolution was about the steam, that’s when machinery came in, people moved from manual work to machines and the machines were driven by steam. The second revolution was when electricity came in, machines became bigger and they became faster. The third revolution was when IT came into space – we got in processors, started automatic processes to make things faster. We brought in the whole era of productivity. The fourth era of revolution is taking the productivity to a higher level where we talk about automating things faster and everybody being more and more productive. And that cannot happen if employees in a store or even online (those interacting with consumers) are not empowered. Employees need to be empowered with consumer information, as well as product information so they can provide a better consumer experience.
The second most important aspect of succeeding in retail is understanding and using Big Data, Artificial Intelligence and analytics. We need to use data proactively, preventively and even post-operatively.
Big Data has qualified that the experience online commerce gives consumers is much higher and more satisfactory than in-store. How are retailers then going to bridge the online-offline divide? One way to do it is to train store assistants to be commerce agents – they provide personal attention, help suggest and select items, look up the inventory to see if sizes, colours etc. are available and more. They also need tablets which can give computed Big Data results and tell them the consumer’s buying history in that particular store, so they can make suggestions accordingly.
Finally, paying online is easier – it takes literally a minute to type in your card details or choose the Cash on Delivery option. In-store lines on the other hand are a pain point. The idea is to ensure that your commerce agent can complete the billing process for the consumer on the company tablet / phone.
The way forward for retail is to go Omnichannel, close the gap between online and offline commerce, provide the exact same consumer services and satisfaction on all mediums.