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Post COVID-19 Retail World: Transform Your Business Model or Perish

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Crises like the current pandemic shake 100s of 1000s of small and big businesses that otherwise seem to be doing fine. Most are fighting it real hard to get into some delivery mode and simultaneously exploring future business models with every possible permutation and combination of the evolving scenario. The complete collapse of many successful business models only proves that companies now need to reinvent their business models that can withstand crises like the one in hand.
A session at the Phygital Retail Convention titled ‘Transform Your Business Model or Perish’ brought together some of the most dynamic technology, digital and innovative leaders to discuss how to put AI & analytics, flexible supply chain with variable cost base and modular design programmes at the core of the business to reinvent models for future businesses. The session was powered by Vinculum Group.
The session was moderated by Anil Shankar, CTO, Shoppers Stop. The panelists included:

  • Abhishek Sudhakar, Senior Director & Head- Men’s Apparel, Sports and Footwear, Myntra
  • Kumar Sambhav Verma, Sr. Vice President & Head Omnichannel- Asia, Bata
  • Venkat Nott, CEO, Vinculum Group
  • Vishal Kapil, CTO, Fashion Retailer
  • Praveen Shrikhande, Chief Digital and Informative officer, Aditya Birla Fashion and Retail

Convergence of Online & Offline Retail
After the initial slowdown, businesses are finally picking up pace. However, they are still not out of the woods and it is extremely important to understand how to navigate the series of challenges ahead. One of these challenges is the convergence of online and offline retail, a challenge which puts the very future of physical stores in question. Online, any which ways, was a good place to be and due to COVID-19, there has been a constant shift towards online. Customers have moved to online in a big way because of various limitations and challenges.
Talking about this, Abhishek Sudhakar, Senior Director and Head – Men’s Apparel, Sports and Footwear, Myntra, says, “Online was more of a deal-seeking and discovery-led channel. However, now both consumers and brands are seeing online as a must have channel. They are not using it as a point of convenience. If we look at all developed countries in the world, online did see an inflection point when it went from a point of discovery to a point of convenience and the same shift we are experiencing in India now. It is imperative that retailers and brands grab this opportunity to make sure that the consumers are well-served. Consumers will always continue to determine our strategies – whether online or offline. Offline is not going to get replaced by online. Our responsibility is to give seamless experience across online and offline. We will have to adapt to having both as a significant part of the consumer journey.”
Reinventing the Role of Stores
Retailers have run their stores in a certain way for a long period of time, however, after the challenges thrown by the pandemic the role of stores is also changing.
“The thinking has sunk in across levels and all functions that it is important to serve the consumer, wherever they are coming from. The normal has shifted to a new normal. Store staff has also stepped up into their new responsibilities, in terms of taking up jobs which they have never done. Store executives are taking up new responsibilities like using order management system, managing an order, shipping from store, making sure that quality is maintained while they ship, etc. From that perspective, store operations have changed quite a lot. Store staff is also looking at ways and means like how to go out and help various customers, brands have gone out of their way to do an assisted shopping through WhatsApp videos, started taking calls, shipment through Dunzo, etc.. The operations what we knew earlier and operations what we know now and how it is going to evolve will be a very different paradigm,” explains Vishal Kapil, CTO, Fashion Retailer.
“Some of the brands are turning their physical stores into dark stores,” adds Anil Shankar, CTO, Shoppers Stop.
“In 2018, we started shipping out of our stores. Our website has been connected to our stores for a while now and we also do a bit of order booking in the store with the objective of improving conversions if customers are not getting the product that they are looking for. We did a fairly large number of transactions from our stores on a day-to-day basis even before the pandemic. However, the current situation has pushed everyone to get there at the earliest. The whole urgency behind becoming truly Omnichannel has never been so high. Consumers are coming back slowly and steadily but we need to ensure that we serve them in a way that they used to like it in the stores earlier. We are not using our stores as dark stores. but we have equipped our stores to handle our website orders, to book orders from our stores and have also connected them to the marketplaces. Before the pandemic, the focus essentially was on how to map customers and make sure each moment they spend in the store is fantastic and delightful. However, now we have started going into the catchment area. Bata is opening its kiosks in the societies since past couple of months. We have tried to reach out to customers as they want the products. Customers have a need right now and the need might be governing the purchase but there is still some fear moving out and our thought behind our shop-on-wheels was why put consumers at risk, so we decided to take these stores closer to our consumers and that has really helped us. The big shift in the retailers mind now is to figure out a channel to give a very easy and accessible service to consumers,” explains Kumar Sambhav Verma, Sr Vice President and Head Omnichannel, Asia, Bata.
Talking about Aditya Birla Fashion and Retail, its Chief Digital and Information Officer, Praveen Shrikhande says, “At ABFRL, we have multiple formats and brands in different categories. Some brands were already online on multiple marketplaces, some had their own websites. Six months ago, the situation changed completely, and it became necessary for all brands to available on all online platforms. Aside from this, there was a big push to connect to the customer online both in terms of how we reach out to them and from an e-commerce shopping perspective. This has led to a lot of innovation and across brands and we have also tried different inventions. How to reach customers when they are not able to reach you has been the key and the only way to reach them is digital. Store will have to work as fulfillment centres in addition to being a store front for customers.”
According to Venkat Nott, CEO, Vinculum Group, retailers have understood that digital needs to be a part of their strategy and recently most brands have become Omnichannel. Vinculum Group is known for onboarding, cataloging, helping clean data and listing on Omnichannels.
“From a brand’s perspective, there are brands like P&G who came in during the lockdown, they looked at their pan-India distribution network, put up the inventory online and connected it to hyperlocal providers and brought the goods directly to consumers. It is a very interesting shift. Another FMCG major has done the same and this just goes to show that brands are going directly to consumers. Stores-on-wheels are no longer restricted to just a particular category anymore,” he says.
“From a retailer’s perspective, everybody is trying to maximise selling online and on marketplaces. One of the challenges of that we have is the legacy systems which do not allow them change easily. We are also trying to breakup some of the bigger engagements or what would be typically very large projects into pocket sizes to enable them to sell online and then phase it out in the form of a full solution form. Apart from this, retailers are also looking to the big sale days as a critical part of their strategy now and that is something that we are observing as well, and I would like to extend this to distributors as well. There also we are seeing very interesting angle where the brands are working very closely with them to push it out for these sales,” he further adds.
Helping Small Retailers Survive
Brands like Myntra support a large marketplace and have a large volume of resellers and there is a very re-tellable tale on how the brand is helping them survive.
“Myntra has been one of the curated marketplace and it has always been about all players irrespective of whether they are big or small. We give them a uniform platform to display their products to consumers. There have been a lot of digital-first born or online brands across categories – footwear, apparel, watches. Some brands even do not have a single point of presence offline, but they are actually doing phenomenally well online. A lot of these brands are actually showing the way to smaller brands who want to get into this space. Catalogue quality, the way they represent their products, they make videos for all of their products – all of this comes as naturally to these brands as offline retail comes to a lot of brands who have got a huge presence in the store network. Visual merchandising is a key skill offline, similarly cataloguing is a key skill online. A lot of these brands are showing the way to smaller brands to really adapt and the smaller brands today are able to divert almost 40-50 percent of their business from online, however, now it would be as high as 80-90 percent. This is not because offline is doing badly but because these brands serve very specific consumer needs. A few consumers who were buying these niches offline are looking online for it. A lot of brands have adapted to doing categories which are consumer-first, so have the abilities to grow online faster,” states Sudhakar.
Omnichannel – The Way Forward
There are many small brands which are still evolving. Many brands have large Omnichannel plays but a skewed mix of online vs offline, points out Shankar.
“We have launched our online operations very recently. We were ready to launch it in March but then the lockdown happened, and we had to stop our trade. After we had opened, we noticed that the potential of online is manifolds as compared to earlier,” explains Kapil.
“Some brands are already getting their 30 percent revenue from online sales, however, the brands which have recently introduced online channels are also seeing a surge in demand. Whether it is a small brand or big brand, the percentage of their cashflow from the online platform has gone up multiple times. Brands who were earning around 30 percent from online have reached 50-60 percent,” he adds.
“There is a device in the consumer’s hand which he does not leave and that device provides them inputs on everything – news, fashion, trends and a lot more. Is it going to make an impact on the consumption pattern or behaviour of the consumer? Of course! The pandemic has escalated the increase of urgency, digital transformation but digital is not for fashion, it is a revolution for the global population out there. It is going to have an impact on everything and retail being the largest industry in the world is not going to go untouched. It is there for long-term and this is just the beginning of the whole digital revolution. The way consumption is going to change, is going to be phenomenal over a longer period of time. Anything at 30 or 30 plus percentage should be what the brands should be looking at. Brands who were born digital are doing much better,” expounds Verma.
“We have brands like Jaypore which are 90 percent online, so their digitally influenced sale is probably going to be as high as 60-70 percent,” adds Shrikhande.
“You need to look at the overall picture and the impact of digital on retail as well rather than just a pure play online transaction,” says Sambhav resonating the same thoughts.
“Retailers need to engage across all channels and the brands those who are able to do it will succeed,” points out Nott.
Changing Consumer Behaviour – Risk or Opportunity?
In the near-term, the customer preference is to go online. However, on a week-on-week basis, more customers have started coming into the stores. We have started seeing improving trends in the stores as well as online. It is a mixed thing at the moment, says Sambhav.
“We have a loyalty base which is more than a decade old. We are not as rich as Shoppers Stop and Lifestyle when it comes to data, still there is a fairly large data set that we have. Our repeat customers and the loyalty database for the essentials primarily innerwear, athleisure play an important role and customers for these categories are definitely coming in and buying because they are already exposed to the store format. Apart from this, we are also providing assisted method where customers can call store and the store will take them through a virtual walk through and after that either we are sending the products right away to the consumer’s place or we have last-mile delivery tie-ups and they are enabling the delivery. Brands need to respond to that in a much better way,” says Kapil.
“The share of Tier II and III consumers has grown 20 percentage point. Most of these are first time online consumers. Apart from this we are also reinforcing all the steps that we are taking making our shipments safer. We are also making sure that the consumers are comfortable shopping for the brands that they love on Myntra simply by ensuring that we are providing genuine products from the biggest brands in the country, adds Sudhakar.
Bringing Back the Lost Cheer
Brands are going that extra mile to bring back the lost sheen.
“This is going to be a very different year. There is a change in the customer buying pattern and the product mix has also changed. The second change that we are seeing is in customers. We have a loyalty program, and it was not looked at that deeply as it is in focus today. Today, all focus is on enriching customer data, communicating with customers in a more personalised manner, using analytics to figure out what product will work for which customer after looking at their past buying habits,” states Shrikhande.
Nott adds that brands today are emphasizing more on information security. “What we used to do in a year, we are looking at doing it in a quarter because the revenues are going up for the brands and there is lot of data also which has been captured. We have seen that brands are selling more online, so we have launched a marketplace monitoring service. Apart from this, there is a way more emphasis on data security.”
Comparative Analysis
Traditional forecasting is based on what comparing the trends with season. Currently, whatever retailers and brands are trying to do they do not have much of baseline for comparative analysis.
“Comparing data points last year to this year makes no sense but there are very interesting stats, if we look at US, the growth which has happened in the last year has happened in the last 4 months, which means retailers and brands need to hit at now and this holiday season might be taken up as a different holiday season but people will buy. Trusted brands where promise is well established, there it is about how you engage consumers and push them well. There is a real opportunity there,” Nott states.
“In fast fashion the cycle has become far more agile, so retailers need align their supply chain to service a fast-moving demand or a fast-changing demand,” asserts Shrikhande.
“It is the consumer who decides what they want to buy and it is pretty apparent that they will move to needs and the way we are trying to deal with it is very simple – we are trying to make that product more discoverable. There are categories, other than the essentials, which are seeing some traction and we are seeing those headwinds and we are making amends in our communication and the way we reach out to consumers. Right now, we are seeing consumer is fairly sure of what he is looking at buying and within the same set of consumers, there are consumers who have additional needs and we help in serving those consumers to the best of our abilities,” adds Verma.
Impact on Demand of High-End Fashion
Post-unlocking, there was a pent-up demand and whatever consumers wanted to buy, they did buy whether there was discount or not. Hence, the sale numbers and margins also went up and this happened with most of the brands and as we move on further towards an end of season, a lot of brands put up their inventory in their entire eco-system on various different discounting. There is lot of deal-seeking that has happened as end of season was almost over and we were entering into a fall-winter season.
“There is a lot of deal-seeking which is going to happen because this season’s stock has been bought some time earlier for most of the brands and that supply is committed and that supply is going to land up in warehouses and retailers will not prefer to pay very high rentals for the warehouses,” says Kapil.
“The biggest change that has happened is that there is a very clear demarcation between essential and non-essential categories. There are categories which consumers will want to buy without deal seeking and there are categories which consumers will buy only if they get a great deal out of it. There was a much starker difference three months back and now we see the old trends coming back slowly and steadily. Footwear as a category was struggling earlier but it almost back to pre-COVID numbers. During the festive season, the traditional categories generally do well, however, this year we expect that demand for these categories will be muted and that will force a lot of top brands in those categories to go into discounting just to nudge consumers to buy more. However, any brand that is in the essentials space or categories are seeing natural demand, they do not need to go into that kind of discounting to sell out. We are the only industry in the world, that has the word fast as the prefix and we are probably the slowest. We still have 8-month cycles to the next season, so some of us have to create better value proposition for consumers to consume now either by discounting, free gifts, faster delivery etc but how are we planning to do our future seasons? We can’t have 8 month cycles, we will have to react today and deliver the product in next 3 weeks if we really want to adapt otherwise we will always end up catching with the market doing discounting etc which really is not the right way to build this,” states Sudhakar.
“Another impact of digital as I see on the whole value chain – the way cycles and seasons were planned, this new channel was not there, no one would have questioned to crunch those into lesser and lesser period. The impact of digital is going to be into so many things, not at the frontend with the consumers but also at the backend as well,” adds Verma.
“While the customers are returning, and more often they surprise you with the kind of behaviour patterns that they are showing is that everybody is getting minimalistic. There are customers who are also coming and spending more time and it is also how you address them with the kind of services that you offer. The change that has been observed is that the stores which otherwise used to get flooded, because of their lower footfalls there the customers are getting much better personalised treatment and to that extent that is also resulting in a different kind of buying behaviour,” shares Shankar.
Keeping Internal Workforce Happy
From an organisation perspective, they had to make changes to keep their internal workforce happy while ensuring to meet the business objectives.
“The organisations, the people in the teams are fairly cognizant of the hard work that needs to be put in to understand changing consumer trends and making the impact. So you take what you have and you run with it, you decide what are the small wins and the all groups are coming together in collaboration. The big shift is that I cannot do whatever I was doing earlier alone, I need more and more help from my internal stakeholders and reach out to multiple departments and they do understand the importance of reaching customers through this medium. The teams have come together and collaborated even better. One big boost is that a lot of projects that we were running in parallel to business came to the fore-front and we were able to quickly run with them. The great thing is that we had some of these outlined and were working on them before the lockdown really happened, so we were able to focus on them. From an efficiency standpoint, it has become a little more efficient because now you jump in from one meeting to another with fixed agendas and close the open points, while it may have become a little more exhausting but it has definitely become more efficient,” shares Verma.
“It has been more about how we can get a lot more efficient in what we do. Efficiency has definitely gone up. Shorter meetings, clearer objectives – we have gone into this mode of enablement and as a company we have to enable our employees to work from home better as a lot of them have gone home, so we have introduced burn-out holidays where people are asked to take 3-4 days off during a month compulsory just to take some time off as the screen time has increased drastically and the horizon between work and home has completely faded. There is no demarcation anymore. From the brand’s side and consumer’s side also, it is again enablement. The one word theme for us as an organisation is enablement. Even for the brands today, for the first time ever, we have more brands approaching us than the any other time. Earlier, it has been always us asking the brands to come online, now it is other way around,” adds Sudhakar.
“There is definitely a new set of skills that we have to train our staffs with. Just after COVID, we expected them to use popular messaging services to talk with consumers and convert them into transactions. They were trained once to address customers once they walk-in to our stores, now we have to take them out of the stores and take the stores to the consumers and where a lot of consumers are walking in the store with the information of the product already with them or just coming to place an order or the customer is not into the store and the staff has to just shift it out to the consumer, so starting from something as simple as the way to communicate on a messenger or how to pack an order in a way that when the customer opens it, he is equally happy as he would have felt if he had brought it in the store. There is a massive upscaling of the staff that we are working on and we have used our internal training academy fairly effectively to train the staff on that and the great thing is that the staff has been super excited and enthusiastic about learning these new skills. They also understand that there is a paradigm shift in consumption behaviour, the buying cycle of the consumer and they are happy to use these skills,” concludes Verma.

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