“There’s no luck in business. There’s only drive, determination, and more drive.”
This quote from Sophie Kinsella’s book, Shopaholic Takes Manhattan, reflects the current situation in the retail industry wherein retail giants are competing with one another in order to grab a larger pie of the business. And while there are discounts and freebies to lure the customer, companies are also adopting newer technologies to bring down their operational costs and, at the same time, provide a better customer experience.
Besides, with the growing popularity of social networks that influence the choices of consumers, traditional business models are undergoing a massive transformation driven by digital technologies.
Globally, the retail automation market is expected to reach about $973 billion by 2018, growing at an estimated CAGR of 13% from 2013 to 2018, according to a MarketsandMarkets report. Given that the organized retail market in India is only now beginning to come into its own, and the fact that the neighborhood stores are still dominant, there is tremendous growth and scope for automation solutions in India. The retailers are increasingly tying up with solution vendors for leveraging radio frequency identification (RFID), smart card and Wi-Fi technologies, among others.
Issues plaguing the industry
Despite advancements in technologies, the retail industry is still plagued with a lot of issues that can be resolved only by adoption of better technologies or approaches. Customer stickiness is one of the prime issues which most big retailers face. Given the myriad choices, it is easy for customers to move from one shop to another which may offer even the smallest of discounts.
Furthermore, transparency and tracking of supplies, customer data, global data synchronization, management of inventory etc. are some of the other pain areas.
“Some of the common challenges that retailers face are supply chain optimization and getting warned early about stock exhaustion, followed by customized marketing for customers,” notes Dinesh Jain, Country Manager, Teradata India.
Human resource retention is another key challenge that retailers are facing. Attrition rates are high and with shop floor resources continually changing, the IT solution should be such that it is simple to learn so that a new resource can be put on the floor as fast as possible.
Punit Agarwal, CEO, Promart Retail India, adds that retailers today need better transparency between systems and better tracking to integrate systems from manufacturer to consumers to obtain customer and sales information. All this information not only helps in preventing wastage but also gives a better understanding of the clients in question.
So, customer experience management remains the lifeblood of retail businesses. “Retailers in the organized sector have started focusing on solutions and products that will help them deliver better experience. They are now looking for technology which will empower them with a 360 degree customer view, help with cross channel orchestration, integrates with social networks and also provides ease of operations over hand held devices,” explains Virender Jeet, Senior VP – Technology, Newgen Software.
Shift in technologies
Engagement with the customers is now the key success factor. Today’s customer is well informed and most of the time, when he comes to the store, he is almost sure what he is looking for. In this scenario, if the representative engaging with that customer is also not equally equipped, the entire experience just nose dives.
“This needs intuitive tools that offer information about him (customer) readily. Arm the employees with relevant information through role centers — dashboards, devices that deliver sufficient set of information relevant to each individual customer, so they can make a relevant conversation,” Roy adds.
Along with this, big retailers are offering ‘shop while sitting at home solutions’, i.e. e-commerce. These websites not only enable customers to shop at a convenient hour but also compare multiple brand products in one go. This helps the customer who wants to understand the product before going to the retailer shop and making the final purchase.
According to Agarwal of Promart, retailers nowadays work closely with their vendors to predict consumer demand, shorten lead time, reduce inventory holding and ultimately save costs and increase consumer satisfaction. “In a country like India, where the consumer is the king, the main focus of any retail chain is to keep the consumer happy. They try to keep track of the consumers’ buying pattern and their choices in order to increase consumer loyalty,” he notes.
Technology is also being leveraged to provide project management capabilities to monitor the progress of store launches. Management of logistics and innovative use of video analytics can help enhance customer experience, thus helping companies build affinity towards a particular brand.
Roy of Microsoft further adds that the future of retail lies in multi-faceted customer engagement known as omni-channel retail. “Times are changing with more and more consumers making on-line purchases; an increasing number of consumers looking to Facebook for information on their favorite retailer before making a purchase; consumers entering shops and posting about their buying decision etc. Retail organizations are looking to expand and re-define their physical store locations to drive a more direct and personalized brand experience,” he explains.
Integrating CRM and ERP
Increasingly, the trend is to integrate CRM with ERP that offers not just full end-to-end functionality and capability but also flexibility to organizations to deploy resources as per their needs.
IT companies like Microsoft are already offering such solutions with attractive features. The company’s flagship offering, Microsoft Dynamics for retail, covers PoS, merchandising, multi-channel management, e-commerce, order and supply chain management, financial, CRM, loyalty and integration, along with Microsoft Kinect for a unique customer experience and much more. “All of this is on one platform and is one end-to-end solution. Having said that, the solution offers full flexibility to organizations to deploy things as per the need. Even if an organization has a competitive existing solution, they can deploy unique parts of our solution, e.g. POS, store management, CRM, loyalty and integrate the same with the existing solution,” says Roy.
With consumer being the key driver, it has become imperative for retailers to have a solution that gives them a consistent view of customer across multiple channels — which is possible only by having a single source of truth as far as customer information is concerned. Same holds true for inventory as well. With consistent and seamless information of these two parameters (customer and inventory), across all the channels, an omni-channel approach is becoming the only choice that retailers have today.
Beyond brick and mortar: e-tailing
With changing times, shopping is not just restricted to going to malls or to a nearby kirana store. The world is fast moving towards online shopping giving consumers the freedom to shop anytime, anywhere. In such a competitive environment, retail giants are finding it tough to compete with online stores and keep up with their efficiency. Not just are consumers spoiled for choice but they are also given heavy discounts to keep them coming back.
To deal with a situation like this, brick and mortar stores have launched their online versions too, enabling customers to order online and pick up from their nearest store.
“Catching a consumer’s eye is the most difficult thing to do in this universe. A lot of times consumers don’t know what they want until you show it to them. The biggest testimony of this, are some of the very well known online stores which give its users the best buying deals and experience across categories. But once a consumer gets educated and the organized sector realized this, we saw the birth of online specialty stores like Croma and the likes — the outcome is that we see Croma also competing with Flipkart,” says Abrar Shaikh, Founder and CEO, Squeakee.
To sum it up, technology is providing retailers (both brick-and-mortar and online) innovative ways to seize strategic opportunities. The new consumer is a multichannel shopper who interacts with retailers via multiple touch points and expects a seamless cross-channel experience.
Dawn of a new era
Retail in India has changed since the past few years. This is just the beginning of a changing era in the world of retail. All that the end consumers want today, and, in the future, cannot be obtained without the use of technology. Today’s retail landscape offers unprecedented opportunities alongside some daunting challenges. Economic factors, the increasing choice in products and shopping formats, and unparalleled access to information are fueling today’s empowered shoppers, who expect more from their retail experience. It is also clear that the focus of the retail experience has expanded well beyond the walls of the physical store, and now includes everything from the retailer’s website and call center to marketplaces and social networks. One can notice that for many products, the end consumer or customer has already decided which product to buy even before entering the retail shop. A true multi-channel and omni-channel retail experience is the call of the day!
Sachin Rao, Country SMB Manager, Facebook says, “For decades now, businesses have relied on the recommendations of friends and family to acquire new customers and grow sales. Facebook takes this word-of-mouth marketing and amplifies it, bringing the offline word of mouth publicity to the online world and helping brands to build their business online, or to it scale up. It holds true for both large and small brands. For many e-tailers specifically, time and money are available in limited proportions and Facebook has been made as an easy-to-use, cost-effective way to promote their companies — in a manner very similar to how people are accustomed to using Facebook personally.”
A lot of online retailers are already using Facebook, because it simply involves setting up a Page, posting updates and promoting posts. But the key is now to graduate from the ‘likes’ business, to listening and engagement. A stronger and more aligned listening and engagement strategy will ensure better business rewards for a brand.
Furthermore, a self checkout solution is another aspect for retailers to increase their profit margins. “Today, a number of companies are using the self-service kiosk for the sale of their products, thus reducing the time spent by customers waiting in the billing queue and manpower cost required for the billing process. However, this technology is still in the development phase in India, especially in the retail sector, but once implemented, it would have a great utilization in the future ahead,” notes Chakrbaorty of Digiworld.
Going forward, we are likely to witness mobility solutions like queue busters which will help customers transact anywhere in the store and provide a personalized experience during the purchase. Market experts also foresee a much greater adoption of big data and analytics.
“Personalization will take customer experience to the next level. Big data and analytics will be used to bring together several pieces of information such as customer history, social media posts, time of the day, etc. Mobile devices will become pivotal to retail activity. Apps, in-store digital displays, hand-held devices with store associates and field staff will see a huge adoption,” asserts Salil Godika, Chief Strategy and Marketing Officer and Industry Group Head, Happiest Minds Technologies.
But a lot of ground still needs to be covered before we will see shopaholics taking India.