The Changing Face of Retail Industry in India

India is fast becoming the retail destination of the world. According to the international management consultant AT Kearney, India has emerged as the leader in terms of retail opportunities. The retail market in India is anticipated to grow to 900 billion USD by the year 2020.

However, the face of the Indian retail industry is changing. India is passing through a retail boom today. A number of changes have taken place on the Indian retail front such as increasing availability of international brands, increasing number of malls and hypermarkets and easy availability of retail space. With the Indian government having opened up the doors for FDI, the entry of foreign retailers into the country has become easier. India has come a long way from the traditional Kirana stores and is on its way to becoming a ‘mall country’. The emphasis has shifted from reasonable pricing to convenience, efficiency and ambience.

The major factors fuelling this change are the increase in disposable income of the people, improving lifestyles, increasing international exposure and increasing awareness among the customers. India has a large middle class as well as youth population, which has contributed greatly to the retail phenomenon. The middle class is considered to be a major potential customer group. The youth are perceived as trend setters and decision makers. Tourist spending in India is increasing, which has also prompted the retail boom.

Food and grocery are the two categories in the Indian retail sector which offer the most promising opportunities. Apart from this, the other areas where there are vast possibilities for Indian retailers are jewellery, apparel and consumer durables. Indian retailers are also trying to create a niche for themselves in areas such as books, gifts and music.

Although organized retail is only a decade old to India but the pace at which the retail scenario and practices are getting tried and tested has been quite remarkable.

We have seen good adoptability to absorb some of the best practices with a touch of appropriateness of local preferences and style. It has come a long way and Indian Retail market has become the next frontier for most of the retail and brands practices.

Changes are good and need to be handled with care. Some of the prominent drivers in vogue are:

Retail Experience

Stores are no more just buying and selling but also to provide unique experience to customers. It’s a trend that has quickly become the pinnacle of retail success for both the big brands and the smaller start-ups.

From customer experience perspective, bricks and mortar stores are still extremely relevant; however, customer experience doesn’t rest entirely in the hands of physical retail.

In this digital era, it’s equally important to ensure that your brand resonates with the consumer online. Digital marketing is often the beginning of the brand journey and is built to assist with brand exposure; hopefully diving the in-store footfall.

Promotional features like use of technology, displays and in-store designs, personalization along with service and operational excellence have been adopted and implemented by brands to attract footfall at retail store. These help in building an important connect with the consumers.

How?

One of the large apparel brands Raymond recently launched its flagship store with that boasts of a double height ‘Live’ façade with LED curtains displaying digital content. This store has a unique fitting room trial experience with ‘Ipad’. The selection appears in the desired size inside the trial room.

Confluence of online and offline retail

Typically referred as Omni-channel phenomenon where physical and digital channels merging, is fast catching up, shopping centers in India are encountering the need to complement physical ambience with online stores. E-commerce and brick-and-mortar will co-exist and finally reach a level of maturity, translating into sound business sense for Omni-channel players.

Example: One of the leading footwear brands in India has introduced endless-aisle technology at one of their stores.

This endless-aisle technology allows consumers to browse, research and pick up their products with convenience. In addition to that, it also allows the retailer to sell products that are not available in stores.

Research based investments

Big Data, fast data and the data deluge are taking the world of digital businesses, especially the customer-focused ones, by storm. Retail is no exception as more and more customers leave digital footprints with every transaction, interaction and engagement at every retail touch-point online, mobile, social channels, in-store and even contact centers.

Technology is enabling businesses to collect shopper data from these touch-points, analyze it and derive insights to make informed decisions, whether it is to provide a better customer experience, run marketing promotions or decide product assortment or gain tighter stock control.

Monitoring and measuring the impact of data-driven initiatives against company-specific metrics such as gross profit, revenue and inventory carrying costs, can offer significant benefits.

Example

Shoppers Stop studied the buying patterns of members of its loyalty program called First Citizen. Based on the insights from it, they shortlisted 900,000 people for a trouser promotion. The insight gained led to significant increase in the sales.

Brand visibility and communication

Focus on brand visibility is the way to make a brand enter our subconscious mind by making it visible through out customer journey.

Brand visibilityis the single, most powerful message that encourages and motivates the customer to look at the product along with the brand attributes. Frequent advertising, and brand activation can help increasing the brand to enter the subconscious mind.

Example: Lots of brands in the mobile space have vastly captured the consumer mind as they are visible on the road as OOH, at the airports, at multi brand outlets as glow sign boards etc.

Digital transactions/Economy

Unlike the West, Indians tend to deal majorly in cash, using debit cards if required with even lesser reliance on credit cards. But post demonetization, consumers have been forced to use digital channels across various walks of life.

The transition from traditional commerce to e-commerce and now m-commerce has been driven by the retail segments. Mobile today is more than just a calling device as the internet-enabled smartphone is becoming a point of commerce — it has transformed into a host of retail outlets in customer hands. We see consumers now shopping across websites, apps and in-store as per their convenience. The growth is fueled by the availability of affordable smart phones and mobile data plans backed by improving telecom infrastructure. Consumers are split into two categories: those who shop online and those who don’t because they prefer experiencing the look and feel of a product.

The second type of consumer opts for cash transactions, being new to the concept of using technology as an enabler for financial transactions. Demonetization has thus formalized the process of going digital for financial transactions where concepts such as UPI (unified payments interface) have become easily available to consumers with the regulatory and policy push accelerating the process.

Example: Reliance Retail became the first organized retail chain in India to offer customers the option of mobile-based UPI app payments at its stores. The new UPI Payments facility is currently live across more than 200 Reliance retail stores across various formats, including Reliance Fresh, Reliance Trends, and Reliance Digital, among others, in Mumbai. The pan-India rollout of this offering at Reliance is also in the pipeline.

Retail sector is poised for substantial growth. Organized retailing will be growing at a rate of more than 18-20% CAGR. E-tailing will form a significant part of the revenue for various retailers. Apart from cashless transactions, changes in the regulatory environment with FDI, GST and ease of doing business, will obviously augur well for the retail industry.