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Reimagining Retail Amid Disruption
The pandemic has accelerated this shift by several years with organisations reinventing themselves rapidly to adapt to the change
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As the dust from the pandemic starts to settle, the retail landscape seems to be transformed, probably forever. As is true with various other sectors, the gap between retail industry leaders and laggards has grown. Even before the pandemic hit the retail industry, it witnessed tectonic shifts driven by technology and consumer preferences. The pandemic has accelerated this shift by several years with organisations reinventing themselves rapidly to adapt to the change.
In a recently concluded roundtable organised by BW Businessworld with some of India’s top leaders associated with the retail industry, a wide range of topics were discussed, including digital transformation (DX) as the way forward, unique features of the retail industry, the need to leverage cloud and future trends.
Digital transformation as the way forward:
Surbhi Gupta, Head of Digital at ACC, underlined, "Digital transformation is a journey which every organisation will have to sooner or later embark on, though the approach of each organisation might be different."
Gupta highlighted that organisations today are so focused on transforming technology that they forget to look at the other aspects. She said, "The three key parts of an organisation are people, processes, and technology. Sometimes, we put a lot of effort into building a technology situation such that we do not take along people and processes."
"I firmly believe in the fact that whenever an organisation embarks on a digital transformation journey, it involves just 40 per cent technology change but a 60 per cent mind-set and cultural change within the organisation," she added.
Gupta emphasised the importance of building the right talent crop within the organisation to catapult an organisation into the DX journey.
She commented, "We are building key technology expertise that will help us respond to a situation more efficiently, and improve our agility. Also, we are focusing on the digital assets we already have and trying to leverage their potential efficiently."
Gupta stressed the need for team members to not only have access to relevant information but the ability to use it efficiently. She explained, "Whenever the sales team goes on the field, it is important that they use the information available to them in an effective manner. There is a management exercise going on within our organisation in which we are trying to evolve the mindsets of our team members. If the salesperson is not aligned with the digital vision, how will he be able to convince a dealer or a customer?"
Himanshu Khanna, Director at HCL Software - DX, India and South Asia at HCL, mentioned, "Technology is now being used to drive large marketing initiatives and today’s tech owners are marketers in the true sense, and this is how this evolution is taking place."
Technology existing out there cannot sell itself. Khanna commented, "Partnership is of the essence. An ecosystem is needed to be built for the technology. Customisation and personalisation are required to make it relevant for the business to bring something extra to the table, and distinguish itself in the market."
Challenges for the retail industry in the post-pandemic era:
Anand Narang, VP Marketing and Customer Experience at Bata, highlighted the unique challenges associated with the footwear industry.
Narang said, "One of the key characteristics of this industry is that people like to try and touch the product and gauge their comfort level. New trends are now emerging to tackle these challenges, including BOPIS (Buy Online & Pick-up in Store) and BORIS (Buy Online & Return in Store). Also, some customers do not like the traditional website experience; as a result, virtual stores are now popping up."
"30 per cent of all the products ordered online are returned. This, in turn, has an impact on our margins. Any technology that allows the consumer to touch or feel something will be welcomed by retailers," he added.
Narang also underlined that during the pandemic there were several impacts on sales too. He commented, "The demand for formals came down as schools and colleges were closed, and the demand for casuals picked up the pace. With schools and colleges re-opening, there is again a surge in demand for formals. Also, there is more focus on health as people are increasingly buying sneakers or athletic footwear. This trend is now picking up pace."
Arun Jayaraman, Head of Marketing at BigBasket, pointed out that standing out in the crowd is the most challenging task. He said, "We are witnessing a lot of competition now, in groceries there are four major pillars – price, assortment/selection, quality, and convenience. The question is how do you differentiate yourself? The majority of consumers have 3 to 4 apps, and wherever the pricing is right, they will go and buy, so the question is how to make the pricing personalised."
As Jayaraman explained, "80 per cent of consumers might order a product based on their past purchase behaviour. We have to figure that out and create a pricing strategy, something which we are currently working on."
Jayaraman underlined the importance of branding for online retailers in today’s date. He said, "Earlier, e-companies did not work like typical FMCG companies, the brand was a key factor. Now, the brand name is important and the question is how you make sure that your brand has a top-of-mind awareness amongst customers, such that they choose you over the competition, even wherein the other services remain very much similar."
The effect of DX on business outcomes:
Himanshu Khanna drew from his past experiences to elaborate on the impact of digital technologies on an organisation’s journey. He said, "DX platforms are technological tools that help an organisation achieve transformation at a digital level."
Khanna recalled that, while representing Sitecore, they partnered with Mahindra Auto, and had content and commerce as part of their offerings, which is key for any personalised digital experience.
He said, "When we were talking about digital transformation, we discussed personalisation, customer acquisition at scale, and providing content exactly at the time when users needed to see it across multiple channels. It took us a year to almost understand the rhythm of how business is conducted in a fast-changing environment."
As Khanna highlighted, "We were able to digitally bypass a lot of business mechanisms, and we could create solutions that pulled together all these elements."
Khanna suggested the importance of having tech partners who have the same vision as you. He said, "When we go out selling technology, they need to implement the technology in the same manner as the customer was explained. This needs a lot of time and cost investment."
Nowadays, we are discussing brands that are looking at an umbrella level digital app or a super app that controls various facets of their business. He commented, "We had a huge transformation effect on the parent brand, not just the auto perspective of Mahindra but the overall Mahindra & Mahindra brand too. We are now talking about replicating this for large conglomerates that have multiple offerings to the same consumer. This is how success stories are born."
Ways in which retailers can leverage the cloud:
Neeraj Bhalla, VP Strategic Digital Projects - Group Technology Officer at Mahindra Group, pointed out that the cloud has vastly influenced how businesses are conducted.
He said, "A large section of retailers is actually on the cloud, even without realising it. In today’s date, people are setting up businesses very quickly compared to the earlier days when brick and mortar stores were used to set up. Now an e-commerce platform can be easily up and running within 3-4 days."
Bhalla explained that businesses can leverage the cloud in a multitude of ways. He said, "CRM at scale, predictive demand management at scale, being able to take stock of the inventories across retail if you have branched out retail outlets, and loyalty programmes as well."
Bhalla added, "Loyalty programmes are something on which a lot more focus should be put in connection with consumer data. It should move right up to the funnel at the acquisition scale itself."
G Ravindran Reddy, Marketing Head at Hindware, was of the view that the cloud proved it was worth 3-4 years back, and brands are taking advantage of the same.
He said, "In today’s era, brands need cloud tools to function for their EBO (Exclusive Brand Outlets) and MBO (Multi-brand outlets). In India, only the very large multi-brand outlets are leveraging its advantages of it. The cloud needs to be integrated with the mid-size or small-size multi-brand outlets across different categories."
Reddy mentioned, "Large format retailers already understand the advantage of the cloud because they have the financial, technical, and talent expertise in their portfolios to take advantage of it."
Reddy highlighted that India is on the brink of a large transformation. He said, "If mid and small-sized multi-brand outlets began to successfully harness the power of the cloud, it would lead to one of the biggest transformations ever."
Himanshu Khanna explained that in our present business climate, the cloud is essesntial. He explained, "Previously when customers asked to see a product demo, it used to take a lot of time to create a custom experience. Now, if a customer asks for one, all I need to do is to ask my technical architect to quickly spin up a digital sandbox hosted on a cloud which can be accessed from anywhere."
Key retail technology trends:
Raja M.V, Head – Marketing and Strategy at Dr. Reddy's, commented that the pharmaceutical industry is yet to make in e-commerce. He said, "E-commerce is just the tip of the iceberg at a meagre 5-10 per cent of what we are serving for the entire pharma industry. In Tier-II and Tier-III cities, the reach is even farther away."
Raja suggested that in the post-pandemic world, consumers are more aware of their health. He commented, "Not pills, the focus is on digital wearables. The Apples and Googles of the world are now venturing into it."
Another major change was that the pharmaceutical industry focused more on collecting data to provide a more personalised journey in the future. Raja underlined, "Pharma industry in FY 2022, we started collecting and analysing data more and more, as better healthcare solutions will further evolve. Each human being is different, and probably the medicine required and the dose required will be different for each individual. Also, it will help provide real-time data for patients."
Himanshu Khanna said that organisations are now able to fix broken processes in a more seamless way across channels. He said, "For instance, if a consumer fills out a paper form and gives it to an agent of an organisation, a notification can be immediately sent to the company and a digital message can be triggered and sent back to the consumer. Or, if that consumer opts for a Whatsapp notification, that could be triggered as well, and, of course, an email could be sent. All of this will contributes to creating a seamless experience that many brands are striving to create."
The panellists concluded the discussion by reaching the consensus that technology has the potential to solve a lot of problems that existed earlier, and organisations need to embark on the journey to find the right solution.