Today’s retail is purely contextual in nature and such contextual retailing is supported by four pillars: an omnichannel presence, deep customer engagement, and digital supply chain – all three powered by robust analytics – which forms the fourth.
The Retail Grocery Industry in India is at a crossroads today. It is faced with multiple challenges: changing consumer patterns and shift in preferences, pricing, government policies, taxation and regulations, rising real estate cost issues and, most importantly, changing customer demographics. Th is is the generation of Millennials and ‘Digital Natives’ – generations that are 24X7 connected to their smartphones, engage with the world through their smartphones and (importantly for us) buy day-to-day stuff through their smartphones. Well, almost – as they can also buy through portals or walk up to a store. Th is is a refl ection of the change in commerce today. However, the generation of traditional shoppers – those who like to visit a physical store, touch and feel the products that they buy and purchase across the counter – continue to engage with retailers. Retailers cannot ignore this still sizable customer segment.
This is a difficult question because customers want everything and they are right. When there are a plethora of opportunities, why should the customer be sticky? Rather, what should a retail grocer do to retain stickiness? Th e answer is actually pretty straight forward: engage deeply and ensure customer delight. Observing customers’ purchasing pattern is a key input for eff ective engagement. It provides the perfect opportunity to show that you care about the relationship by making the order process easy for him or her through standing orders. Wouldn’t it be easy if their order is repeated automatically in fi xed internals such as their monthly grocery list?
The same can be said of delivery too. As customers today typically prefer ordering from the convenience of their smartphone apps, wouldn’t it be nice to allow them to pick up their order at their convenience like a drive-thru whenever they choose or, better still, have it delivered as per the customer’s delivery window preference. Empowering the customer also includes off ering him or her the option of click-n-ship or click-n-pick.
Another trend that is increasingly visible today is around grocery stores and hypermarts becoming a single stop for multiple activities. Th e Point of Sale terminal (POS) has evolved from being just a simple checkout terminal to selling mobile airtime, lottery and event tickets, to utility bill payment and even ATMs (!) where a consumer can get cashback from their debit/ credit card. Th e last item in the current scenario is still largely a wish list for retailers in India due to banking regulation but it may soon change depending on innovation brought around by payment banking.
Now consider a typical scenario in a store. Long queues are a pain. Wouldn’t queue busting and price checker capability at the store help manage queue at billing counter? Th at would ease the workload for your store staff as well as make grocery shopping truly a pleasant experience.
In parallel, consider digital wallets and instore app usage enablement to create self checkout possibility. Wouldn’t it be nice if the customer could just pick up their phone, scan the products, choose discount options, self checkout by paying for it through their digital wallet! Th e process is truly complete and traceable as the receipt for the purchase will be directly emailed to the customer while retaining a copy in a digital repository for future warranty claim or tax purposes. As digital wallet and mobile adoption have increased, the above scenario is feasible today and with very limited infrastructure investment on the retailer’s part. Implementation of such technology means faster checkout and exciting benefi ts such as points and incentives, which ultimately converts to customer happiness.
Have you thought about integrating payments and loyalty? While payment options have signifi cantly increased beyond cash, credit card and Sodexho to multiple payment wallets, considering that most grocery shoppers are almost a weekly customer, certain large format groceries chains are experimenting with closed wallet that can extend credit line and also work as a loyalty system.
That is right. India, as a nation, has gone beyond mere baby steps in adopting ‘Digital’ in commercial transactions. Consider this. In the payments space in India, between 2012 and 2015, the number of credit cards in circulation grew at a CAGR of 6% and debit cards by a CAGR of 27%. To give definitive numbers, as of March this year, India had 24.5 million credit cards and 661.8 million debit cards. In terms of transactions, the total transacted volume through credit cards alone was to the tune of Rs.226.9 billion during the first quarter of this year. Estimates state that this volume can go up by as much as 45% by 2020. This is just one example.
What makes such rapid progress possible in a very conservative society is the twin drivers of growing market development to meet international standards and modes and the government’s visionary policies and action.
A case to consider is Aadhar, which would soon be the basis of every Indian’s virtual identity. The Aadhar system was first launched six years ago – in September 2010. Today, there are well over a billion Aadhaar card holders, thus making it the world’s largest biometrics-based citizen identification system.
Mobile money is another example that is making sure inroads into the Indian society. India will have almost one billion unique mobile subscribers by 2020 and already now is the world’s second largest smart phone market, overtaking the US in first half of 2016 with an installed base of 275 million devices. India is also seeing an ongoing technology shift to mobile broadband services and the number of 3G/4G mobile broadband connections is forecast to reach more than 670 million by 2020, 48% of the total connection base. This points to a period of tremendous growth for India’s mobile economy, which will strongly support and enable the government’s ‘Digital India’ initiative aimed at providing broadband connectivity to all.
Changing customer profi le highlights the paradigm shift towards digital channels and as such ‘pure play B&M’ grocer has an opportunity to use the store as an asset by leveraging the physical grocery mart into a digital hub. Th ese hubs would become the center of multi-channel retailing – also customised multichannel engagements. A digital hub would allow the creation of effi ciencies for faster delivery and off er opportunities to sell ‘value add’ products, such as in the example given earlier.
Delivery, another operational process, strongly hinges on technology. Th is process would encompass shipment of product from the closest identifi ed warehouse, identifi cation of the closest store depending on business preference of delivery time, cost or the need to ensure product freshness. Indeed, the need of the store dictates the level of technology requirement. Th is could vary from the basics of weighing scale integration, multiple barcode support, and perishable/expiry tracking to increase in complexity such as production management that supports repacking into smaller packages, and from deli and bakeries support where recipe management and/or wastage needs to be tracked, to complex pricing management for cuts (meat produce). In the same vein, if the business strategy of a grocer involves expansion into multi-format, like the kinds of Tesco or Kmart, it would make sense to invest into retail store management software that can support multiformat retailers.
Th e development of supermarkets and other large grocery stores has created niche markets, for example, sale of unique, premium quality, or exotic foods chains. Another example is organic foods, which are also becoming an increasingly popular niche market. Th is, however, brings with it a technological need – better supply chain tracking and labelling to ensure the commitment of freshness or organic can be tracked to the origin. For example, ‘farm to fork’ tracking of organic or premium merchandise can be a complicated process involving many producers and suppliers, but leveraging technology to track will help ensure brand promises are met.
Store size, format and operating hours can also at times drive diff erent technology needs – a large format store not only requires very large stock keeping units (SKUs) and inventory handling, but could also require multiple verticals, such as food (including fresh produce), general merchandise, appliances, etc., and sub-verticals (such as deli and bakery) handling, stock segregation in front and back offi ce and docking and related stock management needs, to stock taking activities without hampering sales activities and/or support for shift and session management at POS.
A large format store similarly may want to add to their services – by creating a store-in-store model that sells, for example, upscale coff ee, books, conduct eye examinations and off er spectacles, gift items and sundry. Depending on the business model, it could require a POS that supports revenue tracking and sharing or inventory segregation amongst others. Similarly, store ownership models – independently owned, franchise owned or selling The writer is CEO – Intellect Commerce, a global organization that provides innovative Retail, Store Management, Point of Sale, Inventory and Loyalty Management Softwares for leading retail chains across various verticals like FMCG, Fashion & Lifestyle, Specialty and F&B. inventory on consignment – can have an impact on the both store as well as head offi ce accounting.
Technology and analytics help improve sales. By analysing bill penetration and scanner data, a retailer can make intelligent decisions leading to strategic outcomes. Consider, for example, the standard question of product combinations (what products tend to be purchased together). Yesteryears’ scanner analysis helped a retailer place bananas both in the ‘produce’ and ‘cereal’ sections as many consumers would get to the cereal section and realise that may need bananas and may not want to go back and get them. How do we identify similar missed opportunities? How do we unearth other blind spots? As we start collecting ever more data points, insights such as these require upgrading analytics capabilities to more than just in-store data and insights.
Mobile is and will continue to play a key role in grocery retailing (more so than websites, if I may say) as the customer will be able to ‘shop and build orders on the go’. Th is basically reiterates the fact that convenience designed in the application and the store fulfi llment will be the principal driver of online growth in this sector. Being online also has the advantage of ‘being current’. Typically, in a grocery store, the price of some produce may changes twice a day. Th e fl exibility to refl ect such price changes online to give the customer real-time information goes a great way in empowering the customer to make his or her purchase decisions.
Th e virtues of omnichannel also extend to being able to ship from the closest store location to reduce cost and delivery time. Facilitating curb side pickup for customers when they return from offi ce could be a clear diff erentiation between a true omnichannel retailer versus a ‘pure play’ e-commerce grocer.
While the above narrative presents a kaleidoscope of virtues that technology off ers grocery retailing – both to the customer and the retailer – certain clear and present trends are becoming increasingly visible, in fact too visible to ignore. Today’s retail is purely contextual in nature and such contextual retailing is supported by four pillars: an omnichannel presence, deep customer engagement, and digital supply chain – all three powered by robust analytics – which forms the fourth
About Author :
Ram is an active participant in integrated marketing and communication and as such he helps communicate Intellect to the larger world. Till recently, Ram was a very conservative user of technology, especially those that deal with finance and personal data. Today he is discovering new potentials of technology and the value it brings as a catalyst in easing challenges of daily life.
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