The tech-tonic shift that is helping retailers run business better
Technology is not just creating a better user experience, it is helping retailers run business better.
Technology is creating a better user experience and helping improve sales at retailers — from car makers to departmental stores. For instance, an Indian automaker is building an augmented reality-based game for children who come to their car showroom. These kids get to collect various parts of the car and assemble a model of their choice. The game, developed by consulting audit firm Deloitte’s digital technology team, uses high resolution visuals and data and offers three-dimensional views.
The idea is to nudge children to ultimately influence the family’s purchase decision, said Ajit Kumar, country leader, Deloitte Digital. Use of augmented reality and virtual reality, though, is only a small example of how technology is being used.
It is also changing the way retailers do business, as they use technology to optimise sales and stay relevant amid intense competition. Apart from the front desk or actual store experience, brands are improving customer experience post-purchase and during after-sales service, often creating a customer profile using historical data and enabling faster checkouts during their next store visit.
In short, retailers are looking to create experiences that will eventually lead to impulse buys. “Consumerization of technology has empowered customers to be 10-headed Ravanas (Ravana is the principal antagonist in the Hindu epic Ramayana), not a uni-dimensional entity anymore,” points out Jalan of Manthan Systems, a Bengaluru-based data analytics company that has global retail customers.
The shift to digital is helping retailers acquire new customers, engage better with existing ones, reduce costs, and improve employee morale, according to a joint report by Deloitte and Retailers Association of India published in February. India’s retail market is expected to grow to $1.2 trillion by 2021 from $795 billion in 2017, the report says.
As internet access improves and global retailers set up shop, the share of organized retail is expected to increase to 22-25% by 2021 from 12% in 2017, it said. This will also be driven by e-commerce market growth to $84 billion in 2021 from $24 billion in 2017.
India’s massive retail opportunity may have made the country a battleground for the world’s biggest retailers, such as Amazon and Walmart, but mom-and-pop stores are unaware of the social shift under way and are struggling to stabilise businesses using time-honed instincts.
“Consumer behaviour has changed due to access to smartphones, and use of apps such as WhatsApp and TikTok. The retailer is not in touch with this trend,” says Sridhar Gundaiah, chief executive officer of StoreKing, a company that helps kirana stores in villages adopt digital-led retail initiatives.
Technology helps them to assess the right inventory, manage the supply chain and understand the customer better, he says.
Around 40,000 kirana shops across nine states, including Karnataka, Gujarat and Madhya Pradesh, have seen sales improve by 15% and working capital reduce by 50% after adopting technology to manage inventory and assess sales, according to StoreKing.
“We don’t supply kirana shops grocery or staples. That is a huge part of their business. Our wallet share is still low, yet we have seen impact,” Gundaiah says.
Data is at the heart of innovation in retail, and this innovation can take place in two ways — front desk and backend support.
“All these physical stores have some sort of online presence today...At the same time, in the back office it is about efficiency in operation, and automating things,” said Sanchit Vir Gogia, chief executive, Greyhound Research.
For example, fashion retailers are creating online aisles or kiosks to help customers find a missing size or colour, while also marrying offline and online data to recommend a particular pattern or style to buyers.
Lifestyle Stores, owned by Lifestyle International, has put in place an “in-store endless-aisle initiative” to help customers find their missing size on the online store.
“Technology allows brands to ensure a friction-less journey from discovery to purchase for the customer...,” said Vasanth Kumar, managing director, Lifestyle International Pvt Ltd. “We have introduced ‘Click & Collect’ – an omnichannel initiative that allows customers to order online and collect merchandise from a store of their choice.”
The innovation, for Lifestyle, happens across offline and online through efforts such as endless aisles for offline to voice search online. These are primarily aimed at offering customers better access to products.
In the back end, it solves a perennial problem for retailers — inventory management. Perpule is doing just that. The retail technology startup is making checkouts quicker for consumers at some prominent department stores such as Big Bazaar through an app.
Perpule has moved all the retailer’s data to the cloud (internet-based server), ensuring real-time access. Moving the user data helps multiple stores manage inventory in real time unlike legacy on-premise systems, said Abhinav Pathak, cofounder, Perpule.
For retail brands, this brings down technology costs and ensures payments are processed efficiently.
“The system covers every activity at a retail store at mobile PoS (point of sale) and reduces the cost of hardware-related capital expenditure for companies,” said Pathak, adding 40 popular brands have already shifted to mobile PoSbased systems.
Buyers can also use the Perpule app to scan barcodes and make payments without waiting in line across major department stores.
Ikea, the global DIY (do-it-yourself) furniture brand, earlier this week opened an online store for Mumbai. This is their first such store model globally and aims to tap small-ticket furniture buyers who do not have access to the larger retail store yet. It already has a huge offline presence in Hyderabad and will open its second store in Navi Mumbai soon.
Metro Cash and Carry, the go-to-retailer for small traders, has developed an app to bring kirana stores under a digital platform and streamline their transactions. It offers payment options without a transaction fee. The app will help small traders track their daily and monthly sales digitally, manage inventory and place orders.
Ultimately, retailers are trying to map a customer’s journey from offline to online and online to offline, in order to eventually create a strong user profile, Gogia of Greyhound Research said..