It is an exciting time for retail in India, with the industry witnessing transformation now more than ever in terms of technology driving businesses, the emergence of omni-channel retail and changing shopper behaviour. Consider how Reliance Retail became the first retail brand to enter the top 50 most valuable Indian brands ranking released by WPP and Kantar Millward Brown. Over a quick chat, David Roth of The Store, WPP’s unique retail practice, tells BrandWagon’s Chandni Mathur how the retail landscape is changing and what the future holds. Excerpts:
With e-commerce gaining ground, are stores forced to cut back on physical space?
I am not of the school of thought that says retail stores are going to disappear. I know there is a large level of protectionism for small retailers in India and that sector is thriving. But even in markets where there is no protectionism at all, we haven’t seen the death of physical retail stores. Retailers don’t need as much physical space, and if they had a magic wand, their first wish would be to reduce the space they have as it is probably not in the right places. I think we are going to see a tremendous change in terms of space requirements, but I definitely see a mix of offline and online, the two being in close symbiotic relation with each other. E-tail has made life much easier for customers by taking the friction out of the buying process; consumers are expecting that in the physical store experiences as well, and that is not very well delivered. Offline retailers will have to rise and deliver.
Physical stores are being revamped globally and in India with virtual mirrors, etc. How do you see
technology-enabled shopping helping business goals?
I think everybody is on the same learning curve at the moment. Physical retailers were very reticent about putting in technology because their perspective was that if we make it easy for consumers to get onto the mobile phone in our store or use our wireless network, they will be checking out prices of competitors. But I think they have realised the stupidity of that approach. Retailers are now starting to integrate some of the high technology that gives consumers a more fluid process within the store and there are many things you can do in a store like virtual changing rooms, mirrors that give you a look from all angles and also suggesting what additional purchases you can make and screens which have cameras in them so you can give messaging that’s more targeted. It’s either going to be a much more interesting, helpful environment or spooky. But that’s the direction of technology. The key issue is who is going to pay for it? When you roll it out in about 2,000 stores, the capital expenditure is absolutely massive and the payback is not immediate. Inevitably, technology will standardise things, so rolling out things will be cheap.
How do you see the adoption of omni-channel retailing in India? What are the challenges?
It varies across the world. The UK has the highest percentage of retail sales that’s online and omni-channel. It involves click and collect, where you buy online and pick up the product at a local store. This trend is growing the fastest compared to any other part of retail because it’s very convenient for customers. One of the difficulties is that last mile delivery is very expensive for retailers and inconvenient if no one is home. So being able to click and have it reserved for you, just to be picked up in the store is growing in Asia and with the plethora of retailers in India, supply chain as a pick-up point can be a very important ingredient in the way e-commerce and multi-channel retail develops.
How is shopper behaviour shifting globally and in markets like India? Does India need to play catch up?
The trends are the same. It is the shape of those trends and how quickly they can be adopted that is different. The single biggest thing in India that is different from pretty much all other countries is the percentage of sales that is still done through physically small stores and one or two independent operators as opposed to groups of operators as there are a lot of government regulations that have made it difficult for large retailers to enter the country. Some of this has been talked about for a long time and there are regulations being lifted that might accelerate the pace of change, but I don’t see India quickly becoming a highly consolidated retail market.
What are the innovative trends emerging in last mile retail?
There are a couple of models being tried currently. One is a French model which involves consolidation centres of the last mile run by a conglomerate of retailers and the consumer goes to that new shopping centre and picks up products. The other extreme is a move from the thought that getting something delivered in two days is great, to same-day deliveries and the current demand is over the hour. We are getting more demanding as consumers. Retailers and click and collect guys are getting cleverer in how they deliver. It is to try and reduce the barrier to instant gratification you intend to get when you walk into a retail store.
How do you see the future of retail globally and how do you see it growing in India?
I think retailing is not for the faint-hearted because it is going to get tougher, but also more interesting, and it’s going to change at an accelerating pace. Wherever there is change, there are opportunities for new entrants to come into the market and do things differently. Retail will always be dynamic; that is in its DNA.