Good customer experience can drive retail in India

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: Attractive glass buildings with posh interiors, huge discounts displayed right at the entrance, customer service executives holding loyalty card forms and seeking a few minutes from you. Do all these remind you of your experience each time you walk into a retail shop in your neighbourhood? Well, this is just anindication of an upcoming big boom in the organised retail sector in India.

According to industry estimates, the organised retail sector in India occupies around 4% of the $350-billion retail market, which is expected to hit the $635-billion mark in 2015. Large Indian corporate houses like the Tatas, the Birlas and Reliance have diversified into retail and are expanding in a big way to capture the market share. Even top global retailers like Metro, McDonald’s, Wal-Mart, Staples and GAP are not lagging in expansion and have entered or are entering India through cash and carry, franchise, licensing or single brand formats. An interesting observation is that even those few mom-n-pop stores are modernising the store layouts to buck the trend.

However, during expansion, retailers need to have a long-term view to address important business and techno- logy issues to enhance customer experience and improve the market share/profit.

Right formats for Indian market

In developed markets like the US, large formats such as hypermarkets and super centre stores work well. However, considering the Indian customer’s shopping patterns, small to medium store formats such as convenience stores and supermarkets would be able to drive customer traffic in the city centre and developed localities of Tier-I and Tier-II cities. While mid-segment and price-sensitive customers purchase their grocery on daily or weekly basis, upscale customers do it monthly. So, they look for such formats in their neighborhood within one or two kilometres.

In specialty segments like electronics, home furnishing and merchandising space, large store format would be successful. Here, the customer shopping style would be different wherein he enjoys his weekend shopping and also looks for more varieties.

Enhancing customer experience

To attract customers, retailers have been focussing on promotion schemes, loyalty programmes and few in-store strategies. However, they need to focus on enhancing customer experience in areas of points of sale (POS), customer complaints, parking spaces and the like.

a) Adequate parking space

A time-conscious customer who wants to do quick shopping and sees a No Parking sign in front of a convenience store or supermarket would obviously try to locate another store in the neighborhood, which has ample parking space. Only a few retailers have copied convenience and supermarket formats from markets of the developed nations, but not all the elements. A large parking space for the customer is one of the key parameters while designing store environments in the west. As per industry standards, at least five parking slots for four-wheelers are reserved per 1,000 sq ft of a store. Convenience and supermarket stores with enough parking spaces during peak hours would definitely drive more customer traffic.

b) Quality staff for customer help

Few off-price and discount retailers put up a weekend sale to attract customers during weekends. Most price-sensitive Indian customers (in mass category) visit such stores to take the advantage of promotion schemes. They look for help even though prices are displayed and direction is provided to identify departments within the stores. In this light, shortage of quality staff in the stores for providing adequate help to customers would immediately lead to customer dissatisfaction. An increase in the number of quality staff would help to manage confused customers about promotions and where they would find specific items in the stores. The handling of customer complaints and returned items (due to manufacturing defects) need to improve a lot, to catch up with the standards in the west.

c) State-of-the-art systems at POS

Retailers typically look for low-technology investments to maximise the

Return On Investment (ROI), taking a short-term view. Most of them still use the old point of sale systems (software and hardware), which might not have been enabled to manage new services, sending real-time demand information to the head office etc. Providing additional services such as selling airline tickets etc, at POS is also catching up. It is not difficult to lose a customer to the next door unless retailers begin using state-of-the-art systems at POS in order to avoid queues and enhance customer experiences. They would need to look beyond traditional strategies and use self check- outs, shopping carts with scanners, mobile commerce, etc, for convenience in shopping.

Appropriate investment

Most of the specialty or merchandise retailers target customers using physical store channels, while postponing other channel strategies to a later stage. But retailers need to have an aggressive sales/marketing strategy in multi-channels, including online, mobile, mail and call centre, if they want to drive customer traffic effectively. Indian upscale and mid-size customers who have been using online channels for banking and travel products, would find it convenient to use them in retail as well.

Mobile is a new channel in multi-channel retailing and the channel of the future. It started with the market for ringtones and moved on to text-based ordering. Now, m-commerce solutions have been piloted in quick service restaurants, among online retailers and entertainment retailing across the globe.

Selling merchandise and speciality goods in various channels with appropriate technology would help to increase the sales. It is a fact that online retailing is around a mere 0.1% of the retail market in India, whereas it is around 4% of retail sales globally. Analysts project that by 2011, online sales would account for nearly 7% of the overall retail sales. So, there is a huge potential for India to catch up with the rest of the world.

All the above-discussed business and technology issues need immediate attention in one of the fastest growing sectors in India—retail. In addition to promotion and loyalty schemes, appropriate formats, enhancing customer experiences and adequate investments in multi-channels would drive the market share of retailers in this changing retail landscape. If 100% FDI is allowed, the retail sector would take off like the boom in IT sector witnessed in the late 1990s, and would take all the related sectors to great heights as well.