Identify and unleash the future opportunities in retail business
The Retailers’ Association of India organised its annual technology conclave (ReTechCon) in Mumbai recently. Innovation and transformation were themes that kept recurring throughout the conference. The focus was increasingly towards improving the financia
The systems tsunami
Automation was one area of discussion that made it to the panel held at the annual conclave. According to Atul Batra, chairman of Nasscom Product Council, the next 18-24 months would see the penetration of artificial intelligence into retail-focussed applications in a big way. The concept of Natural Language Processing will progress to the level that voice applications would understand not only the user’s preferred language, but also the lingo. The way artificial intelligence provides interaction experience and gives inputs would be radically changed. Omni-channel real-time client identification and interaction would unleash a new level of customer experience.
Batra compared the phenomenon of artificial intelligence in retail to a tsunami. It was present for a while but now the waves are getting bigger. Retailers would need to build systems and ride the wave in such a way that they can benefit from this wave or else they would lose out on the opportunities. India, according to him, has an opportunity to bring about a digital revolution of a scale not seen anywhere till now, leapfrogging many levels of legacy systems and processes. The opportunity would be optimally harnessed by an active combination of retail businesses, technology companies and academia, which Nasscom was striving to catalyse.
Ramesh Menon, CEO, HyperCITY Retail, took the thought further when he said the speed of change and innovation has picked up and will only get more rapid. Today, in all areas of retail business, consumers are driving change and retailers must respond with architectural transformation to keep pace with customer requirements within the limitations of commercial viability, the key gap to be bridged for this low-margin business.
Samik Roy, country head for Business Dynamics, Microsoft India said that this should be viewed as a positive disruption, as a tailwind of the consumer being so empowered and having access to multiple communication streams. Organisations need to remove constraints – thinking, processes, delivery, even the manpower. Adding to it, Shitij Agrawaal, CEO, Sahyadri Agro Retails said that his company was a connector – more than 10,000 farmers were connected to the urban and overseas customers through technology and standards facilitation via Sahyadri.
Power to the customer
Now the customer is so empowered that the David Ogilvy quote – your wife is your customer – seems apt. The new fad of Fidgets was cited as the example of the change in the aspirations and connectivity paradigms. In terms of innovation, Kavindra Mishra, CEO and MD, Pepe Jeans India, gave the insight that they had created a highly successful YouTube campaign with renowned YouTube sensation Lily Singh. That was a statement of intent that companies now do what it takes to effectively connect with customers. For collaborations, Batra underlined the need – when consumers are in control of the conversation, with access to comparable market offerings, and they need convenience and a hyper-personalised experience, the only way to manage financial and other constraints is through collaboration. Customer today is impatient and wants to be treated as a segment of one. Retailers should pick their areas to maximise returns, identify the gaps and get partners on board.
One key insight was that data owned by retailers should be tallied with data required, and that should form the blueprint of the work plan. Menon indicated that instead of following the pattern of client requirements, it was time to anticipate. Innovations were needed with capability to tweak based on actual user responses. Ashwin Khasgiwala, CFO, Reliance Retail emphasised that technology adoption is the name of the game, when faced with a demanding customer. The Ola and Uber examples were cited to nail down the thought that customer behaviour and expectations have changed irrevocably and businesses must adapt. For this, technology must be a great enabler, especially in the organisation’s own mindset shift. Here Pepe’s pilot project of a custom studio was discussed, where the customer can customise their denims through a laser tool. By this, Pepe would get data on client preferences, which it could use in immediate manufacturing runs. The immediate plan – getting this tool online – would enable a greater aggregation of data and invaluable understanding of trends. Khasgiwala’s added that Reliance Retail helps mentor start-ups and enable ideas to emerge and provide an execution platform. This would give much food for thought to the industry. Abel Correa, head – IT strategy Arvind, gave the view that customers today wanted a journey, not a product and they would welcome the company who had the passion to traverse the journey with them.
Mishra opined that the Indian consumer was much advanced than the global average. When asked for a wish list and a trigger to move business further, his response was to wish for the understanding why customers did not buy, what was it they wanted and did not get. Any negativity has to be handled at the source, more so when social media provides a more damaging outlet for the same. The cited example of Anand Mahindra – who is active on Twitter and whose tweets indicate that there is someone in the company interested in a complaint – was very relevant. Here Roy interjected that a good CRM solution, with adequate touchpoints, would provide the answer.
A priority from the customer’s side is that in-store billing should be possible on mobile or tablet as it would have been online then. The question that they raise is why the customer must get into lengthy queues. Retailer staff must think of themselves as commerce representatives. A digital, queue-free payment journey with fewer people would be the goal, for which technology and the human element come together.
The need to focus on customer experience
Customer experience and management of the same was yet another discussed topic. During the discussion, the hoopla around customer experience would seem excessive but Vikram Idnani, IT head at Trent had a perspective on it. He related the United Airlines incident, a problem badly handled by the company, and the subsequent overnight drop of USD 140 crore in market capitalisation of the company. The business was handled well, only one touchpoint went unattended due to which all the good work was nullified.
Vishal Kapil, IT director at Adidas India, went into the matter further. First expectation is quality, which is non-negotiable. He gave his own company’s learning – India is a country of sports enthusiasts rather than participants, and also has a genetic inclination to diabetes. Here Adidas started an Adidas Runners Group and used some part of the marketing budget to create a platform whereby 25,000 people participated in different sports events. That entire process not only created a market for the company, it reinforced the product as a life-altering brand beyond the quality aspect.
Mohit Dhanjal, director-retail at Raymond had his own interpretation of customer experience. As per him, this was the fourth revolution in industry, the first three being automation, services and online connectivity. Raymond in general had been investing in product quality and trust ahead of the curve, but this phenomenon has overtaken the company thought and experience, and Raymond too is learning now.
Correa stressed on the need for small businesses to keep things simple, because there would be complexities galore when growth happened. He also talked about security not getting much importance and that event being inevitable when some business got burnt.
Kiran Komatla, VP – IT at Burger King India went further and said that customers’ choice of brand is now influenced by the experience. The product quality, the service offering and the entire transaction experience – all have to come together in sync to make the brand stand out. For people like LG who have a B2B channel, it is imperative that they empower their clients to create a memorable experience for the ultimate end-customer. The measure of success achieved by the showroom owner or distributor is the metric by which the B2B channel of any company will be judged. Kapil averred that the net influence being indisputable, it should be used to make information available and customisation options convenient.
Transformation – the need
Dhanjal puts the case for transformation succinctly when he said that Raymond aims for transformation by 2020 into a customer-centric organisation in such a way that no trace of the earlier organisation remains. Customer service should be part of the company’s DNA, a sentiment which was shared in different ways by various speakers across the event.
Raymond has mapped out the process with timelines and deliverables. For instance, the company has 714 stores. When these stores started operations, they were mostly marquee in their own locations but with time they are not necessarily so. So the company started an upgradation programme, largely focussed around technology, but when customer feedback was adverse, they scrapped the same programme and rolled out a new platform. That is the ideal commitment to transformation.
Correa stated that digital businesses would not only need infrastructure, but they would also need different people, preferably those from the younger generation. Also, those people would be able to learn from challenges that they would face in the next five-year period. Himanshu Chakrawarti, CEO, Hi-Care Services also promoted the case for technology investments for transformation. Payments for pest control treatments were earlier driven by cash and cheques and had already gone digital before the demonetisation announcements. Now the technician who attends to the site has a POS machine. The territory manager, when tracking complaints, can nail down the exact centre and exact technician who had been on the complaint case. Likewise, Agrawaal affirmed that the positive role of technology for Sahyadri was for the QR code for food packets. This code would provide data like on which farm it has been supplied to, sowing and harvesting dates and the inputs used.
Innovation – the ongoing improvement
Raymond’s foray into custom tailoring was again driven by customer requirement rather than a profit centric approach. They went beyond to fasten this offering to make it available at the customers’ doorstep.
Innovation need not be with bells and whistles, as Chakrawarti puts it. HiCare is a pest control business and they invested in technology so that 700 out of their 1,000 technicians on the road know have their movements are optimised through technology. Hi-Care have been able to offer their retail customers the option of logging in and choosing the date and time of having the technician visit their premises. With digitisation, the business is now operating on 60-70 sales team instead of the earlier size of 200. With the further installation of a Chatbot, Chakrawarti was confident that nearly 85-90 per cent of transactions could be sorted out at that level. A big advantage is that the traffic at the site comprises of visitors who are focussed, serious and clear on requirements rather than just curious visitors.
The cost of integration came up during the discussion. The general view was that integration of IT pieces – technology, manpower, franchisees, client sites – was now not a costly or complex exercise because of connectors being available now. Clearly, the challenge is the CEO mindset, mostly because the IT heads of organisations tended to be from the infrastructure development side and not the applications development side. Technology today offers value if the other side can harness it. Correa had the view that being cost effective was vital. Correa added that one should not take a thirsty elephant all the way to the river, there would be a better way to settle the matter.
S Shriram, MD of Smiling Baby, had his own angle on the value of technology. His company, specialising in products for infants, had started three years ago with one store of 1,500 sq ft in Chennai. He shared his learning that the entire catalogue was not needed on display. One LED in-store plus website and the mobile app served as catalogues, and delivery could be done without keeping products in stock everywhere. With that, store size requirements shrinks and franchisee viability goes up – a very pertinent thought. Shriram outlined that baby products and food are two segments that would will not run out of business. Smiling Baby taps the gynaecologist network and targets expectant mothers— yet again a business innovation. The company sees sufficient growth in the state of Tamil Nadu itself, where it can manage logistics and reverse logistics, which are very often a profitability killer. It has 3,500 separate products sourced from 75 suppliers, but does not have a centralised warehouse.
The cost-effective side of the visionary IT developments also came up. At a 3-5 per cent net margin, retail could not afford expensive experiments. It is necessary that every rupee spent in IT should generate Rs 100-200 in revenues to break-even, especially when one considers that there would be a need for some other investment in a year and therefore payback periods need to be compressed.
KAVINDRA MISHRA, CEO and MD, Pepe Jeans India AT PEPE’S CUSTOM STUDIO, THE CUSTOMER CAN CUSTOMISE THEIR DENIMS THROUGH A LASER TOOL. BY THIS, PEPE WOULD GET DATA ON CLIENT PREFERENCES, WHICH IT COULD USE IN IMMEDIATE MANUFACTURING RUNS. ABEL CORREA, Head – IT strategy, Arvind CUSTOMERS TODAY WANT A JOURNEY AND NOT JUST A PRODUCT AND THEY WOULD WELCOME THE COMPANY WHO HAS THE PASSION TO TRAVERSE THE JOURNEY WITH THEM. SHITIJ AGRAWAAL, CEO, Sahyadri Agro Retails OUR COMPANY OPERATES AS A CONNECTOR. WE HAVE CONNECTED MORE THAN 10,000 FARMERS TO THE URBAN AND OVERSEAS CUSTOMERS THROUGH TECHNOLOGY AND STANDARDS FACILITATION VIA SAHYADRI. RAMESH MENON, CEO, HyperCITY Retail TODAY IN ALL AREAS OF RETAIL BUSINESS, CONSUMERS ARE DRIVING CHANGE AND RETAILERS MUST RESPOND WITH ARCHITECTURAL TRANSFORMATION TO KEEP PACE WITH CUSTOMER REQUIREMENTS WITHIN THE LIMITATIONS OF COMMERCIAL VIABILITY. S SHRIRAM, MD, Smiling Baby BABY PRODUCTS AND FOOD ARE THE ONLY TWO SEGMENTS THAT WILL NOT RUN OUT OF BUSINESS. WE AIM TO TAP THE NETWORK OF GYNAECOLOGIST AND TARGET EXPECTANT MOTHERS. THE COMPANY SEES SUFFICIENT GROWTH IN THE STATE OF TAMIL NADU ITSELF.