Technology is changing the world in ways that would have been considered unimaginable ten years ago. At the turn of the century, if someone had told you to dictate your shopping list to a phone and have it delivered within half an hour, or book a cab with one click, you would have called it futuristic! But it has all become a way of life now – our “new normal”.
Over the past decade or so, the retail industry has undergone several transformations and evolved exponentially due to the assimilation of online and offline channels, growing consumer awareness and increasing demand. disposable income. In recent years, the digitization and formalization of the economy as well as the ease of access to venture capital and venture capital have catapulted the growth of the sector in India.
According to a Bain & Company 2021 report, India’s retail sector is one of the fastest growing in the world, and is expected to reach $ 1.3 trillion by fiscal 26. E-commerce share is expected to grow. grow from 6% of the overall market in FY21 to nearly 11% by FY26. However, traditional commerce, which has been extremely resilient during the pandemic, will remain relevant for a long time. Despite severe economic turmoil, the market share of traditional commerce increased slightly from 87.1% to 88.8%.
When the pandemic hit, many small retailers and family-owned stores adapted to digital platforms to keep supply chains and operations running. Having tasted technological success, they want to adopt an omnichannel approach for their end customers. Traditional retailers and kiranas are the backbone of Indian retailing, contributing around 80% of total retail trade and 11% of GDP. A report from Deloitte-FICCI echoes this fact, highlighting how digitization is empowering them and opening up new growth opportunities for the FMCG industry.
A black swan event, COVID-19 has triggered a fundamental disruption in all industries, especially retail, leading to a shift in the way consumers shop. Customers are more and more demanding; therefore, retailers must constantly innovate and reinvent themselves to stay relevant. With the pandemic accelerating the digital commerce transition in India, the digital evolution that would likely have taken half a dozen years occurred a few weeks after the pandemic-induced lockdown. Having an online or omnichannel presence is no longer a choice. Now gamers need to invest in technology to improve the customer experience. Digital acceleration has opened up new opportunities for the sector.
Yet the million dollar question remains: With changing consumer and buying behaviors, where is retail in India heading? Some of the levers are:
Hybrid Behavior: Customers now decide “when to shop”, “where to shop” and “how to shop”, whether online, offline, or a mixture of the two. They are looking for a seamless omnichannel experience. As a result, âPhygitalâ has become an intrinsic part of the customers’ shopping experience, and this integration between offline and online retail is likely to develop further. Retailers will need to imbibe an integration strategy to improve the value proposition and customer experience.
Instant Satisfaction: Customers want to order everything with one click and be delivered in 15-30 minutes. In addition, they want a single solution for all product and service needs. The age of instant gratification means people don’t want to wait hours or days for their products to be delivered. Therefore, the need of the hour is to create efficient supply chains and delivery solutions. Capacities for faster deliveries with over 99% OTIF delivery (on time in full), demand forecasting based on AI / ML, IoT for real-time monitoring and others are the future of retail.
âRetail-tainmentâ: Today, customers seek and enjoy superior and unique experiences through elements such as gamification. Simply ordering or purchasing a product is no longer exciting and retailers need to effectively engage and engage customers at all touchpoints of their buying journey. Virtual dressing rooms and experiential retail; 3D modeling and augmented reality to help customers try / visualize their products online; chatbots and voice assistants for a personalized brand experience; Big data analytics for ultra-personalized, hyper-localized target marketing and customer engagement are essential to prepare retail for the future.
One-stop shop: Customers are looking for a full range of services under one roof, such as payment options, credit / finance, insurance, logistics and delivery choices, etc. As a result, it has given birth to ecosystem players who facilitate or complete the entire service value chain. For example, financing options may include purchasing goods through the EMI and BNPL programs (buy now, pay later). It is therefore a winning proposition for all stakeholders – the buyer, the seller and the financial partner. Merchants must invest in partnership to become a full player in the ecosystem.
Value Awareness: In India, price-sensitive customers are constantly looking for great deals and discounts, making smart pricing and targeted promotions essential for engaging and connecting with customers. As pressures on retail margins intensify, driven by intense competition, it is imperative to reduce service costs and ensure profitability while meeting changing customer needs. Retailers must take advantage of automation technologies to reduce the cost of operations.
The technologies that initially defined digital transformation – artificial intelligence, process automation, and in-depth analysis powered by machine learning – are still evolving, even as new technologies emerge to augment and complement their capabilities. The supply chain and delivery management have changed dramatically over the past 20 months, taking advantage of the rapidly growing gig workers and technology.
Technology will undoubtedly remain a critical enabler for delivering a superior customer experience. Meanwhile, the levers to build a future-ready retail business would be to focus on creating an agile and sustainable supply chain, offering an immersive customer experience as well as the convenience of phygital shopping while being a one stop destination for all customer needs.
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The author is the Managing Director and CEO of METRO Cash & Carry India and Chairman of the Retail and Domestic Trade Committee, FICCI