All signs today suggest that it’s a new world with consumers dominating every facet of business. We are now witnessing the evolution of ‘retail’ gradually moving into ‘consumer commerce’ where, increasingly, consumer expectations are at the centre of all business decisions and consumer demand is dominating the value chain. We have also seen how Direct-to-Consumer models are proving to be an alternate avenue to shop. This also indicates that retailers/brands are now offering products and services without first having proven themselves as a store-based retailer/brand.
In this inter-connected ‘consumer commerce’ landscape, the line between online and offline shopping is blurring – retailers with physical locations are growing their e-commerce operations, while e-commerce pure plays are embracing physical stores. To succeed in this brave new world of retail, organisations need to combine the best of both online and offline commerce to devise a strategy that appeals to today’s savvy consumers looking for a fluid shopping experience between online and offline touchpoints. So, given the swift storm of changes in consumer expectations, what could retailers work on to sell and sustain?
Here are 8 power tips for traditional physical retailers and new age online retailers which we believe could help your businesses become fit for the future:
Nurture, protect and deliver inspiring experiences to your customers
Today, consumer businesses are rapidly harnessing customer data and analytics to help them understand consumers better. To that effect, we are seeing consumer companies partnering with a lot of new-age startups to provide a frictionless purchase journey and enhance customer experiences. Consumers want a brand that goes beyond product sales and creates a social and inspiring experience. In such times, retail cannot compete on proximity, selection, and price— experience is the only way to win. Going forward, retailers should start thinking of their customers as assets who should be protected, nurtured and invested in.
Be Omni-present but monitor profitability
With the sudden spurt of retailers wanting to be present across all possible physical/digital channels and niche categories emerging, it is important for brands/retailers to monitor profitability across channels and categories. It is imperative for retailers today to re-examine their product range and assortment, real estate portfolio, workforce requirements and realign investments from time to time to ensure the best returns wherever possible.
Participate in the Tech-ethron but make sense of your tech investments
Enough and more has been spoken about technology investments which could be a game changer for retail and there is no doubt about that. While technology investments are imperative for seamless operations, it is important to understand the ROI of these investments, basis the scale of growth that these businesses are seeing. For e.g.: Data analytics allows greater customer segmentation. By levering on that data, technology investments should enable brands to talk directly to potential consumers with targeted messages that are engaging and relevant. Retailers that don’t catch up will find themselves lagging as the versatile practices of mobile, web and in-store integrations take center-stage.
Supply chain scalability is critical
Missed expectations on deliveries and fulfillment are creating challenges for large scale retailers. To match demand-supply fluctuations, companies will need to modify their supply chains to develop capacities in manufacturing, warehousing and logistics. Further, companies will need to synergise efforts in the manufacturing lines, procurement, and production operations with an attempt to integrate back-end infrastructure with front-end activities.
Curated Content to be key
To optimise for omnichannel, these three aspects must be aced: personalisation, real-time engagement, and commerce everywhere. The unison of these three aspects forms an effective personalization engine that empowers brands to distinguish themselves and gain competitive advantage, develop personalized customer experiences across multiple channels, and ultimately improve profitability and growth.
Diversify payment offerings
A clear push to both online purchases and cashless payments of different kinds is being made. Retailers must offer diverse payment options to cement their online market presence and increase revenue. Enabling local payment options at target regions can allow businesses to reach new market audiences and widen their reach, either locally or internationally.
Re-assess cost of doing business
With lower retail margins continuing to build pressure, retailers must realize that traditional methods of cost cutting will not be sufficient; additionally, they will have to go deeper to identify new avenues of profitability. For instance, investments in novel technologies to enhance the efficiency of supply chain or investments in payment tools to reduce friction in customer purchases.
Move out of the box and leverage customer relationships
Regionalisation/localisation continues to gain popularity owing to a growing Indian language base, especially in Tier-II, Tier-III cities, and rural areas. Therefore, it will be imperative for retailers to adopt a regional content strategy and reach out to the masses. Further, ‘assisted commerce’ models will have to be leveraged to connect with the ‘offline’ consumers. Shoring up customer relationships and maintaining brand loyalty becomes extremely imperative in such situations.
All evidence suggests that this crisis has already fundamentally changed the way consumers interact with brands. In this new retail world of “consumer commerce”, retailers would need to get every inch of their business to adopt a ‘customer first’ approach. The future belongs to those who carve the best digital and physical experience– even as online retailers keep developing their physical stores. For consumers, on the other hand, the new age of retail is looking fun, easy, and omnichannel.
Authored by Harsha Razdan, Partner and Head, Consumer Markets and Internet Business, KPMG in India