According to IMF World Economic Outlook (Oct 2016), India is the fourth fastest growing country with its GDP projected to accelerate at 7.6% (2016) (1) and pegged at an estimated value of INR 121.65 lakh crores (2). The quickly evolving retail industry in India constitutes over 10% of the country’s GDP making it a prime attraction for foreign investment. India’s retail sector ranks fifth in the list of favourite global destinations for foreign investments. From US$600 billion in 2015, India’s retail market is estimated to reach US$ 1 trillion by 2020. The domestic retail market is expected to grow at 12% p.a. (3).
Given the favourable statistics, it may be imperative to ask – can retail businesses in India be a part of this joyride and grow proportionately or beyond?
What constitutes growth?
Increased sales? Yes. Increased profitability? Yes. Decreased expenditure? Mark them all yes. In the last two or three decades, the idea of retail business growth has expanded to include other determinants like increased share value and net worth, low employee turnover, higher customer and employee satisfaction, professional management and so on. With the passage of time and radical changes in the external environment like; internet, LPG etc., the old school parameters of growth albeit quintessential are not enough for business growth. In fact, in a dynamic and ever-evolving business industry like retail, growth and survival are no longer two different concepts. For a retail business, the need of the hour is customer delight, display, speed, accuracy, integration, HR, risk management, social media, gen X, blazing fast internet, ERP, Big Data, mobile applications, customer and so on. Retailers cannot expect to achieve higher growth by doing just the same old things again and again.
Modern Approaches to Retail
Multinational retail giants are playing with the latest technologies to improve their multichannel shopping experience. We can take the example of virtual mannequins (VM) in stores. VMs are like programmed projections on a screen. In the retail stores, a VM is activated the moment a customer removes a hanger from the rail. And what follows are the views (on a nearby screen) of models in the chosen garment. How cool is that!!
Another useful technology finding room in the retail stores around the world is beacon. By using beacon technology, customers can be alerted (over mobile app) about offers, discounts, new arrivals, proximity to stores whenever they are in the store or in close vicinity to the store.
Setting high standards of shopping experience for customers can help a retail store stand apart in the crowd and pull customers back to the stores.
The focus of the most profitable retail stores has shifted from customer satisfaction, by a few notches higher, to customer delight. A satisfied customer might still not return to your store. But the chances of a delighted customer coming back to the store are significantly higher. For example, in a fast food joint, serving good food will create customer satisfaction. But adding extra mayo or cheese to the food will make it lip-smacking. And that’s delight. A modern retail store should weigh in on having delighted customers than just satisfied customers.
Standard Operating Procedures (SOP)
SOPs are now a standard tool of management. The retail management encompasses a wide range of activities involving several process owners. Having clear and predefined processes (who, when, what, where etc.) can help managers and executives easily ensure that the activities are flowing as intended. Thus, SOP eliminates possible ambiguities and confusion pertaining to work or its flow in an organization.
Big Data and Retail Analytics
Data is like gold to retail and marketing strategists in business decision making. Business data collection is aimed at better understanding of customers and markets. The latest fad in this direction is direct collection of data from customers’ devices like mobile phones or any other device with active internet connectivity. This helps retail companies in product development and improved services. But while doing so, companies must take utmost care of customers’ privacy concerns. With the help of retail analytics, companies can improve their customer services, supply chain management, vendor management, merchandising, product line modifications and so on. Use of analytics lends speed and accuracy in the retail decision making process.
In today’s fast paced, dynamic and competitive business environment, windows of market opportunities are limited. Because of several factors like core competency, resource constraints and risk element, companies often take the franchise route to experiment with new markets or new products and services. By undertaking to share risk and benefits, the franchise route offers a win-win situation for both the franchisor and franchisee.
Gen Next Customers
One of the significant demo-graphical changes in the last decade or two is the increased dominance of the gen next customers. From a retail and marketing perspective, an increasing population of customers aged below 24 (constituting more than 50% of total population according to census 2001) (6) has emboldened the drive to address the needs and aspirations of this supercluster customer segment.
Use of Social Media
Social media has become an effective tool for retailers around the world to establish and maintain their connect with customers. Given the vast number of users of various social media platforms, companies can easily and quickly communicate their ideas to a wider audience cutting across cultural and geographical barriers.
In the retail world, you’ve got to know the competitive landscapes at all times. But all too often, retail audits provided by third parties are up-to-date, quick enough and they are tailored specifically to your needs.
“VALUE” is something which can reduce the cost to the consumer during the entire process of shopping. Retail Audit is a tool which will help every marketer to get that value.
The key to retail business success, in the next five years, will hover around customer orientation, business process management, and technology. From a delightful shopping experience to ease of payment, from internal restructuring to product packaging; these elements will play a pivotal role for a retail enterprise in building the road map of achieving a high growth trajectory.
To know more about “Achieving Double Digit Growth in Retail” get in touch with our Retail Experts on [email protected]
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