Ivy Jun 06, 2014 No Comments
Where Analytics is no longer about a competitive edge, but survival.
The Indian retail industry is a vibrant landscape. Considered the fastest growing industry in the world, it has witnessed myriad business models over the last 20 years. With rising income levels, urbanisation, plastic money and increased rural consumption, India has emerged as the favourite destination for global retail giants like Walmart and many hi-end international brands. Currently estimated at US$ 490 billion, India’s retail market is expected to touch a whopping Rs 47 trillion (US$ 782.23 billion) by 2016–17, expanding at a CAGR of 15 per cent.
The Indian retail sector, historically the domain of unorganised retail, is seen to display a shift towards organised retailing formats. The traditional small to medium retail stores are jostling for space among larger organised and branded retailers, hypermarket retail chains and malls. While grocery stores and fashion boutiques have adopted online platforms, start-ups have taken to franchise models. Well-funded retail operations like Shoppers Stop are expanding their mega chain stores across the country to tap the lucrative multi-brand retail market. Yet, despite a thriving consumer market, many retail stores have failed, either shut down or sold out, best exemplified by the Pantaloon / Future Group. Why so?
Over the last decade, foreign brands and e-commerce platforms have posed a challenge for the traditional Indian retailing businesses. Second, the retail sector is one of the most competitive industries where consumers / customer habits are in a constant state of flux. To capture a sizeable portion of the consumer spending and retain customer loyalty, retailers need to respond suitably to grow and survive the aggressive competition. In such a scenario, it is those businesses that have looked at technologies for actionable insights that have survived and thrived.
Key to survival – data and analytics
Indian retailers have realised the need to get out of their complacent mode and traditional methods of marketing and advertising for that competitive edge. So there has been an increased adoption of sophisticated methods of retail management for data warehousing and Customer Relationship Management (CRM) to survive competition and solve various on-premise business problems. However, the practice of investing a significant amount in customer data and insights for new strategies of growth and customer engagement have occurred only amongst the larger retail chains.
The concepts surrounding data and analytics have been slow to catch-on amongst the SMEs, even though you will find many small stores and retail operations maintaining a customer database. At the very basic level, stores leverage such customer information for promotions and festive offers. While small retailers will leverage your ‘date of birth’ or ‘wedding anniversary’ for a special discounted offer send over email, other retail chains will use the demographic stats of its customer base for targeted advertising in a neighbourhood during festivals. Yet this alone is not enough to remain ahead. Not only are competitors too using such tools to attract customers, but new stores and retails chains are also mushrooming every month. It is no longer about a competitive edge, but survival.
So retailers who have been gathering customer data need to leverage such information for ‘deeper insights’ – to understand buyer motivation, the kind of data shoppers share, mobile couponing, ‘true demand’ estimates, demographic patterns and various analytics-based loss reduction solutions, to name a few.
Emerging trends and technologies
The aggressive competition in retail has given way to avant garde cutting-edge technologies that aim to capture data for new-age insights and applications.
Retailers of any size can redefine their marketing efforts by capturing and analysing data of shoppers from their buying patterns, apps on mobile devices used to compare prices or get directions, conversations on social media, from store footfalls and video insights or e-commerce purchases, and so on.
Bottom line: At the end of the day, what every retailer wants are fewer markdowns and higher profit margins – possible, through the right mix of analytics solutions.