Rise of the Retail Phoenix

Transforming retail India with emerging technology

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Contents

3 Mantras to drive future of Retail in India

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Executive Summary

The New Indian Consumer

Unrest in Retail India

Top 5 Trends and Implications

The future of retail is data, tech and experiences

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/ editor

Retail is now everywhere, on everyone's fingertips. It is no more just online or offline. With the dawn of the new internet that is more connected, humane, immersive and data driven, brands can engage directly with end consumers with relevance, value and purpose-driven strategies. With the consumerization of technology, consumers are in control of brands but they are also open to new paths to purchase.

Today consumers buy experiences, not products. As everything around us gets uber-fied, consumers will want to do or will have everything without owning anything. Experiences will become the deciding factor. 

Because retail is so product-centric in India today, there is too much attention given to closing a sale.  Not enough thought is given to providing the right creative experience to enable customers to choose and buy a product. Brands need to create new experiences and hack into micro-moments that occur through new channels in their path to purchase.

Executive Summary

We believe that the Retail Phoenix is waiting to obtain new life by rising from the ashes of its brick and mortar predecessor. Brick and mortar retail already have the advantage of the physical store. Providing new customer-centric experiences can become a competitive advantage in the new era of the informed and impatient consumer.

It is time to put on our start-up hats and take data, technology and innovation seriously. It is time for the Retail Phoenix to rise in India.

This report discusses new trends and technologies that provide opportunities to transform retail in India. It is written by the Innovation team at Omnicom Media Group, India in collaboration with ISDI Parsons School of Design (associated with Parsons New York) and Academy of Customer Experience (associated with BPGroup UK).

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The rise of digital consumerism and the power of e-commerce start-ups have raised expectations from retail experiences. According to a 2015 Forrester report on Customer Experience with consumer-facing brands across industries, only 9% brands qualified as ‘good’ and the rest were ‘OK’ or ‘poor’ experiences.

More than 60% of the Indian consumer population comprises the younger generation. Living every present moment to the fullest is more important than planning for the future.

They showroom, webroom, comparison shop, ask friends, look up reviews online, hunt down coupons, go shopping online and get food delivered to their doorsteps, workplaces and virtually anywhere. They also carry wallets digitally via their smartphones and with a flash of the phone, pay for transportation, food, fashion and entertainment on the go.

Every product they purchase must be an extension of themselves. They share views on stuff they buy online and offline. Sometimes even throw in a bad review, hoping for free stuff. They demand for customer service and discounts more aggressively than ever before as if it is their birth right.

They, with as much ease, also walk into a kirana store (mom-and-pop store) knowing that they will be greeted warmly by a known face who understands their needs and offers customised products. Such is the plight of the new Indian consumer. 

While expectations have risen, one thing is clear that Indian consumers are now comfortable with digital and mobile technologies and are open to new experiences in their paths to purchase.

The New Indian Consumer - Informed and Impatient

The holy grail for retail in India is to combine the [customisation,

convenience and care] of the physical kirana stores with the [comfort, choice

and cost] of e-commerce platforms

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Brand, e-commerce platforms, digital, IT and Business Operations teams operate as silos, and only team up when necessary. The ecosystem of system integrator vendors and digital asset development vendors are different today. While the understanding of digital is growing amongst business leaders, the lack of proof from digital investments in driving bottom line growth is slowing down change.

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Since 2015, Indian start-ups and global e-commerce companies have leverage new digital technologies to put the customer at the centre of business and elevated the standards of customer service. This has caused a lot of unrest within brick and mortar retail companies in India. Today as we continue to serve the informed and impatient Indian consumer enabled by mobile devices, Indian unicorns face the risk of being outspent by global counterparts. To top this, what works in the West may not work in India. In the US, retailers grapple with the ability to offer customers personalised experiences across both their online and physical stores. In India, far more complex challenges exist within the ecosystem of organised and unorganised retail.

Currently unstructured, disparate data silos exist in brick and mortar retail companies attempting to go digital. There are issues with information flow not only across the e-commerce platforms and physical stores, but also within sales, marketing, operations and customer service. Lack of transparency exists in offline business that is so innate to e-commerce platforms.

Unrest in Retail India

Many technology initiatives get stalled due to siloed teams, lack of investment and fear of affecting

existing business operations ””

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Trending Opportunity

Resulting Impact

2017 IndiaRetail Trends

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Unstore & Repurpose for Phygital Retailing

Internet of Me

Immersive Shopping Experiences

Selling to Humans, not Consumers

Walletization of Retail

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IMMERSE

PERSONALISE CONNECT

HUMANISE

TRANSA

CT

2017 IndiaRetail Trends

In this era of the digital consumer, customer satisfaction means creating and fulfilling new and individual experiences. As technology enables ad blocking online and ad skipping on TV, marketers are increasingly searching for ways to better engage consumers in person.

Marketing today is increasingly playing a role in driving growth, not just enabling business. With the consumerization of digital, consumers are in control of brands. New consumer technologies can also bring new opportunities for brands to break through the clutter and create new experiences for consumers.

Today customers are ready for more than just a retail store - free Wi-Fi, take-away content, and physical pickup of products is a good start but to transform retail, the physical world of retail and customised online experience need to unite in a fluid and unself-conscious way.

The internet has enabled information access for customers but information by itself is job half done without the experience. With content driven engagement, brands need to turn stores into spaces for stories that encourage human interaction and collaboration.

Brands are looking to ensure in-store content and their communications are useful, informative or entertaining to readers and viewers.

The in-store experience has to continue the story the brand is trying to convey. Brands need to create valuable and meaningful stories for the consumer, hitting the right person at the right time – and in the right environment.

Brands are now designing their event experiences with content generation top of mind. In-store events are the ultimate catalyst for content creation and more importantly, distribution and social amplification.

Today consumers buy experiences, not products. Retail needs to sell

content-driven experiences ”

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Unstore Brick and Mortar

KEY IMPLICATIONS

Going direct to consumer gives opportunities to brands to rip through the value chain and directly sell to the consumer. This is not a new concept. Dell's direct to Consumer model revolutionised retail by effectively leveraging the last generation of the internet (aka web 2.0). With the dawn of the new internet that is more connected, humane, immersive and data driven, product and manufacturing has immense opportunity to engage directly with end consumers with relevance, value and purpose driven strategies.

In-store navigation for large format stores, digital displays for product information, customer centred store layouts, engaging music, and inviting aromas are some of things retailers can no longer ignore to differentiate with themselves.

To optimise the shopping experience for customers, retail companies have to offer customers a networked shopping environment as well as products that are specifically tailored to their desires.

Customers should be able to search for product information and information about relevant products via a safe and reliable Wifi network in the store. Customers can also receive buying incentives via shop-related mobile coupons in real-time while shopping.

Samsung Creates Experience

Ford Connected Studio

Sephora Make-up Tutorials

Samsung is among the retailers creating experiential spaces that don't dedicate precious square footage to stockrooms. Trying to better engage consumers with interactive stores

Ford is changing customer mindset of its activities as a 100 year old brand and communicating the change from automotive manufacturer to Smart Mobility experience provider.

Sephora installs makeup stations, allowing shoppers to learn from Youtube tutorials. These stations will help enrich the experience for the customer who wants to sample the product.

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Repurpose for Phygital Retailing

Today lack of real-time personalised offers, long lines and poor customer assistance at retail stores are key deterrents in the current physical store experience.

With retail sector emerging as one of the largest sectors in the Indian economy and organised retail growth predicted to grow from 8% to 24% of retail, brick and mortar retail have an incredible opportunity to bring back the customer to the physical store but with a differentiated experience.

Channels are driving this retail growth, and their composition has an impact across both the revenue and the cost base of the organisation.

With new digital channels emerging every year there are more interaction options for retailers and their customers.

Indian consumers today are as comfortable shopping online as in a retail store in their neighbourhood. As the lines between physical and digital get blurred, retail needs to imbue their brick-and-mortar operations with updated missions.

Merge the thrill of discovery with freestyle mixing and combining

of online and offline shelves

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KEY IMPLICATIONS

While companies attempt to go ‘omnichannel’, just being present across multiple channels is not going to cut it. This will require implementation of a fluid, seamless experience across channels driven by consumer data aggregated from multiple sources.

Having a physical presence itself is a competitive advantage for established retail businesses that are facing the risk of being outspent by global e-commerce counterparts.

Retail has opportunities to revamp the experience with technology, not just in customer service but across each stage of the purchase journey – research, discovery, choice, payment, delivery, post sales, rewards, etc.

Kenneth Cole

Rebecca Minkoff

Myntra Goes Offline

The physical stores adopted the online feature by introducing product tables that displayed items laid flat on a low surface, offering a more physically tangible version of the online concept and contributing to the feeling of a refreshed store design.

Rebecca Minkoff adds “smart” mirrors to flagship store dressing rooms. No cameras are involved in the tech integration. RFID tags recognise each item brought in and shoppers can pull up product screens that show the item styled with different looks, as well as other available sizes and colours, much like you would find when shopping online

Myntra will open offline stores in the next three months. The hybrid model of running online stores with a select physical presence is finding takers for many online commerce companies.

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According to a recent PWC report, 55% of consumers admitted to using their smartphones for researching products on the go before making a purchase. Internet penetration is influencing the gaming, retail, information, social media sectors in the growing Indian economy. Mobile internet has overtaken the traditional use of text messages and connected people more closely. This has enabled people to communicate and share their views on various topics on a digital platform. In a country like India with such diverse cultures and languages and population the content on the internet is huge.

The true value of the internet comes from the need to connect people to people (and not things). As things around us continue to get more connected, there comes the need to personalise content with context in order to avoid information clutter. The Internet of Things should improve our daily lives by understanding our behaviors, habits, and interests and providing us unique experiences based on time of day, location, weather, device and other real-time contextual data. To become more sentient, it needs to provide experiences based on what consumers are often not conscious of and almost echoing their choices.

Internet of Me: Shift from e-tailing to me-tailing

The vision of transforming any ‘thing' into media for

personalised brand connect is becoming a reality

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KEY IMPLICATIONS

Retailers can use technology to boost their omnichannel offerings by integrating tools into their apps like barcode price-scanners and beacon-powered notifications. These features create a smoother shopping experience, increasing return visits.

The main players of the latest retail technology include beacons, RFID, and smart digital displays. Retailers can also improve location-based marketing programs to create more personalised and intimate shopper relationships. The Internet of Things is a network of everyday devices connected to the internet, continuously collecting data. IoT is helping retailers learn more about their customers.

Amazon Dash Button is a Wi-Fi connected device that reorders your favourite product with just the press of a button. Each Dash Button is paired with a product of the customer’s choice, which is selected through the Amazon App.

Godrej Nature’s Basket Beacons

Amazon Dash

Bajaj Allianz Drive Smart

Godrej Nature’s Basket deploys sensors to collect the precise location and information about shoppers. The sensors will give that information, if a person is near a particular section in the store.

Bajaj Allianz General Insurance launched ‘Drive Smart’ to reward customers who drive safely and well. This will be done through a device fitted in the car and an app which provides real-time feedback on driver behaviour including on over speeding, changing gears in the wrong fashion, too much idling or driving rashly.

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In the race to improve customers' experience online, designers are working to reduce the number of clicks it takes for a visitor to become a customer. Web designers and user-experience experts are trying to bring the real-life experience of shopping to e-commerce such as recreating the fit and texture for an online shopper.

Virtual reality, Augmented reality and Mixed reality technologies immerse consumers in sensory and personalised product experiences. With consumers now having the power to control their experiences as they want, these technologies have the potential of taking personalised storytelling to the next level.  

Immersive shopping experiences

To reduce return rates for items bought in-store or online, consumers should be provided with ‘what you see is what you get’ experiences

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Symphony EYC launched iCapture, an image recognition technology to track implementation and compliance of assortments, product placement, and promotional space; identify out-of-stock issues and evaluate brand share of shelf.

Eyes In The StoreKEY IMPLICATIONS Providing real-time information and immersive product experiences in the awareness phase of the customer journey can help shorten the purchase cycle and aid with faster conversions and reduce return items. This can help bridge a common trust gap that typically prevents consumers from shopping online especially with products that require touch, feel and other types of sensory experiences such as apparel, furniture, beauty, automobile, real estate products.  

L'Oréal Professionnel introduces Style My Hair, the virtual hair makeover tool. Browse through countless haircuts, hair styles, professional hair colours and effects to find the one of your dreams. Adjust the hair around your face, as well as the colour effects for that perfect look.

L’Oreal Virtual Hair Makeover Tool

IKEA VR GamePut on your VR headset and prepare to explore IKEA kitchen in full 3D. Walk around & interact with some parts of it just like you were there. Instantly change the look and feel of the kitchen by selecting a different material finish.

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Walletization of Retail

In India, mobile commerce represents nearly 50% of online retail sales; and an average consumer spent over 11 times more time on retail apps in 2016 compared to 2014.

Consumers are opting for digital payments for not just e-commerce and transportation but to make big-ticket purchases such as gold and cars. Mobile wallets such as Paytm, MobiKwik, Oxigen have emerged as the most significant contributor in pushing cashless and electronic payments. The growth in m-wallets is mainly a result of a simpler payment process and the growing penetration of smartphones with ease and perceived security driving this momentum.

As of March 2016, Paytm alone has more than 130M active users across platforms - Web, WAP, Mobile, APP, SMS, IVR, point of sale with payments accepted through all instruments - Net Banking, Credit/ Debit/ Cash Cards. Researchers forecast that the country’s mobile wallet business will grow to about US$ 11.5 billion by 2022. With the roll out of UPI (unified payment interface), it will allow transactions to take place through a single virtual ID or mobile number, authorised by banks. The purpose of UPI is to bring the convenience offered by wallet companies to those who only have bank accounts.

The disruptive nature of m-wallets is a lifestyle enabler with new revenue opportunities for

retail and brands

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KEY IMPLICATIONS

India offers a unique potential for homegrown as well as global retailers to seize the mobile opportunity. As the Indian shopper continues to drive mobile commerce, mobile-first apps from retail and brands should woo first-time smartphone users using unique and innovative approaches. The opportunity lies in bringing different ecosystems together to provide value in the daily lives of customers. The growing number of mobile-only payment options provide shoppers with flexibility and convenience like no other online shopping channel. In fact, today many customers are dropping off the purchase cycle if they don’t find their preferred choice of payment option.

Paytm’s rapidly growing offline payment network gives small merchants instant settlement at almost zero cost. They are targeting small merchants which will include Kirana stores, Autowallas, Taxi drivers & Milk Cooperatives.

Fintech Meets Health

Kirana Walletization

Tap & Go

Axis Bank has partnered with fitness wearable startup GOQii to integrate NFC payments on its platform. This is the first time that fintech and health are coming together in the Indian startup ecosystem

Visa Checkout introduces new interactive button for faster mobile commerce. The consumer sees a picture of their card on the button, swipes it to the right, and simply enters a password inside the button itself to authenticate.

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Selling to Humans, not Consumers

Customer expectations have risen to levels where retailers need to serve information anywhere and anytime. The content is available online but lacks human connect. The known face at the kirana store or your favourite mom and pop garment shop is perceived to be irreplaceable.

Store employees are not knowledgeable enough to help consumers with their needs. There is too much attention given to closing a sale and not enough to providing personalised experience to enable customers to choose the right product.

Humans connect with emotions, not technology. Humanising

algorithms is essential for connect

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KEY IMPLICATIONS

Networking and interaction with the customer in the shop needs to improve in order to shape the customer shopping experience in the future. Enabling the store assistant with product and customer intelligence in real-time can close these gaps.

According to Ray Kurzweil, by 2029 computers will achieve humans level of intelligence. Amazon’s Alexa, Google’s Allo, Apple’s Siri and Facebook’s chatbots are already using Artificial intelligence to recommend better products and services personalised to our needs.

Store employees can have real-time access and display product information and personalised recommendations for customers on a portable device. Purchases can thus be made anywhere on the sales floor directly with the customer.

Also, customers value a timely response to service questions above any other customer service aspect. Response times can be boosted by utilising chatbots to assist the inquiries. The bot can even make suggestions for products that might fit the customer best.

Macy’s developed in partnership with IBM Watson an AI powered shopping assistant. This tool frees up staff and provides shoppers with helpful information as they navigate stores

Yes Bank has done more than 13,000 transactions in terms of transferring funds since the launch of its Yes Tag bot. Customers seek the bot’s assistance for performing simple actions such as requesting a cheque book, cancelling a cheque payment, obtaining term deposit details etc.

Macy’s Shopping Assistance

YES Tag Bot

Domino’s has officially launched its Facebook Messenger chatbot that lets you order a pizza with just one word “PIZZA.” Because really, why complicate something so … uncomplicated?

Pizza Bot

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3mantrasHow to drive the future of retail in India To compete in the age of digital consumerism, traditional retail businesses will need to transform their current structure, processes, and technology to become more innovative, agile and experience-driven. While such a strategic change is difficult for companies to fathom, it is now a necessity for survival. Those who look only to the past or present might miss the future. Here are three mantras to drive the future of retail in India.

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1India is about innovation born out of hardship and necessity.

‘Less is more’ has always been the mantra of Indian innovation.  Born of scarcity and lack of capital, frugal innovation or ‘Jugaad' is generally at the core of innovation. The belief that there are better and more cost effective ways to use the materials and processes drives creativity in business. It’s just not about making things cheaper but also better, more appropriate and scalable.

Take the example of ‘Kan Khajura Tesan’ – a mobile-based media channel created for rural markets that have minimal access to mainstream media like TV. This pull-based content marketing channel not only reaches the masses effectively but also provides vernacular content sponsored by Unilever’s brands.

Businesses that think about the end consumer stand to win. Paytm is integrating into the daily lives of Indians in every way possible – not only enabling e-commerce, but now also integrating with petrol stations and kirana stores.  

Hacking growth with ‘jugaad' comes naturally to most Indian entrepreneurs. Cash on delivery is a well-known payment type on almost every Indian e-commerce site today. Utility payment kiosks are helping consumers pay their utility bills, refill talk time and more. Mobile POS and outside-store kiosks are slowly gaining traction to manage the crowds rushing into grocery stories over the weekends. Messaging apps like Whatsapp for retail have rapidly grown amongst kirana stores, now forcing e-commerce to embed chat features into their apps.

Hardship driven Innovation

Due to lack of capital, innovation in India is generally not about

implementing the newest technology and process, but creatively applying mainstream technologies for greater

scale and impact ”

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2For the first time in history, individuals are developing the ability to share information with everyone at any scale and in just a few seconds. The consequence of this is that traditional retail is becoming volatile as a business model and retailers have to adapt their business proposition to a continuous change process that is being led by their customers.   Why design thinking? In this rapidly changing consumer-driven environment, retailers need to put on the start-up hat. They should cultivate creative confidence and a passion for experimentation. The need to fail fast with a test and learn approach is much needed today.   Much of retail is built on creativity — whether it’s fashion, electronics or other goods designed to capture the attention of consumers. But retail employees have been distracted by the overall business purpose and have set aside the ability to apply creativity to customer interactions.

Design thinking with its user-centred problem solving methodology is a perfect tool for retailers to better understand their customer’s shopping motivations and the role they will play in their customer’s buying process.

Take a look at Apple stores where it's not about the technology but designing the store for simplicity, discovery, freestyling and doing-it-yourself yet assisting as needed. There are no waiting lines. It’s about relevant showcasing of products based on neighbourhood, season and other personalisation with 'less is more' in mind.

Design Thinking

Start with design, then think technology

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3Besides high cost, the lack of humaneness and fear of disruption to existing operations have been key deterrents to leveraging new technologies for business growth in India.   The concept of calm design that is invisible, humane, elegant, and non-intrusive is now being widely applied to technology design, as per Amber Case - cyborg anthropologist. These factors can help not only improve adoption of new retail technologies but also create a unique brand experience.   Also in today’s age where every thing around us can potentially become media, digital technology would mean clutter for experiences if personalisation and ‘calm design’ is not effectively implemented.

Calm grocery shopping: Imagine a smart shopping cart where the cart knows your shopping list, helps you navigate the store and guides you to the products you need. It also provides offers on these products and serves content like recipes from your favourite chef. As you walk down the aisle, it sends out a soft ambient indicator letting you know of a new product, that maybe of interest to you, has a special discount.

A virtual shopping assistant makes this entire experience more humane and interactive, only providing you help when you need it. It also knows that you have a dinner this weekend and recommends customised food for the party.

In the above scenario, technology is woven into the journey and requires the least possible amount of attention. It improves the shopping experience by knowing the customer and communicates to inform and assist in a calm and humane manner.

Calm Technology – The Method In The Madness

While the right use of consumer data can drive personalisation,

lack of calm technology interfaces is job half done”

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The intersection of technology, content and culture is the sweet

spot for retail experiences

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/ editor

AboutLaxman Murugappan, Co-founder & Principal consultant

Academy of Customer Experience is partnered with BPGroup from UK. Academy of Customer Experience / BPGroup is a global Customer Experience & Process Improvement consulting firm. A trusted advisor to leading businesses, governments, and institutions that brings on the table unique insight to Customer Experience trends on a global stage, along with ‘next practice’ insights, approaches and strategies to deliver success across all sectors.

Siddharth Shahani, Executive Director

ISDI is committed to a new model of cutting edge design and innovation education, integrated with commercialization of design. ISDI students and faculty create an enabling ecosystem in the corporate world (India and abroad) to catalyze design thinking. ISDI brings about an Indianization of global innovations while working out a global perspective to Indian innovations.

Editor: Avinash Jhangiani, Chief Innovation Officer / avinash.Jhangiani@omnicommediagroup.com

Omnicom Media Group is the media services division of Omnicom Group Inc. (NYSE: OMC), the leading global advertising, marketing and corporate communications company, providing services to over 5,000 clients in more than 100 countries. Omnicom Media Group India’s new innovation offering hacks growth for clients and transforms their businesses with new and emerging technologies in areas of customer experience, sales and operations, and new revenue generating models.

November 2016