Sunday, May 4, 2014

Retailing Format, Marketing Personality and Customer Service: The Three Drivers for an Indian Retail Revolution

India has today several glitzy malls with shops dedicated for homegrown brands as well as multinational brands. The retail channels are a combination of single brand retail or multi-brand retail shops. Also coexisting in the normal shopping districts are standalone shops and the ubiquitous kirana shops (mom and pop stores). Quite obviously, the investments in the mall based retailing are significantly higher than those in the more traditional ones. Frequenting the variety of shopping options, one would certainly find a step function increase in product choices but an inexplicable lag in terms of salesmanship and customer service. Even the traditional retailers seem to be less concerned about attracting customers and retaining customer loyalty. As India would continue to witness an explosive retail growth, in terms of infrastructure mainly, long term viability would depend on full utilization of such infrastructure.

The new Indian retail revolution seems to be based on mall and shop infrastructure on one hand and product portfolio on the other. Communication is largely through media advertisements and text messaging. New product launches, discount periods and festival seasons are leveraged to inform customers of product availability. The expectation of the retailers, however, largely is for customers to reach out and choose for themselves the products they need. The importance of customer service to connect the customer with the products on one hand and the retailer on the other seems to be less recognized. There is, of course, a hypothesis that the customer of today is well informed and he need not be burdened with excessive verbiage on the products. Such hypothesis misses the point that customer service has a more holistic meaning to it.
Physical and virtual
Customers are aware that there are now several options to source anything through the Internet, often at lower prices, and based on considered evaluation of alternate product characteristics. Yet, the physical format, despite its price premium, offers one unique advantage of person to person contact and a conversation to help the customer. The physical malls and shops of today seem to miss on this element all together. Even where product displays are provided, the emphasis is more on the customer-product contact than on customer-salesman contact. In rare cases where customer-sales person contact is enabled, the emphasis is more on meeting the sales target rather than on understanding and fulfilling the customer need. The two key influencers are the ratio of sales persons to customers and the marketing personality of the sales person.
It is important to note that while virtual format cannot replicate any of the unique features of the physical format, the physical format can combine the best of both the formats. At an intense level, it could be providing a suite of computers and tablets for customers to first exercising their choice short list through virtual retailing and then taking them on to more focused physical marketing. At a subtle level, it could be in terms of electronic displays that stream live the high points of the shop and its products. While the virtual format can rise up to the physical challenge by promising the earliest possible delivery (for example, the promise by of a 24 hour delivery), the physical format can extend itself by promising wider access beyond what is on the shelves through in-store Internet kiosks. The key to the success of the physical-virtual combination lies in making browsing while shopping feasible and pleasurable.
Retailing format
Apart from multi brand and mono brand retailing options, category retailing options also exist. For example, Reliance has chosen to develop specific retailing channels and store formats for product categories such as home needs (including FMCG), footwear, apparel and electronics. Future Group also follows a similar approach with Big Bazar and Pantaloons. Tata Group has Landmark, Westside and Croma for books, apparel & accessories and electronics respectively. The logic is that such segmented retailing enables focused customer groups which can be served with better product choices in each category. The results have, however, been mixed. Given the relatively high work pressures in India, it is a moot point if consumers would like to visit dedicated shops or would prefer one location for all their needs. The success of malls is perhaps attributable to the need to have one stop retailing solution. None of these groups, however, has experimented with a monolithic retailing format such as Walmart, where their own corporate brands act as mega malls.
Indian retail may experiment with one more concept of stores within stores. Large behemoths like Hindustan Unilever and P&G may create sub-stores within the stores where all of their products can be offered as integrated solutions. This is a trend that is apparent in electronics with displays organized as per product categories and brands with dedicated sales personnel. It is the value proposition of brand loyalty and product loyalty that could determine the drive for, and success of, such a store within a store concept. Extending it further, these giants could have their own exclusive sales plazas or malls. There is, therefore, likely high scope for further evolution of the physical retailing format in multiple models. Whichever retailing model is adopted, the development of a marketing personality would be foundational for the retail success.
Marketing personality
The success of the physical format depends on the marketing personality of the shop and its sales persons. Marketing personality, like all professional personalities, gets developed based on personal attributes, education and experience. While Indian institutions are focused on developing marketing managers, little infrastructural support is available to develop the needed marketing personality in frontline sales personnel. These persons do not need statistics for market research or strategy for market penetration. They need, however, a deep understanding of consumer psychology, a thorough knowledge of product attributes, an inquisitive mind for customer needs, an empathetic approach to striking a conversation, and above all a commitment to deliver value for the customer. They are relationship managers more than sellers or marketers.
Larger hotel and hospitality chains have been quick to realize the need for frontline customer interface and have established dedicated in-house training institutions and on the job training and apprenticeship programs. Shops and malls as well as a host of other customer-facing organizations have perforce to depend on the general pool of talent from educational institutions. There are, however, only a very few institutes in India that impart the right kind of education and training for developing a well-rounded marketing personality. National Institute of Sales, founded by NIIT has been one but the country needs a lot more. On the lines of Industrial Training Institutes offering technical apprenticeship training, the country needs Marketing Training Institutes to turn out sales and marketing personnel who can support the retail revolution.  A retail outlet that has persons of appropriate marketing personality tends to acquire a customer-friendly personality of its own. If retailing format would owe its success to marketing personality, the latter in turn would need customer service as the key driver.
Customer service
Customer service has several components. The first is a warm greeting; whether a sales person welcoming a customer to the store or a field sales person greeting the homemaker or doctor, the warmth, smile and connectivity of the welcome greeting sets the tone for a customer friendly ambience. The second is a polite enquiry on what the customer is looking for. The ability to distinguish between focused and unfocused customers as well as impatient and languid customers is the key to guide them appropriately to the required store location. The third is to provide transparent and authentic product information; informed decision making by the customer leads to customer satisfaction. The fourth is to understand customer indecisiveness as an opportunity for need discovery rather than to force a buy through canvassing. The fifth is an ability to commit to getting the right product after the need discovery. As products range from high generic to high technology, the need to understand consumer psychology and align the store philosophy becomes progressively more important.
As products move higher in specificity and technology, two factors become important. The first is the ability and willingness to offer pre- and post- sales support; this is essential to ensure complete lifecycle support to the customers. The second is the ability and willingness to transform each sales transaction into relationship development; this is essential to ensure a value proposition for Indian retailing beyond products and brands. To succeed in this, the ratio of customer service executives to the customer base becomes important. Investment in people and technology would be an important component of the new retail format. People investments must focus on adequate numbers of trained marketing people. Investments in technology should focus on understanding the consumer needs better and forming a long lasting relationship with them. When Google and Facebook can collect huge amount of information on the preferences of the site visitors simply through their browsing habits, the physical stores should be in a position to supplement customer data bases with physical connectivity and emotional rapport.   
In the emerging Indian retailing milieu, as discussed in this blog post, while the choice of an appropriate and differentiated retailing format would be a key strategy consistent with each retailer’s vision, development of marketing personality and integration of customer service would be universally required to drive sustainable growth.
Posted by Dr CB Rao on May 4, 2014            


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