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 amazon.in
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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