How retail scenario has changed in India in recent year?
The current economic scenario is like an ice in the ocean. Cold economic wave from west has fluttered down to east.
United States of America and China has left no stone unturned to prove individual economic supremacy. USA backing out of Iran JCA (Joint Comprehensive action plan) and fostering countries to zero oil import out of Iran refinery, fire in Abqaiq refinery( World’s largest oil processing refinery in Saudi Arabia), political turmoil in Syria, Turkey, Hong Kong, and Afghanistan are enough reason for the current economic slowdown.
Government and agencies across the world are worried at the economic peril that lambasted the growth of automobile sector, first ever to witness in last 1 decade. The mammoth effect is seen in fashion, telecom, agriculture and the core industry.
The 2008 economic slowdown impacted much of the western world and some countries of West Asia. 2019 economic turmoil seems to play havoc in East Asia including India besides the other parts of world. IMF GDP forecast are way lower than the projected GDP of countries.
The effect is such that business incentives is dropped, planned marketing expenses has been cut and the entire focus has shifted to expansion, ground and minimalistic execution. National and International brands both are thwarted by unrelenting challenges of low walk-in & low conversion. The internal incremental growth given to the retail managers are unwary though business managers are experimenting and doing their bit to revive and grow as best as they can.
To meet business target brand managers choose one or two or combination of below route:-
1. Expansion
2. Limiting head counts, retaining the best and laying of unproductive one’s
3. Reducing investment
4. Restricting ATL and BTL
5. Focus execution at store level by VM specialist
6. Delivering quality service
7. Incentive on profitable category
8. Re-orienting plan-o-gram
9. Utilizing social network platform for promotion and brand hype
10. Discount
Any combination of above route taken from business perspective seems okay however from brand and consumer point of view there lays a grey area and experience concern.
Retail managers open multiple store in short time. While the expansion takes place, there is a compromise on experience, quality execution, material quality and the final outcome. As a result this leads to deteriorating in-store experience and low TOM. Latest research and publication of the ad agency shows this trend.
The onus also lies on the front end team and other support function that in hurry ends up doing thing which they themselves are not satisfied with. Stores flooded with discount and differential price tags add up to the differential perception of the brand. Brand once known for exclusive design, product and customers longing for are no more the scenario.
Discount has now become regular feature and feather of the brand to grow business. E-retailers like Amazon, Flipkart and Snapdeal etc. offer deep discount to customers. Online players have gone online to offline. Omni-channel is an emerging concept, gradually progressing across length and breadth of the country. Brands are adopting technology at speed, implementing the learnings of west to be ahead in the competition.
Customers no longer wait for the brand to announce discount as it’s a regular trend throughout the year except for the high end brand meant for niche customers.
The growth indicator shared recently by research agency are optimistic for the luxury brand meant for elite class which is 4% of the entire population and slated to grow by +100 % by 2025 with the average household income expected to grow 1.7 times. The High Net worth individuals is expected to increase by +90% leaving behind China growth in the same segment. For most developed countries retail sector revenues are 15 to 20% while for India it is around 25%.
A recent publication suggests that by 2022, there will be +800 million smartphone users in India, accounting for +60% of the population, ensuring assured business to e-retailers, mass and mid segment brands.
In such economic scenario, it is imperative for the brands to be consistent in in-store experience, wise in expansion plan & excellent in customer service as it is the in-store journey that customer remembers throughout their life. The word to mouth publicity starts here and stays with follow up later on. Marketing gimmick is short lived in today’s innovative world.
Experience once lost is lost for forever. It takes a hell lot of time for brand to revive and come to the platform where it was once the pioneer.