Leading in the new reality

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Leading in the new reality

STOrai Magazine

26 Apr 2021, 13:07 — 7 min read

India’s consumption has been displaying steady growth over the last two decades - capturing the imagination of investors across the world. The entry into the new decade was expected to demonstrate a continuation of this narrative. However, the advent of COVID-19 has slightly altered the course of this story. Even after a short bump in the graph in 2020, the consumption pattern as well as the retail market of the country is on pre-covid growth track, the pandemic has introduced a delay of 1-2 years in the trajectory.

 

From managing crisis to leading

Retailers need to evaluate pivotal changes in their consumer value proposition and decide positioning options basis it.

Responsible Retail - Conscious play: Focus on mainstream sustainability, localized sourcing, fair trade and align with consumer values.

Alternate Retail – Non-traditional offerings: Focus on new business models, e.g subscriptions, renting of products, or solutions based retailing.

Personal Retail - Individual is important: Focus on individual level personalization, customization of product / service.

Spectacular Retail – Experience led retail: Focus on Retailtainment (entertainment, gamification, experiences and/or additional services) to engage & involve consumers in shopping experience.

Omnichannel Retail - Seamless Channels: Focus on creating uniform, smooth and integrated omni channel experience across both instore and online channels.

Convenient Retail - Quick & Easy: Focus on ultra-convenience in in-store experience, delivery and/ or online shopping journey; focus on reaching the customer through small stores in urban locations.

Value Retail – India Values Value: Focus on low pricing.

 

Also read: The Experience Project

 

Business Model Decisions

It is equally imperative for retail organisations to design the operating model with chosen direction of proposition. They need to:

  • Adapt store network for safety and omnichannel excellence
  • Align offer through merchandising, SKU optimization and investing in private labels
  • Adapt pricing and promotions to reflect new customer needs and expectations
  • Innovating purchase journeys through click-&-collect, curbside pickup, store layout redesign
  • Supply chain agility through planning analytics and strategic partnerships
  • Optimise customer acquisition cost by digital personalization, channel allocation & value communication
  • Develop the digital capabilities to execute all actions successfully

 

Pandemic impact on forces that shape retail model

The pandemic has had a distinct impact on forces that shape the retail landscape

 

New Game Plan

Retail brands are developing new strategies to 0ace the game across the world.

Adapting network: UK supermarket chain explored fluid formats to increase availability.

  • Initiated several formats in different geographies
  • Click and collect, express delivery through app, dark stores with increased timings were some of the changes Leading US mobile brand transforming stores to offer seamless experience
  • 20+ Express stores launched across the country
  • Other stores designated to Curbside pickup option

Defining Pricing & promotion: Korean mobile brand drove sales by offering discounts through partnership.

Aligning offering: Leading US supermarket launched private labels for higher revenue

  • Witnessed high revenue growth for its private label products in Q2, 2020
  • Launched 50+ new private label products by end of 2020

Innovating purchase journeys: US food retailer offering safe journeys to grab market share

  • Increased curbside pickup to 3X post covid
  • Offering it across 150 stores now, covering > 30% of total US stores Leading Indian QSR building omnichannel capabilities to ensure sales
  • Offered takeaway and Pick-nDrive on app
  • Increased online ordering as % of total delivery by 11% yoy

 

Ensuring supply chain agility: Italy supermarket chain leveraged partnership to ensure delivery

  • Reported a 10-fold increase in sales via its partnership with logistics start-up, Glovo

 

Optimizing customer acquisition cost: Chinese cosmetics company leveraged online platforms for customer acquisition

  • Trained store employees to host livestreams
  • Increased sales by 45% vs. the same period in 201

 

Long-term view

In the long term, locally adapted operating model decisions will be key to market leadership.

High Tech | Data driven play: Focus on automation; leverage AI, predictive tech, digital supply chain, Voice tech, digital payments.

Many Indias | Regional play: Focus on customizing operating model based on needs, preferences of different regions across India to better penetrate regional markets.

Alliances | Collaboration is key: Focus on creating partnerships/ alliances with other players, incl. unorganized retail to create own ecosystem and more economically penetrate the market.

Gig | Flexible labour: Focus on leveraging Gig platforms – flexible labour (day of week, time of day, location)

Multichannel | Be present everywhere: Focus on presence in both physical stores and online channels to serve all types of customer bases.

No frill | Low Cost Ops: Focus on providing bare minimum shopping experience & keeping costs at a minimum; can potentially leverage Gig economy.

Process | Recovery scenario planning: Due to the uncertainty postcovid, only one definitive recovery plan may prove insufficient. A scenario-based recovery plan and the strategies for each of the scenarios is needed for any disruptions in the future.

People | Agile & resilient organization: Build innovative organization and creative collaboration models with dedicated, cross-disciplinary teams to respond to problems in an agile way.

Technology | Big bets in Technology: Technology is going to drive purchase journeys going ahead. Retailers need to focus on an end-to-end digital presence from product discovery to post-purchase.

 

Also read: The road ahead for retail businesses

 

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Image source: shutterstock.com

 

Article source: STOrai MagazineAdapted from RAI – BCG Report ‘Retail Resurgence in India: Leading in The New Reality’

 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.

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