For quite some time now, the transformational growth of e-tailing globally and in India, has led to the death knell being sounded for offline, brick-and-mortar retailers. While it is resoundingly true that the online challenge has greatly impacted the face of traditional retailing as we know it, the gloomy predictions of the vanishing grocery store or the fashion and apparel stores in the nearby malls have not quite materialized.
An Overview of Successful Tactics Adopted by Both Offline and Online Retailers
The Indian retail scenario has been the stage for many innovative tactics – as brick-and-mortar retailers, across a gamut of categories, strive to stay relevant while online retailers struggle to outlive the ‘valuation euphoria’ to actually drive business value. Yes, the verdict is clear – retailers, both offline and online have to adapt or perish and not responding is not an option; but the key is to tap into consumer needs and behaviours which transcend the online/ offline platform debate.
The Context:
Retail marketing objectives – both online and offline, typically center around 3 main areas:
– Building footfalls, and subsequently turnover
– Building a brand image (to ensure loyalty, repeats, bigger ticket sizes and generating WOM)
– Building a customer connect (which will sustain the above)
Most tactics that have worked aim to fulfil one (or more) of the above objectives – using the levers provided by insights on shopper and consumer mindsets.
In our experience, we find the most effective tactics (in both online and offline settings) have been those that are rooted in shopper insights on mindsets and its translation into effective shopping triggers or addressing barriers. Based on our body of experience in researching shopper insights across a range of categories, we have identified a few core shopper mindsets that tend to drive shopper behaviour in India.
The article is structured as follows: First, we provide an overview of these mindsets; then we focus on how offline retailers are tapping into these mindsets in crafting their strategy; followed by a look at online e-tailer tactics leveraging the same mindsets.
SHOPPER MINDSET FRAMEWORK:
1. THE VALUE-SEEKER MINDSET: The Indian shopper is a value-seeker, no doubt about it. Characterized for long by the ‘middle-class mindset, the India shopper has been one who values thrift and frugality over flashy displays. While the recent years of growth and economic power have slowly worked to provide access and exposure to both knowledge and purchase of products across price points, the old habits of seeking value are too deeply ingrained to shake-off in an instant. This value-seeking mindset continues to underpin the way Indian shoppers shop, even today.
Meeting the discount economics head-on!: Tapping into this mindset, offline retailers are bringing the same game to the table – with a renewed focus. From the regular Wednesday sales and Big Bachat days to Festival Sale Days, grocery retailers (Big Bazaar, Reliance More et al) in particular, have adopted this with enthusiasm. Event Sale Days (Independence and Republic Day Sales) have been used for quite a few years now – and all Big Sale Days are key footfall drivers. Interestingly, if used well, they also tend to be loyalty drivers (as 7 out of 10 people only shop in a single store)!
Retailers continue to reinvent these ‘days’ – newer concepts like Women’s Day and recently, the Big Bazaar GST Mahurat bonanza are being used to tap into prevailing public sentiment, create excitement and transform that into footfalls and billings.
2. THE CONVENIENCE MINDSET: This is a key consumer mindset across India (as it is globally too). With hectic lifestyles balanced between working hard, the demands of an extended family and social setup and inadequate infrastructure (roads, public transport), the Indian consumer is a time-poor, hassled, convenience seeker in almost all aspects of life.
In the retail scenario, convenience has, for long, been defined by the location factor. Across all our research, distance and parking facilities are 2 key factors that emerge on the top in deciding store to shop at – for grocery. The local kirana has always been available to provide home delivery and this aspect was replicated by some of the bigger chains to drive business in grocery retail.The other major area of play has been in financing – a legacy of the value-seeking mindset. Hence, payment convenience – in the form of credit, EMI, tie-ups with finance companies have now all been added to the retailer offerings.
Customising the game beyond mere convenience: Building on the ‘convenience mindset’ insight, offline retailers are now raising their game to deliver dramatically superior service. Further innovations today, in this area of customization range from customization of fit, personal style recommendations and even personal shoppers in the case of apparel (Raymonds – a pioneer in this field with their made-to-measure) to curation and bundling of products needed for a recipe for gourmet groceries (Spencers). Asian Paints is a pioneer in this field in India – having set up their Experience Stores to help shoppers visualize paints for their homes; this, of course, has now been extended to an online home visualizer too. Besides this, Asian Paints offers colour consultancy services and even helps source contractors and other suppliers for the job. Fabindia offers interior design consulting services – a natural fit for their range of furniture and furnishings. Philips Lighting has offerings that can help customize the lighting solution for their customers. In all cases, retailers are going beyond the norm in order to deliver convenience and reduce barriers to adoption.
Similar examples of convenience can also be seen in the provision of after sales service and exchange of old products – two techniques adopted in the Consumer Durables and Appliances and Mobile Phone categories. ITC’s Chaupal Saagar (Rural market) took this concept to rural markets – where the appreciation of convenience would be even more heartfelt.
3. THE INVOLVED/ ENGAGED MINDSET: As consumers evolve and gain access to better quality products and services, their expectations – functional, sensorial and experiential – begin to rise too. In the retail scenario, with increasing disposable income and the rise of the mall culture, the act of shopping itself has become a way of self-indulgence; shoppers expect and respond enthusiastically when the shopping experience is made extremely interactive, involved and engaging. Marketers who tap into this
trend reap the benefits.
One of the biggest advantages of offline retailers is their ability to build and take the shopping experience in their stores to a different level – thus delivering on building both brand image and customer connect. In fact, this is such an important element of the marketing mix that even online retailers are opting for at least an offline/ physical presence which will help drive these objectives for them.
Our studies in Modern Trade have frequently thrown up the following insights on what works, spatially, in this format to drive engagement and involvement in-store:
1. Circular forms to break the monotony and attract shopper attention: The retail space is filled with right angles most product packaging is square, shelves are at 90 degree angles and they meet the floor at right angles. Curved, circular, oval shaped visual merchandize and packaging help grab greater shopper attention
2. Movement catches a shopper’s attention: The modern supermarket is quite still. Other than the shoppers themselves, there is very little in the physical store that has motion; integrating movement into the design of signage and visual merchandize to create more impact in store
3. Sensorial triggers (that encourage shoppers to see, smell, taste, touch and feel) also drive in-store engagement and interactions: Shoppers spend more time, have higher and more engaged interactions with POSM and brand leading to better conversions.
Riding on these spatial insights and tapping into the indulgence mindset, offline retailers have come up with a plethora of in-store innovations – shop-in-shop, pop-up stores, digital interactive experiences in store, cookery workshops, cosmetic and beauty makeovers are all innovations that retailers are unleashing in their stores – keeping footfalls ticking and building the shopper connect.
Fashion and apparel retailers are amongst the forefront of this movement as the category lends itself well to upping the experience ante. In Van Heusen’s digital store in Bengaluru, digitization takes shoppers to new levels of display, fit customization, style recommendations and virtual trials! Raymond’s flagship store in Bengaluru is designed to sell apparel only through an iPad and customers may click ‘trial’ on the iPad for
the selection to appear in the desired size inside one of the trial rooms. Zivame, the lingerie retailer, is also experimenting with interactive technology for fittings.
The cosmetics category is another area replete with retailing innovations – beauty brands and retailers using multiple tactics from personalized skin analysis and recommendations to workshops and training and in-store beauty stations and makeovers.
In the grocery space too, after the success of FoodHall specialty food outlets, Big Bazaar Gen Next stores are moving it up further a notch. The stores in Noida and Mumbai have interactive digital screens, sit-down checkouts and experience zones for multi-sensorial experiences for food products.
4. THE ‘MAKE-ME-FEELSPECIAL’ MIND-SET: While value and convenience mindsets spoke to the functional needs of shoppers, the other mindsets address the more implicit and emotional needs of customers. The need to feel special and indulged is a key element in this – in keeping shoppers invested in the brand and the shopping experience. The outgoing nature of the new shopper – seen in the changing attitudes towards brands and shopping experiences below, is proof of this.
Treat ‘em special: Retailers are tapping into this mindset and developing activations and programs that seek to address this. Apparel retailers, departmental stores now regularly come up with Season Collections – and loyal customers are specially invited to special showings of these clothes. Preview sales are also a tool in the same genre with special discounts sweetening the ‘special’ effect even further. Retailers and malls often conduct movie promos and interactions with movie stars – increasing the conversations for the movies and building a brand connect for their own banner.
Channel-specific brand launches and promotions have also been used to further the ‘special’ feeling: The initial hoopla and excitement using this tactic came from online-only deals and promos (Great Online Shopping Festival by Google) as well as exclusive online brand launches and pre-orders. Interestingly though, as penetration of e-commerce deepens and evolves and the e-commerce space gets incredibly crowded, offline retailers actually have an advantage here – of an established brand presence and customer base. Consequently, using offline retail as a tool for brand launches and promotions is turning out to be extremely efficient marketing. Xiaomi has launched an exclusive ‘offline only’ Redmi 3S+ – across most large format offline electronics retailers as has Nokia and itel to name a few.
5. THE CONNECTED MINDSET: Th e final, inescapable truth – a reality of the world we live in today – it is a connected world; consumers will lead a very large part of their lives online, Omnichannel is a market reality and shoppers will increasingly move seamlessly between online and offline in their shopping experience. The consumer is connected, always on! And the retailers’ answer to this mindset is:
Get online! When you can’t beat em, join em!: Brick-and-mortar retailers have started recognizing the need for an online presence, a digital presence. Most retailers now have their own websites with shipping options; recognizing the online option as a new channel, a new monetizing opportunity. In the electronics and consumer durable space as also with the mobile phone retailing space, showrooming has been a very real drain on offline retail sales – the habit of researching offline at showrooms and then buying online. The only way of countering this has been for the offline retailers themselves to establish and grow their digital presence.
In addition, most retailers – especially of services, have also understood the need to maintain an active social media presence. This is of particular importance to meet the retail objective of building and maintaining a consumer connect. Social media has the power to build or break reputations and any retailer cannot afford to ignore an active social media program. And in this connected world, as offline retailers aim to deliver a seamless experience across channels, the physical stores themselves are being changed to build this image further. The earlier examples that we saw – of interactive and digital displays at various stores, of virtual mirrors and visualizers all help drive the fact that the offline retailer is moving with the times .
TAPPING INTO SHOPPER MINDSETS: AN ONLINE PERSPECTIVE
Now, what if we change the narration lens from the offline retailer to the online retailer? What is their story from the other end of the spectrum? Here are some of the crucial challenges faced by online retailers and how they are trying to overcome them:
1. THE VALUE-SEEKER MINDSET: The Amazon Great Indian Sale, the Big Billion Day Sale, the pre-GST Sale, the Republic Day Sale… SALE, SALE, SALE. The end of reason sale aptly summarizes the sale occasions! Various sale propositions have been the mantra of online retailers to get people on-board the e-commerce bandwagon and increase their share of wallet as also to increase focus on new or languishing categories. Added to these big ‘shopping events’ are the daily deals that hit shopper mail boxes or notifications that pop up in their apps, every other day. Shopping has become an all year round phenomenon as e-tailers have managed to create more and more new occasions to shop.
For e.g. During the Dussehra/ Diwali sales of Nov 2016; spends on the top 3 online portals increased by 2.8x compared to the previous month. And the trend is getting more pronounced with each passing year. Amazon’s Great Indian Sale in May 2017 saw spends increase by 1.5x compared to the same period in the preceding week. Flipkart registered an even higher bump in spends, an increase of 5.4x during the Big10 Sale that same month. (Source: Kantar IMRB – eMarketPulse online shopping panel).
The data clearly shows the huge uptake in sales across categories during any sale period. This meets the Indian value conscious behaviour of waiting for a sale period before buying anything.
2. THE CONVENIENCE MINDSET: ‘ARE YOU BUSY?’ – THE GREAT TIME SAVER: Time is in short supply. In this day and age, all we want to do is cut down on
unnecessary time – time on shopping, grocery and actually spend that extra hour to recuperate from a hectic week at work, only to listen to the increasing crescendo of a child’s tantrum! Nevertheless, we are all still in search for that little extra time.
Lo and behold, the e-tailers are there, ever present, to the rescue. One of the e-tailers making life simple is Big Basket. Their smart basket reminds consumers of what they bought previously and prompts them to buy forgotten items. Now you need not even think. A list is always ready.
Amazon Pantry also offers similar convenience to the customer through their offer of ‘subscribe and save‘ whereby a consumer need not even remember there is a baby at home who needs diapers. Much like an auto debit, it will automatically get delivered to them at the right time. And very soon we will forget what a grocery list looked like or even the entire grocery buying experience at a local kirana store!
This kind of an innovation is also seen across categories right from e-grocery to e-furniture. Now you don’t need to hop from shop to shop or use your imagination to the fullest to wonder about the dark wood bed fitting in with a grainy texture wardrobe. Instead, e-tailers have started providing services which enable the shopper to actually try the product before deciding to buy. Many e-tailers are also trying virtual reality to give a sense of comfort to the consumer on how the product will look like with changing designs and templates – so that they are at peace with their decision.
And at the other end of the spectrum, there are also local drop off points wherein one can collect the delivery if the timings of the delivery do not work. All of these ‘conveniences’ will work very well to improve the e-tail footprint and convert more people into online shoppers. A few years hence, all one would need to do is push a button for everything to come to your place.
3. THE ENGAGED/INVOLVED MINDSET: Till date, the e-tailers were grappling with getting more and more consumers to try them – a challenge that continues to exist. However, as the consumer is evolving and undergoing new experiences in this connected world, their benchmarks are changing. A new breed of consumer is fast emerging who wants to be more engaged and involved in the entire shopping experience. To cater to this consumer type, e-tailers are offering customization as well as personalization.
Instead of bombarding consumers with notifications, e-tailers are focusing on targeted marketing. They track the purchase patterns and the browsing history to send across relevant notifications to consumers increasing the purchase opportunity. Many e-tailers are also experimenting with chatbots. Recently Titan has launched a chatbot on its portal to increase engagement levels with consumers who want to find products online quickly.
There are other innovations like virtual experience to cater to these kind of consumers. Nykaa offers virtual try outs of cosmetics using a skin palette. On an e-tail portal like Limeroad, one can shop for the entire look or even shop for a celebrity look – there are suggestions offered based on the consumer selection – accessories, footwear etc.
Last year, the travel portal, Ixigo launched an AI powered chatbot – a personal travel assistant. ixibaba will not only tell you everything you need to plan a trip but also give you real time information on weather, travel routes, flight timings, train status and more.
E-tailers and other digital natives have a head start because they have built their business models around collecting data and responding to customer needs. These companies build strong customer loyalty using both traditional vehicles, such as loyalty programs, and new models, like ‘free’ and short-notice delivery, automatic replenishment, and other forms of convenience. The deeper, direct connection enables digital natives to fully understand what customers need and create new ways to serve them, both independently and by working with suppliers.
According to data published by the Boston Consulting Group, brands that create personalized experiences by integrating advanced digital technologies and proprietary data for customers are seeing revenue increase by 6 per cent to 10 per cent—two to three times faster than those that don’t. As a result, personalization leaders stand to capture a disproportionate share of category profits in the new age of individualized brands while slow movers will lose customers, share, and profits.
The high level of customization and personalization is here to stay. It will be the key to diff erentiating across a plethora of options any consumer has.
4. THE ‘MAKE-ME-FEELSPECIAL’ MIND-SET: E-tailers are also trying to promote the select club among consumers and offer a huge spectrum of services much like the hotel industry does with its card holders. Amazon Prime makes its users feel special with deals only for Prime consumers like Prime days. With services like faster delivery, new shows only on Prime, exclusive deals only for Prime Members, a Prime exclusive is also meant to generate brag value much like the American Express Platinum Card. Players like Ola have launched Ola Select which help jump the queue. There are special events, promotions for those in the exclusive membership circle.
One also sees exclusive tie ups with e-tailers especially for the mobile category. A One Plus 5 was launched and was available exclusively on Amazon. Similarly, Flipkart had exclusive deals with Motorola and Xiaomi. There are a few international brands only available on Myntra. All these actions intend to make us feel not a part of the cattle class. But a part of something special which caters to only us!
5. THE CONNECTED MINDSET: OFFLINE, ONLINE, WHY NOT BOTH We see a growing trend of online players setting up offline stores to complete the consumer experience and to bring in more consumers in its fold. PepperFry is trying to beat the touch and feel barrier through their outlets. Myntra has opened its exclusive outlet for its private label. Others like Zivame and Nykaa have opened physical outlets to complement their online stores. The brick-and-mortar stores like Lifestyle, Max, Shoppers Stop etc are also focusing their strategy on providing the consumer the full experience by adding e-commerce portal to their offline stores. Omnichannel presence will be a must to ensure a seamless shopping experience for all consumers.
In conclusion:
To conclude, as we have seen in fair detail, the debate is not one of online or offline. They are both here to stay. The key to successful retail business is in linking up to basic, intrinsic shopper mindsets that define the Indian shopper. These shopper mindsets are universal; they transcend the online-offline platforms and are instead, drivers of behaviour. Success for the retailer (whether offline or online) comes from building on these insights regarding mindsets in crafting programs and interventions and more importantly, offerings that speak to these mindsets. Herein lies the success of the retailer.
The Indian retail scenario has been the stage for many innovative tactics – as brick-and-mortar retailers, across a gamut of categories, strive to stay relevant while online retailers struggle to outlive the ‘valuation euphoria’ to actually drive business value
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