Ready for the Retail Revolution?

As 2015 comes to an end, it’s time for an annual round-up of how the retail sector performed in 2015 and predictions for the year ahead.

While several researches in 2014 had revealed growing consumer preference for physical stores over online shopping, 2015 had upturned that notion. This year, e-tail took the industry by storm. While the number and popularity of e-tailing sites grew, poor service and inconsistency disappointed consumers.

A good retail experience includes great product, great service and a fun experience. This can come in all shapes and sizes, depending on what kind of retailer you are.

According to ‘India Online Retail Market Forecast & Opportunities 2016,’ India will witness several changes in shopping trends in the next few years. As India is set to become the third largest nation of internet users in the next two years, the e-tail market is expected to grow immensely, given the rising middle class in India with growing disposable income in hands and lesser time to spend in physical stores.

More brick-and-mortar retailers are stepping up their online game and increasing the percentage of their sales that come from online channels. Web-only retailers have been growing at an impressive rate too. For conversions and larger transaction sizes, retailers need to leverage trends that are currently transforming the retail landscape.

Millennials as key driver Retailers need to be aware of the unique preferences of the millennials and create shopping experiences that satisfy their need for trustworthy information, and personalisation of products and practices. This generation is already a powerful force in the market, and its spending power will grow.

They are highly motivated by peer recommendations on social media. They trust themselves and their peers more than they trust brands. To reach millennials, retailers need to invest in mobile, as they are the largest group of smartphone owners who grew up with anything and everything just a click away, making them impatient by nature.

Retail in 2016 will continue to be driven by the preferences of baby boomers and even more by millennials. Next year, we can expect stores to overhaul their strategies to bridge this gap between offline and digital channels.

Big data: Making it bigger Retailers will use data to get to know their customers and provide customised shopping experiences. One example is the ability to analyse footfalls to make better decisions and tailor customer interactions. Big data can now reveal precisely when specific customer groups will shop and exactly what they want. Retailers can then make targeted adjustments to staffing, product placement, marketing displays and prices. Detailed analysis of individual SKU (stock keeping unit) performance metrics can also allow retailers to adjust merchandise assortments and promotions, improving inventory throughout to avoid costly markdowns.

Augmented reality Imagine being transported to your favourite store while staying in the comfort of your own home.

Trying on jewellery without it physically being there. Or being able to see exactly how a new sofa would look within your living room.

Since the launch of Microsoft’s Windows Holographic, augmented reality has gained immense popularity in a short span. From virtual fitting rooms to interactive window displays, merchants are continuously finding ways to use augmented reality to draw attention, engage customers and improve their shopping experiences.

IKEA launched their augmented reality catalogue to enable shoppers to visualise how certain pieces of furniture could look inside their home. Not only that, the app also measures the size of the products against the surrounding room and fixtures to offer a true-to-life size where possible. We will see a huge increase in AR-centric efforts in 2016.

Personalised shopping experiences are more likely to motivate consumers than unfiltered user-generated content. Consumers are already tuned into the kind of shopping experiences they want.

They are finding the information they need to make purchase decisions, even if that means they are not getting it from the retailers themselves. They shop on their own terms via the devices they choose, at the times they want, from different locations. That doesn’t make retailers less relevant; it has the power to make them more relevant if they can provide those experiences seamlessly and give customers the information they want.

To become a trusted partner in consumers’ buying journey requires tremendous change. But after the doomsdayers of the early e-commerce movement, retailers should be heartened: Competing in this new environment of always-connected, highly-informed consumers won’t be easy, but it can be rewarding.

We believe there will be a clear drive to review and improve retail standards and the customer journey.

Yatish Mehrotra is Head- Branded Retail, Tata Teleservices Ltd

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