Indian Offline Giants trying to Crack the Digital Code
With rapidly changing technology driving a revolution in consumer behaviour, the Indian retail market is witnessing a big shift in its marketing strategies. Years ago when someone wanted to buy a television, they would go to a local store, look at the options available and buy a TV on its face value based on their budget. Today, a customer has access to Internet on the go and they can browse a brand’s website online, learn about a new product through email or a YouTube ad, read reviews about it on various forums or social media, check it out in a nearby physical store and ultimately buy it at a great discount online along with a cashback offer that they found on their bank’s website. One of India’s largest cashback websites – Zingoy has bank offers circulating on its platform almost daily.
In short, advance in technology has thrown up new and greater possibilities for retailers to reach their customers. Thus today, the new challenge for retailers is to provide a seamless experience and consistent communication to customers across all channels. Omni-channel retailing is like weaving a spider web- perfectly uniform as well as strong.
Majority of the top retailers selling online in the USA today are omni-channel retailers, which had started out as brick and mortar stores. But are India’s biggest offline retail giants utilizing the full potential of the various opportunities presented to them through these varied marketing means at their disposal? Or are they struggling with the complexities offered by these multiple options?
Let’s take a look:
Reliance Retail’s journey into the online world began with RelianceFreshDirect.com, now RelianceSmart.com, which offered fresh groceries, dairy products, packaged foods, and confectionery and personal care products. Supported by Jio broadband services, reliance plans to take be India’s top online grocery store, giving tough competition to Amazon Now, Big Basket and Grofers. In April 2016, it launched AJIO, a high-end online fashion store, Reliance Retail’s first pan-Indian ecommerce venture.AJIO is considered the ultimate fashion destination for styles that are handpicked, on trend and on a much better budget than one can expect.
Reliance was also the first of its kind that took the revolutionary step of making voice calls completely free and brought data prices to rock-bottom. Their invention of Jio, the company was in stark contrast with that of a traditional telecom company that made money simply by selling SIM cards.
Going forward, the new Reliance, which aims to get 50% revenue from its consumer business such as retail and telecom, plans to leverage its network to create business models in areas such as education, health, entertainment, banking, etc. The company wants India to take the leap in internet services in areas such as smart devices, energy, and digital transactions.
It is expected that Reliance will have more than 2 billion connected IoT (internet of things) devices in our country in the coming two years. Jio aims to connect at least 1 billion of them on its IoT platform, which is expected to be a ₹20,000-crore a year revenue opportunity! 5G will also be a significant milestone for the company’s future.
Reliance Retail has plans to compete with market leaders, Amazon and Flipkart by offering a wide range of products and same or next-day delivery. The conglomerate has plans to integrate this new online shopping model closely with its Jio app. It aims to overtake the current e-commerce leaders by 2020-21.
Future Group entered e-commerce earlier than others with Future Bazaar but it experienced little success and was soon shut down. Big Bazaar Direct was its assisted e-commerce venture, in which franchisees sold Big Bazaar products to customers with the help of a tab. It was launched in 2013, and closed down in 2016 after it failed to become viable. It also acquired the home décor site FabFurnish, which is now called HomeTown and serves as the online arm of Future Group’s flourishing home décor venture launched in 2006.
While trying to learn what not to do in e-commerce, Future Group has always kept itself entrenched in the online game through partnerships with Flipkart, Myntra, Amazon India. It had also hosted the Mahabachat Sale with Snapdeal and tied up with Paytm to allow Paytm users to make online purchases at Big Bazaar. It even launched fbbonline to offer a better shopping experience to customers. The only real success Future Group has tasted online is with the promotion of Brand Factory sales. The views and engagement generated on a discussion around any Brand Factory sale in the forums of an online shopping community called DesiDime, stands testimony to this fact.
After terming e-commerce as an expensive affair, Future Group had previously announced its plans to launch a new digital model, Retail 3.0, which was to merge technology with brick and mortar retail. Baptised Tathaastu, this new model will allow customers to get anything they want at FutureGroup’sEasyDay department stores using Whatsapp, voice-ordering or an application. Combining an ambitious expansion plan with artificial intelligence, Future Group founder and chief executive officer (CEO) Kishore Biyani explains why he’s placing bets on layering technology over his brick-and-mortar store network.
He states “The future of retail will be driven by data science and customers experiencing a seamless journey between the physical and digital worlds. For this very purpose, Retail 3.0 a high-tech and high-touch environment had been constructed. The first phase was about high-touch physical stores. Then came the conventional, pure online models. Data science and artificial intelligence is transforming the way we engage with customers and the way we fulfil orders. Every product or brand a customer chooses, tells a story about the customer. On average, there are almost one million customer transactions that take place across our businesses per day. Customers buy food, grocery, fashion and home products from us. They visit us multiple times, often within just a month.”
Future Group now aims to continue on their agenda to be a part of the new digital world that will last for the next three decades.
Only recently, in September 2017, Aditya Birla announced that it is closing down its two-year-old e-commerce venture Abof.com, finally caving into intense competition from Flipkart and Amazon. A year before that, Trendin, the first online arm of Madura Fashion & Lifestyle, a subsidiary of Aditya Birla Nuvo, was also shut down to have separate websites for each of its brands- Louis Philippe, Allen Solly, Pantaloons, People online, Peter England, Planet Fashion and Van Heusen. However, that was a move from e-commerce to omni-channel taken for offering their customers a richer brand experience, greater engagement and multiple channels.
Aditya Birla Fashion and Retail (ABFRL) has also been using kiosks in its physical stores to help customers discover new catalogues and collections. This textiles-to-telecom conglomerate has taken omni-channel to another level in India by launching the Van Heusen Style Studio in January 2016. This store is equipped with cutting-edge technology like a virtual mirror, fits scanner, and tablet-bearing sales assistants. Here customers can choose their style, size, colour et al and try the ensembles virtually without entering a physical trial room and the store records all their selections and purchases by simply asking them to register and create a customer ID.
As recent as March 2017, ABFRL adopted ‘My Collection’, an industry solution, to bring its customers innovative collections inspired by customers and trendsetters, in around 7,000 Point of Sales. Clearly Aditya Birla realizes that the role of physical retail stores has to evolve to stay relevant in this digitally evolving scene.
The oldest business giant of India, Tata Group entered the e-commerce space with Croma Retail Online in 2014, and recently marked the territory more aggressively with its very own online marketplace, TataCliq, in 2016. It is India’s first-of-its-kind phygital store offering customers the choice of buying online and picking up/ returning their orders offline, providing shoppers the reassurance of in-store experience and convenience of online shopping.
Apart from the online vertical, Infiniti Retail (Tata Group’s retail arm which runs Croma) had also launched the smaller and hipper Croma Zip Stores and tinier Croma kiosks in malls and airports in order to reach their customers through different channels. It also offers the click-and-collect facility across the chain of Croma stores in India to provide a seamless shopping experience to its customers. Today, the online arm of Croma has become so strong that Tata Group even ended its strategic partnership with Snapdeal. Probably, Tata is the only offline biggie to have made a decent impact in the Indian e-commerce space.
Around 14 Tata companies have partnered with Tata Insights and Quants (Tata iQ), a Big Data company incubated by Tata Industries Ltd, with a result, they added around Rs100crore cumulatively in just 18 months by cross-selling, upselling or by changing the way they served their customers. The best example of it is Tanishq, the jewellery arm of Tata, which increased its in-store sales by 30% by running carousel ads on Facebook.
Recently, Tata Sons chairman N Chandrasekaran spoke of a new digital business that the group was in the process of setting up. “We have created a new company called Tata Digital,” he said. Tata Sons has infused Rs 1,000 crore by way of equity, he said. “The company will create a number of digital platforms. We have already identified the platforms we want to create. The first platform is already being built and the next two to three platforms are in the process of being developed,” he said. “So, each one of these platforms lets us (focus on) a particular segment and particular need-some will be B2C platform, some will be B2B platforms, some will be B2B, B2B2C platforms.”
K Raheja Group
InOrbit Malls, a group company of K Rahega, are the first in the country to go omni-channel. From building its digital community, connecting with audiences through social media and mobile app, to providing customers exciting offers while they shop, InOrbit Malls is doing it all.
Shoppers Stop, the department chain owned by K Raheja Corp Group, is also aiming to bring about 20% digitally influenced sales by 2020 by implementing Connected Mobile Experience (CMX) across 80 physical stores in India. The initiative is already helping Shoppers Stop gather deeper insights into customer preferences and behaviour, and it enables its employees to collaborate with colleagues from other locations to make faster decisions and quicker resolutions for the customers. The online arm of Shoppers Stop has already been in operation since 2008, while its smartphone app was launched in 2016 to enable shopping on the go.
By simply offering guest Wi-Fi in stores and automatically recognizing registered devices, Shoppers Stop has been able to help its shoppers discover better shopping possibilities, develop deeper loyalty and experience greater convenience, personalization and engagement in stores.
HyperCITY Retail, another part of K Raheja, that had announced its plans to focus on smaller stores and launch its own website as part of its omni-channel strategy, was acquired by Future Group in late 2017.
On the whole, ever since the exponential growth in the e-commerce market, these offline giants have tried their hands at running an online store of their own, albeit with little success. Consequently, they are now using their online channels to leverage and promote their offline business, educate customers and acquire new customers but not really for making sales or penetrating the online e-commerce market.
One of the reasons behind this is that these offline giants still hold a myopic view of things. Their averseness to deep discounting and keeping the business running while enduring losses reeks of traditionalism. Even their online arms like the Croma Retail site had a lot more complexities built into them compared to pure-play online businesses. Although the transition is quite significant, what is needed is a bigger change – a cultural shift and forward-thinking because the current 90%-10% split of offline-online market could easily become 30%-70% or even 40%-60% in a matter of a couple of years, and then it would be a lot more easy for these biggies to gain an upper hand because they already have the logistics, branding, customer care and everything else in place.