In a now viral clip, one of the industry leaders made a profound statement on his vision of organisation and industry in a post-COVID-19 world. His response was short and direct. He wants to treat each of India’s retail outlets, where his company’s goods are sold, to be unique units; getting a specific set of products in the right quantity to precisely serve the consumers of that outlet. Does this sound too futuristic?
The world ahead
COVID-19 pandemic is arguably the most disruptive event of this century. We do expect macro-trends and India’s consumption patterns to move back to trajectory in medium to short term, aided by economic stimuli. It is evident that this event will have a potentially irreversible impact on our lifestyle and our buying patterns.
Developed markets have seen a significant uptick in convenience store sales. In the developing market, there has been a resurgence of local general stores (a particular segment of the ubiquitous Kirana stores). As customers try to maintain social distancing and avoid large-format stores, local general trade has an unmissable opportunity to step up their digital game. New paradigms of consumer buying behavior (such as community buying, increased salience of pharmacy channels for FMCG) are observed, along with new O2O models and B2B partnerships for fulfilment.
In developing markets, platform players are taking a holistic approach towards this challenge. Through digital infrastructure, assured connectivity and host of useful business applications, they are laying the technology foundation to serve partners in the ecosystem.
Enabling a “data driven” retail ecosystemfor Retail 2.0
In our research, we identified three major constraints towards this implementation. Firstly, most Kirana stores are not in a position to invest in a computing infrastructure. Secondly, there is no value for them in a recommendation application alone that recommends assortments or order quantities. They also need a tool to do their day to day operations; starting with a point of sale. Lastly, unless they see tangible immediate returns to start with; there is no reason for them to stay invested.
A data-driven and analytics-powered application should be operating on mobile smartphones. Primary channel of communication should be a messaging application that can take orders, communicate, dispatch and facilitate payments. This application should also have the ability to conduct basic operations of a typical unorganized retail elegantly.
An intelligent processing engine on this can pick all data and send it for processing. Algorithms can be leveraged to use the collected information, blend it with micro-market trends and predict actionable intelligence like what to sell, which promotions can run better, etc.
Unorganiawd retail owners have a deep understanding of their customer base but often are let down by an unmatched supply process. With data-driven approach and digital reach, their human insight can be matched with the power of data and algorithms.
Winning over Retail 2.0
Figure 1: Possibilities with “Data Driven” Retail
As FMCG players navigate the unchartered waters of the post-COVID world, success would be predicated on being nimble and responsive to rapidly changing customer expectations and external factors. For example, lockdown rules may change dynamically imposing movement restrictions for consumers and suppliers. Demand from certain segments, and retail hotspots may continue to be subdued. A location-enabled micro-market level (pin code or even more granular at a retailer level) planning for sales as well as point of sales visibility and promotions will become really important to win in the new normal.
At the same time, it is critical to sense the early signals to identify long term trends. Businesses are trying to put together data driven techniques to get a sense of their demand and supply calibrated by realistic market data. The rich data from the connected retailers will also generate insights that could be leveraged for channel strategy, trade spend allocation to new product development.
Both are made possible by participation in the aforementioned digital ecosystem, and building a robust analytics platform that provides actionable intelligence.
In a new world
Finally, the digitisation of unorganised retail matched with the analytical intelligence of brands is likely to result in a superior experience for shoppers. Think of a time when your good and reliable family store will get two customised supply bags from the supplier for you. One will be a pack of your weekly essentials. Other one will contain a few “you may also buy” items. Chances are you will buy both!
(The authors are both partners at Deloitte India. Views expressed are personal)