Leon Pieters, Deloitte, Retail News, ET Retail
What trends do you see in the retail industry globally?
Consumers are looking to digital media to make more informed decisions about their purchases. That trend is growing. There is social media and also other data available on the internet, so the consumers are going to now make more networked decisions. This is happening for the products on the e-commerce channels and those available through traditional channels.
More and more traditional trade is now moving to e-commerce. Your dairy shopping is now moving to the e-commerce space. E-commerce players are also aware that they need to collaborate with traditional trade, and they are now opening outlets in order to give experience to customers. This is because consumers have shown a preference for experience in their shopping process. Consumers want to experience products for themselves in a showroom like the ones we have for cars. They are then placing orders in the showrooms via the internet for delivery on a later date.
How do you look at the Indian retail market at the moment?
I came for the first time in India 23 years ago. I am not an expert on the market. But I can tell you from the interactions I have had with the clients in the past 72 hours. E-commerce at the moment in India is at 1% to 4% and in the next few years, it will grow to 10%. The way millennials are using their mobile phones, going forward the purchase decisions would increasingly be made using mobile phones. I expect a rise in the middle class in the years to come. It will grow out of that 10% to even 30, 40 or 50% for different categories. That is my first observation.
Secondly, I am very much aware that the retail infrastructure here is a little different than the other parts of the world. When I say other parts I mean North America and Europe. I believe 90% of the retail is still done offline. The mom and pop shops are still around, a trend that we don’t see in the rest of the world. There is a specific requirement for trading and replenishing those mom and pop shops. We have seen how mom and pop shops can really benefit from digitisation.
Some of the Indian companies are providing a digital infrastructure to those mom and pop shops. So that will give them more insights on consumer behavior and there will be more data available. It will make a seamless experience for the owners of those of mom and pop shops. Some of the Indian companies are heavily investing in that because they understand that those mom and pop shops are there to stay. The global e-commerce companies realize that India is different from UK or China or France.
You spoke of the use of digital in the India retail space. Do you think the Indian market us heading the right way?
Couple of months ago I was in China. China as India is a huge country as well so a huge population. And in China I see everyone walking on the streets looking at their phones. So everything is digitized in China. The mom and pop shops there are also digitised. They don’t use credit cards for payments. They use Wechat or Alipay.
I don’t see that here in India. Penetration and viewership of the internet are at a different levels here in India as compared to the rest of the world. I am 100% sure that with the rise of the middle class and the use of mobile phones by millennial, that will see a change.
What kind of measures you think Indian retailers should take to enhance customer experience?
The consumer product companies need to position themselves in a way that provides additional information and builds a community. The digital experience is key as the larger purchases are made outside of the stores. In the shop itself what you need to do is really provide an experience. If you look towards an Indian shop in the past, it was more of a warehouse, where you have a lot of inventory. More and more stores are transforming themselves into an experience center.
In the consumer product companies, communities are upping the next level of loyalty program. In India, it is very relevant as you get certain perks and benefits from it. But you would like to also associate yourself with that community, especially for the millennial that is important. They want to belong to a tribe that could shape their digital identity to a certain extent.