2018 RETAIL ASIA-PACIFIC TOP 500
OVERVIEW were present online, and vice versa. As a result, what consumers started to seek was an end-to-end, completely seamless experience. For instance, a product bought online could be picked up from a store, or repaired at a physical store, or could be returned or exchanged at a store. Similarly, if a product was bought offline and there were issues with it, consumers preferred to use the online channel for complaints. Shopping was no longer about a retailer or a channel; it reached a level where consumers preferred retailers which allowed them channels to interact with them directly, both online and offline. This became even more prevalent due to the rise of mobile Internet retailing, which allowed consumers to constantly be in touch with the retailer, from the point of research to the acquisition of the product.
Technology becomes an intrinsic part of retailing in 2017 Technology became an intrinsic part of retailing in 2017. From the consumer’ s perspective, the use of smartphones to research information about a product, find the best price offered by retailers and buy it became a very common practice. Even when it came to payments, due to demonetisation, the use of payment wallets and cards became a common phenomenon for most retailers. The use of smartphones was also a common practice for offering discount coupons with QR codes. In general, with the help of smartphones, the entire retail experience went through phenomenal change. One of the most successful strategies employed by retailers was the use of social media to address consumer grievances. Irrespective of the retailer being online, offline, mobile or omnipresent across all channels, retailers responded to any complaints posted on social media immediately, within 24 hours.
From the perspective of retailers, the use of technology was visible in terms of their product displays and social media presence. Van Heusen set up a virtual mirror in one of its flagship stores in Bangalore; consumers could stand in front of the mirror and try on clothes virtually, without having to actually try them on. Similarly, Soch, an Indian clothing retailer, had videos of models exhibiting its latest collections right in front of the entrance of the stores, generally on the store entry walls. These practices helped retailers attract footfall to their physical stores, helping consumers to engage in the whole retail experience.
Convenience emerges as the strongest parameter when choosing a retail channel One of the key shifts in retailing practices in India was observed in the selection criteria. Indians were driven more towards price than any other parameter when making a decision regarding their retailing habits. However, over the course of 2017, what emerged as a strong parameter for consumers in their selection process for products, channels and brands was convenience. Indian consumers, primarily millennials with higher disposable incomes, did not mind paying more for a retailing experience which was more convenient than the cheapest option. This was prevalent across both grocery and non-grocery retailing. Consumers in metropolitan cities preferred to order their groceries online, even if the price was marginally higher than the small neighbourhood kirana stores. This was driven by the convenience that the online channel offers, which kirana stores do not. Similarly, for non-grocery products, consumers preferred retailers which had a presence across both online and offline channels, as it allowed them to have a more seamless experience, and more options from which to choose in terms of delivery, products and payment.
Second- and third-tier cities become the new target for expansion for modern retailers One of the primary challenges that retailers face in India is a lack of good real estate locations at reasonable prices in urban areas of the country. The presence and expansion of organised retailers is very dense in urban areas. Metropolitan cities such as Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bangalore are among the most sought-after for retail presence and location. However, real estate prices are consistently high, which is a major cause of concern for retailers. As a result, retailers started to look at second- and third-tier cities. Apart from real estate prices, another reason why second- and third-tier cities have become lucrative for expansion is the rising demand from semi-urban consumers for brands. The lack of presence of most international brands and a major proportion of national brands in these areas led consumers to resort to the online channel. Retailers have realised this new market, and naturally plan to tap into it. A few retailers who have already expanded in these areas are D-Mart, one of the fastest-growing hypermarkets in India, which opened a new store in Zirakpur, a satellite town in Mohali, Punjab. Similarly, BigBasket. com, a leading online grocery retailer, delivers to Huskur Village, which is outside Bangalore, and H & M opened a store in Mohali, Punjab.
Private label becomes a major source of income for retailers Grocery, non-grocery and Internet retailers focused heavily on private label brands in 2017. Consumers were no longer only price-specific, they cared more about the quality of products. As a result, brand loyalty witnessed a dip among consumers, which led to an increase in private label consumption, as consumers were more interested in the product than the brand. Furthermore, private label products are often priced marginally lower than national brands, and the quality is similar in both cases, thereby giving more incentive to consumers to buy private label. BigBasket. com’ s Fresho brand in fresh food and vegetables has been a success for the retailer; similarly, it is now common for consumers to buy Spar’ s private label groceries. This is also visible in non-groceries, whereby Shoppers Stop, one of the leading department stores, has 16 private label apparel brands.
— Shekhar Anand, Analyst
INDONESIA
Changes in consumer behaviour significantly weaken the retailing industry Given Indonesia’ s large population and current demographics, coupled with favourable governmental policies that encourage the nation’ s economy to grow, the country is deemed as a potential market for not only local players but also foreign players. However, currently the growth rate in Indonesia’ s retailing industry does not look as enticing as before. This is due to several factors. From a macroeconomic perspective, the weak start to 2017’ s consumption rate was attributed to lower income growth, followed by increased electricity rates for the middle-income population. It could
46 Retail Asia June / July 2018