Retail’s technological evolution can be described in 3 major shift over the last 20 years. The first shift had to do with business process automation in what is called the package software era, where retailers were getting their ERP and CRM strategies in place.
The second shift was during the spread of the internet and e-commerce, where brick and mortar retailers were challenged by pure play e-commerce startups like Amazon and Flipkart. With no proven models or products, every retailer had a different strategy. Technology was evolving fast and Indian retailers were scrambling for the right kind of skilled resources.
The third shift came in the form of digital businesses where consumer technology grew faster than businesses could adopt or adapt to them. This is the era of Uber’s and AirBnB’s where an entire business is built on the back of a digital platform.
Indian retailers, to be relevant and successful, need to make fundamental changes to how they approach business priorities, strategy and investments. Retailers are currently competing with the platform approach that uses data as a currency, because everything retail, is going digital.
Agility of working with market changes will be the key of a successful retailer in the future be it online or offline.
This technological shift implements a chat or messaging platform that uses text or voice (natural language) to communicate. When artificial intelligence and machine learning is added to the mix, the chat bots (or personal assistants like Siri and Google Now) interact with brands, products and services across time and geography, with an informed context of the customer.
Conversational Commerce will ensure human (and human like) conversations, on a digital channel, lead to product discovery, recommendation, promotions, commerce and logistics.
Digital platforms will evolve to bridge the gap between big and small retailers. The capabilities of ‘going’ e-commerce is not limited to the bigger brands alone. In fact, smaller retailers with a limited product mix, go online a lot faster than their bigger contemporaries.
Conversational Commerce is a service offering. It is as simple as taking a brand to Facebook and leveraging the benefits of an integrated ecosystem that give customers, a seamless user experience. It opens up the opportunity for retailers to tap into existing platforms like Facebook messenger, Whatsapp or Wechat that are ruling their space and can innovate faster, better and already have a formidable customer adoption.
As businesses need not develop the capability, in-house, the entry barrier on Conversational Commerce is very low.
Strategy for meaningful businesses
Indian retailers, to stay relevant, will have to re-evaluate their future investments in 3 specific areas or horizons to build solutions and new businesses that will allow significant disruption.
The short term strategy involves evaluating traditional approach to overcome current challenges and extend existing investments to defend market position. During this phase, businesses grow to redefine capabilities, rationalize their business core offering and explore partnerships.
The mid-term strategy is investing towards meaningful business models to create new markets, products, services and unbundling existing offerings. These investments are usually made in technologies and approaches that have been developed outside of India and have a future as the market, business and its customers evolve.
The long-term strategy is disruptors completely reimagining the future and building products or services for an entirely new generation. Exploration and experimentation with technologies, existing only in labs, create viable options for the distant future.
Every business is equipped to be a viable digital business. However, the investment, change of mindset and strategy, for the journey need to be drafted and followed upon, from today. Retailers should invest in the following to be truly digital businesses:
1) Digital Strategy - Defining future business
2) Digital Transformation - Bringing technology to the core, not as a support function of the business
3) Digital Platforms - Making long term IT investments to encourage platform thinking. As these IT investments have to last longer than the changes in consumer preferences (from website to mobile apps to gestures, augmented reality. This is because the foundations of a digital business need to be infinitely scalable.
Mobile apps are a great channel to reach customers. But that’s all they are. On an average, there are not more than 15 to 17 regularly used apps on a phone. Most apps’ reason to exist is keeping in touch - social networks and messaging platforms or to avail a service - hailing taxis, buying groceries, finding competitively priced products etc. Just as during the internet boom, where every business wanted a website - today, every business wants its own app.
Current retail app strategies is to load the app with discounts but this strategy of creating a ‘price war’ is self destructive to the business and to retail brands in the long run.
A retailer’s mobile app strategy is successful when it adds value, to the time that a consumer spends with the former’s brand. If consumers do not see a reason to come back to the app, more often than not, the app gets deleted. This is what makes celebrating ‘app downloads’ an irrelevant metric as opposed to the number of active users.
Extracting knowledge from data to inform innovation and business decisions across the economy is big business with astronomical possibilities. The limits of this, only lay in the capacity for insight-producing software, algorithms and computer models.
Search engines, websites, electronic transactions and indeed, all of the 21st century data generating tools and activities create a cascade of information. This information is mined by data scientists who understand the demographics, needs, wants and preferences of entire markets.
This in-depth data interpretation enables marketers to better understand customer motives and behavior. Thus, enabling marketers to craft tailored, intelligent marketing and customized manufacturing (with data-enabled smart machines and 3D printing) that hastens the decline of the one-size-fits-all era for many products and services. While the level of personalisation will become the differentiator for retailers, the technology for this exists today.
The race to be relevant in the digital era is something of a challenge, not just for Retail India but for retailers across the globe. Businesses are on a constant journey of adopting digital technology to transform inside out while also, building solutions through continuous dialogue and feedback from customers and stakeholders.
Retail is a consumer-centric business where choosing to define in-house solutions rather than co-creating it with consumers, is a poor choice.
Indian retailers, in particular, need to embrace business agility when approaching technology. They need to move from packaged software to scalable, modular and flexible platforms, from monolithic code bases to microservices architecture and from a ‘do everything in-house’ attitude to inking the right partnerships.
Over the last 3 years, I have seen the acceptance of technology as a first class citizen in boardrooms. The acceptance of technology as core to the business rather than a support function is evident. The dialogues at IRF are more around ‘how to make it happen’ rather than ‘should i wait for someone to do it first’.
Every CIO and CEO that I have met at this year’s India Retail Forum was wellread on, aware of and concerned with the fast pace of innovation. They are honest about their struggle, to keep their organizations nimble, agile and attractive to the best talent. They are eager to partner with companies like ThoughtWorks who can heavily influence if not shape their Digital Strategy, Digital Transformation and Digital Platforms.
There is a lot of hope that inspires the innovation, in Retail Global and Retail India. Businesses are experimenting with future technology or making current IT investments more robust, flexible and infinitely scalable.
In India, people are going to be social while still needing physical experiences, but a lot of that will be augmented with digital experiences and most of it will become seamless (the experience across multiple channels, from product discovery to service will have no drop/friction in customer experience) in the next 3-5 years.
The new generations of digital natives are experiencing the internet for the first time, sometimes exclusively, on their mobile devices and this phenomenon will not be limited to just the urban population. Internet and mobility is transforming rural India and unlocking value and domestic consumption - without making the investments in getting the physical footprints to grow retail brands
(The writer is Market Principal, ThoughtWorks India, a global technology firm)
Published Date: Nov 01, 2016 02:55 pm | Updated Date: Nov 01, 2016 02:55 pm