The Indian retail sector has seen a high growth over the past decade with an emerging trend towards organized retail formats. The organized retail sector has today reached a share of 8-10% from an initial penetration of 2-3% a decade ago. There are multiple factors that have pushed the growth of Indian retail sector such as strong and robust economic growth, increased retail spending, growth in product categories that are retailed and emergence of innovative distribution channels such as smartphones. In such a powerful growth environment, it becomes critical for players to understand best strategies for higher profitability in Indian retail industry:
Figure 1Six Strategies for Indian Retailers to enhance their Profitability
- Customers are king
The first critical step towards enhanced profitability in retail begins with addressing the needs of consumers. Since consumers vary by region, state and street, it becomes critical to understand local market dynamics and accordingly arrange product assortments in an online or offline store, so that their diverse needs are met. It may be a good idea to hire a chief consumer officer whose job is to continuously understand and address the needs of customers.
- Unique value proposition
In a highly competitive market segment, it makes sense to position your brand with a differentiated value offering. Retailers that design a unique value proposition which sets them apart from the competition multiply their chances of survival in the fierce competition. In order to develop a consumer centric value proposition, it is logical to analyse customer feedback about your brand, and then devise strategies to serve them better. Innovative ideas should form the basis of your value proposition strategies.
- Customer experience matters
Retailers need to merge online shopping experiences with offline in store experiences so that each customer touch point is attractive. Some of the key strategies for a seamless customer shopping experience include effective inventory management, an integrated sales and operations planning process, multi-modal transportation networks, and training of staff for various management activities.
- Let data decide for you
Retailers need to harness the power of data analytics to take critical business decisions. Digital analytics provide useful insights to retailers for marketing, supply chain management and customer experience. Knowing who your customers are, what they need, and how the entire retail chain works makes you a smarter player. Remember, analytics is not a one-time feature. It needs to be continuously explored for customer preferences that keep changing with time.
- Invest in technology
An intelligent retailer understands that the only way to stay ahead of the competition is to keep investing in new technology. It is good to take bold risks, but one should always have a back-up plan ready for an unforeseen failure. It is understood that technology has a small shelf life, but continuous contact with customers is expected to me more effective than blanket marketing.
- Protect your reputation
When you run a business in a digitally charged environment, you are also exposed to potential risks of such technology. Be it social media or potential website hacks, you need to be vigilant about your digital assets.
These powerful strategies can definitely change the game for your company in a highly competitive retail sector in India.