The retail industry has a long legacy in India. In olden times, markets and fairs used to get set up over weekends and holidays. These were the primary source of entertainment for villagers, but slowly they became the hub for transactions of goods where people used to exchange and buy things they needed. As the country developed, a more common form of retail business came into existence. Most of the retail business started happening through convenience stores, also known as mom and pop stores, or neighborhood stores. In India, these small shops are commonly known as 'Kirana' stores. These stores still comprise a large part of the retail industry, and in every small town one can find hundreds of such stores. In India, Government backed retail stores are also popular. Co-operative stores, Public distribution system, and Khadi stores provide quality products to consumers at highly competitive prices. The retail industry evolved a lot in the last decade with the rise of EBOs (Exclusive brand outlets), supermarkets, shopping malls, and specialty stores. Ecommerce is disrupting and making a big impact in India's retail landscape. Currently it's a battle between homegrown FlipKart (now owned by Walmart) and the global leader Amazon. However, with changes in government policies we expect to see other domestic players such as Reliance start to make an impact in the online retail commerce.
The retail market is growing at quite a fast pace in India. With a population of over 1 billion people, India is a highly attractive market for domestic and global retail players. The total retail market in India is estimated to be around $780 billion, which accounts for 10% of the country's GDP. Out of this, 90% is unorganized retail business and around 10% is organized. Kirana stores form the major chunk of unorganized retail market. These shops dominate the Indian retail market, as most Indian consumers still prefer to go to the nearby neighborhood shops to buy daily groceries and consumable items. However, with the growth of eCommerce, fast free deliveries and organized retailers, this is starting to change rapidly. This is further confirmed by the projected growth rates. While Unorganized Retail market is expected to grow at just about 11%, the organized retail market is far ahead with expected growth rate of 19%.
Ecommerce, personalized recommendations and data analytics are helping retailers offer superior products and services to their customers. Deep analysis of online and in-store purchase and browsing history is helping retail players get a better understanding of their customers. This data helps with running targeted promotions based on individual customer's tastes, preferences and purchasing patterns. Decision trees and learning algorithms trained on neural networks are used to uncover patterns and trends that otherwise would have never surfaced. Products are being priced “correctly” based on live data streams from hundreds of signals. Data related to consumer demand and the competitor's prices is collected and provided as training data to algorithms that then calculate and determine the most competitive price. Retailers are also using technology to set real-time pricing based on demand, time, events and several other variables. For retailers, the key to success lies in creating a unique shopping experience for customers while they are physically present in the store. Data analytics and AI helps stores with identifying optimal product placements. For instance, certain products are placed near the entrance, checkout lines or on specific shelves to help realize higher conversion rates.
It is clear to retailers that will have to adopt latest technologies to stay competitive. Sensors and cameras are now being used to provide hassle free shopping experience to consumers. Amazon has launched a chain of convenience stores called Amazon Go in select cities where feedback from cameras and sensors is integrated with technologies like Computer vision and Deep learning. This combination of cutting edge hardware and algorithms allows users to simply pick an item and leave the store - no need to pay at the counter, no facial recognition required, no product scan required. This technology is not only automating the purchase process, but it is also providing very important data to Amazon that forms the basis of further intelligent solutions. For instance, the cameras installed in the Amazon Go stores not only capture what the users are picking, but they also store information about products which were picked up by the user, but were placed back on the shelf. This data is then used by machine learning algorithms to recommend changes that would lead to better conversions. Just how far the technology has advanced can be seen in the virtual fitting rooms being used by Tmall, a Business to Consumer (B2C) online retail company operated by Alibaba in China. Tmall recently launched virtual reality dressing rooms, also known as “magic mirrors” in select cities. These kiosks have augmented reality dashboards where shoppers can try clothes or cosmetics on their virtual avatars before making the purchase. The cameras installed in the kiosk take photos and prepare the full-scale avatar while the user browses through the various clothing options. If they like the dress, the Augmented reality system places the selected dress on the Avatar so that the shopper can see in real-time how the dress would look on them. If they decide to buy, they simply open the Tmall mobile app, scan the QR code for the selected dress, make the payment, and complete the purchase.
Big Retail chains are now using robots in different ways to enhance the in-store experience. Robots can recognize a customer and greet them when they enter the retail store. They can also converse with them using speech recognition software, or touch screens. Based on the conversation with the customer, they provide recommendations, or even guide the customer to the correct aisle in the store where they can find the product. Robots can also take a picture of the customer and store the purchase information and other details, so that the next time the same customer comes to shop, the robot recognizes them and offers loyalty rewards or other targeted promotional offers. These are only few examples of the impact of technology on the retail space, but these go to show that the level of innovation possible today is only bound by your imagination.
As more and more companies are entering the lucrative retail market, competition is only getting tougher. A big chunk of retail business still happens offline - through brick and mortar stores. At the same time, people are spending several hours a day on smartphones and computers. 'Online to Offline (O2O)' offers the potential to leverage mobile technology to drive offline sales and create new business opportunities. The O2O model connects consumers who are online with physical stores, making way for a seamless retail experience. This integrated O2O marketing strategy has resulted in generating new customers as well as increased sales for both online and offline channels. Let's take an example of restaurants. O2O model now enables consumers to browse food menus of their favorite restaurants on their smartphones. They can pick their favorite dish and place the order on the way to the restaurant. When they arrive at the restaurant, their dish is ready and they simply have to pick and move.
Retail giants who have been able to successfully integrate their online and offline businesses are taking away market share from competitors. For instance, the recent tech investments and renewed focus by Walmart are already reaping big results and it is starting to give Amazon's retail business a run for its money. The line between offline and online retail will continue to blur.
Artificial Intelligence (AI), Machine Learning, Robotics and Internet of Things (IoT) are pushing retail and commerce into the next phase of the connected experience. The result would be superior customer service, easier and safer shopping experience, lower costs, better inventory and logistics management, and a lot more exciting innovation in retail.
