With the rapid influx of new players, both online and physical stores, the growth of the retail sector has become inevitable. India’s retail market is expected to double to US$ 1 trillion by 2020 from US$ 600 billion in 2015 driven by income growth, urbanisation and attitudinal shifts, as highlighted by the Boston Consulting Group and Retailers Association of India.
The retail industry has undergone a major shift in the past couple of years. Life is good for the consumer; everything seems to be available everywhere, not just across different outlets in different cities, but also at different price points across physical and virtual stores as well, with the rise of e commerce. Consumers are enjoying the omni-channel experience. The retail sector has emerged as one of the most dynamic and fast paced industries. Today, one can purchase virtually everything, from gadgets like smartphones, tablets to accessories like wallets, belts, shoes, clothes to perishable items to groceries online. Mobile apps add another dimension to the rapidly changing retail industry.
With India being the fastest growing mobile app market in 2014, while downloads will triple globally, it is expected to grow six fold by 2015 in India. Among the plethora of apps being used and developed, shopping apps will lead the way as per a report by KPMG. India is the fifth largest global destination in the world for retail and with myriad players operating, it will be a predicament for most companies to sustain and stay competitive.
Apart from their core focus area of offering desirable products to the consumers, what will help the retail industry stay afloat and also help players drive competitive differentiation is how they use IT to understand customer behaviour and act on it. Big data, a term familiar to most, and analytics, consumption of this data will be the game changer.
How does a retailer decide what the consumer wants? Data analytics can give retailers accurate answers. Efficient platforms that can store the vast amount of data generated intelligently will become crucial in determining business success.
Data analysis benefits
Benefits of using big data analytics might seem as an extra cost or a burden in the beginning but it will help retailers grow in the long run.
Right pricing- real time: In today’s hyper-competitive sales environment, buyers compare prices with a click and share their experiences on the Internet—good, bad, and ugly.
Traditionally, retailers lowered prices enormously at the end of a season to make way for new merchandise. Analytics suggested they would do better by selling items at a lesser discount earlier, when the demand was starting to sag, but before it hit a low point in an attempt to out-crunch their rivals to success.
Superlative customer experience/Personalisation: Having previously made a purchase, for instance if a consumer purchases a power bank, the power of big data analysis enable retailers to offer him/her with discounts when it comes to buying other mobile accessories online without the consumer asking for it, thereby – ‘Reading the consumers’ mind’ and providing them with the right possibilities.
Smart Merchandising: In a number of cases, consumers may add the products to the basket but may not purchase it when it comes to buying online. With Big data analytics, a retailer can actually map on to those customers as well and offer discounts on those products to the customer so that he/she may buy them if, in case, the reason for opting out is the price.
Increase profits in the long run: Use of analytics helps retailers turn inventory faster, improving both gross margins and optimise retail prices.
Predict what the future holds/Predictive analysis: Predictive analytics can improve retailers’ pricing, inventory control, customer service, and ultimately, their bottom line. With this tool, businesses can identify events prior to them occurring and help in avoiding any issues that may lead to losses as well as take the lead over competition.
It may look like a conflict between Apollo and Dionysus at present, but we all know, big data analysis has big gains on the horizon for both online and physical stores. Data storage and management forms the bedrock on which insights are drawn. Big data will mean big business for Indian retail, and eventually the consumer will benefit. It is certainly exciting times ahead. It means better shopping after all!
((The writer is President, NetApp India & SAARC)