Recently, at the NexGen Retailers Meetup organised by the Retailers Association of India, I got a chance to listen from the man himself, one of the Gurus of developing modern retail in India, Mr. BS Nagesh, who spearheaded Raheja’s retail arm Shoppers Stop from 1997 to 2009. He is currently the Non-executive Vice President at Shoppers Stop and Founder of TRRAIN (Trust for Retailers and Retail Associates of India)
There were about 30-odd heads of Bangalore retail fraternity sitting in the room. He asked the room to give him a list of questions they would like him to comment upon. I present below the insights I derived from that session.
Know the Consumer: Yeah, we all know that. But seldom do we apply it in our business. We find it boring, and feel lazy to draw a customer avatar. At best, we draw a very basic demographic profile of the consumer stating their age, height, weight, name, location, gender, favorite movie, favorite car, places they hangout etc. Push yourselves to go deep. Go deep by asking the following questions :
What are their personal goals, business goals ?
What is their preferred source of breaking news ?
What are the 3 biggest challenges they face in life ?
What happens around them if those problems/challenges would not get solved ? What will their boss think, what will their friends think ? What will they feel about life ?
What is your customer secretly afraid of ?
What is it that really want in life, more than anything else ?
What is the best thing that could happen to them if the most painful problem in their life gets solved ?
Now, using these answers, write a story around it. And better still, get your team to write similar stories from their perspective. This brings me to the next point.
2) Empower your Employee: In Retail, the person engaging with the customer right there on the shop floor who has the maximum data. Your employee is your face at that time. That is where the action is. You need to absolutely empower your customer-facing to carry forward your vision, philosophy and do a flawless execution of the experience that you want to create for your consumer. Frequently, you hear customer-facing employees saying “Yeh Head office se poochhna padega. Sir yeh hamari policy mein nahi hai. Sir, let me get back to you about this. Sir, let me page my manager about this”.
Remember “Khidmat ~ Service ~ Seva cannot have a policy”. You have to carry the brand’s mindset to convert a prospect into a customer. You can’t put it on hold when the action is happening right there. So its wrong for a brand to first create a barrier to your philosophy by rendering the employee useless and making him a dumb waiter, and then when he does not convert a sale, you keep wondering why did we lose it ? Policy buried in brand manual kills active consumer engagement. Convert Policy into pro-active training and empowerment and it starts to spell Magic.
So empower your Store Manager, and Store Executive, and even your Store Janitor !!
3) Collaborate with your Complementing Competition: Instead of trying to Compete and Beat your Competition, try Collaborating. Infact, the word should be “CO-OPETITION, not COMPETITION”. If 3 competing brands are supplying goods to the same hypermarket, can’t they get together, share the truck and save logistic costs ? If a mom-baby apparel store is organising a Mother’s Day Sale, what stops them to call a Kitchen Appliances Brand or a Toy brand and invite them to participate in that campaign ?
4) It’s not brand loyalty, it’s BASKET LOYALTY – The customer comes to you for the experience that you deliver, instead of the product that you sell. In today’s environment, you can get the same product at hundreds of places. It’s the experience that you create for the consumer, which keeps bringing him back. A classic example is Muchhad Paanwala. There are 1000s of Paanwalas in Mumbai, but you keep going back to Muchhad at Breach Candy. You get Pani Puri at every nook and corner, but so many people swear by their own, personal Gol Gappe Wale Bhaiya – “Woh Bhaiya jis nazaakat se khilate hain, unke haath mein kuchh baat hi aur hai”
Try to make every employee in your store, a Muchhad Paan Wala !!
More than scheduling board meetings and forecasting, invest more in training your team for 100% Customer Delight. (A good read: Why Isn’t there a Nobel Prize for Customer Delight? )
There has been a case study about Nordstrom’s exceptional Customer Service. A Nordstrom employee has listed some of these in this Shopify article:
– A Norsdtrom salesperson rarely points. If you have a question about where something is located, they walk you there.
– Salespeople are taught to walk your bagged purchased around the counter to you vs. just handing it across the counter.
– Salespeople can offer to ring up your purchase without you ever having to stand in line. This particularly happens a lot in the shoe departments.
– Departments are generally trained to answer the phone on no more than the 2nd ring.
5) Somebody asked about traditional modern retail becoming wary of E-Commerce. Commerce is Commerce. Whether it is Electronic or Physical or Offline or whatever you may call it. Commerce can be multi-channel or omni-channel. Commerce is when the transaction happens between 2 parties. I think we have gone over-weight on defining E-commerce. Online Retail in the USA is 7% of total Retail, and In India, its about 5% in India.
So retail on the whole, still happens conventionally in most cases. Or it also happens with multiple touch points. You may hear a book from a friend (Social Touch Point), then you may see a TV mention of the same book, then you go to a nearest book store, and then you find a mention in the newspaper also, and then you finally buy it online.
He said and I quote – “It’s not about online commerce, as much as it is about Online Knowledge or Discovery”. Online marketplaces are mulling opening brick and mortar stores probably because they know catching upto 95% retail is impossible. They can max go upto 20-25%. Online is just a channel which fuels more commerce. You can’t isolate it and make it another kind of commerce.
Online E-commerce is not a threat to traditional retail, but a Messiah, a carrier to promote your brand.
6) OmniChannel: OmniChannel is not just about online and offline. That’s binary. But there are plenty of other dimensions to it. “Word of Mouth” is a channel. A courtesy phone call to your customer is also a channel. Think of your employee, your vendor and your customer has 3 important channels who promote and sell your brand. It’s ironical that Word of Mouth which is the biggest converter for any brand is not even taught in any institution. How do you generate Word of Mouth Referrals for your business ? If you think Word of mouth contributes to a significant part of your revenue, what are you doing to increase that ? If you answer this question, that becomes the starting point to define your OMNICHANNEL strategy.
If you get 1000 customers in your stores every month and out of the 1000, 100 customers fill your feedback or give you their contact information, are you making the effort to give them a personal phone call and asking them “Sir, you wanted a black striped Zegna Tuxedo. I saw that we have just got fresh stock. Should I come over to you to show a few designs, or would you like to visit the store some time?”
If my wife asks me that she has to go shopping for Sarees or Jewellery, I would take her to Old Delhi because that is where I can indulge myself in all kinds of Chaats, which the shopkeeper graciously orders for you. It’s a petty expense for him, but by creating this small experience, he ensures that you will come over more often.
7) Add Service to make the product Juicier: To extract more value out of the same transaction, add service components to it. Service has a fatter opportunity than the product itself for a decent markup. Combine both and you instantly increase the value of the same transaction. Say, a men’s suits retailer adds 1 year of free drycleaning coupons. Won’t that be a good value-add to charge more in the same transaction. Or a kitchen hob and chimney brand throws in a handyman service to clean your utensils and kitchen 2 times during the year (which can be availed when you throw parties at your house). What about a brand like Mom-and-Me, offering a dryclean service for your stroller within first year of purchase? Or a restaurant offering a chauffeur at the end of the meal, because you are high on spirits? Remember, when people enter your shop, their money barrel is loaded. They are ready to dispense cash. They are just looking for good value coated with a nice story or reason.
8) Depth is better than Width: Traditional retail brands after opening their first store, sometimes try to go wide by opening stores in different cities. If your first store is doing well, why not go deep by opening more outlets in the same city. Its much better to open 50 stores in one location, instead of poking the map all over and going cross-country.
9) How to increase profitability?: Remember, Sales are Generated by Customers, Profits are generated by Merchandise. Either you mark up the merchandise value, or you reduce the cost of goods sold. Profitability never increases by markdowns, deals, bargains, and discounts. As a retailer or a brand, if you keep thinking about markdowns and discounts, because of “fear of loss of a customer”, then you would never get time to focus on improving the value of the product, or reducing the cost of goods sold. Think BeSpoke. Think Private Label. You can create private-label products or bundle up different products to create a unique service offering and increase profitability. For example – WestSide has greater pricing power because they do their own private label Vs Shoppers Stop who has 65% of brands as third-party.
Think about how you can add more value to the same product and keep constantly marking up the price of the same product, because there are takers who are lurking around for a trigger to buy more from you.
Hope this helps. Please comment below and tell me one thing which you have applied in your business, to increase customer delight and basket loyalty ?
Before I end, I would like to end with a quote by Robert Spector (in the book – The Nordstrom Way)
“Never judge a book by its cover; open it up. If you treat a kid who is buying a $19.95 belt the same as a businessman buying a $1,995 Oxford suit, you will be successful. That kid might become a customer for life.”
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