Retail Operations Benchmarking and Excellence Survey 2014
About the Study
• The Retail Operations Benchmarking and Excellence Survey (ROBES) focuses on the state of multichannel retail in India.
• Consumers have increasingly taken to e-commerce, and retailers in India have responded by gearing up to run this emerging business model in tandem with their physical stores. This report looked at developments in this area to gauge the maturity of current practices and to identify best-in-class KPIs and processes.
• The report considers more than 40 Indian retail brands across four segments. It highlights the current state of affairs, the best practices to be pursued, and the improvement opportunities available to retailers
Focus Areas of the Study
Methodology
The research sample included senior management (CEOs, MDs), COOs or heads of operations, and directors.
A total of 37 participants with 44 retail brands between them provided over 1,200 data points across six functional areas: Organization, Operations, Customer Experience, Marketing, Technology, and Finance.
The survey was conducted across four broad retail segments – Fashion (apparel, footwear, and accessories), CDIT (consumer durables and IT), Department Stores, and Other Retailers (pharmacy, books, music and gifts, and food and grocery)
The survey also included interviews with e-tailers across the Fashion, CDIT, and Food segments to capture their views and some of their best practices.
Key Take Aways
Brick-and-mortar retailers have begun their multichannel journey in earnest. For most, non-store revenue is currently less than 3 percent. This is indicative of a high potential for growth.
The primary objective for multichannel initiatives is geographical expansion (21 percent of respondents) and revenue enhancement (18 percent), which is likely to be driven by the online marketplace as a growth channel. However, with an eye on improving customer experience (21 percent), retailers have a strong focus on their own ecommerce website.
With ‘showrooming’ affecting segments such as CDIT and mobile phones (who were early adopters of multichannel) and faced with customers who straddle shopping channels with ease, most retailers are making concerted efforts to re-invent themselves. They plan on doing this by understanding the non-store customer, offering a seamless experience, and revamping delivery and payment mechanisms.
Buoyed by growth rates of more than 15 percent, large retailers are leveraging non-store channels to reach tier-2 and tier-3 cities and farther flung areas where they do not have a brick-and-mortar presence.
Smaller players view this as an opportunity to compete on a more level playing field with chain stores: the non-store channel has led to a democratization of brands.
Retailers are increasingly looking to create specialized structures to cater to non-store channels. However, intra-organizational collaboration remains a big challenge. Collaboration between store and non-store channels is also a key challenge – some retailers (21 percent) are taking steps to incentivize cross-channel collaboration.
Operational hurdles remain. Most retailers are still finding their feet in terms of managing their assortment, order management, inventory, delivery, and payment systems. It is encouraging to see CEOs and COOs leading multichannel initiatives in 70 percent of the retailers who we resurveyed.
The Fashion and CDIT segments have been highly receptive to the online marketplace. There is a lot of commoditization and brand clutter in this space. Any kind of differentiation is yet to evolve.
Physical stores continue to enjoy higher loyalty from customers as compared with non-store channels. A key reason for this is the lack of a unified CRM program across channels. Non-store channels have demonstrated around 30 percent higher returns compared with physical stores.