Digital disruption in retail

Consumer

From the perspective of a brand’s interaction with its consumers, time and distance have been the major dimensions that have been decreased. This led to greater convenience for customers. Preference for instant gratification, enhanced shopping experience, sustainability, and easy access to social media have led to the creation of new-age consumers who are more confident and expressive in terms of how they think, feel, and act.

Brand

It is not only about maximising shareholder value alone but also about the impact that retailers have on local communities, the environment, and the social capital that they build. This signals the brand’s commitment to promote inclusion and celebrate diversity in a world where trust levels in big businesses have dropped to a historic low.

Product

Return on catchment or pin code is the key driver to defining product assortment at stores. It is no longer sufficient to track same store sales on return on investments at a store level. Shortening product life cycles and the dramatic increase in new product launches have also created the demand for agile and dynamic product portfolio rationalisation.

Store

A phydigital store is a place where the boundaries between the physical shop and the online website blur to provide a seamless experience to customers. Digital influence factors have increased across categories and brands usually struggle in aligning their digital content, transactions, and aftersales service to keep pace with market disruptions.

Channel

Direct-to-consumer models, such as exclusive brand outlets (EBOs), are witnessing increased investment from brands seeking to retain their relevance amid squeezing margins due to large format retail (LFR) and large marketplaces. While the share of multi-brand outlets (MBOs)/general trade continues to deplete, we see an increased focus on brands increasing their engagement with the top quartile of MBOs. The resultant changes in business models are visible across the three areas of demand generation, capture, and fulfillment. There are possibilities of dramatically increasing footfall, conversion, average bill value on the front end; improving merchandising, assortment planning, brand experience at the store; and driving better availability, demand sensing, and inventory rotation in the supply chain, by deploying asset-light digital technologies using the start-up ecosystem. This might result in retailers accelerating sales at a lower cost to serve to help build more sustainable and profitable business models for the future.