Digital retail transformation- In store

Brick-and-mortar retailers have a significant opportunity to leverage digital technologies to transform the store. Digital upgrades will help keep up with shoppers' demands, whether it be "scan and go," personalization or buy online, pick up in-store (BOPIS). Beacons, connected IoT devices, and smart digital hubs/stations allow for better customer engagement and rich in-store experiences. The technologies offer a wide array of opportunities: from indoor navigation, contextual promotions distribution, and customer self-service. By adopting innovative payment methods, retail brands move fast toward the digital future.

From Apple Pay to Tesco payments, consumers will soon be switching from cashless to cardless, so businesses should be able to keep up. Let's take a look at what retailers should evaluate when working towards in-store digital transformation, and how they can create real value for their customers.

With the help of augmented reality, Sephora allows the customers to "try on" their products. Namely, the company has built a virtual "Visual Artist" tool. After uploading your photo through Facebook Messenger, this smart chatbot will help you visualize different makeup styles and products, provide personalized suggestions, and offer some items you might want to purchase.

Another similar tool acts as an augmented reality mirror that simulates makeup on the user's face in real-time.

 Nike's new flagship store in New York, dubbed "House of Innovation 000," embodies the store of the future, with an app that creates digitally connected journeys for consumers to utilize mobile checkout, request try-on items throughout the store, or instantly shop in-store displays.

 Think of furnishing a home and IKEA will likely come to mind. IKEA has heightened user experience with the help of a mobile application utilizing augmented reality (AR). IKEA Place, available on Android and iOS, is basically an app that allows you to fit pieces of furniture in your house, using AR via a smartphone's camera. However, utilization of augmented reality is not the only thing that will help IKEA reach its clients. It has launched an idea hub called Space10, a research and design lab aimed at creating smart products and solutions.

 Starbucks has one of the most successful digital transformation cases in food-and-drinks retail. This coffee shop chain has launched its "internal venture capital-style incubator for digital technology," Starbucks Digital Ventures, back in 2009. One of its first products, its mobile application, became an integral part of the Starbucks digital ecosystem.

Another major innovation introduced by Starbucks as part of the company's digitization is its Mobile Order & Pay (MOP) feature. This means that customers can order their drinks in advance, pay directly within the app, and pick up their orders at the store. The benefits of such a system are obvious: It eliminates waiting, provides a convenient and secure payment option, and increases the store's through-put by reallocating labor from the register.

As a result, 6 million orders and transactions are served by the MOP every month.

Grocers such as Kroger have been quick to react with the launch of its "Scan, Bag, Go" technology last year, and many others have launched new technologies to accelerate the checkout experience. While eCommerce and mCommerce are considered the future, Amazon has implemented an advanced option for shopping in traditional brick-and-mortar stores. Amazon GO has thirteen stores in New York, Seattle, Chicago, and San Francisco.

What is special about those stores is that there is no need to pay for the purchased items in the store. The new store concept is part of the Just Walk Out Experience, because – with the app – that's all you do to purchase something. After downloading Amazon GO app, customers connect their Amazon accounts. Using computer vision, sensor fusion, and deep learning algorithms (a subset of machine learning), in-store devices indicate which items were purchased by a customer.

After customers leave the Amazon GO store, the Amazon account connected with the checked application is charged for the purchase. You can watch the Amazon GO introduction video to see how it works. But the industry is famously slow to adopt new technologies, and many retailers wind up sticking to legacy operations for fear of upending painfully tight profit margins.

According to a recent study by Oxford Economics, only 3 percent of retailers have completed company-wide digital transformation projects. That's an easy statistic to avoid in today's burgeoning technology landscape.

 According to Hitachi consulting survey, the largest barriers to improving digital maturity are a lack of internal strategy and a lack of knowledge and understanding of digital transformation, both at 29% of responses. At the same time, management buy-in was cited by a surprising 19% as an inhibiting factor, suggesting that despite the clear and present need to invest in digital, almost one in five firms are led by people reluctant to believe the hype.

Further to that, concerns over these barriers led a quarter of respondents to state they were "scared" to digitally transform, citing a lack of understanding around how best to begin transformational projects, coupled with a heightened fear of risk. If retailers are to survive this troubled period, then getting over these fears may well prove to be essential over the coming months.

 Credits:
https://www.zdnet.com/article/10-vendors-enabling-digital-transformation-in-retail/ https://www.mytotalretail.com/article/the-journey-towards-in-store-digital-transformation/ https://insights.samsung.com/2019/02/04/the-emergency-of-digital-transformation-for-brick-and-mortar-retail/ https://www.cio.com/article/3394047/best-practices-for-digital-transformation-in-retail.html https://www.altexsoft.com/blog/business/digital-transformation-stories-how-starbucks-ikea-walmart-and-sephora-revolutionize-retail-industry/ https://www.forbes.com/sites/nikkibaird/2018/03/13/what-digital-transformation-actually-means-for-retail/#6cd98c097038 https://www.i-scoop.eu/digital-transformation/retail-industry-digital-mobile-shopping-transformation/ https://www.happiestminds.com/whitepapers/digital-transformation-in-retail.pdf https://www.consultancy.uk/news/19647/digital-transformation-is-essential-for-future-of-british-retailers https://www.cio.com/article/3394047/best-practices-for-digital-transformation-in-retail.html https://mi9retail.com/20-facts-you-need-to-know-now-about-digital-transformation-and-innovation-in-retail/ https://nrf.com/blog/digital-meets-physical-retail-experience-future

Artificial intelligence in Retail- Trends

The competition in retail is fierce and great products alone are no longer enough. Whether shopping online or in person, customers want seamless, personalized shopping experiences. Artificial intelligence and machine learning enable retailers to boost their bottom lines, in part by showing when it’s not necessary to offer a discount.

At the same time, these systems give shoppers prices they view as fair and non-arbitrary on the products they care most about. Some of the applications are highly visible attention-grabbers such as in-store robots scanning shelves and interacting with shoppers or online chatbots enhancing customer service, offering related items to a shopper’s selections or speeding the path to purchase. Many robots employed behind the scenes in distribution centers or retail manufacturing also leverage self-learning technology. Elsewhere, AI powers fraud detection and autonomous delivery technologies including drones and self-driving delivery robots.

With operations and CX has become increasingly important to the future of retail companies in the UK, many are turning to AI for help. A new survey has found 80% of retailers believe AI has the potential to increase customer loyalty, while 75% intend to engage an external technology supplier to enhance their AI capabilities.

Credit: Vue.ai

Vue. ai, an Indian-US startup that develops artificial intelligence platforms to help online retailers work more efficiently and sell more, raised $17 million in a Series B funding this week. This round was led by Falcon Edge Capital, with participation from existing investors Sequoia and Global Brains (KDDI Japan). 

Helping retailers compete by making better use of their data, Oracle continues to weave significant artificial intelligence and machine learning capabilities into its Retail Insights and Science Suite. With new features, such as notebook-based data science tools, retailers can quickly deploy new data science-driven solutions to further engage and delight customers across channels.

Gap Inc partnered with Oracle to deploy Oracle Retail Merchandising Cloud Service and Oracle Retail Integration Cloud Service to drive operational agility and furnish Banana Republic business teams with better intelligence. In addition to migrating complex retail and financial workloads to the cloud, Gap Inc is also looking to seamlessly connect front-end and back-end functions by moving from a private cloud to Oracle Cloud Infrastructure leveraging various Oracle technologies, including Oracle Exadata Cloud Service and Java Cloud Service as foundation for a Retail Integration Hub and Oracle GoldenGate for real-time data replication.

Banana Republic is obtaining a clear view of merchandising activities through the cloud. The apparel retailer, a division of Gap Inc., operates more than 600 company-operated and franchise retail locations worldwide and an e-commerce site, is deploying Oracle Retail Merchandising Cloud Service and Oracle Retail Integration Cloud Service, powered by Oracle Cloud infrastructure. The GAP Inc. is an existing Oracle Retail user.

Banana Republic intends to drive operational agility and furnish business teams with a single view of inventory, product data and transaction details. For example, the combined solutions allow the retailer to synchronize merchandising operations from buying to inventory valuation. Moreover, a modern user interface delivers exceptions and alerts to simplify management of daily tasks such as managing purchase orders and sales auditing, including offering a path to resolution or items that require attention. Banana Republic users have the data needed to do their jobs more effectively and easily.

Kamal Osman Jamjoon Group LLC, a fashion retailer with more than 700 stores, now has a more unified view of operational data, improved store operations and is driving a higher level of customer satisfaction after deploying Oracle retail platform and technology. KOJ, which runs nine brands across seven countries, has achieved more than a 98% inventory accuracy as well. Operations and Customer Experience are the top benefits of AI in the retail industry. New research by law firm CMS and consultancy Retail Economics shows brands and retailers believe artificial intelligence (AI) can deliver significant opportunities on both fronts. 63% of respondents said AI could give rise to significant opportunities to optimize supply chains, while 53% thought it could reduce costs, and just under half (47%) said it could create more meaningful relationships with customers.

Credit: CMS and consultancy

While most businesses want to adopt AI technologies, many do not have the internal capabilities, meaning they either have to recruit and build up an in-house team or bring in an external provider. An overwhelming 75% of respondents said they intended to engage an external technology supplier to enhance their AI capabilities.

However, there are a few challenges with AI implementation. Just one in five consumers trust retailers and consumer companies to responsibly handle their sensitive data. At the same time, only one in six consumers feel comfortable with the idea of AI-powered in-home delivery, and 42% of shoppers forecast that drone delivery will never become mainstream. Companies will also need to up-skill rapidly to accommodate their new offerings. Nearly 60% of organizations feel they lack the specialized skills required to roll out new AI technology.

Credits:
https://www.retail-insight-network.com/news/pvh-deploy-oracle-retail-solutions/
https://www.fibre2fashion.com/news/textiles-technology-news/gap-inc-brand-banana-republic-adopts-oracle-retail-cloud-249049-newsdetails.htm
https://www.digitalcommerce360.com/2019/03/25/how-ai-and-machine-learning-help-retailers-optimize-price-and-promotions/
https://www.analyticsindiamag.com/mad-street-dens-retail-arm-vue-ai-raises-17-million-in-series-b-funding/
https://www.retailcustomerexperience.com/news/fashion-retailer-boost-store-operations-customer-satisfaction-with-oracle-technology/
https://www.consultancy.uk/news/21330/operations-and-cx-are-top-benefits-of-ai-in-retail-industry
https://www.forbes.com/sites/blakemorgan/2019/03/04/the-20-best-examples-of-using-artificial-intelligence-for-retail-experiences/#6b32ef644466
https://www.linkedin.com/pulse/artificial-intelligence-retail-vikas-d/

Digital Airports- Technology, Innovation and Analytics

All airports are looking for ways to increase productivity and efficiency in the world in addition to enhanced capacity, better security, passenger experience, and robust operations. In order to realize the full potential of advanced digital technologies and business transformation, there is still a long road to go. Next-gen Airports that are in construction today represents the most technologically advanced establishments that leave a source of inspiration for others to follow.

 There was a time where except the healthcare industry (robotic surgeries), use of robots and AI driven technologies was considered sci-fi and futuristic. We see so much of these in our daily lives especially when we travel for work or leisure. With the rapid pace of advancement, these technologies have now become commonplace. When you enter the Airport terminal doors, to the second you land in a foreign country, digital technology advancements are playing an increasingly important role in a wide variety of ways to identify, authorize, authenticate and verify.

Self- service check-in podiums are biometric-enabled (Iris, Thumb impression, smart card readers).
You can download a bespoke mobile phone application that is designed for you to help navigate through the airport, understand ongoing approvals and processes i.e. from check-in to boarding, and bag drop to shopping (duty-free). The new cognitive and advanced computing data technologies like big data analytics are also aiding airlines and airports to connect with their customers like ever before. Understanding of patterns in passenger choice, behavior helps better tailor services and market targetted consumers to promote these.

Recently, I got to learn about companies like Extreme Analytics that help provide information about the travelers, their locations, also the variety of mobile apps that they use as they move through the airport. These applications have a thoughtfully designed user interface that monitors network performance to ensure the consumer is provided with adequate bandwidth and connectivity. In a case when the user feedback/response drops, the designated network manager is able to determine the cause of the deficiency:

a) bandwidth limitations at the edge or core, due to the broadband connection back to the Internet, or; b) the result of a slow remote application server.

The amount of situational awareness that these real-time analytics provide can then be combined with other real-time user and environmental inputs to provide a view into function and security. It is imperative to understand that one cannot see the concept of digital transformation in isolation.

DT is not just about customer experience or made for just customer-facing solutions. It is about a progressive and stable omnichannel customer experience through pervasive digital channels like mobile, www, chatbots, SMS, USSD, airport kiosks, and airport signage. Scoping such implementation includes support from the contact center, airport agent solutions, inflight operations, revenue management and packaging, marketing and pricing.

Credit: Datalex 

One can highlight the plan based on the chief complaint/ pressing issue or a problem that the airline is trying to solve. However, a comprehensive strategic directive is required to address all problems w.r.t digital transformation effort.


Think of the airline brand as a retailer and a mere seller of airline seats.
Airlines clearly understand that engaging and delighting customers are the only way to drive loyalty and this can be achieved by aligning their digital products offerings through the customer’s journey. These airlines also need to stress on providing unique content and capabilities that are required as per demand study.

Case Study: EasyJet. 

EasyJet has put in a great deal of effort to make sure their customers are not drawn in solely by the inexpensive price of its flights but are more driven based on the customer experience provided. Easyjet aims that when their customers travel with them their travel is easy, comfortable and informative through digital apps.

You can scan your passports on your phone and input all passenger information into EASYJET's online portal. You order a sandwich that can be delivered to your seats and you will get an automatic text if your flight is boarding/ or if it is delayed. When you land, you get the baggage carousel number and a navigation map to get there.

You can book parking, do car hire at just a click of a button!

Here are the few use cases: 

1. Enterprise-wide- Real-time operational insights 

Industry: Airports/ Airlines 

Capability: Real-time operational visibility 

A wise man once said, Your eyes cannot see what your brain doesn't know. To smoothen out operations and improve performance, Airlines also need to gain visibility into its operations. A big problem here is disconnected, disparate and redundant IT/IOT systems. To gain facility-wide visibility and control, Melbourne International Airport integrated its IT and OT systems to allow one view of the entire airport’s operations in its Situational Awareness Platform.

Multiple TIBCO technologies were used to incorporate essential operational modes, such as landside transport, aircraft positioning, vehicle information, vehicle flow, flight schedules, fire systems, asset management systems, check-in, and baggage handling. The dashboard access allows airport managers and operators to visualize potential opportunities defining the customer’s journey through the airport and act real time.

The platform processes data from more than 2,000 aircraft, 1,000 airfield and terminal assets and 15 core operations systems.

The outcomes were: 

1. Real-time geospatial mashup of data streams in a fully interactive map on any device

2. Unprecedented visibility into airport operational systems

3. Incident identification and management

4. Industry-leading analytics and predictive capabilities for proactive resource and demand management

5. Will allow for collaborative decision making (CDM) between airport operators, service providers, stakeholders, and airlines to improve quality of service to customers

6. Fully supported COTS platform with long-term development road map minimizes time-to-value

7. Fuels continuing the drive for greater operational innovation and efficiency

8. Enables the enterprise strategic vision through a robust set of core integration technologies



2. Tracing Consumer demand 

Industry: Manufacturing, Food & Beverage including airport stores/chains 

Capability: Paperless product traceability, automated business logic

Now more than ever manufacturers are under pressure respond to consumer demand for traceability and deliver outstanding customer service. To address this challenge, a major Australian soft drink manufacturer implemented an information database system that connects the customer experience directly to production. The solution involved making the production information system available to the Consumer Complaint hotline and applying a series of automated business rules.

Each bottle’s product code could be traced back to the production facility, line, time of manufacture, and the line leader and shift manager details. This allowed the company to react in real-time to product issues but also gave the manufacturing teams visibility into the value and impression they create with their customer.

Now, instead of waiting for daily and weekly reporting, the company can identify and react to issues by the hour. The accuracy of complaint data was increased by up to 95 percent.



3. Single Sign-on, Customer Insights 

Industry: Transport, Airports 

Capability: IOT, automated business logic, border management solutions (Passport Control, visas, pre-clearance, automation) 

Changi airport is the front runner when it comes to Digital Airports. With the convenience of a single account, customers can now view their Changi Rewards loyalty points and iShopchangi purchase history on the same dashboard on the Changi Airport website and iChangi mobile app. For Changi Reward members using the iChangi app, they can enjoy the convenience of the Changi Rewards e-Card as well.

For CAG, the benefit is also significant. The single login ID enables a consolidated 360-degree view of the customer, which was not possible previously when the individual systems maintained their own set of user databases. These numbers will continue to soar in the coming years as new airport features like greeting through robots (at Tokyo Airport ) and the airport luggage check-in robot (at Geneva Airport), become more common.

Automated processes and driverless vehicles will eventually handle baggage handling, refueling, security, and check-in processes, which will be necessary to manage the sheer volume of things and people efficiently. As airport operators think about the airport of the future and act to align their systems to achieve that goal, they are experiencing difficulty in moving from legacy systems to automated processes and, eventually, integrating A-CDM completely.

The most significant legacy issue, by far, is operating airports in silos – something future airports cannot afford. Airlines have an extensive laundry list of tasks – each as urgent as the next – that is required to be done more efficiently with fewer resources.

According to Frost & Sullivan, these challenges, combined with global capacity constraints, will drive up airport IT spending over the next five years. For an organization as complex as an airport, the crucial element of successful airport digital transformation is the integration of the airport’s operational planning and IT solutions.

While emerging technologies such as biometrics, the blockchain, and artificial intelligence are exciting, these point solutions solve specific problems in a very complicated environment. This is a crucial distinction because passengers have grown accustomed to seamless experiences, and expect as much wherever they are, whenever it is.

Their everyday lives involve highly interconnected hardware and software that simply do not operate in silos – and airports must behave this way as well. Silos leave financial value on the table. When people and software operate in silos, the lack of alignment not only severely cripples operational and cost efficiency but also leaves the door open to risky miscalculations that result in delays, inconvenience, and even mishaps.

Moreover, burgeoning passenger growth is only increasingly burdening the traditional siloed set-up. As inefficiencies compound, airports will continue to bleed money through delayed and reactionary decision-making. Particularly in times of irregular operations, operators risk missing opportunities to deliver compelling customer experience. In response to this, airport operators are today automating many of their processes on systems that can plan complex, interdependent resources. Full integration begins by implementing a single, holistic system that gives planners a complete view of on-the-ground operations.

Then, they will truly be able to drive operational performance improvements across the business. By uniting all these voices and sharing timely, accurate information, airport operators can work with confidence. These are powerful tools that are available, out of the box, and can be configured to solve the many scheduling challenges in the airport. Airports are barged with an ever-increasing passenger base and digital technology is expected to aid and augment an airports’ ability to handle enhanced capacity. Digital transformation efforts can improve passenger experience by streamlining processes, which in turn will help drive revenue growth for the airports.


References/Credits: 

https://www.nagarro.com/en/blog/tag/digitization

http://www.changiairport.com/corporate/media-centre/resources/publication/issue-7/a-seamless-digital-experience-through-one-changi-id.html

https://www.circusstreet.com/blog/easyjet-digital-transformation

https://www.lux-airport.lu/category/blog/

http://blog.datalex.com/introduction-to-airline-digital-transformations

https://www.extremenetworks.com/extreme-networks-blog/how-to-enjoy-air-travel-again-elevating-the-air-traveler-experience-at-the-airport-of-2020/

http://www.airport-world.com/news/general-news/6153-blog-the-rise-of-the-digital-airport-experience.html

http://www.adlittle.com/en/insights/viewpoints/airport-digital-transformation

https://www.internationalairportreview.com/article/76057/future-digital-technology/

https://www.forbes.com/sites/michaelgoldstein/2019/03/27/what-are-the-best-and-worst-airports-for-business-travelers/#c17d3a572322

http://www.airport-business.com/2019/03/europes-airports-embrace-digital-transformation-sesars-innovative-excellence/

https://www.moodiedavittreport.com/the-digital-conversation-how-to-maximise-digital-revenues-at-the-airport/

https://en.airport.ir/news/63405/The-rise-of-the-digital-airport-experience

https://www.circusstreet.com/blog/easyjet-digital-transformation

https://www.isa.org/intech/201708channel/

Technology led and Consumer Driven Ecommerce

With the passing of time, a lot of retailers have started to experiment with the latest technology. Although, we know that technology is really important to any retail organization, and retailers are doing their best to serve their customers. On this journey of customer satisfaction, retailers work towards implementing the ideas and also ensure that the entire process is seamless.

Over the years, customers have become connected to their favourite brands in a way that was never seen before. One of the most common ways is by interacting with them on the various social media platforms where the brands educate and provide relevant information to the consumers. The future of retail looks like this: A customer walks into a store and a sales associate says, “Welcome back.

We think you’ll like this product.” The product offered is chosen not only by using the consumer’s prior purchases but also by the store’s intelligent software. The software knows the product’s characteristics (including style, fabrication, color, design, fit, etc.) match what the customer likes. The software is not using the kind of algorithm that Amazon uses to sell books (“customers who bought this also bought these other things”); it’s much more sophisticated than that. It works the way Spotify recommends new music.

Spotify looks at the many characteristics of a song and identifies how it compares to other songs, making its recommendations highly personal, targeted and effective. We are no longer in the business of brands creating value in the rarefied confines of their owned-and-operated supply chains, protected from the extremes of competition that they could afford to extract value through a series of imprecise, expensive, third-party handoffs. As the shift from physical to online stores continues to gain momentum, the legacy institutions will still comprise the greatest share of brand fulfillment, even as their singular power over consumer choice and brand strength is eroding.

 A wave of digital retailers is moving from the internet and into some of the empty mall space left vacant by companies in bankruptcy, like Sears and Payless ShoeSource, or trimming back their real estate, like Gap. One venture capital firm is at the center of the new normal in retail as traditional sellers scale back their footprint while digitally native companies open some of their first brick-and-mortar locations.

 Headquartered in Venice, California, Fifth Wall Ventures has backed more than a dozen businesses, including electronic scooter maker Lime, co-working platform Industrious and real estate analytics company VTS. It has $305 million in assets under management, investing mostly in tech and real estate. Now, it has its eyes set on retail. Fifth Wall has raised $64.5 million as of November, and has a target of $200 million, for a new retail fund, according to a filing with the Securities and Exchange Commission.

 I bought the shorts and, returning to the hotel, I searched the internet for the sandals. I found them on birkenstock.com and was completely dumbfounded by the choice on the site – there are literally hundreds of style/colour combinations to choose from; far more than I had ever seen in any store – the choice was incredible!

 Second example. I am a keen skier and, in the past, have treated myself to Kjus skiwear, which is expensive, stylish, technical clothing. The only physical retail stockist in the UK is Snow+Rock, so last month off I went to the Kensington High Street branch. I found a pair of black salopettes but didn’t like the colour of the jackets and so I returned home to look online.

On kjus.com I bought a jacket, two further pairs of salopettes and three mid-layer vests. None of these options had been available in the store. Department stores survived for decades when consumer behaviour didn’t change very much – as they controlled store opening hours, the locations (stores) where you could obtain the product and the selection.

 Now via the internet and mobile, the consumer is in control with 24/7 opening hours, a variety of delivery options and in most cases access to the whole product file of every brand.

References:
https://www.forbes.com/sites/richardkestenbaum/2019/02/04/retail-technology-nrf-oracle-barneys-zebra-technologies-columbus-consulting-infor-steve-sadove-true-fit-revolve-group/#44d41b016399

https://www.entrepreneur.com/article/329922

https://www.warc.com/newsandopinion/news/from_banner_ads_to_brand_creation_the_digital_retail_revolution/41688

https://www.cnbc.com/2019/03/04/meet-fifth-wall-the-vc-firm-helping-online-retailers-open-more-stores.html

Retail Industry- Focus Middle East

Retail is in revolution. Technology is changing not just how consumers shop, but how retailers operate. From supply chain management, to customer engagement, to brand management – everything is changing.

The Middle Eastern retail sector, is no doubt undergoing a change, a revolution, albeit at a different pace compared to the more developed countries. Even within the Middle East itself, the rate of development of the sector varies across the analysed countries. Recent announcements have confirmed that the face of online retail is set to change.

It truly is an exciting time for the Middle East. The PC is still the primary channel for online retail. However, the use of mobile is growing and taking a larger role in the online shopping process. Further, the advancement of online retail varies across product categories.

One of the important factors which have an impact on buying behaviour, and as a result of the retailers themselves, is the payment method as consumers are still wary of online security and have a preference for cash payment. Finally, social media and personalisation influence consumer shopping behaviour and should, therefore, be a consideration for retailers with the change and evolution of the sector.

Retail in the Middle East is changing. The digitisation of today’s society has presented challenges for those retailers that have not addressed their digital strategy. The threat of online shopping is real and has lead to the death many store on the high street and in the malls.

 Will you be next? The smart retailers are adapting quickly to these disruptive agents. Whether this be by adopting an omni-channel strategy to ensure they are in front of the customer when the impulse to buy hits or by implementing data science techniques to identify what the consumer wants even before they realise it themselves. The game is changing and your digital strategy will be your game changer.

Airbnb fuelling new startup ideas globally

I came across this news item recently stating "Airbnb Now Letting Hosts Search for Superhosts to Professionalize Listings"

In a bid to further scale and professionalize its business, Airbnb has quietly rolled out a website page that enables individual hosts — including those who are just considering putting up an apartment listing — to search for superhosts in their areas to manage the whole thing for the individual host. These superhosts, who have multiple listings and essentially take on the roll of property manager, help create the listing, evaluate pricing, handle messaging with guests and optionally can meet guests upon check-in, among other tasks.

The way it works is that the individual host searches for a nearby superhost, or perhaps a management company, selects one, and then pay a host fee usually ranging from 10 percent to 20 percent in addition to the 3 percent fee that Airbnb charges hosts for each booking. The host and superhost negotiate the superhost-management fee. That commission of up to 23 percent amounts to a hefty fee but may be attractive to an individual host in a popular destination who is renting out his or her apartment as a part-time endeavor and doesn’t want to bother with the hassle of it all.

 For Airbnb, it is a way to attract more listings and to professionalize them, and in the process make more money by adding listings and better-meet guest expectations. At the same time, Airbnb is also busy trying to expand its vacation rental listings globally.

In India, we are noticing a surge in people who believe that real estate investments are the best way to make money. Many top brass executives and Ivy league college graduates are now defining models enabling buyers to find properties that can easily go on AIRBNB, Homeaway etc. and fetch good rentals.

Most of these properties are 1-1.5 BHK apartments that are in a city centre location, well kept society and a view. Such properties were mostly rented by bachelors but return on investment was pretty flat- i.e. between 10-20k per month. (Pune, Hyderabad, Noida, Bangalore average). There is an inflexible and steady demand for studio apartments in both metro cities and Tier II cities. Studio apartments are the most cost effective residential option for people who want to own a house rather than rent one. The younger generations who are just starting out prefer to buy a studio apartment, because it is within their budget and they can save for a bigger home at a later time in life. The compromise is on space.

Airbnb listed properties in Bangalore (most of then are 1 Bedroom, Hall, Kitchen)

The average buyers of such apartments in Bangalore are newly wedded couples, single professionals or double income families. If you scan through Bangalore vacation rental availability on AIRBNB you will find most properties that are studios or 1 BHKs.

For builders these 250-400 sq ft flats are a hot selling commodity. This is a fast moving category, generating sales and cash flow. Youngsters in early period of their careers prefer these studio apartments because they are not concerned with space but more with themselves, their careers and most important savings and their financial portfolios.

 These are compact, maintenance friendly homes, and have all the facilities which are the need of the present. So if you can get a small home, where you don’t need to be hassled by its maintenance and it is very much within your budget, there is nothing like a studio apartment.

With new start-ups growing by the day and concepts like AIRBNB, supply for regular homes are overtaking the demand, studios are starting to work well for both the developer and the buyer. The big developers have also kept a certain percentage of space for studio apartments in their projects, after seeing the sudden demand for this type of accommodation.One reason why they might be making a comeback today is because of the high rise in property prices and the steady decline in real estate absorption across cities. Developers are looking at studio apartments and 1BHK flats as a way to increase sales and generate some much-needed liquidity in the market.

With the help of some smart tips, people are now jazzing up these flats to make them more AIRBNB friendly. Returns have increased over 4 times than normal family rent figures and it is a win win for both hosts as well as guests.

Mobility for Shopping and Retail? Why is it required?

......Let's take the example of a female shopper aged between 30 and 40 entering the store for purchasing groceries and other consumables. The application detects which store she has entered, and "greets" her with a welcome message and a list of the day's special offers in that store. The application then displays a "shopping list" built automatically based on her past purchase history, along with a recommended and optimal "shopping path" through the store. While evaluating a particular product - say a box of a new cereal brand, the shopper uses her application to scan the barcode, and retrieve additional information such as nutrition facts, and reviews and comments by other shoppers.....

What is likely to outnumber the billions of human beings on planet Earth over the next few years? The answer: mobile devices such as smartphones and tablet computers. Consumers the world over are switching to such devices as their primary channel for communicating, messaging, performing basic tasks and accessing information over the internet. This revolution is impacting various industry sectors, one of the significant ones being the retail industry. In retail stores the world over, consumers increasingly use 'smart' shopping applications on their mobile devices while inside the store. 

New research conducted by Brand Anywhere and Luth Research last November showed that 51% of consumers are more likely to purchase from retailers that have a mobile-specific Website, but only 4.8% of retailers actually have one. 

These applications provide value added services such as information on products beyond what is available in the store. Such information could include product details, reviews, ratings from other consumers, and better deals from other retailers. If a better deal is available elsewhere, the consumer usually opts for it resulting in a negative impact on store sales. Retailers are usually willing to match the best offers from competitors - but are hindered by the lack of real-time intelligence about consumer behavior while inside the store.

Smartphones currently influence 5.1 percent of annual retail store sales, translating into $159 billioni  in forecasted sales for 2012, according to new Deloitte research. For the first time in the industry, the in-depth study measures the “mobile influence factor,” or impact of smartphones on in-stores sales.

The mobile influence factor captures the in-store sales driven by consumers’ store-related smartphone activity such as product research, price comparison or other mobile application use.

Deloitte anticipates mobile’s influence, based on consumers’ smartphone use, will grow to represent 19 percent of total store sales by 2016, amounting to $689 billion in mobile-influenced sales. By comparison, direct mobile commerce sales will pass the $30 billion mark by that time, according to industry estimates. 

Shopping is more than just making a purchase, it's a process, and like most things today, technology is changing the process of shopping, which in turn is changing consumer behavior. Mobile technology is disrupting the traditional path-to-purchase and is having a profound effect on the retail landscape.

In many ways, the shopping process has become more casual. Traditionally, people would do most of their product research at home, narrowing their selections before deciding on a purchase. Mobile technology is changing this process by empowering shoppers with the ability to gather information on the spot from multiple sources, check on product availability, special offers, and alter their selection at any point along the path-to-purchase.

People are planning and shopping differently today. Mobile shopping is spontaneous, non-linear, and very fluid. People are shopping in ways, and in places, that they never did before—and that's really the power of mobile shopping.

Ecommerce in developing markets

India has an internet user base of about 250.2 million as of June 2014. The penetration of e-commerce is low compared to markets like the United States and the United Kingdom but is growing at a much faster rate with a large number of new entrants. The industry consensus is that growth is at an inflection point.

Unique to India (and potentially to other developing countries), cash on delivery is a preferred payment method. India has a vibrant cash economy as a result of which 80% of Indian e-commerce tends to be Cash on Delivery. However, COD may harm e-commerce business in India in the long run [6] and there is a need to make a shift towards online payment mechanisms. Similarly, direct imports constitute a large component of online sales. Demand for international consumer products (including long-tail items) is growing much faster than in-country supply from authorised distributors and e-commerce offerings.

About 80% of this is travel related (airline tickets, railway tickets, hotel bookings, online mobile recharge etc.). Online retailing comprises about 15%. India has close to 10 million online shoppers and is growing at an estimated 40-45% CAGR vis-à-vis a global growth rate of 8-10%. Electronics and apparel are the biggest categories in terms of sales.

If you feel India is a near-term booming market for ecommerce, I would agree. Things have changed today in terms of both investor and customer perspective and now it is more real than ever.

 A year ago, Mukesh Bansal, the chief executive officer (CEO) of India’s largest online fashion retailer Myntra.com, started the process of raising a new round of funds by reaching out to several investors, including Premji Invest, SAIF Partners and others. At that time, Myntra was facing aggressive competition from Jabong, backed by Germany’s e-commerce conglomerate Rocket Internet, as well as India’s largest e-commerce firm, Flipkart.com, both of which challenged Myntra’s dominance of online fashion sales by offering deep discounts (30-40% on a daily basis, in most months). The battle was obviously being closely watched by the investors Myntra was courting. “The feedback from most of them was: we are interested and we like what you are doing, but not now”.

Here are the excerpts from a recent interview:

The evolution of the e-commerce market in India has been quite remarkable over the last few years. What does the future hold for this fast-growing industry?

E-commerce in India has evolved significantly in the last decade, and there are many aspects of e-commerce like TV shopping, online shopping and mobile, which are all part of what is digital commerce. That journey has happened over the last decade.

eBay entered India nine years ago through the acquisition of Baazee.com, and five years prior to that was the start of organized retail in India. So, it is about 15 years old.

What is interesting though in India is that the entire evolution of e-commerce happened over 15 years. In advanced markets like the U.S., it took over 50-60 years.

First you had organized big-box retail, then catalogue shopping, then TV shopping, Internet and then the mobile shopping. In India, this entire journey is compressed into 15 years, and especially e-commerce has been compressed in nine years since we came in. It is moving forward quite rapidly. Industry statistics talk of a 55-60 per cent year-on-year growth, and moving from a $2.1 billion to a $3.2 billion market in 2014.

Amazon.com Inc in July 2014 said it will invest a further $2 billion in India just a day after the country's largest e-tailer Flipkart attracted $1 billion of fresh funds, raising the stakes in a nascent but fast-growing e-commerce sector.

Amazon, which opened its Indian website in June last year, has drawn up the battle lines by slashing prices, launching same-day delivery, adding new product categories and embarking on a high-voltage advertisement campaign.

Amazon and Flipkart are joined in India's $13 billion e-commerce sector by marketplace Snapdeal, fashion e-tailer Jabong, and U.S. auctioneer eBay Inc.

Indian e-commerce is expanding at a compound annual growth rate of 34 percent, according to a joint report by consultants Digital–Commerce, the Internet Mobile Association of India and the Indian Market Research Bureau. That rate, however, is slower than in some other emerging nations such as China.

Of the $13 billion market, travel services account for about 70 percent, according to consultancy Technopak. The type of goods sold through Amazon made up $1.6 billion of the total last year, according to researcher Forrester, and Technopak expects that figure to swell to $76 billion by 2021.

By comparison, e-commerce sales in China are likely to surpass $180 billion this year, according to researcher eMarketer.

In May, Myntra agreed to be bought by Flipkart in India’s largest ever e-commerce deal. Myntra fetched an estimated value of more than $330 million, significantly higher than the $200 million valuation it received in January. At least 10 e-commerce firms, including Flipkart, Snapdeal, Jabong, Pepperfry and Limeroad, have announced fund-raisings over the past two months and investors and analysts say that several other sites such as online marketplace Shopclues and fashion retailer 

Yepme are likely to receive money within the next six months. Flipkart said on 26 May that it received as much as $210 million, mostly from Russian firm DST Global Solutions Ltd, which has backed companies including US-based Facebook Inc. and Twitter Inc. as well as China’s Alibaba Group. The online retailer has now received $770-780 million since starting out in 2007, including $360 million last year. A few days before Flipkart’s latest fund raise, online marketplace Snapdeal announced that it raised $100 million from new investors. including Temasek Holdings Pvt. Ltd, BlackRock Inc. and Premji Invest. It had raised $133.7 million less than three months ago.

The fund-raising by Flipkart and Snapdeal reflects both the increasing amounts of capital required to build a national e-commerce business as well as the strong revival of investor appetite for India’s fledgling Internet firms.

From 2012 to the beginning of this year, hundreds of sites such as Indiaplaza.com and Urban Touch, which raised anywhere between $1 million and $10 million each, shut shop as investors become increasingly parsimonious about giving money to e-commerce start-ups because of high cash burn and lower-than-expected sales growth. Now, analysts say, they can’t seem to get enough; large global financiers such as Morgan Stanley, Singapore’s state-run investment firm Temasek Holdings and US investment firm BlackRock are queuing up to invest in India’s e-commerce businesses.

What Ecommerce means to me?

"Metros have a dominant share of purchases, with Tier 2 and 3 cities catching up fast. Metros contributed 51 per cent of all e-commerce transactions, while Tier 2 and 3 cities contributed about 40 per cent and rural India 9 per cent. "

India has 100 million internet users today. According to eBay Census 2011, a study on the Indian e-commerce landscape released last year, as many as 3,311 Indian cities shopped online between July 1, 2010, and June 30, 2011. Of this, over 1,267 were non-metro cities. For catering to this segment, understanding Customer behaviour, mindset and comfort are of prime concern before we plan the second coming of ecommerce in India. Consider this when you shop on BestBuy or ebay for a laptop, you don't pay that much attention to taxes as much as you pay to SHIPPING!!! While a little research is required to understand the conditioned response from buyers better , putting business strategy to this approach is a natural business solution that will evolve.

Retailer Hat: Boss! I am a small time apparel retailer in one remote part of Delhi. Recently I have heard a lot of my shopkeeper friends discuss about the internet where one can register free of cost and suddenly you become visible to the entire Delhi internet savvy population. ....This has got me excited as I see a whole lot of new customers who I can serve and who know about my existence. I would like to be a part of this I say to myself. I expect to achieve the following:

Inform Delhi about my existence and the products I deal in apart from my regular customers I cater to.

Hopefully attract new profitable customers whom I can sell to and get incremental business.

I have heard about a lot of websites these days offering to increase my business by bringing new customers only if I give their customers huge discounts plus pay a commission on every sale to these websites. I wish if the website would just connect me with these new customers and let me do the selling. Please don’t dictate to me how much discount I need to give to your customer.

I have currently registered my business on yellow pages and also subscribed to just dial services. Though I have paid upfront to these companies for listing me in their retailer database I hardly get any customers from them. I also spend some money every quarter on distributing some pamphlets in my locality to let people know about any special offers I am currently running. I wish to market myself aggressively however I don’t want to spend a fortune doing it.

"We recently heard about Letsbuy buyout by Flipkart. This is an example of what is likely to be additional consolidation in the e-commerce space. In addition to cross-sector mergers, category consolidation is also likely to be on the upswing. But if you see what consumer demands in a market like India is -i-commerce (intelligent commerce= best discounts) and s-commerce (peer recommended assisted shopping experience). Here, I see a marriage of Content, ecommerce, services and social media support."

Take another case!

Customer Hat: Geees! I am a housewife who dabbles with the internet searching for the best price for a product I need. I generally visit the retailers in my locality and also search the websites to see if I can come across some new designs.

I don’t mind paying for a product which has some exclusivity attached around it. I will definitely get motivated if I can see that it is looking good on me. Maybe I would like to put on a dress virtually, post that on Facebook and see if I get compliments!!

I use Google to surf the internet and a couple of other deal sites to do my product search. However not every time do I get the relevant information I am looking for. I wish there was one such search engine which was custom made to give all answers to my shopping requirements. I wish I could see the product pictures and read their description. Also get the address and contact information of the retailer.

Apart from this basic information I wish I could also get a personal shopping assistant who could recommend some designs from their collection based on my specific body type and give me some style tips to complete the look. I need all this and more at a price competitive to the store I normally shop from. If only the retailer could deliver it to my doorstep and I could make the payment once I receive the delivery. This would make me happy. I also need to earn some loyalty points for using this shopping search engine redeemable across all the retailers showcasing their products/services and listed with this shopping platform.

In short it tells me that If I am coming up with an e-commerce venture in India, I need to know that here is this quintessential shopper who seeks the thrill of shopping /winning and getting rewarded all at the same time across my spectrum of shopping needs with a tangible value proposition.

Retail Employment in India

Barriers to Employment
India's fiscal deficit and its capital distortions, restrictive labor laws, and poor infrastructure are the most important barriers to rapid growth. However, research shows that the most important problems are product and land market barriers, and India's ability to absorb the imminent surge of the working age population.

Challenges facing Indian retail industry

•The tax structure in India favors small retail business
•Lack of adequate infrastructure facilities
•High cost of real estate
•Dissimilarity in consumer groups
•Restrictions in Foreign Direct Investment
•Shortage of retail study options
•Shortage of trained manpower
•Low retail management skill

Will Rural Retail Catch up fast ???

Rural India, which accounts for more than 70 per cent of the country's one billion population (according to the Census of India 2001), is not just witnessing an increase in its income but also in consumption and production.The rural retail market is currently estimated at US$ 112 billion, or around 40 per cent of the US$ 280 billion Indian retail market, according to a study paper, 'The Rise of Rural India', by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

Major domestic retailers like AV Birla, ITC, Godrej, Reliance and many others have already set up farm linkages. Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance Fresh, Project Shakti (Hindustan Unilever) and Naya Yug Bazaar have established rural retail hubs.

Rural retail was supposed to cash in on the prosperity of Bharat, but the storyline hasn’t really gone the way big corporate houses had hoped.While some have chosen to wind up business, others have preferred to go slow due to a host of reasons.

Such stores offer products like agri-inputs, cattle feed, plastic furniture, FMCG products, automobiles, banking, crop insurance and other agronomical services.

Setting up an organised retail business in rural towns proved to be challenging. Companies have faced problems with regard to infrastructure, distribution, fluctuating rural incomes and stiff competition from local kirana stores, which operate at much lower costs. However, these factors did not deter companies such as DCM Shriram Consolidated Ltd (DSCL), ITC, Godrej and Triveni Engineering from investing in rural retail.

However, recently, Triveni decided to shut its 42 stores after its retail venture incurred losses of about Rs 19 crore in over five years of operations. The company had not expanded the number of outlets for the past two years. DSCL, with 300 retail outlets under the Hariyali Kisaan Bazaar brand, did not expand in 2009-10. It is not looking to increase the number in 2010-11, either. Over the last four years, they have grown the business 10-fold to around 300 outlets. Having achieved a critical mass, the company in 2010-11 is focusing on consolidation.

The erratic monsoon in the last kharif season had affected farm incomes. However, rural incomes have gone up consistently over recent years, on regular increase in the support price of crops like wheat, paddy and sugarcane. More, farm income is not taxed.
As rural retail does not have any benchmarks to follow, we have to keep innovating. Like all retail formats, rural retail also had a slowdown and is now looking at focusing on making its individual formats work. With improvement in the market sentiment after a satisfactory rabi season in 2009, we can expect the markets to improve.

Some ray of hope at the end of the tunnel

The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The India retail industry is expected to grow from Rs. 35,000 crore in 2004-05 to Rs. 109,000 crore by the year 2010.

Comments welcome!

Business Planning in Retail-IT

Linking IT with business strategies is easier said than done. The demands facing today’s retailers are more numerous and complex than ever before. Consumers have come to expect more value and higher service levels, while retail executives want to leverage technology to attain marketing, operational, and financial advantage. Corporate governance boards demand due diligence scrutiny and outside regulators continue to add rigor into financial reporting and business processes. As a consequence, the IT project request backlog continues to grow and retailers search for ways to measure IT’s business value and to balance the effective utilization of the IT resource.

Are Business Strategies Dependent on Technology?

Creating a retail IT strategy can be the result of an active and engaged IT organization that partners with the leadership teams of separate business units on a cross functional basis. This partnership can take the form of shared educational experiences, industry analysis, competitive trend observation and analysis, and thought leadership relative to emerging technology and applications. Through involvement with the business units, the IT organization can evolve from being a service enabler for business units to a technology competitive advantage driver across the entire company.

Retail IT- Fashion or Fusion?

The Business-IT Fusion approach enables retailers to frame IT initiatives with quantifiable business cases plus business objective alignment. This approach, when combined with an understanding of best practices from both within and outside of the retail industry, becomes invaluable in the decision-making process. The retailer can then refine and rank company mission-critical initiatives, and define a multi-year phased approach to achieve business results. The end result is IT direction aligned with corporate direction.

The Anti- Climax

For most retailers, IT is not seen as a strategic partner of the business — it is simply viewed as a cost that needs to be better controlled. One reason for this is the widely-held belief that only a small percentage of IT projects yield their expected results, and that many projects exceed their time and budget constraints — or are abandoned all together. Considering that most retailers do not have an IT strategy aligned with their business objectives, the implication is that a large portion of their IT project spending is either unproductive or not supportive of business goals.

Organised Vs Unorganised

Going by Census 2001, nearly 3 crores of people work in wholesale and retail trade in the country – 1.1 crores in the urban and 1.9 crores in the rural areas. Any protest by this sector “will cause companies such as Reliance, Pantaloon, Spencer, Bharti and now the Birlas to stand up and listen.
Organised retail has not penetrated and will not penetrate rural India for obvious reasons – it is just unviable. It is only the urban areas that organised retail is slowly but not steadily growing in.
Those belonging to the upper middle income group and higher income group and living in cities have been increasingly patronising organised trade thanks to the latter’s proliferation. That way speaking, they have traditionally stayed away from the mom-and-pop stores as far as possible.
Who patronises the outlets of organised retail in urban India? Definitely not the lower stratum of society; this stratum represents people who are either daily-wagers or who work for the unorganised trade and industry; their employment is seasonal which means they may remain jobless during the off-season. At sunset, they receive their wages with which they buy their rice or atta for the austere supper ahead. Their purchases are meagre and only the mom-and-pop stores will entertain them. Organised retail will not vend 50 ml of edible oil or 250 gm of rice or atta to such humble consumers.
Those belonging to the lower end of the middle – income group are generally employees of State / Central governments and the organised private sector.
They buy from the mom-and-pop stores on credit during the month and settle the bill when they receive their salaries in the first week of the succeeding month. At best, the lower end of the middle-income group may patronise organised retail for purchase of vegetables because the vegetable vendor does not provide credit anyway.
The truth therefore is that unorganised trade has not been affected to the extent it is made out. The statement of Mr Praveen Khandelwal, General Secretary, Confederation of All India Traders that “united we stand, divided we fall” is at best a diversionary tactic. Instead he had better prevail on his fellow-members to equip themselves better to take the competition head-on by being transparent in their dealings, by being quality-conscious and by being price-conscious, amongst other things.