Covid-19 and the consequent lockdown has disrupted life and businesses in a huge way, and that in itself is an understatement. Although India has entered the first phase of Unlock 1.0, gone are the days when people would move around carefree in shopping malls and indulge in retail therapy.
The last three months have brought about a significant change in consumer behaviour, which is likely to remain, at least until the Covid-19 vaccine is launched. E-commerce channels have witnessed a spike, especially with regard to online grocery, and the trend is likely to further accelerate in the next few months.
Getting all that one needs without stepping foot into a physical store is crucial for today’s homebound consumers. This puts an added responsibility on the retailer to understand the customer and serve him well during these tough times, with speed and convenience being important differentiators.
No one understands this better than Lavdeep Walia, Vice President and Chief Marketing Officer, More Retail (formerly Aditya Birla Retail Ltd), whose customer-centric approach has put several brands in FMCG and Retail on the path to success.
In a freewheeling chat with The Blue Circle, Lavdeep discusses the impact of Covid-19, changes in consumer behaviour and significant trends that will continue to remain in the post-pandemic age.
Impact of Covid-19 on the Retail Sector
Challenges arising from the spread of the virus have forced the retail sector, just like others, to fast-track tech adoption, pointed Lavdeep.
“All of us were trying to figure out a convenient way to serve our customers by making our stores closer to them. We adopted innovative solutions within the store itself, such as the Click and Collect Model, and also introduced new billing mechanisms. The work on this was going on over the last five years. However, Covid-19 has fast tracked it, something that was predicted to arrive in the next 5 years,” he added, emphasising that this could be a temporary phenomenon but could lead to a permanent change in consumer behaviour.
Adoption of e-commerce in online grocery was a mere 1% in the past, and today lies anywhere between 15-30%, shared Lavdeep. This presents retailers with an opportunity to respond to their customers better and faster, and at the same time, gives them a chance to improve.
“I would say it is an opportunity because nimble, dynamic organisations who would be able to adapt to tech innovations faster will be able to respond better. Those who are not digitally savvy and can’t adapt to this speed will certainly suffer in the short term; they will catch up but have to take that leap. In terms of improvement, I think it is a wake up call for every department in organisations to look at how fast consumer behaviour is changing.,” added Lavdeep.
Understanding Consumer Behaviour
Even in times of crisis, the fundamental principles of running a business do not alter. What it brings to the forefront is the significance of understanding different customer segments and their needs, to navigate better, expressed Lavdeep.
“For any organisation to succeed, and especially us, the first step was to look at ‘where is the customer need, what is the customer sentiment, what are the cultural tensions and how can I as an organisation solve those issues? It could be short term, medium term or long term. Our ability to understand our customer needs played a big role in defining our strategy,” he added.
While there are conversations around an empowered culture, Lavdeep feels this is the time to really know if a retailer can meet the demands of a customer fast.
“If a customer calls a retailer and has an urgent need, say because he has small kids and can’t step out, then it is a test for the retailer if he is empowered enough to organise a home delivery, even if it’s a small threshold in terms of value,” said Lavdeep.
Having worked in different roles across a range of industries,he believes that it is all about getting the end customer to the centre and then being able to solve the problem in a quick way.
“The customer hasn’t changed, his behaviour has. Of course, it has changed due to various factors, such as the generation, but it has also changed because the solution did. At one point, it was a demand-heavy scenario, where if you were able to provide the product and advertise on TV, you would most likely be able to sell. Today, if you believe that the product is a solution for your problem, you will buy,” pointed Lavdeep.
Bringing back Customers
Unlike earlier, physical retail stores are not buzzing with people, due to the fear of contracting infection. This might be a dampener, but there’s also a silver lining – this is a boom for any channel that will provide doorstep delivery, shared Lavdeep.
In the next 6 months to 3 years, the channel that will be able to deliver at the time and place the customer wants, among other needs, will be the winner. This means that omnichannel is a critical factor to survive,” he added.
But customers will eventually return to the physical stores; currently, they are being forced to stay home due to high levels of fear and panic, but eventually this will wear down, feels Lavdeep.
“If we look at consumer behaviour, it is either dependent on greed or fear. Currently, people are willing to pay extra for their safety, which is why home delivery is doing well. This is not a natural phenomenon, no one wants to stay home and order everything at home; the present scenario is forcing us to behave like this. In the next 3-4 months, the footfall is likely to rise in stores. We are already seeing this internationally and in some cities, including Bangalore. But it will depend on how the outlet can assure customers of the measures they are adopting to keep the environment safe,” said Lavdeep, adding that a mix of online and offline channels will help retailers succeed.
Spotlight on D2C and Hyper-Personalisation
Direct-to-consumer (D2C) businesses have evolved at a rapid pace in the last few years, predominantly driven by smaller, often local players, who have identified niche segments or consumer needs, and recognise the advantages of direct consumer reach, powered by technology.
Lavdeep believes that personalisation is likely to be further accelerated, but it is completely dependent on the ability to understand and predict certain changes in the customer behaviour.
“If I were to reach you directly, I need certain data to understand you, otherwise I can’t do personalisation. Past historical trends will be the basis of next purchase transactions. The ability to specifically understand this segment of customers, and serve them with a specific solution will play a critical role. Globally, reaching out through mass mediums has already stopped, and targeted media has taken over. You can’t have everyone; rather it is better to pick a specific segment and serve them well. Hyper-personalisation will become a critical aspect, much more fast tracked now,” he shared.
Another factor that will come into the limelight is enhanced hygiene and safety, something that was not of much value in the past.
“People drive scooters with no helmets or cars without seatbelts. I am not just speaking of grocery, but safety has not been a priority in India. But post-Covid, fear will change the behaviour,” expressed Lavdeep.
Despite all the hurdles, the retail cart consumption story is likely to go up in the post-Covid era. After all, the opportunity in India, specific to grocery, is more than USD 500 billion.
“We are a high food consuming economy, and are also moving to health-oriented and high branded segments. There is no dearth of demand in the economy. I believe it is important for retailers to treat customer as a superpower, and focus on innovating different channels. If you don’t, then you need a significant pull for your segment that delivers value to your set of customers,” shared Lavdeep, signing off.
(Edited by Anu Choudary)
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