New Normal in consumer behaviours will lead to New Retail practices: Divya-Colliers Int India
By Divya Seth Maggu, Director, Valuation Services at Colliers International India
Retail in India has always been an engaging affair. A movie outing followed by dinner is a generally accepted combo for a social outing. Anyone from the metro cities would concur that weekends also meant customary mall visits - be it for shopping or general catching up with friends. Staff in stores had been aligned to customers wanting to touch and feel and scan through the range of products available. While all of these activities have been completely washed out in the wave of the pandemic, an emergence of new and reconditioned consumer behaviours will pave the way for restructuring and realigning Modern Retail.
With multiple weeks of lockdown in the larger cities in India, behaviour of the retail consumer has seen a remarkable shift. Social distancing and safety have over ridden all forms of carefree shopping. Economic uncertainty has added fuel to the fire and dampened the desire to spend for many. For those who can, online shopping has taken prominence.
Community buying has come up in a huge way across societies. While a lot of retailers who had been slow in the online space have ramped up on the digital front to keep the revenues flowing, there are also quite a few new unorganized startups which have sprung up in these times - thus increasing the competition tremendously.
Proper precaution with increased store disinfecting and cleaning regimes, implementation of the new industry-standard queuing systems will now need to be standard operating procedures and cannot be positioned as unique selling points!Though the fondness for sales may lure back a segment of buyers, however malls will need to do much more in the post pandemic world to keep the ball rolling.
Strategic as well as financial realignment will need to be done, by retailers as well as mall owners, in their respective operating models to tide over the changes in the external environment.
Cost Optimization: with real estate costs, salaries, interest payments and other costs adding up while revenues have been dwindling across most categories, cash management becomes critical for survival. Companies should also assess their liquidity positions and evaluate options to invest, borrow or monetize. The haggle for a complete revenue share model for rentals between retailers and mall owners would probably settle for a mid-way agreement so as to work together towards ensuring profitability.
Supply chain management: retailers will need to robustly plan inventory and logistics since there will be fluctuations in both demand as well as supply till businesses return to normalcy. With the market moving towards a more omnichannel and delivery-based model, simultaneous alignment in terms of digitization will need to be done. In fact owing to the increased need for last mile delivery, we may see more and more city centric retail space being taken up by retailers.
Customer retention: creating an ownable and unique retail experience to click the right chord with the consumers should be top priority for mall owners on any given day and more so now given the recent market movements for malls to survive. Parallelly, retailer placement should be viewed through the lens of the brand. Retailers will need to create the desire for their physical stores to be preferable over competitor stores as well as over online channels.
Though the context is different today and the need to reinvent is more important in the current scenario, however the challenge is familiar – to give customers compelling reasons to come to the store. Now is the time to introspect, act and restage!
(With business operations in 68 nations, Colliers International is a real estate services and investment management organization. It was established 25 years ago and has about 15,000 employees. Its revenues were about USD 3.5 billion in 2019 with USD 33 billion of assets under management.)