Aurora Magazine

Promoting excellence in advertising

Staying tuned to the customer’s expectations

Published in May-Jun 2017
Why traditional retail giants need to understand e-commerce and how it can impact the retail industry.
Illustration by Creative Unit.
Illustration by Creative Unit.

There is a passage in Julius Caesar in which Cassius tries to convince Brutus to betray his friend Julius. He talks about how Caesar dominates everything; he is like the Colossus, while lesser men must live in his shadow and in fear of his wrath. Last year, I had my own encounter with giants when I attended a talk at the Karachi School of Business Leadership (KSBL). The giants I met were not political leaders or despots from literature but representatives of two of the largest retail companies in Karachi – Imtiaz Super Market and Chase Up.

No one can deny the popularity of these companies and we must pay tribute to their perseverance over the years to attain such success. Yes, they can teach us a lot. Sadly, part of what we can learn from them is how not to behave. I was especially saddened to see their somewhat myopic views and lack of touch with reality. When asked about the threat of online stores, they seemed relatively unconcerned. At the talk, there was a representative of a recently launched e-commerce store who happened to be a seasoned digital marketing professional, who had to counter their almost arrogant stances.

Personally, I feel that online stores pose more of a threat to each other than to these established behemoths. They lack differentiation, value addition or the budgets to help them stand out from the clutter, so I can understand if these traditional stores feel that e-commerce is not a big threat. They did, however, say they were exploring the possibility of online deliveries. A self-evident reason for this is that building a superstore costs money and even they do not have an endless space capacity; therefore, other channels such as online can cater to a larger customer base and increase sales.

More dangerous than underestimating the potential of e-commerce was the disdain shown for smartphones and their penetration. One of them said that a smartphone is only used to play games and nothing else. Working in a start-up that does most of its selling online, I can say that over 70% of our web traffic comes from smartphones; so it seems very risky for a traditional store to be oblivious of the potential these devices provide. The advent of 3G and 4G, and the decreasing cost of smartphones, means that a large number (at least in urban Pakistan) can access the internet and experiment with online shopping.

When questioned about research, one of the representatives of the retail giants said he did not see the value of spending, say two million rupees, on research. His view was that there was not much that research could teach his company. This abhorrence of research may explain their previous views on e-commerce and the importance of smartphones.

In my experience, research has been an unsought good for marketers and the research carried out today is related more to attitudes, habits and media consumption, rather than packaging design, etc. There are still uncharted areas in the field (without even mentioning ethnography). Globally, retail research is a booming business, with names such as Forrester, Gartner and PwC involved and publications such as Forbes and the Harvard Business Review devoting articles to it. Retailers are looking for ways to manage customers, attract them in-store, and lure them into staying longer. Furthermore, research can help retailers (big or small) find out about customer attitudes, behaviour and habits, as well as predict trends and identify how shoppers are likely to respond to a new outlet opening. Through research, retailers can access a wide range of useful and actionable insights that can aid them to streamline processes and manage inventory. Retail research, if executed properly, can easily deliver a 10% return, so for that two million rupees, a retailer can improve operations and perhaps save Rs 20 million.

I said earlier that the boom in e-commerce stores does not pose a major threat to traditional retailers. However, digital itself can alter the shopping experience and transform a retailer’s way of doing things. In more advanced markets, in-store branding and promotions are losing their effectiveness as customers are always on their phones. This, therefore, calls for a more integrated in-store and digital marketing mechanism. A step in the right direction would be better websites and more mobile-friendly sites. Even malls, such as Dolmen, can benefit from Google Indoor Maps and technologies such as beacons that provide information as well as offers on a real-time basis.

What will eventually define whether people shop online or in-store is the retail experience. A recent article I read talked about humanising the retail experience. As the writer put it, “Retail (r) Evolution’s David Kepron has described purchase decisions in today’s marketplace as ‘a souvenir for a great experience,’ and this has never been truer. In a world in which products and services are ubiquitously available, we buy where we are given the best experience.”

This could mean we may choose to buy electronics online and clothes in-store. Humanising the retail experience means allowing customers to access information and providing this information at the right time. It means creating moments that are immersive whether in terms of being experiential or catering to the need to socially share on social media. Retailers can encourage shoppers to review these shares and so increase the credibility and relevance of a future product search. This calls for research and if needed remodelling of the retail process for players, be they superstores, malls or even popular designer brands. As Ries and Trout reminded us in their book Positioning: The Battle For Your Mind, the only real Colossus are the customers and they seem to be changing and evolving at a fast pace.

Tyrone Tellis is a marketing professional working in Pakistan.