While internet penetration in India may be low, its influence is on the rise. No longer polarised, brands are aligning the virtual and physical for seamless retail experiences. So tells Dominic Twyford to India Retail.
While internet penetration in India may be low, its influence is on the rise. No longer polarised, brands are aligning the virtual and physical for seamless retail experiences. So tells Dominic Twyford to India Retail.
By international standards, Indian online shopping is immature. This is hardly surprising considering that estimates suggest that India has around 75-million internet users, well below 10% of the population. In addition to low internet penetration, traditional attitudes to shopping create a barrier to its adoption. Indian shoppers are already conditioned to expect products – especially day-to-day essentials – to be delivered to the home by local shopkeepers, this value-add somewhat negates the convenience offered by online shopping.
Another important factor is that Indian shoppers are now getting used to mall shopping, a visit to a mall is an event and often a day out for the family. Shoppers also like to be involved in the shopping experience, preferring to touch, see and test the product before the final purchase.
The financial transaction also presents an obstacle, unlike an intangible online purchase; in-store purchasing provides opportunity to negotiate with the shopkeeper and pay in cash.
Ultimately, buying and paying for a product online requires an element of trust, which can only be established over time. Currently, many Indian consumers are wary of online transactions due to the fear of fraud. Traditional shopping habits and behaviours need to evolve if shopping online is to become mainstream, and, as ever India’s young population are set to become the agents of change.
Changing attitudes to online
It is safe to assume that as internet access slowly improves India’s growing urban population will drive adoption of online shopping in volume terms. This growth will be spearheaded by India’s younger consumers, comScore figures show that 75% of India’s current web population is under the age of 35, compared to 52% globally and 57% regionally. This technologically clued up, but increasingly time starved generation are likely to buy in to the benefits of online purchasing. To them it will become a useful tool and practical solution that suits the increased pace of life in modern India. Another influence will be the increase in working women; online shopping is set to become a real benefit for women who juggle the roles of traditional homemaker and modern-day salary earner.
Online influencing in-store behaviour
While online isn’t currently a direct threat to in-store shopping, there are signs that the web is beginning to influence in-store shopping behavior.
According to Experian, shopping ranks as the 10th most popular online activity in India (compared to 4th in the UK and 5th in the US). More importantly they conclude that the Indian shopper is now more likely to use the internet to get product information, carry out research and shortlist preferences.
In this regard India is following an established global trend, shopping is no longer polarised; the choice is no longer online versus in-store. The modern shopper picks and chooses which channel to use, the traditional customer journey is now more complex, consumers are no longer forced to carry out their research and make their purchases in-store, the modern journey is a fusion of both.
Social networking, peer group research and opinion forming
Even where internet penetration is low, word of mouth and peer group research is playing a decisive part in the purchasing cycle. Social media and social networking is enabling individuals to tap in to like-minded communities that share common interests.
Facebook global membership is approaching 700-million, but there are signs of “Facebook fatigue” in mature markets like the US and Canada where numbers are slowly dropping. By contrast recent and widely reported figures in the Indian media claim that Indian user numbers are increasing at pace, Indian Facebook users totaled 26.6-million in June this year, up from 24.9-million on the previous month. Social networking is becoming a powerful consumer tool in India, providing consumers with a platform from which they can research and recommend brands and services.
Mobile revolution
While the increasing influence of online is a global retail trend, India displays its own unique characteristics. The mobile phone – subscriptions are nearing 800-million countrywide – is likely to be the device of choice to access the web. As smart phones become more popular and 3G broadband services improve, India’s internet revolution could conceivably bypass the less prevalent PC – Intel/IMRB research pegs computer penetration in urban India at 38% – in favour of the cheaper, ubiquitous mobile phone.
This presents retailers with both an opportunity and challenge. Online portability provides retail brands with the chance to engage with consumers through out the day irrespective of their location. Brand-consumer dialogue can now take place outside the confines of the store and at all stages of the customer journey, whether it be pre-sale and during the planning and research stage, en-route to the store, in-store or at home post-sale.
The challenge for the Indian retail sector
Given India’s technological prowess and the influence of the countries young demographic, it is safe to assume that internet penetration – whether fixed line or mobile – will improve and that its influence will become even greater.
With additional competition expected from the likes of digital classified portal Quikr, and retailers that specialize in “clicks” rather than “bricks”, FITCH contend that all retail brands need to create more compelling physical retail experiences. Retailers should be focused on maximizing their unique asset – the store – to attract shoppers and counter the convenience of online shopping. This approach requires retailers to enhance the in-store experience in which layout and visual merchandising become key factors, as they are elements that can’t be replicated online.
In addition, customer service and face-to-face interaction becomes even more important, staff need to add value to the shopping experience by displaying in-depth product knowledge and a level of customer care that can’t be found on a website.
India’s retailers should start to gauge how they can exploit the internet’s unquestionable potential by marrying the physical and virtual throughout the customer journey to improve the overall brand experience.
Aligning in-store and online
Research across FITCH’s global network has highlighted a number of brands that are leading in the area of aligning in-store and online. The NIKE ID store in London is one example of a global brand that has perfectly aligned the virtual and physical. Whether you are visiting the store, using the phone app or accessing the website, the brand experience is consistent. NIKE ID have successfully shown how technology can stimulate creativity, at each touch point you can customise your own pair of shoes and have them delivered to you. The brand experience concludes with an opportunity to post a picture of your shoe online to inspire others and build a loyal community around the brand.
Smaller independent brands are also exploiting the potential of online. The Albion Café in London has integrated Twitter into its food service operation. The café’s oven is connected to a device that allows the baker to send tweets to followers, telling them what has been baked and when the next batch of fresh product will be available. This approach is perfect for brands where freshness is a key part of the brands overall appeal.
Both of these brands has successfully managed to create relevance across virtual and physical brand touch points, whether they be pre-sale, in-store or post-sale. While technology presents many advantages, the truth is that consumers will always desire “real” human experiences; India’s retail sector needs to focus on delivering appealing in-store experiences while harnessing the power of online.
Dominic Twyford is a Client Director for FITCH in Mumbai that specialises in creating and developing retail brands. Dominic is leading the development of FITCH’s new office in Delhi.
This article originally appeared in the September-October 2011 issue of ‘India Shop’, a bi-monthly sister publication of the ‘Images Retail’ magazine published in India.