If you talk with traditional business man from India about profitability of their business they will reply something shown in the article cover image i.e 1 paise , 5 paise etc. In business terms they consider Indian One Rupee as 100% & 5 paise profitability means 5% profitability.
To ensure business is profitable retailers puts all possible efforts but in today’s time a big question for retailers is to find which way to go i.e. Online Store, Offline Store or Omni Channel.
A study done by Alix Partners speaks about profitability of apparels retailers across 4 channels. The study was pretty exhaustive & covered some of top retailers from US. While few will say in store sales is more profitable vs other mediums but let us not get into debate of who is better than whom. Let us understand insights from study & see how future tech will empower retail.
The Alix Partner study says , 30 to 40 percent of all clothing bought online ultimately gets returned. The customer psych is new subject everyday with same digital identity.
Customer is king & you need to know your king’s interest & behaviour to serve better.
Every retailer desires to be best while serving their customers but reality differs & hence we have various customer voices being reported by real customers. 100 satisfied customers go back with a smile on their face & no data whereas 1 unsatisfied customers populates enough data for e-world which sabotages the brand image for long time.
Retailers also know that customers are better understood with data & when an e-commerce player hits trillion dollar in valuation then they realise they are way far in this race & too small the size. All I can say is, not to worry Indian Telecom Revolution is a big example when in 1980’s we were struggling with landline phones & world was way ahead & then in 2000 the mobile revolution brought Indian consumer 100 years ahead.
Coming back to retail , indeed e-commerce players stands many steps ahead in this race today , so whats the plan of our loved brick & mortar format retailers ? Here’s an understanding of data well built to connect the dots in ecosystem using cognitive engine.
Retail has always been about dealing with huge volume of growing data.
Ranging from footfall trends or website visits to sales data, every retailer scrutinise it for insights depending on their capability & efforts involved. Analytics for recommendations, predicting customer churn, lead and ad scoring, analysing customer behaviour etc is available but to limited set of retailers who know how to collect & read data.
On one side we have players who have adopted to techniques like Machine Learning that are capable of supporting pricing patterns, inventory forecasting, cost reduction etc & on other side we have a majority retailers missing the train.
Conclusion : The profitability of retail is dependant on collection of meaningful data & analysing in real time using effective models. Note this is a new standard & not a desire.
Future of brick & mortar retail is going to get data with velocity, variety & volume so think collaboration & ensure ecosystem strengthens the individual business. At last never forget customer is king & privacy of king’s info is supreme priority at all stages.