Consumer Mindscapes 2007, BS Nagesh, customer care associate and managing director, Shopper's Stop, discussed how retailers can better understand and satisfy today's consumers. With the retail boom in the country, he highlighted some points to help retailers gauge the difference in the behaviour of consumers and accordingly derive insights for their business.
He started by citing the example of Hyper City, Malad, a hypermarket which was launched in 2006. Research showed that because Malad is an area dominated by the Gujarati community, stocking non-vegetarian food items would be useless. Ironically, HyperCity underprovided such items by 10 times in the first month itself. The fact was that people were visiting the mall from places such as Bandra and beyond and the findings of the research were quite off the track.
Adding to that, he said that when they offered the HyperCity consumers a catalogue a year and a half ago so that they could order directly from home, the response from the customers was negative and most of them wanted to shop directly from the mall. But recently, when offered the catalogue again, the customers were delighted with the convenience of choosing what they wanted to buy directly from home. The reason for this sudden change in behaviour was traced to traffic congestion. A year and a half ago, it would take the shoppers an hour to reach the mall, but now it was taking them more than two hours.
Nagesh shared an insight which he thinks is a completely new phenomenon in India. In one of his retail stores, every day, the store staff used to find 40-50 trolleys, fully stacked but lying hidden in different corners of the store. Unable to understand why this was happening, Nagesh's team began studying the store with the help of the closed circuit cameras installed there. They discovered that many families came to the store and picked up lots of things they liked. But because they never had enough money to pay for everything they had collected, they hid the rest of the stuff in a trolley in a corner.
So, people want to enjoy shopping without buying and without having to pay for the experience. Nagesh pointed out that such people should not be deterred from picking up lots of things because this is like a practice session from them. And if one day they have enough money, they'll definitely come back to the store to buy it all.
According to him, there are no benchmarks in the industry for department stores. But it is very important to understand that Indian customers have started understanding their rights. Whether the retailers understand their behaviour or not they should respect their rights at all costs.
Nagesh said that the First Citizen Loyalty Programme customer base is currently contributing to 62 per cent of Shopper's Stop sales, although this base forms just 15 per cent of the total customers. The profile of the First Citizen customer includes 67 per cent men and 33 per cent women. Some 85 per cent of these people are credit card holders. There are more working women than housewives. Around 65 per cent of this base is in the age group of 18-34 years.
One of the reasons, according to Nagesh, that Shopper's Stop has been able to maintain the First Citizen base is because they have constantly upgraded their offerings with changing consumer preferences. First Citizens also have benefits such as a separate lounge, separate cash counters, festival season offers and sale previews.
When Shopper's Stop went back to its customers to ask what they expect, it was found that the Classic members expected more in terms of monetary benefits. The Silver members expected more in terms of monetary returns as well as convenience. The Gold members were the only ones who wanted to be acknowledged with intangible returns. Nagesh said it was very tricky for a retailer to understand what that intangible way could be. But he explained that the intangible return is the customer's expectation from the retailer at that particular moment.
He cited an example to explain his point. A customer in Bangalore wanted to gift a ring as a surprise to his girlfriend in New Delhi. Once he had chosen the ring and made the payment, an executive from the Shopper's Stop New Delhi office went and delivered the ring to the girl along with a bouquet of flowers. The girl was very happy to receive the ring, but was more delighted by the fact that her boyfriend had sent her a bouquet all the way from Bangalore. The boyfriend in fact had no clue that a bouquet had been delivered to his girlfriend. He discovered only later that the sales executive had been thoughtful enough to take a bouquet along with the gift.
Nagesh said that if retailers are able to capture this expectation of their customers, they'll go a long way in establishing long-term bonds with them. All that retailers can do today is provide the right environment for their customers to shop freely. They should try to satisfy the customer's expectations and, in return, the customers will give them the reward of loyalty.