26 October 2022 14:48:59 IST

Kushankur Datta is a PGDM student at XLRI Jamshedpur
Debajyoti Das is a PGDM student at XLRI Jamshedpur

Vishal Mart can use tech to enhance the customer experience

Organised retail outlets should embrace technology | Photo Credit: Getty Images

Kushankur Datta and Debajyoti Das from XLRI Jamshedpur won the IBS-Hidesign case challenge to come up with a strategy to put Vishal Mart back on the top shelf. They win a gift voucher worth ₹12,500 from premium and ecology-conscious leather goods brand Hidesign.

The retail market in India has grown at a CAGR of 10 per cent-plus consistently in the past decade. The Covid-19 pandemic hit the sector financially, but it made businesses more resilient. Unlike the key players in the US like Walmart, the Indian market has a high number of retail players with the traditional unorganised segment forming the major chunk with 70 per cent-plus share. Consequently, the Indian market is highly competitive and dynamic in terms of technology, services, channels, and strategies.

Porter’s five Forces Analysis of Indian retail market

What should Vishal Mega Mart do to grow in the competitive and dynamic retail sector? 

According to Kearney Research, tier 2 and 3 cities will drive the growth of organised retail in the coming years. As per industry estimates, the market size of these cities is expected to grow from the current $5.7 billion to $80 billion by 2026. In fact, these cities will become the major contributors in overall organised retail, currently growing at a CAGR of 20-25 per cent.  This is due to the following factors and forces: 

This gives Vishal Mart, which is a first mover, the perfect positioning and opportunity to leverage this growth. 

Factors influencing the growth of organised retail in tier 2 and 3 cities

Strategies to be adopted by Vishal Mart to grow and compete in the retail sector: 

Experiential shopping

The modern shopper doesn’t visit malls just to shop. The metro cities in India offer an experience to consumers, thus turning them into repeat customers. This phenomenon has also percolated to tier 2 and 3 cities. Thus Vishal Mart should look to curate experiences for its consumers through the following means:

  1. Food courts in select tier 2 and 3 cities
  2. Multiplexes in select tier 2 cities. It can tie up with third party providers such as PVR as well
  3. Game Zone for kids in select tier 2 cities. It can also tie up with third party providers such as Time Zone

This strategy will also ensure cross-selling and up-selling for Vishal Mart.

Better brand mix

Vishal Mart should employ advanced analytics to judge the seasonal and regional shopping behaviour of consumers. This will ensure that inventory doesn’t go unsold and reduces the chances of stock out.

Technological enhancements

To compete with e-commerce platforms such as Flipkart and Amazon it is essential for organised retail outlets to embrace technology.

Thus Vishal Mart should look towards adopting the following technologies:

  1. Customised targeting of customers: Data analytics and geotagging is to be used to target customers with curated ads for products suiting their lifestyle and taste
  2. Improving Vishal Mart retail app: The app should be used to move from customer relationship management to customer experience management. It should be a one-stop destination for all information that a customer seeks.

Would you recommend Vishal Mega Mart to go for an omnichannel strategy or should it continue to focus on offline expansion as a value brand? 

With the major future growth markets being the tier 2, 3 cities, it is important for Vishal Mart to cater to all customer markets and channels and make a strong presence in these cities. Vishal Mart only has a retail presence and requires an online presence in terms of a shopping app or website to provide the convenience to its customers.  

  • Faster deliveries: Vishal Mart can use its offline stores to integrate with its online shop, to provide faster deliveries to these smaller cities.
  • Click and collect: Vishal Mart can also focus on providing customers with a physical engagement with the products & apparel in these cities, as an extension to the online platform, akin to the concept of a US store called Bonobos, which has an offline store just for providing consumers with a look and feel of apparel.
  • Vishal Mart app should act as a one-stop information app for customers.
  • Integrating communication through SMS, email and social media to be coherent.

How can Vishal Mart expand its consumer base across India?

Vishal Mart should focus on the key growth drivers in the industry to capitalise on the retail wave in India. The customer experiences form an integral part of any shopping experience and further investments can help prioritise Vishal’s tech enablement, while improving the customer journey. Some of the key recommendations include curating a holistic shopping experience integrating with food zones and multiplexes to improve footfall.

Another key driver is the food and grocery segment, which forms 68 per cent of the market distribution in the Indian retail landscape, and Vishal Mart should focus more on ready-to-eat food items in tier 2 and 3 cities.

  • Digital shopping presence: With internet penetration in tier 2 and 3 cities, the focus should be on building a shopping application that can provide short-duration deliveries.
  • Digital marketing: With over 75 per cent social media penetration in Instagram and WhatsApp, Vishal Mart should focus on customised targeted ads using advanced analytics.
  • App: Improve the App to be a one-stop destination for information needs of a customer.