Shrikhande was the keynote speaker at the Leadership Summit organized by the All India Gems & Jewellery Trade Federation (GJF) in Mumbai on February 21. His message was that understand the consumer and the transformational processes that he or she was undergoing, was key to successful retail.

 

Shrikhande maintained that this evolutionary process was not fully understood by the retail community yet. He encapsulated this insight in a phrase that a Bollywood-crazy society would understand – “picture abhi baaki hai” (the picture remains to be seen).

 

In order to fully see and understand the picture, he noted, it was important to understand, that no matter what the product being sold, the shopping process involved two distinctive processes within the consumer. The first was what he termed a “brain” process, the logic components of the transaction, where the consumer considers price, quality, convenience of access, service and consistency of product quality.

 

The second process, according to Shrikhande, was one of the heart – an emotional one. This process involved the consumer’s trust – of retailer and product – as well as the memories of previous experiences, the bonding felt with the retailer, the values he embodied and consequently his ethical standing.

 

Getting this picture, Shrikhande observed, was key to successfully penetrating the Indian retail market, which he estimated at being in excess of $470 billion. By far the largest portion of the pie – 70 percent in terms of value – was accounted for by food and agricultural products. Only 16 percent was claimed by personal accessories. The market was dominated by a youthful customer base and significantly, a rapidly growing segment of women who were now entering the workforce.

 

Most modern-format retailers in India, he said, were losing money. Where once it was thought that these new entrants would sweep the market, it is now clear that they are making no headway against the small “mom-and-pop” stores that have traditionally been the dominant feature of the Indian retail landscape.

 

These stores, he said, were set to survive and thrive in the near future. The key to their success, he noted, was customer service. They had personal relationships with customers, knew the products and services they wanted and were willing to make home deliveries of even the lowest-value orders.

 

 

Picking on the relationships with customers, Shrikhande noted that in Shoppers Stop’s own experience it had discovered that a customer base of 2.8 million drove 70 percent of its sales. This is what made the group put customer care as its foremost priority and it was sensitive to the fact that different parts of India had different cultures and held up different icons to aspire to.

 

Luxury apparel was the group’s biggest sales segment followed by beauty care products – and the second category was growing at an astonishing speed. Jewelry was relatively small but continued to show growth. The interesting point was that some 80 percent of repeat customers were the ones who drove the jewelry segment’s sales and influenced its growth.

 

Shrikhande’s advice to the jewelry retail community was to focus not on the product so much as the customer. Understanding the customer and his or her wants and aspirations, as well as catering to the “heart” part of the retail transaction, he noted, was key to growth. The “brain” part of the transaction was not to be ignored, but this part was a given in any product category and the only variables were what the “heart” part brought to the transaction.

 

He said that the entrance of the global retail giants into India – including Wal-Mart, the world’s largest jeweler by value and volume – was not likely to affect the retail scenario in the country in the near-term, as several structural issues remained to be resolved. In the medium-to-long term, however, he said the entry of the global players would have a significant impact. They could make a financial impact of between $20 and $30 billion with their entry and the intense competition could drive prices down by as much as 30 percent.

 

Those with strong customer bonds and a good understanding of what he or she wanted, Shrikhande noted, would continue to survive and thrive.