2020 has delivered a VUCA disruption like never before. Even though things have stabilized now, businesses are still struggling to make sense of the debilitating effect of lockdowns on the once buzzing retail landscape.
Since the pandemic hit, retail has been evolving by the day. Businesses are compelled to continually explore future business models and align processes around customer convenience. In the new normal, the line between online and offline shopping has completely blurred and the changes have culminated in the emergence of a new and hybrid retail model – Phygital retail, which is all about serving consumers from a distance. Going ahead, frictionless shopping, virtual trials, and last mile delivery will be some of the inherent aspects of fashion retail.
The Impact of Social Distancing and How Brands Are Navigating It
After the pandemic hit, the need for physical distancing proved to be a major disruptor for brands and retailers across the world. Especially, in a sector like fashion and lifestyle where touch and feel still counts as a salient purchase decision influencer, staying
afloat became a jaw-clenching ride for businesses.
At the same time, smart brands took it as a leeway to rethink and rejuvenate their strategies to align with these testing times.
“The first one and a half moth was a shock for us all. But it gave us the time to think about how to go about the next phase of re-opening stores in adherence to the new protocols of safety and hygiene. It involved immense revamping of SOPs — first in terms of how we take care of the health and safety of our own people,” said Vivek Bali, CEO, Sephora India.
Like most physical retail stores Sephora too is a destination of retail experience and according to Bali, the main challenge that they encountered was ‘rethinking the entire format’ in a way that kept the experiential essence intact. In line with this, the retailer introduced ‘one time use applicators’ in its stores.
“We kept on time applicators for all our ranges so that they can be disposed of after customers use them. Luckily we had planned an inventory for it, and it worked out well across all of our doors. So, basically we continued to let consumers try our products but made it extremely safe for them,” added Bali.
But while Sephora continued with product trials, they had to pause their Mini Flash Makeovers, a free 15-minute ‘mini-makeover’ service that the retailer offers.
Like Sephora, there are many other brands which are navigating social distancing born out of the pandemic. Caratlane, an online born and bred jeweller launched its first offline store in 2012. Since then offline retail has played a significant role in the company’s revenue. When the pandemic hit, the company’s first reaction was to cut down on its marketing efforts, in a bid to conserve cash. Yet, it noted no significant dip in its online business.
“It was surprising and highly overwhelming to see people shopping for jewellery even during such dismal times. So, in April 2020 and May 2020, we were selling but not delivering anything. Keeping this in mind we realised that we need to serve our customers like we used to and hence, we converted everyone in the stores into tele-callers. So, although there were no deliveries, we were making sales in decently encouraging numbers,” explained Avnish Anand, Co-founder, Caratlane.
When deliveries started for nonessential products, the brand slowly ramped up their marketing and communication efforts as well. In the initial days, Caratlane did face inventory related challenges when most stores, that also acted as fulfillment centers, shut because of the lockdown.
“But eventually most cities opened, and malls also allowed us to pull out our inventory. Also, there was a big lull in terms of new inventory for a long time. Mumbai is a jewellery manufacturing hub in India and with it being worst affected by the pandemic, new products were out of the question. But the good news is that things have stabilized as has the jewellery segment in India which has been especially buoyed by the festive season. The recovery has been pretty impressive,” he added.
Fortunately for Lenskart, spectacles and optical instruments are considered as essential commodities. Even then, when the company wasn’t spared of its share of challenges during the lockdown. Infact, in the first 30 days of the lockdown, Lenksart kept all its 650 stores shuttered.
“The first challenge was to let the government know that we are part of essentials. It is an essential commodity alright but the challenge is to convey the message to local authorities,” said Amit Chaudhary, CoFounder, Lenskart.
But like most smart retailers, Lenskart was quick to spot and grab the opportunities that the lockdown provided. The company’s first step was to keep serving the consumer from a distance. “We switched on to cloud telephony for all our staff overnight. So, we have about 2,500 employees calling 5 million consumers. Also, we trained all our employees to take orders online even on the phone. While the number of orders weren’t exactly same, we were very well doing 30-35 percent of it,” he added.
If there is one positive connotation to the entire COVID-19 situation, it is the rapid adoption of technology. After the pandemic hit, both consumers and businesses were compelled to ante up their reliance on technology. “We have a seen a surge in number of brands in our platform after the lockdown. Similarly, we have seen an extremely warm response from our consumers, although you would expect fashion and lifestyle to be the last thing in people’s minds during such times of crisis,” said Kumar Saurabh, Business-Head, Lifestyle, Udaan.
According to him, it is apparent for businesses that the traditional physical way of doing business needs a major overhaul. Hence, an increasing number of businesses are now turning to digital medium to get closer to the consumer and serve them better.
Consumer Behavior – What Will Change and What Won’t
The Coronavirus pandemic has also tagged in immense shifts in consumers attitudes, behaviors and purchasing habits — and many of these new ways are expected to remain post-pandemic.
At the same time there has been changes that are deemed temporary and are expected to roll back post the pandemic.
While causal clothing has seen a spike in demand post the pandemic and lockdown, Kumar Saurabh revealed that contrary to popular belief Udaan has seen warm response for traditional fashion categories like formal wear during the lockdown. “For a section of consumers, shopping is therapy, and nothing can change that,” he stated.
One of the primary consumer behaviour changes during the last few months is the rapid shift towards digital retail channels. Even in India, there has been a massive rise in first time users and this shift is expected to continue even after the pandemic ends. Consequently, going ahead, online platforms are becoming indispensable for offline stores, and online–offline service integration is expected to increase.
And to make the transition between the online and offline channels seamless and efficient, businesses are compelled to explore modern technologies like Augmented Reality, Endless Isles, etc.
According to Avinish Anand, a lot of these changes were temporary and now that markets have opened up, Caratlane has already witnessed consumers going back to their older ways. “I think a fair section of consumers tried the new way of trying and buying and now that she feels comfortable she will stick to it. At the same time, there also has been a significant pool of consumers who tried the new ways only out of necessity and now that options are open they have rolled backed to their old ways,” he said.
Are Phygital and Omnichannel the Same?
With consumers restricted to the safety of their homes, the paradigm shift to online channels has been very natural. As digitalisation becomes a way of life, retail is moving towards a closer intertwining of channels. The future of retail will now be dictated by the emergence of a truly new form of Omnichannel — connected or Phygital stores.
In the Phygital world, the aim is to become more meaningful to consumers by converging both experiences and offerings. It is about revolutionizing customers’ physical or brick-and-mortar shopping experience by creating a seamless, omnichannel experience synchronizing the digital and instore retail experiences. It involves hybridizing the physical (the point of sale, its products, etc.,) and digital components (touch screens, connected mirrors, endless isles, etc.,) at the same time and in the same place to off er a unified experience to the consumer.
“Phygital or Omnichannel for us is to provide all digital technologies that we use in all our channels of retailing. It’s all about how both these channels can mutually help each other and ensure that the consumer gets a seamless and uniform experience across all our channels,” said Chaudhary.
“When a consumer walks into a store, how do we prompt her to use the phone to make a purchase. Concepts like cash counters are slowly becoming obsolete — these can very well be executed using our smartphones. India has been an extremely slow adopter of in-store to mobile technology. We have to learn from other countries how they have leaned on Omnichannel retail to build engagement and generate higher consumer numbers,” said K Radhakrishnan, Co-Founder, Tata StarQuik.