India’s retail sector is classified to be one of the fastest growing sectors accounting for more than 10 percent of the GDP. The high levels of personal disposable income (see figure below) combined with the growing proportion of young population makes India as one of the fastest growing retail markets in the world. India is set to become the world’s youngest country by 2020 with 64 percent of its population in the working age group. This demographic potential offers India and its economy an unprecedented edge over other markets.
Traditionally, India’s retail sector has been dominated by the owner manned small shops, however with spending habits associated with young generation and increased usage of credit cards, the focus is shifting towards larger format organized stores. The organized stores which were earlier confined only to Tier-1 cities are now finding shoppers and hence expanding widely in the Tier-2 cities as well.
With organized retailers expanding their network, each store wants to offer more value to their customers at the same time maintaining their profitability. Offering value to the customers while maintaining profitability seems paradoxical; and may be difficult to achieve with traditional business practices. There may be several means to offer value to customers eg. Discounts, more options on products, loyalty programs and so on, but each activity is associated with a cost, and if proper balance is not met, may hinder the overall profitability of the firm.
Given the huge amount of people interaction involved in an organized retail store, it acts as a perfect hub to capture data of its customers. It’s quite easy for these stores to capture data like mobile numbers, credit card details, vehicle owned, preferred products etc. of individuals. A lot of this data is generally captured during checkout.
Given the fact that retail industry is sitting on such rich reserves of quality data wouldn’t it be interesting to see how retail industry can implement analytics practices to drive information from this data and increase its profitability while offering value to its customers?
In the coming articles, we discuss different metrics that can be implemented by retail firms to know more about their customers. In due course we will also walk through some interesting cases where these practices have already been implemented. Stay tuned..
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