With a background in high-level marketing positions at TCS and Reliance Retail, V Rajesh is a well-known retail and shopper behavior expert. He is particularly interested in comprehending customers' habits and patterns of consumption. As the marketing field is rapidly evolving, with the customer's desire for fast response driving the change, Rajesh, in an interview with affable.ai, explains how innovative technologies like machine learning and AI will be leveraged to influence purchasing decisions.
According to him, influencer marketing will play a major role in the retail industry. Still, he thinks that many retail brands are not taking advantage of the opportunity on social media, video platforms, and WhatsApp groups. Despite this, Rajesh predicts that influencer marketing will continue to grow and that the use of celebrity endorsements in traditional media will decrease.
V Rajesh points out that influencer marketing often leads to high-impulse purchases through social media posts and reels. He also forecasts that the trend of products themselves becoming influencers will become increasingly important in the future. To gain further insight into his thoughts on the retail industry and influencer marketing, one can find out more about what Rajesh has to say on the subject.
Being a retail expert, you have stated that one of the toughest challenges in your journey has been influencing the shopper's mindset concerning grocery shopping dominated by traditional formats. How did you overcome it?
One of the early learnings was that we should understand our customers and, more importantly, their consumption habits/ patterns. This has stood me in good stead regardless of the category I have been involved in across various retail formats. Getting back to grocery, there are a couple of key patterns which drive consumption and, thereby, the habit of purchasing from a specific outlet.
For example, the bulk item in the grocery purchase is a key loyalty driver. Rice in south India, Atta or wheat in the North, etc. When this understanding was leveraged, the mindset of becoming open to purchasing from air-conditioned supermarkets changed. A few other aspects also helped. Such as briefing the staff to speak in vernacular, making the shoppers feel welcome and comfortable, etc.
What challenges do retail brands today face in the context of the altering marketing landscape, even though it is critical for brands to understand their customers' consumption patterns? What is your approach toward that?
Retail brands can be broadly categorized into food/ grocery and non-food. Both of these segments face unique challenges. Grocery retail has to manage with wafer-thin margins. This is mainly because of MRP. MRP creates a glass ceiling due to the inability of the retailer to fix prices. Even if the shoppers in their area of operations are okay with the price, the retailer cannot do anything about the price of a packaged product. This is an important aspect, as pricing plays a key role in the scope of any marketing effort.
The shifting marketing landscape is dominated by well-informed shoppers. As such, they are well-informed about the prices. However, the inability of retailing to leverage pricing is a major challenge. I am often asked about the potential misuse/ fleecing of customers if there was no MRP. My response is a counter question – How do you, as a consumer, know that the MRP on the packaging has been fixed in a fair manner? What is the guarantee that the customer is not paying more than the worth of the product already?
This pricing on products (MRP) is market forces led. The same will happen if retailers are allowed flexibility in pricing what they sell. If competition is considered a balancing factor for fixing the correct worth of the product as the MRP, the same logic of competition will apply to retailers also with regard to the selling price that they offer.
My approach to this challenge would be to do away with MRP completely. The other challenge for grocery/ food retail is that this is a very difficult category to manage for various reasons which I shall not get into due to space constraints.
Non-food has its challenges. Electronics, consumer durables, mobile phones, etc., operate on very thin margins but require high levels of working capital because of the high unit price. Apparel depends on the forecast of fashion trends and has to contend with unsold stocks at the end of the season. That is why they offer "End of Season Sales" (EOSS).
The shifting marketing landscape is defined by the customer's need for a speedy response. An important expectation is any kind of resolution; the faster, the better. There are two parts to this - the physical logistics for moving the product and the softer aspects of interacting with the customers. The softer aspects are relatively easy due to the smartphone, helplines, and customer resolution through these. It is the physical logistics that is the challenge. Technology, in a variety of ways, would help to resolve this also in the years to come.
As you mentioned, technology will help resolve some of the key challenges in the retail sector. How do you think artificial intelligence and machine learning will become integral to marketing in the coming years?
This is already becoming a major aspect and is being leveraged to influence purchases. From something as simple as showing products purchased together to recommendations, AI and machine learning is playing a larger role than we think. These are actually playing a significant role in managing the supply chain, which is not visible to the shoppers.
Managing optimal inventory, being able to predict buying behaviors, etc., are all leveraging these technologies. With the all-pervasive use of smartphones, we are very generous with our data. Why do you think that everyone wants to push users to install their Apps? Not only install the Apps but give the App all kinds of permissions. The wide range of user data feeds into analytics, AI, and Machine Learning.
Another massive opportunity for AI and machine learning is in the space of customer service. Chatbots are slowly becoming passé. Predetermined robotic answers are tiring to our customers who want responses to questions phrased in the manner that they wish to use. I would not be surprised if your future customer service person is a robot who is powered by AI and machine learning to assist you with the most complex queries that anyone can come up with.
Customer service, which is an integral part of marketing, will move to a wholly new level when these technologies evolve. ChatGPT is already making waves, and we need to see if this is exactly the kind of solution for customer interactions.
As we talk about marketing, how do you think running an influencer program will be important for retail brands in 2023?
Influencer marketing is already here to stay and can only grow. The influencer segment is still at a nascent stage in India. There are multiple channels that can be used for influencer marketing. However, only a few of these, largely social media, are being leveraged. The opportunity is huge, be it social media, video platforms, or even WhatsApp groups.
Each of these platforms must be explored by the content creators/ influencers in a far more aggressive manner. Only then would the marketing strategy of retailers/ brands take note of such options.
A classic example is FM radio. Before private players came into the picture, FM radio was not considered in any media plan. However, with the explosion of private players, FM channels have become an important part of any media plan, especially for media-insulated and short-term marketing plans.
Given that multiple channels are yet to be used for influencer marketing, how will the strategy serve its purpose both for the online marketplace and e-commerce platforms?
If one were to see the reality of influencer marketing, it is actually decades old. "Bobby" a super hit film in Hindi, led to a rage of polka-dotted sarees after that film was released. If that is not influencer marketing, what is?
The difference is that the heroes and heroines were aware, to a limited extent, of their power over consumer choices. However, very few leveraged it as an "Influencer". Another example is an outlet called Kachins. This was a clothing store in Mumbai, and once it was known that a famous actor in the 1980s used to purchase from this outlet. It became famous for that very reason. I am referring to a period when fabric would be purchased, and tailors would stitch clothing. Imagine the influencer power if people were ready to purchase readymade garments from this outlet when the prevailing trend was the opposite.
Coming to the present and in the years to come, influencer marketing is here to stay for two main reasons. One is the desire for popularity and likeability. The social media "dependence," for want of a better term, is a clear example of this. Can you imagine anyone posting something and not being bothered by the number of likes and shares that they get? The influencers are the first to check this out as they have made it into a vocation.
Even for those whom this is not a vocation, likes and shares are super important. So, following influencers and their role in the marketing/ branding of products would continue to grow. My expectation is that celebrity endorsements in mainstream media might even reduce. With stringent guidelines being considered for celebrities who endorse products that are not of good quality, celebrities might turn into influencers more than endorsing products in mainstream advertising.
The second reason for the shift would be the use and consumption of content from smartphones. With wearables and the Internet of Things (IoT), our dependence on devices is going to become complete and total. Any person or organization which dominates this medium is going to dominate the thinking of the consumers and their consumption patterns. The current influencer marketing also includes the purchase of high-impulse products because of a reel or a post. Even though there is no influencer involved, the product itself becomes one. This would also grow significantly in the years to come.
How do you believe retail brands are attempting to take advantage of the creator economy and execute a successful social commerce strategy in a cutthroat environment?
Retail brands would wake up and start to leverage the creator (Content creator) economy to a larger extent. As I mentioned, the initial opportunity lies in lifestyle categories. Even when it comes to food, gourmet retailers might leverage this opportunity in a far more effective manner.
Of course, the entire space of YouTube channels has burgeoned with cookery channels, unboxing of products, etc. How many of such options are influencer driven or lead to influencer marketing-led actions is still not clear. Another example is WhatsApp groups. These are platforms for content creators, even if most of the content is forwards.
Another trend is the emergence of stand-up comedians and meme makers. They would definitely play a strong role as influencers and, more importantly, help in creating viral messaging.
Many retail brands have started to recognize the importance of community. But organizations and brands commonly encounter difficulties when attempting to implement it. What approach do you think is the most effective for locating these communities and collaborating with them?
Community-oriented initiatives are not new. Tupperware is a good example of tapping into the local community. We can look at physical communities and virtual ones. With regard to physical communities, the urban landscape is still largely mixed-use. As such, communities are still fragmented. It is only in the past few years residential suburbs have started to make an impact. This would help in creating urban communities, which can be leveraged like in the case of a mega-gated community.
The other kind of physical communities would be based on similar interests, preferences, and passions. Decathlon, for one, is tapping into a community that is interested and passionate about sports and outdoor activities in a very successful manner. Virtual communities are already in vogue on Facebook, WhatsApp, etc. Such communities offer an excellent opportunity, and it is only a question of the retailer/ brand making an effort to identify and be a true part of the community. Any blatant promotional effort without contributing to the community would soon fall flat on its face.
How has the Indian retail industry evolved post-pandemic compared to other countries? Are brands growing to the concept of paid boost behind influencer content instead of dedicating marketing budgets towards social media ads?
Indian retail is slightly behind other western countries as our shoppers are still at the early stage of the life cycle of the shopping experience. So physical stores would continue to thrive. Post the pandemic, we have seen the return of shoppers to outlets, malls, multi-plexus, etc. Some brands, especially lifestyle and upmarket brands, have taken to the concept of influencer content.
Even physical retail has adopted influencer-led initiatives. However, this is in addition to conventional marketing efforts. At best, influencer marketing would be carved out of the conventional marketing budgets. I am specifically talking about conventional budgets because many brands have leapfrogged from conventional marketing to exploring influencer marketing.
What top trends and innovations do you see making a big impact in retail marketing?
There are a couple of technologies that are going to redefine the way we shop and consume products. Firstly, entertainment/ recreation and work would become the priority in the years to come. Earn to spend and spend to earn. We are still a few decades away from living a virtual life with life support machines sustaining our human bodies or even our brains alone.
In the immediate future, augmented holographic reality and 3D printing might change the way we shop. A shopper can visit any outlet in the world and do their shopping through holographic augmented reality technology. Not only that, they need not even purchase the product. They might purchase the 3D design and get it printed at home. Just a few decades ago, having a home printer was unthinkable.
Nowadays, a home inkjet printer is very common. The same thing is going to happen to 3D printers. Even the products which cannot be 3D printed can be delivered in minutes using drone technology. This is something already being tested and used.
Getting back to the entertainment and recreation part, the concepts of Metaverse, Virtual world, etc., would be dominated by the consumption of entertainment and recreation. The consumption of products would still be physical. Till the time I can get a haircut in the virtual space, and it reflects in my physical being, this would hold true!
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