CEOs in Conversation: The Future of Shopping: Reshaping Omnichannel and Retail Digitization for 2022 and Beyond
Presenting some insightful takeaways from a chat on “The Future of Shopping: Reshaping Omnichannel and Retail Digitization for 2022 and Beyond”, between Harsh Shah, Co-Founder of Fynd (moderator) with speakers, Sanjay Vakharia, CEO of Spykar & Kapil Mahtani, Founder of Tresmode during Mapic India Forum 2022.
(PS: This interview has been edited for length and clarity)
Harsh: So, today we have two very interesting brands—one super popular, massive, high street brand, which has 300 stores, going to about 500 in the next three years—Spykar.
And then we have Tresmode, a premium brand, which actually went from 20 to 15 stores, and will probably go maximum to 25-30 stores in the next three years.
Spykar and Tresmode—two very different brands, with different price points and ASPs. Hence, very different organizations to learn from.
Impact of omnichannel
Harsh: Sanjay, what has been the impact of omnichannel on your brand, especially considering that Spykar has rolled out omnichannel across franchises also, which almost no one else has figured out yet.
Sanjay: So, the most obvious and clear impact is the efficiency that omnichannel brings to inventory management. But more than anything else, it's also probably the conviction that we all now have that offline and online does and can converge, and eventually lead to servicing the consumer in a much, much better manner.
Harsh: What about you Kapil? How has omnichannel impacted your brand?
Kapil: Ours is a quasi-omni model. It allowed the inventory of stores to be available to every consumer who visits the website. Over time, we realized that nearly 40% of our revenue started coming from stores’ inventory. It allowed us to increase business by 40% because we could make that inventory available to the consumer.
Biggest omnichannel challenges
Harsh: For Tresmode, all stores are company-owned only, all of them are within your control. What were the kind of challenges that you had to face when you were implementing technology for omnichannel in your stores?
Kapil: You know Harsh, from a technology point of view, there was zero. Because it's all about an API talking with another API and then integrating into everything. The biggest challenge was the mindset of our people. People didn't want their inventory being pulled out through a different vertical of sales. They didn't want inventory to get sold from the website. And they're always wondering about channel conflicts on pricing.
Harsh: And that I can imagine for a franchise it’s going to be even bigger. What was different for franchises when it comes to technology deployment for omnichannel?
Sanjay: As Kapil said, the mindset was more of a challenge than the technology piece. It's been a very challenging in that sense because franchisees have very different objectives for doing their business, and they're always reticent to give away inventory and also to accept lesser margins, which in the case of omni are lesser because obviously there are other costs also involved.
Harsh: Could you please share some anecdotes in dealing with your franchises?
Sanjay: So, some of the regular and common conversations are with the franchise stores where a lot more inventory moves out. They come back saying that there has been a good sale, but the margin for them has been low. Probably one of the biggest cribs for them is losing sale on the physical front.
Overcoming challenges in implementing omnichannel in a franchise model
Sanjay: We have kind of circumvented that now by having quicker inventory refills for that particular store, which are courier-led and not transport-led. So yeah, giving them assurances that inventory would not be an issue for them so that they stay enthused and help us do omnichannel effectively. We worked on ensuring that the franchisees also do not lose their money. Also, this business was an added business for them.
Evolution of omnichannel
Sanjay: While the challenges have been there, we are as a brand structured—as far as our retail is concerned—with hundred percent franchising. But, I'm very happy to say that my team managing omni and us as management have been steadily increasing our inventory planning now only for omnichannel business.So till a few seasons back, we were doing omnichannel business through our stores and retail inventory was eventually shared between omnichannel and retail. But now omnichannel comes and sits under my retail department from inventory perspective and they have their own share of buys & OTBs. This also shows that we are more and moreconfident about the outcome of this business which has steadily improved, and it's a sizable and a significant portion of our business, and going ahead, it'll kind of continue to see the same trajectory.
Stand of omnichannel in organisation
Harsh: What does this mean in terms of creating the right organization structure? Give an example of what KPIs you changed in order to bring this in line?
Sanjay: So, first and foremost, we created a separate set of people looking at omnichannel business. Omnichannel is separate within my e-commerce business also, and they report to a separate set of people.
Since omnichannel has a big interface with retail and the physical part of it, we have now moved omnichannel under retail. The execution is entirely hanging at the hands on my retail team. So, today my retail team owns omnichannel as a business and hence, they are more than happy to facilitate and iron out issues to create whatever process is needed for that business to grow. And this doesn't happen just because we've told them to do it. It's also because the entire team knows that this is a way forward. And they are very, very enthused, right from, the lowest rung at Spykar to the senior leadership. Everybody is very sure about where we are headed.
Doing it internally vs partnering externally
Harsh: What does that mean in terms of prioritizing what capabilities to build internally against what to partner externally? Is that driven by economies of scale, cost decision, or capabilities. In what areas is cost more important than capabilities and vice versa?
Sanjay: So, having an internal team working on everything might be a little difficult and more expensive. Omnichannel is an area where outsourcing works very well. Talent acquisition is also a challenge. So, I think from that perspective, we are very happy going ahead with an outsourced model—have the right set of people to look at this business internally for coordination, expansion and other areas that need to be taken care.
Cost does matter a lot. But today I think our scale is not so big that it warrants to bring that cost in, at this point of time. And also it's evolving. Also from a merchandising perspective, there are various other areas also which we need to cover and also understand better before we say that, okay, this is finally the model that we want to work with and hence, let's start putting money and people and resources behind it internally.
Harsh: What about you Kapil?
Kapil: Internally, we are just gonna create great quality and ensure that values are met. So we will work on product development, product manufacturing, and the brand building. Everything else gets outsourced. And that's what tech allows us to do.
Be it delivery, supply chain, ad tech or cataloging, everything can be automated and tech cares of it. So, we will focus on creating what is important for consumer and get better at that and everything else we will outsource.
Technology initiatives to try
Harsh: Kapil are there any technology initiatives that you guys are not into or something that you want and definitely want to try out?
Kapil: What I want to try out, a little futuristic—the metaverse, when that becomes a reality with 5G coming in sooner or later.
Consumerism will change. The way we use our phones will change, consumer behavior will change. At some point you’re going to be sitting back on a Saturday evening and think of going shopping in Beverly hills. So, we have to be on Beverly Hills on the metaverse. We have to ensure that you could walk through our store as though you did it physically and experience everything within. We have to deliver that experience and also ensure timely delivery of the product. So, I think that's the kind of technology we have start thinking about and start working on.
Futuristic vs efficiency
Harsh: Sanjay for you, futuristic vs efficiency, where do you like to spend your time from a technology perspective?
Sanjay: I would rather spend time on my efficiency building areas. So, I have a great congruence of offline and online, and I have not yet started exploiting my offline consumers as much for my online business. So I think that would be a critical area for me to explore and spend the next couple of years over there. So CRM in a real sense, and not just loyalty and discounts and points, is where I would like to put my effort.
Harsh: What are some of the experiments in technology that did not work out the way you expected them to?
Sanjay: We haven’t been too adventurous in technology. As I told you, our people's mindsets are very, very offline. To expect them to really embrace so much at one go, and that includes myself as well, will be self defeating in some ways. So we've taken on things which the business needs as of now. It's a need basis, it's not a good to have, it's a must to have things that we have embraced as of now. So like magic mirrors and there's so many things that have come and gone, even in the retail business space. We haven't really touched and gone into adventure into any of them.
So we've been very cautious, I would rather say very sure-footed. Because last 5-6 years have been tumultuous for all of us, whether it's COVID or whether it was the time just before COVID, when businesses were kind of slowing down. So we didn't want to experiment leading to expenses which probably cannot have ROI.
Kapil: Speaking of loyalty, the customer today wants instant gratification, because the deals are available everywhere. So they don't want loyalty from a long run process. Mindsets have shrunk. The gratification time spans have shrunk. They want things quicker. Earlier what used to take a week to get a delivered, today they want in a few hours. That's how consumer behavior and expectations are changing. CRM is a great area. If you can put a lot of money then you can then own the consumer. Because then you can figure out how to educate them across the process, but it comes with big bucks.
Harsh: And Kapil, is there something that you were not happy about? Things that didn't work out in some of your technology experiments?
Kapil: We just started imbibing technology post-COVID. But certain things in tech that really did not work for us was data analytics. All of a sudden, you see consumer changes, the data you're holding and relying on just goes down.
Harsh: Is it focused on some black swan event only or you think that in every two, three years there is a black swan event so it's become a normal anyway?
Kapil: I think it is the mindset which is changing. If the mindset changes then it makes a new consumer, so the data you are relying on is not on level with our old avatar of the consumer.
Conclusion
Harsh: So if I was a retailer in the brand, what should I be reading? Or where should I be looking to find some inspiration about what can actually change the way I serve my customers. And how do you look for inspiration on how retail can change and evolve in the way you serve your customers?
Kapil: I get inspired by people themselves. By talking to them and figuring out how they're thinking differently. 'Cause their thought translates to retail consumption. That's where inspiration comes from, you know, talking to them, learning from them.
Harsh: Well, I would like to thank you so much guys for this. I really appreciate your time and the depth of the conversation that we had. I wish the best and hope see your brands pushing their envelope with technology a lot more. Thanks.
About Spykar
Established in 1992, Spykar is India’s leading jeans wear brand with the ever-changing dynamics of the global fashion industry. From what started as solely a men’s denim brand sold at multi-brand outlets, Spykar has expanded its portfolio to become a one stop shop for casual wear ensemble for both men and women—available pan India across 240 exclusive outlets, 900+ multi-brand outlets, all key large format stores and e-commerce portals.
Spykar forms an ideal representation of executing omnichannnel retail in a franchise-owned store format.
About Tresmode
Tresmode is one of the leading offline as well as online luxury footwear stores in India. It provides its customers with latest trends in footwear and hottest collections of men and women shoes.
With more than 20 Company-Owned Company-Operated (COCO) stores, Tresmode forms a good representation of omnichannel implementation in COCO store format and balances the speaker panel for this fireside chat.
About MAPIC India Retail Forum
MAPIC India, formerly India Retail Forum (IRF) hold’s India's premier annual event where retail brands learn, grow, shop, and experience the future of retail. Held on 14-15 September, Mapic India Forum 2022 saw a footfall of 300+ leading retailers, 200+ exhibiting companies, 150+ global speakers and 1500+ delegates from across the world.
Mapic India 2022 focussed on the theme of moving to the next normal. There were power-packed sessions where business leaders discussed not just about sustainability and innovation, but more importantly creating those experiences with consumers that will also shape the future of retail.
Fynd took great pride in being the official omnichannel partner for the event this year, setting up our stall at the event and participating in various sessions in various capacities.
