Retailers are Focusing on The Wrong Experience
Retailers can learn important lessons from studying kiranas, mom-and-pop stores in India. In our present day quest to design the most efficient and enticing shopping experience, complete with the latest technology, retailers miss what is really essential. Kiranas are small spaces, packed to the brim with merchandise. Catering to a neighborhood population, the kirana offers personalized service which the larger stores either can’t or don’t want to supply. Of course, as a thought leader in the customer service arena, that caught my attention. With a population of 1.3 Billion, 90% of India’s retail market is controlled by the mom and pop stores. 90%!
Amazon and Walmart are investing heavily in India according to a May 2018 article in The Wall Street Journal, Retail Goliaths Meet Their Match in India. While significant parts of the article were about cost structure, the authors stressed how personal relationships have proved to be a strong competitive advantage. Even though kiranas pay more in wholesale prices than the global behemoths like Walmart, the other costs for rent, labor and operational expenses are low. Quotes from customers peppered throughout the piece about the great customer service were compelling.
Every day I read magazines, periodicals and on the Internet that retailers feel the need to use experiences as a way to attract and keep customers. Miami just granted approval to build the biggest and most expensive mall in the world, according to a Canadian developer, Triple Five Worldwide Group of Companies. It will be called American Dream Miami. The complex will include 2000 hotel rooms, an indoor ski slope, ice-climbing wall and water park with a lake where guests enter a plexiglass submarine and dive underwater. What I don’t read about – everis how developing a personal relationship between an associate and a customer can add a competitive advantage. One of the owners of a kirana was asked why he is so successful. His response, “he keeps no inventory, he recognizes his customers by voice over the phone, and his deliveries arrive within 30 minutes because his delivery boys know where all his customers live.”
Can we compare a typical large retailer to a kirana? Is that fair? In my opinion, yes. Walmart and Amazon are giants in the industry and can’t compete with kiranas. It’s not about price or technology. One of the quotes from a kirana customer, “We have a personal relationship with our man at the kirana; the owner even knows my name. We can call and ask for one box of matches or four eggs and they come running.”
Of course, a retailer in the US or anywhere else in the world could not hope to match the cost structure of kiranas in India. However, the personalized service can be replicated. Perhaps a single item delivered in a moment’s notice might not be possible, but the spirit of overall service delivery can be duplicated. Retailers should think of their brick and mortar establishment as a coffee shop and associates can be trained to get to know their customers by name and know their preferences. People love to go to their favorite coffee shop where the associate behind the counter recognizes them immediately, says good morning, using their name, and asks about the family. And, if the customer is absent for a few days, that is noted too and the next time the customer stops in, the associate makes sure to ask how everything is.
Competition is the name of the game. You don’t know who or what the next competitor will be – just ask the limousine and music and photography industries. If one of the reasons that Walmart and Amazon can’t compete in India is because building personal relationships is not integral to their business model, it’s a strong argument for your business to rethink how personal relationships can become your mantra and clear competitive advantage.
There is no doubt that successful retailers in the future will heed the model; Think Personal! I would advise retailers to not only Think Personal but Act Fast before it’s too late. Don’t build fancy walls, build lasting personal relationships.
Image courtesy of The Wall Street Journal.