New Delhi: Simon Hay , global chief executive at British consumer insights company dunnhumby, a subsidiary of supermarket chain Tesco Plc., spoke in an interview about the future of shopping and the complexity of tracking big data and social media. Hay was on a visit to India, which, he says, is an enticing market with organized retail, e-commerce and social media all developing together. Edited excerpts:
How have shopping baskets evolved over the last 5-10 years?
There has been a drive to convenience, a drive to smaller baskets and higher (shopping) frequency, and that has something to do around food wastage, expiry dates and all those things. People want fresher products. I think there are more instances of people managing to a budget—we can see basket types change and particularly in places where people pay monthly. You can see people getting short on money towards the end of the month and the cuts of meat change and even the way they pay changes—you know the use of credit cards goes up at the end of the month...that’s not to say people have stopped treating themselves, but they treat themselves by saving on other essentials and treating themselves to higher quality meals.
How do shopping habits get affected during a slowdown? Do retailers spend more on your services during a downturn?
Well, I think, during such a time, the value of money is unmoved…customers want their money to go further. When times are tough and things are uncertain, you want to spend less, you want to save more, you want to stop going out to cinemas and restaurants, you spend more time with your family. And, therefore, how do we deliver more value and put customers in touch with the best offers? So we help them cook better for their families (at home). A lot of mums around the world struggle with what to cook and how to be more creative.
On the other hand, there are a number of strategies companies pursue in difficult economic times. But you’ve just got to work harder, look at value, you’ve got to look at the efficiency of promotions, of stores, of your labour, make smart decision and smart decisions are made with data and with keeping the customer in mind. Actually we’ve grown pretty well, we’ve grown about 50% since the recession started in 2008, because we are helping more retailers around the world take better decisions, to allow them to win with their customers.
You mainly do back-end work in India. Are you talking to your global clients here in India and working with them?
India is a hugely enticing retail market and we’ve got a number of conversations in play here. For now, we call it centre of excellence, so it’s not outsourcing, it’s an integrated part of how we work, and we use, the scale and brains in India—we get more engineers, more mathematicians and more statisticians and their skill set in one place than we can in many other major markets in the world.
The single most mind-blowing thing about India is that modern retail is developing in a world that’s digital and mobile and social, and I don’t know what it means for shopping but I can say it’s going to be challenging and exciting and interesting. Because I can’t think any other market of this scale has developed in this era in this way.
What is social media doing to retail?
We bought a social media company a couple of years ago because we knew it was going to be important going forward, and we see social as being a whole platform of advocacy. It’s incredible…we look at a hotel’s website and don’t like it much, and then we look at Trip Advisor and see what other people say, other people we have never met in our lives will influence our shopping behaviour and choices, as opposed to a professional organization. And, of course, if your friends can recommend it, so you are definitely more sure. So we will end with a much more “friend oriented” search, so that’s got to be on the radar as opposed to what the world says on Google. Social is affecting shopping and, I guess, we are all still learning about it—it’s a huge explosion. We are doing work, quantifying the value of friends to brands; we can actually put a monetary value to how does their behaviour change—that’s important when brands want to know how much they want to spend on that media.
What will the future of shopping be 5-10 years from now?
Well, it’s going to be mobile, digital, social and I think stores will look very different because of that and the “store” per se has to fulfill a very different role.
So stores in the United Kingdom—Tesco, for instance—are building a restaurant inside, adding a coffee shop, a fashion store in a much more inviting store experience; there is much more cooking in store, non-food items (like durables) being sold. So it’s got to be much more experiential, more sales staff, more interactive and it’s got to be a much richer and enticing experience. And, of course, the whole delivery experience—the way you feel it, experience it, buy it and how you get your hands on the product—is going to change. So, I think, in India the role of the store will have to be a showroom, it’s got to be a place you buy, where you eat, where you gather, a fashion store, convenience store; it’s got to fulfill all the roles within the four walls and it’s also got to be a place where you will pick up all your products.
But what happens to big box retail?
The whole experience of the big box store in the US and in Europe is massively going to impact what happens in India. The lessons people are learning is that if you put too much concrete in the ground, it is going to be pretty expensive, and concrete doesn’t go away. So, going forward, it is going to get more convenience, more local, more compact; I can’t really see people building a 150,000 sq. ft store that might have happened five years ago. The lesson people have learnt is the inflexibility of property strategies is going to shape the future of retail in India as much as mobile, digital etc.