(L to R) Arvind Singhal, chairman and MD, Technopack Advisors and Devendra Chawla, president, Food Bazaar, Future Group
With consumers armed with digital research, is there a reduction in the influence of the POS in the purchase decision?
Arvind Singhal (AS): As far as India is concerned, unfortunately physical retail did not really evolve to the point that there was a lot of engagement with the customer. One cannot just form their judgment based on a few retail stores or a few shopping malls. If you see the traditional mom and pop stores, there is very little engagement with the customer where point of sales are concerned. With online information sources becoming better, the influence of the physical point of sales is certainly becoming less.
Devendra Chawla (DC): This is definitely not true for modern trade. There are many ways to get information, digital is enhancing information, but it is not replacing information at POS. Consumers today want more and more information because more technological and superior products are being launched - and consumers want to meet people in the stores, as they desire more information. Therefore, I do not think that the POS influence is going down but one can say digital is adding a lot of value. The spends of companies at POS is only increasing.
Does more information access online lead to lesser impulse purchases?
AS: This is true because if a customer has already made up his mind and is reasonably clear as to what s/he is looking for, they are going to the physical store for a last minute validation and are very unlikely to browse around and look for something else. Therefore, impulse purchase would be much lower at the physical store.
DC: ‘Impulse’ by definition means unplanned. If you want to buy a pack of chips, you will not go online and research if Lays is better or Uncle Chips. Impulse purchases are always small ticket and the value normally does not exceed Rs 500 or 1,000. Being lower values, it’s all spur of the moment, mood-driven, and has nothing to do with digital.
Does the influence of POS vary with category? In which categories has its influence gone down the most? In which categories is it still powerful?
AS: This influence does vary with every category. If you look at food and grocery, which is the largest in quantum of spending by a typical middle class family in India, there is no influence of digital media in terms of purchase decision. In these categories, there is a great influence of POS as one goes to the store and checks things out especially in modern retail. Clothing, digital electronics (smartphones) and consumer durables (washing machines) are categories where digital media has great influence on purchase decision made by consumers.
DC: POS does not only mean a point of purchase material like a poster or display but will also include people standing in the store. The influence of POS varies from category to category. The old well-established products do not need information, as they are well understood. Highly penetrated categories like soap do not need POS but electronics like iPhone or iPad will need information.
For an ordinary pack of soap or noodles, there is no requirement of information, as they are regular buys. But for any new launches, people want to know more and the whole world is not online so POS is very influential. Especially from a supermarket point of view, people do not research online.
Have brands (not retailers) married digital/mobile with POS promotions effectively? Is there scope for improvement?
AS: Brands have not been able to collaborate digital with POS promotions. These are early stages for a brand to do that and this is just the beginning as there is an online revolution as far as India is concerned. We will see more of this happening with brands engaging with consumers in a seamless manner both online and offline in the years to come.
DC: t is at a nascent stage, and is happening as we speak. Many attempts are being made by brands to get it right. However, there is no doubt that digital will be very important tomorrow. It will aid and be one of the mediums to reach out to the consumers, influence them, and impart information. However, I do not think that any company sees it as a replacement for POS. Digital media in the electronics category is very strong as people will research online and find out. But, when it comes to FMCG and supermarkets, it is not true as people do not go online and research about a regular soft drink. For new age categories, such as energy drinks and probiotic drinks, health conscious people would want to know a lot and hence they will go online. Companies are doing a lot in terms of digital but they need to do a lot more.
Can a point of sale influence be used to override the pre-wired digital information influence? How?
AS: It is possible that a brand can use POS to override the digital influence. For example, in the category of smartphones, while features of the phones might look the same, a good sales person at the POS can actually make a decision to go from one brand to another brand. He can also up-sell by demonstrating better features of a particular brand. POS is still very important in many categories especially those that are high value.
However, there are certain categories such as clothing in which the POS and the sales person is becoming negligible. There will be some influence in terms of visual merchandising as to what products are displayed and how they are placed and so on; but beyond that the influence of POS is becoming lesser. These categories have already moved on from the influence of the POS.
DC: The most important decision is the last mile information. So between a digital and the POS, the POS will mostly win. Because when you are about to buy, you need the information at that moment - and the information you get will decide your purchase decision and not what you left your home with. You may have left home with the decision to buy a certain brand of soap but if you get new information at POS, you are absolutely certain to change your decision.