The fashion retail business in India, Vineet Gautam said, is unlike any other in the world.
“India is just not a country, it’s like a continent. You have hundreds of cities. You have many states. You have hundreds of religions. You have 500 dialects,” he said. “The taste of consumers changes every few kilometers and that’s the biggest challenge for anyone who is entering the country and trying to understand consumer behavior and understand what consumers want.”
As the CEO and India country head for the Danish retailer Bestseller, Gautam knows that well. In India, he said, you simply can’t run a successful business without a plan to take the country’s diversity into full account.
“I think people who will win in India’s fashion industry are people who will be able to understand what the consumer wants and be able to tailor-make their collections or their assortments and be able to fulfill consumer demand,” he said.
To a certain extent, Gautam said, fashion is all about gut. But gut only goes so far. Today, as a result, retailers are facing a crisis of unsold inventory. Tons of clothing ends up in landfills every year. And tons more ends up on a discount rack.
“Prioritizing the right product at the right time is the key to our business,” he said.
With the right technology, Gautam said, key decision-makers in India’s retail world could enhance their intuition and help them forecast better in order to deliver what consumers want in each store.
“We can look at Excel numbers, we can look at mega trends, but we are not able to analyze every aspect of a product and compare it to others. Human memory is limited,” he said.
Bestseller saw an opportunity to expand its capabilities when company leaders recently visited IBM labs in Bangalore and experienced the power of Watson firsthand. Gautam and other Bestseller leaders provided Watson some data about some of its products, and Watson came back with deep analysis about how they might perform in stores.
“I think that was our tipping point,” he said “We said ‘Watson is going to be our engine to deliver what we require in our business.’”
Today, Gautam said, Bestseller is embarking on a journey to become a fully AI-driven enterprise. In the near future, Bestseller plans to use AI to determine the right assortment plan for each store, predict the next best product to incorporate into its mix, and improve the efficiency of its supply chain. The end result, Gautam said, will be happier customers in stores, and a reduction in the amount of inventory that goes unsold.
“The consumer promise is to have right product at the right time, but the business promise is how to improve the efficiency of the product. We want to fulfill both promises,” he said.
Today, Gautaum said, 85 percent of Bestseller sales are retail and 15 percent are online. While the share of online sales will likely continue to grow, stores will remain a crucial part of Bestsellers’ business. That sentiment is echoed across the retail industry. According to a report from RSR and IBM, 63 percent of retailers whose sales are outperforming their competitors’ say stores will be an important part of how consumers shop their brand three years from now. Fifty-five percent of those retailers plan to open new stores in new markets.
If stores are going to drive business for Bestseller in India and beyond, Gautaum said, they need to continuously evolve. Leaders, as a result, need to keep evolving too.
“I think the biggest mistake retailers are making in India are still taking the customer for granted,” he said. “They are not changing as fast as the consumer need is changing. They still believe their business model, which was yesterday, will survive tomorrow, but consumers are changing faster than we think. I think that’s where the challenge remains.”