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Driving Indian Consumption Through Integrated Multichannel Retailing


It is déjà vu time for Indian retail. From a multi-billion dollar opportunity in early 2005, today, Indian retail is poised to become a trillion dollar opportunity by 2020. With the current market size coming from a rising Indian middle class estimated at US $500 billion, this translates to an additional US $800 billion in the next eight years.

In the past, retailers have tried to exploit this trillion-dollar opportunity by increasing their store presence across major cities in India but with limited success. The trillion dollar Indian retail opportunity cannot be addressed by the conventional retail model as the opportunity is spread across the sub-continent where a billion plus customers need a million sales and service touch-points. Is the current operating model followed by Indian retailers prepared to cater to such unique and ubiquitous customer demands across these million touch-points?

Integrated Multichannel Retailing (IMR) is a forward looking model for Indian retailers to make the elusive trillion dollars consumption dream a reality. And one of the key variables that will contribute toward the success of this model will be the deep collaboration between retail and its FMCG partners.

Benchmarking multichannel practices with the best-in-class

Discrete efforts in multichannel initiatives will not increase revenue, bring in cost synergies or enhance customer experience. Today, retailers seeking a sustainable growth path must align their current brick and mortar practices with their multichannel initiatives. Benchmarking with global best practices is the most effective way of addressing this challenge. The “4i Multichannel Maturity Model (4iMMM),” presented in the paper, allows retailers to assess where their organizations stand, benchmark with leaders, identify gaps and monitor progress to improve maturity and become the best in today’s digital era.

The 4i Model states four maturity levels – Individual, Independent, Interconnected and Integrated – on the basis of a qualitative analysis of use of “integrated commerce best practices” across eight critical business areas:

  • Strategy
  • Model
  • Channel
  • Organization
  • Proposition
  • Process capability
  • Systems
  • Customer engagement

Where is the retail industry in terms of multichannel maturity?

While compiling this paper, we looked at Top 10 retailers across five formats:

  • Hypermarkets
  • Department stores
  • Home improvement
  • Apparel / footwear
  • Electronic specialty

We looked into the parameters suggested in the 4i Model and segregated retailers across different level of maturity, on the basis of our estimate.  We considered a total of 65 global retailers for this study. The result of this study is entirely TCS’ view based on secondary research on the five key parameters of the 4i model and may vary from the retailer's actual multichannel maturity.  

The five parameters include the following:

  • Option for store pickup
  • Option for store return
  • Cross-channel assortment
  • Social media integration
  • Adoption of innovative techniques like mobile commerce, mobile applications, kiosks, QR code, etc.

Our study highlighted the following:

  • Out of the 65 retailers included in the study, only 11% achieved the highest level of maturity.
  • Department stores and home improvement retailers have taken initiatives for multichannel integration and are seen mostly in Level 3 and Level 4 of multichannel maturity.
  • Tesco with its integrated “Club Card” program, innovative mobile apps, cross-channel transaction integration and precise delivery time slots has achieved the highest level of maturity. It has also been awarded with the “Multi Channel Retailer of the Year 2011” at the Oracle World Retail Awards.
  • Best Buy, the biggest electronics specialty retailer in the world, has managed to achieve the “Integrated” level of maturity by investing more in cross-channel capabilities and integrating the processes and systems between call centers and stores, leading to a unified ownership of customers between all sales and operational channels.
  • Out of the 16 Indian retailers analyzed, 60% do not have any e-commerce presence and hence fall in the lowest level of maturity “Individual.” Retailers like Shoppers Stop and Future Group have made initial forays into multichannel capability.

As more and more Indian retailers realize the importance of integrated commerce, we expect the multichannel trend to catch up and many more Indian retailers heading towards high levels of maturity.

Integrated Multichannel Retailing for the Indian Retail Industry

Indian retail has the tremendous potential of 1.2 billion consumers, but is constrained by its relatively inadequate and expensive customer connection points in the form of physical stores. The emergence of digital channels (Three screens: Laptop, smartphone and flat panel TV) can augment a retailer’s physical stores in India, to not only increase customer reach but also engage customers through channels that are relevant during their shopping journey. A shift of a small percentage of the business toward digital channels can bring in the much-needed efficiency in the retailer’s business, leading to significant improvement in profitability. For a retailer to make this happen, it needs to collaborate very closely with its suppliers and synchronize its operations with its key FMCG partners.

We present IMR as an inevitable choice for Indian retailers in their quest for enhanced customer experience and business sustainability. We cover in-depth what this integrated retail environment means for FMCG companies and how they will play an important role in its evolution. We also highlight the Multichannel Maturity Model and detail five simple steps that will help Indian retailers to evolve from an independent stage to integrated multichannel retailers.

Retailers in their endeavor to transform into an IMR entity that are present everywhere Indian customers shop need to initiate the transformation with three simple steps:

  • Conduct a diagnostic study to understand the multichannel maturity by leveraging the 4i Model
  • Create an Integrated Multichannel Roadmap for execution
  • Begin the journey following the five steps: Plan, build, execute, harvest and nurture, which will help them graduate to the next maturity level 

For an in-depth analysis of IMR, read the TCS and FICCI Knowledge Report (PDF, 4.52 MB), launched at “Massmerize 2012.”