What’s a hotel anyway? Is it any more than a well done up shared space?

With new business models in place these days, the hotel you visited last time may have moved to a new brand license. So the Radisson becomes a Crowne Plaza, which in turn might be another brand from one of the big brand franchises.  There is an absolute lack of distinctiveness and the way the large aggregator networks seem to be operating; it seems we might have something akin to the economy class flying syndrome. Nothing distinctive, as rooms are fought or lost at a specific rate. The experience is then nothing to write home about.

While the hotel industry has seen significant changes, there is one thing that has not changed. It is the need to have a place to stay when visiting another city. In fact travel for work or leisure has only seen a significant upswing and most people book hotels either through the travel aggregator or some corporate desk. People also expect much more from their travel. Increasingly people are looking at alternatives that provide the uniqueness of the city in the staying experience as well. Think Airbnb kind of places.

So what does the hotel room offer? Choice of Pillows, silence, comfort at the upper end of the spectrum or a functional space that is mostly indistinguishable from the other. In-hotel entertainment has seen better days. It certainly needs to be reimagined for contemporary times.

The unique food of a city is best consumed in favourite places in the city. The hotel food is rarely that. It may be good quality, but unique it is not. Then there are the hotel shops. They look the same, the products are similar, and there is not much of service. Everyone has a bored look because there are hardly any walk-ins. I wonder how they make ends meet? When people travel, they want to experience the city, take back a bit of that city, and its experiences. Most hotels don’t seem to provide any of this.

So what is a modern day hotel then? A place with unique characteristics of the city that only the ultra-rich can afford or a place that reflects the rich culture of the city and connects to the more modern ethos?  

Or

Is it a shared space which promises a particular safety in a new place? 

On the topic of shared spaces, there are shared spaces galore now. Shared working spaces are cropping up everywhere. They look as posh as the upmarket hotels and sometimes even have better food and entertainment. Coffee shops are shared spaces too. People talk, work and have fun. And the coffee tastes better and more often than not its priced at the same level.

Another shared space in a hotel is the ubiquitous business centre. I find it a bit anachronistic in these times. Most visitors have some computing device, and the need for a dedicated business centre with related hardware is somewhat limited. However, it is also a place, mostly tucked away, and I have rarely seen anyone inside. So I am sure the footfalls must also be reasonably limited. However, how can hotels, where so many people come to do business, have mostly empty business centres? Surely there is a need to reimagine what a business centre means to a hotel’s customers. 

In the mid-1990s a hotel in Delhi opened a cyber café complete with cutting edge hardware of the time, a unique ambience and an internet connection. It was at the lobby level and visible to all. It was quite a thrill as internet services had just started in the country, and this was indeed a statement of intent by the hotel. It caught the attention of the business traveller and created quite a buzz amongst the residents of the city.

Modern hotels need to think about their connection with the city. There are many hotels you pass by and know that you will never enter there. One reason is that you don’t need to stay there. However, every day, there are people in a city who will habitually go to some café and work from there. They will spend a long time there, maybe not the most comfortable of places but they go there. For the coffee, for the people to meet and work and have great conversations. Laptops, tablets and the familiar aroma of coffee. These cafés have designed around this need with easily accessible power and workstation like common spaces.

Further coworking spaces are offering the kind of experience that hotel lobbies once did. The interesting term they use is not guests or tenents but members. It has implications in service and offers continuity that is beyond the transactional point system.

So, what more can be done?

People are writing, making videos and podcasts, designing products and so much more. Imagine a podcast recording in the hotel itself. Imagine a podcast for hotel guests. Would a 3D printer in the business centre offer people a different way to experience this innovative hotel? Alternatively, help the product designer working late in the night to test their hypothesis?

Most guests who stay there might not be averse to having next morning delivery from the stores in the hotel. Let’s say you need something before you fly out and you can’t go due to your schedule. Why not have unique pop-up stores that offer a flavour of the city. For other things, a kiosk-based system that allows you to order items mainly from the city and these are delivered by the logistics company the very next morning. Worth exploring?

Think about all the people who stay there, people in the loyalty programme of the chain, all the events that take place. People are there to work, to connect, to learn and to enjoy themselves. What is the real experience of these people in these objectives? Could these hotel chains benefit from a members only forum which is available when you are at a hotel? Can serendipity create unique hotel experiences?

Could the hotel come alive with augmented experiences of the city? In ways that help its staff talk about the places, people and food with these visual and sensory aids. 

Hotel relationship programmes are jaded.  They still offer room nights, points, food discounts and some entertainment. Yes, some will have better shows that can be termed exclusive, but most are the same. So, the jaded travellers seek out the new disruptors who might offer unusual places. I recently read that they are offering houses/stays with surprising twists like historical moments, genetics and more. So can a reimagined programme include coffee club memberships, hours at the business centre, internet access that works across multiple destinations, digital services that go beyond mobile app check-in and much more. The relationship programme would not just unlock services for the hotel but might become a place for customers to do business with each other. Think of it as the app store for the hotel chain. The programme would not be based on the surveillance kind of analytics but with privacy by design objectives. 

Finally, any hotel is part of the ecosystem of the city.  In a world with severe climate concerns and the growing water shortage, hotels need to rethink their pool strategy. No matter what you say, the water is coming from the local city reservoir. There is a big disconnect between a city starved for water and hotels with their vast pools meant for fun and frolic. Most hotel photos include a pool picture, and that is likely to change very shortly. Will these be replaced with eGames / holodeck experiences?

The hotel industry needs to change. Fast!

A social media update announcing the coming retail apocalypse is now a routine occurrence. News articles about this issue are relatively common as well. The impression created is that new players hungrier for success are stomping all over brick and mortar. At the same, these new companies are not just online but are also opening stores and designing unique data-driven experiences. 

If done thoughtfully, automated services and bots can be a nice convenience. People want to have a more straightforward experience. Besides, there is enough to show that people like to socialise. We crave company and connections. For a long time, it was convenient to go to malls and traditional stores. These places provided the convenience of everything under one roof. You could also spend time with family, friends and celebrate occasions. Technology has upended this equation a bit. It is somewhat more convenient to order or manage requirements via websites, voice assistants, apps and bot. The robot hotel did end up creating vast amounts of work for the few humans that were part of the project. 

Retailers, however, need to rethink the offer and experience. Traditional thinking about space optimisation needs to be reinvigorated, and customer journeys need to redesign. I am very optimistic about the changes taking place. New retail requires fresh imagination, and it can be exciting to imagine and implement this brave new future.  Store formats and services will go through a transformation primarily driven by the question, what can the store do more? A new connected customer experience that builds on a data-rich environment but brings the core values of human empathy in service delivery. 

No matter where this retail leapfrog takes us, some fundamental principles need to be kept in mind. 

Focus on first-time customers: 

India is growing fast and not a saturated market like many others. There is an opportunity in the smaller retail formats as well as larger ones. Rather than look over the shoulder and worry about competition, there is an opportunity to redesign the experience for all. Maybe there is something to be learnt from another sector like software companies. They have a term called on-boarding. Rather than sending promotional or sales offers, how can we think about re-designing the experience of our first-time customers? Many of whom may be experiencing the category in a completely different way. 

Integrated customer experiences: 

Ok, let’s get the omnichannel word out of the way then. It seems to be the panacea for all the ills of modern retail. Much of the writing related to omnichannel is confusing. What about the leadership in retail then? Are they clear about the benefits of omnichannel?  Not all organisations are ready to implement it for varying reasons. It is, however, looking at the business model from a technology point of view and it seems to lose track of the actual needs of the customer. 

Companies have viewed the social channel as a way to promote and for customers as a way to highlight service gaps. The service equation needs redefinition.  Emphasis on process enhancements could be brought about if the stores, social channels, apps could offer relevant services that matter to the customer. The key focus needs to be on the customer journey and pertinent aspects across touchpoints. How can integration of search, purchase and service across these multifaceted brand outposts drive value and convenience for the customer? 

Data defines the experience:

Adding technology does not mean a business is making adequate use of the data. All too often data exists in a silo;  achieving whatever the company may be trying to track. Unlike the traditional retail businesses, the online retailer is probably generating far more data and is also using it more effectively. Moreover, I think it is the pace of data generation and subsequent utilisation that needs attention. Traditional dashboards do not quite cut it. Is it just better algorithms or a better culture of data utilisation? Could be both?

We have got to look beyond basic transactional analytics. Gone are the days when CRM meant sending emails and old style loyalty programme statements. CRM also does not mean third-party sourcing of data via dubious service providers to enhance existing transactional data.  Due to concerns about data protection, privacy laws and even security issues, organisations need to be mindful of not being blindsided by weak data governance. 

The opportunity offered today is to connect the data that would otherwise exist in silos. Making it count means offering customers something that is timely, relevant and convenient. What can be done to create a perpetual and actionable insights platform and not just social media command centres of the not so distant past? 

Moreover, let’s not lose track of the retail team 

Working in retail can be very demanding with pressure to offer excellent service even going beyond the call of duty. However, with almost gig economy like business models where a person belongs to a staffing service provider how motivated can this person be to go above and beyond. Then there is the distance between the employee and the leadership of the retail brand, going through the matrix organisation and so on. It can be tough! Companies have sought to address these existential threats by increasing automation to reduce attrition and more. 

So this surprises me. Will automation improve convenience or will it enhance the experience that you remember? So the charter for the new retail has to be about how people can help create moments that leave lasting impressions. There is then a need to think about the customer journey, and it’s touchpoints and the employee journey concurrently. It is not enough to offer standard learning modules. Learning then has to be based on insights we have on customer intents. Ideas that were designed earlier to improve offer or optimise the website, need to be brought into  learning for improvement. Not on a post facto basis but at a pace benefiting the promise the brand makes to a customer. Connected customers in a new connected store, need employee connection in  detail as well. Microlearning, augmented learning experiences, constant skill enhancement has to be a consistent part of the journey. 

Data is going to play a critical role in building the employee experience. Not just the basic data of who sold more and if they have been trained in the necessary modules. Instead, analysing team performance much as we see in sports. Where every single ball bowled or played, free kick taken or goal scoring movements are mapped and discussed. Learning and Development needs to be a mentor with multiple feedback systems to help improve the performance of each. We need to think of people as assets, not some number on excel sheet to be ‘optimised’ or automated away.

People will continue to form the basis of a high-performance retail experience.

Many years ago, an engine oil major, a much-loved brand in India worked with us to answer an important question, “What next?” Why? Because each new car brand was endorsing their own or partner engine oil brands. Also, the experience had changed from one where a customer went explicitly to get the oil they wanted to one where the car company just changed the oil whenever the car went for service.

This company went out to create a very successful direct servicing connection with their customers.

It is now time for FMCG brands to think about customer experience of their products. The kirana (grocery) store in urban Indian markets is slowly disappearing. Indian shoppers are increasingly ordering online, driving the brick and mortar kirana store to rethink their business models. There are several reasons for this. First, the grocery retail in India forms 60% of the total retail market. Secondly, it is a hyper-local business.  Preferences for fruits, vegetables, ingredients and other goods vary according to locality, even in the same city. Thirdly, grocery has another added charm; these are essential purchases with high repeatability. However, there is more, it’s a high margin business for online retailers if they can capture the customer base and introduce private labels.

However, the customer experience in most grocery categories has a long way to go. For instance, if I say, unpolished dal a specific brand will pop up in your head. They created the category, backed it with their strong trustworthy name and made me aware that this was a healthier option. It’s the only brand I look for when either ordering online or in my sporadic grocery store visits. And, there is significant difficulty in ordering it. Grocery shelves have many companies claiming to offer unpolished dal. Since the brand that I actually want is impossible to get most of the time I look for substitutes. A lot is being written about the private labels started by grocery retailers and I wonder if high margins is all there is to it. Could it be that the unpolished dal company only thought about advertising and forgot about the many other touchpoints urban consumers now look at. 

Could it be that the unpolished dal company needs a refresh of the consumer journey?

The journey map for a new grocery brand needs to factor that customers are increasingly aware that good food and good health are directly correlated, and while they will make an effort to seek out the brand they trust, they also want convenience and better service. Which is perhaps why the engine oil brand is still going strong after 15 years and the unpolished dal with great advertising is struggling to be visible to me. 

However, what does all this mean for the traditional FMCG businesses? Traditionally, the FMCG sector has seen itself as a brand company. Most product manufacturing was either outsourced or restricted to the company’s centralised factories in a few locations. The company distributed these to the kirana stores and focussed on creating customer pull through advertising and promotions. The store owners created the customer experience and not the brands. The kirana store owners understood what customers wanted, how products could be upsold and made mattered.

With the ability to capture customer mindshare and stickiness, the grocery e-tailers will now have disproportionate control over distribution channels. They can quickly move customers to their private labels. Additionally, e-tailers already own consumer data and know their preferences. Creating relevant communication is easy for them.

How can the FMCG company compete?

The answer perhaps lies in rethinking the retail experience in the form of customer journeys and building a direct customer-company connection. Knowing your customer is the first rule of customer marketing, and in a data-driven world, perhaps it precedes everything else. However, aggregating databases with customers name, number and email with customers social updates is mostly ineffective. The lifestyle preferences of the customer and their needs have to be an ongoing journey of better understanding and better services.