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E-commerce is an evolution, not a revolution: Gianfranco Casati

Interview with group chief executive (products), Accenture Global

Rohit Nautiyal 

Companies that survive are the ones that evolve from being brick and mortar distribution outfits into being multi-channel companies equally focussed on offline and online, Gianfranco Casati tells Rohit Nautiyal Other than being tagged as a low cost manufacturing hub, has anything changed in the role played by emerging markets in global business environment? India is a growing market in terms of demand and service. Based on Accenture's interaction with clients, we can infer that the process of globalisation of Indian companies is the top most priority. North American and European companies have lost appeal and now the ball is in the court of emerging economies like China, Indonesia, Malaysia and Africa. India is an attractive market for both local and international companies. Western brands have immense aspirational value for consumers in emerging markets. Do the MNCs exploit this fact to under deliver to South Asian consumers vis-a-vis consumers in developed markets? The MNCs have come to realise that there's a convergence of consumers across the globe through common preferences and behaviour. The expectation of quality and product characteristics is converging and consumers are way more consistent across markets than what some of the MNCs have figured out. Several factors go in this direction. First, common products across geographies can create better synergies in manufacturing, product development and supply chain. At times, it's counterproductive to keep differences. Second, the digital world will accelerate the convergence of consumer preference for the same products as there's no barrier in the age of social media. Indian companies in personal care and cosmetics are sensitive to the fact how some products are significant for certain ethnicities. The evolution of retail will be a big factor here as it's already transitioning from being a traditional physical distribution network to going online. The more you go online, the more you bring down barriers in terms of where you buy from and what you buy. Companies will continue to overcome barriers; price associated with shipping costs and sourcing, for instance. What are the lessons we can learn from existing online business models abroad? The most fundamental lesson from the US is that e-commerce should be perceived as an evolution and not revolution. Over the years, several e-commerce start ups in the US have shut down. The only companies surviving are the ones that have evolved from being traditional brick-and-mortar distribution set ups into multi-channel companies equally focused on offline and online platforms. Every big and small e-commerce company in the US aspires to beat Amazon, the benchmark of successful e-commerce ventures globally. Amazon started with books but is regarded as the largest online supermarket in the world today. Retail companies are realising how they need to invest in infrastructure and distribution systems. The game now is to understand the next way of consumer interaction. This is where the idea of seamless retail experience will come into play, enabling movement from online to physical stores without duplication.

So, physical stores in the future may look like sophisticated experience centres allowing consumers to see how products will fit in their environment. Apple stores are doing this for consumers already. As far as Indian e-commerce story is concerned, things will move forward on the back of strong supply chain and implementation of effective distribution network across the country. Most of the e-commerce websites in the US are developed in India. Also, India has different stages of consumer maturity. A recent study claims that India will have half a billion smartphones by 2015. This indicates the speed of technology adoption in the country.

Meet Gianfranco Casati

Casati is the group chief executive for the products operating group. Accenture's products operating group serves a set of consumer-relevant industries like retail, consumer goods and services, life sciences, automotive, industrial equipment, infrastructure and transportation services; and air, freight and logistics and travel services

He is a member of Accenture's executive leadership team and reports directly to the Accenture chairman and CEO

Prior to his current role, Casati spent four years as managing director of the products operating group for Europe. He also served as Accenture's country managing director for Italy and as chairman of Accenture's Geographic Council, supervising 12 Accenture offices in Italy, Greece and several Eastern European countries. Additionally, he led Accenture's Electronics and High Tech practice in Europe

After practicing as a certified public accountant, Casati joined Accenture in 1984 and became partner in 1994. Prior to the company's transition to a corporate structure and IPO, he served as a member of the Accenture board of partners and led a global programme aimed at redefining the partner compensation and career model

In his 25-year-plus career at Accenture, he served as the chairman of Accenture's geographic council in its IGEM region (Italy, Greece and emerging markets). He is now the president of the Italian subsidiary

What kind of optimism do you see in rural retail? Even after great work done by companies such as HUL and PepsiCo in building distribution chains, a large number of people are still not a part of the consumption cycle. I do not expect the MNCs to understand rural markets at a granular level. When you have a global business, market segmentation becomes challenging. Local manufacturers understand the market in a better way. Once I visited an apparel store of one of my clients in south China. The store had no windows. When I asked the client why he did not exhibit his offerings like other shopkeepers, the client said that the windows gave an impression to customers that the store was expensive. He wanted to provide the best quality at a competitive price point. And so it's no surprise to see how none of the global apparel players have made a dent in rural India and China yet. Local companies have a huge role to play in tapping the potential of rural markets for the next 20 years. In the last 10 years, many MNCs have come to India to test waters. At the same time, companies based in South Africa, Brazil and India have learnt the art of selling products and services to developed markets in North America and Europe. Do Indian companies and MNCs understand that product innovation is critical to rural markets in India? Indian companies like Dabur will continue to focus on products relevant to certain segments of the Indian population. Over the next 10 years, both Indian companies and MNCs will invest more in creating products for rural markets. Also, the future generation of consumers in rural and urban India will have lesser differences in terms of product preference.

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First Published: Sun, March 24 2013. 20:28 IST
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