The concept of mystery shopping in the retail sector was initially used by luxury brands and that too just in developed countries. Times, however, have changed. Today, mystery shopping is a big industry even in India, writes Prerna Sarin Chawla.
Aesthetics, quality and value are key to any business with direct consumer interactions. Consumer behaviour experts believe these three key points need to be taken care of if any such business has to grow and sustain itself. The biggest implementation of these are to be seen in industries such as retail, hospitality, F&B, telecom, aviation and healthcare. Among these, the retail industry is deeply impacted if they do not consistently measure these elements quantitatively and qualitatively.
While many companies today try to gather information about their consumers from the consumers themselves with direct small interviews done by stores of the customers who walk in, but the smarter lot does it in stealth mode, and quite often this is done by third party companies. It is there that the concept of mystery shopping enters the discourse.
Mystery shopping first came into the picture in 1940s when it was actually used to measure employee integrity, and it is still used for this purpose as are many others. Then later in early 2000s, it was adopted by the retail industry in a methodical and structured manner as a vital tool in measuring the level of sales, customer services staff and their integrity, and also store evaluations.
Mystery shopping in the retail sector was initially used mainly by luxury brands and just in developed countries. It is, however, registering a steep growth in developing economies where tough competition in retail markets even among medium and small companies, is making them go in for mystery shopping practices. It is believed that mystery shopping provides better feedback and analysis because it is done without the store knowing that they are being assessed and hence, the real and live tests help companies get to know how consumers behave and what the level is of customer service and sales management in their stores. Though mystery shopping was initially adopted to know how customers can be better served, and what are the key things they look for when they visit a store, it is now also used to know other things like how they stand with quality, visual merchandising, store maintenance, sales staff behaviour, and also what they lack or have an edge related to the competition.
Since 2012, India has witnessed a steep rise in mystery shopping exercises owing to increasing brand awareness, shopping affordability, internet penetration among the masses, and presence of many foreign brands who started selling through e-commerce and through joint ventures with Indian companies. Foreign brands consider this practice to be highly important because the stores and operations are not fully owned by them but the labels are theirs, and hence any changes -positive or negative-can deeply impact their image and valuations at least in India and sometimes in other countries or their home countries too because word-of-mouth matters a lot even in today's world.
Besides all this, the rising competition among brands also forces them to adopt such methodology. So, now from a local Delhi designer brand to a high valued Italian menswear brand store, from an e-commerce electronics company to a busy hypermarket - everyone requires mystery shopping.
While some big companies employ their staff to mystery shop their stores, most others employ third party mystery shopping services companies. Being a concept which started in foreign countries, most such companies are multinational in operations. There are some home-grown companies too who started this work a few years ago foreseeing the growth of the retail market.
But whichever way they do mystery shopping, it reaps good and useful results. The kind of data collection which happens and the way it is analysed real time makes a meaningful mix for companies. The best part is that it is done by shoppers on the ground in almost real conditions. The only gap can be due to shopper integrity which is minimised with seasoned shoppers and with surprise integrity checks.
One major audio-video brand has been using mystery shopping simply to evaluate prices of its LED TVs in different dealers, shops, big chain stores, etc, and has been able to ensure tremendous success to make it uniform across the spectrum once it got to know the places where there was more bargaining, how the sales people reacted, and how far they yielded to customers' demands.
Another case is of a designer menswear brand which is not so well known among the masses. They got mystery shopping done at their stores which are not more than three in one metro city, but they met their main three aims - measure the level of sales and customer service, understand better the customers' requirements and likes, and the most interesting aim of spreading their name further.
Yes, few companies like them also use mystery shopping for deeper market penetration. They send mystery shoppers to look for products which are yet to be launched, and then eventually the demand grows because the name grows too. One FMCG company used this idea once to launch a new product. They sent mystery shoppers to every nook and corner across India, including smaller cities, where they asked for that particular product. Since the product was not there yet, people were curious to know. The dealers would ask the distributors and eventually every dealer started stocking four times the quantity. Hence, the company witnessed immediate boom in dealer sales by 400 per cent and much wider penetration was achieved than what a normal ad campaign would have fetched them.
Since fluctuations of mystery shopping business is too hard to handle at times, most of the mystery shoppers in these companies are freelancers. This is because many times smaller companies do not require mystery shopping regularly because of budget constraints or due to their strategy for seasonal assessments only. For bigger clients, mystery shopping companies do employ permanent mystery shoppers as well, but that is again very rare because this leads to restrictions of the sample data.
With freelancers, there is a larger pool of mystery, and hence the sample is much larger for better analysis.
Companies based upon their products or services, opt for mystery shopping of different kinds like telephone calls, store visits, visits with pictures included, visits with audio recording and sometimes visits with video recording as well.
The audio and video recording or the data collection like quotations, brochures, etc, is common because it not only helps validate the facts, but the real and critical reason is to secure integrity. Since most mystery shoppers are freelancers, they are not too much bound by mystery shopping companies, and hence there is a risk of breach of integrity. It has been found that some mystery shoppers do it just for fun or just to enjoy freebies or earn the fees, but don't take it seriously or sometimes reveal their identity to make it easier, which in turn makes the whole aim of mystery shopping shredded to zero. Most shoppers do it as a part time work, and many times work for various mystery shopping companies. Hence, this is a serious challenge faced by mystery shopping companies. The contracts of terms and conditions are duly agreed upon by shoppers. This is hard to implement because a company may lose shoppers if things are forced too much upon them, since mystery shopping is not the primary job for such people.
But then, the mystery shopping industry is a multi-million dollar industry, and there are several international and local players in this domain. Many renowned market research companies are in mystery shopping business, while many are solely mystery shopping companies. Since knowledge of the market expectation and a huge shopper pool is important, international companies also have to have a good grasp regionally. When they do not have a deep penetration in local markets, they jointly work with smaller companies. This started a few years ago only because earlier only big companies like luxury brands or premium hotels leveraged mystery shopping. Now, even smaller companies use this concept. Since they have their markets in many smaller cities and towns too, it becomes difficult for bigger companies to find enough number of shoppers.
Since there are many mystery shopping companies and there are thousands of mystery shoppers, it is important and challenging to manage integrity issues and their cascading effects. Mystery shopping companies who have been in the business for years do realise this and hence have the terms and conditions covering all such factors. However, smaller companies still struggle and find the going tough. Moreover, even shoppers have in the past raised questions of mystery shopping companies because some assignments were so focused on staff behaviour that some people lost their jobs.
Nevertheless, mystery shopping is an organised service, and while small companies help in reaching out to smaller segments of the market, the big ones have better structured programmes. In the whole scenario of any mystery shopping programme, discussions between the mystery shopping company and its client is crucial because it is extremely important to understand client expectations. In some cases, expectations have to be diminished as well because sometimes certain situations are not realistic or practical to create by a mystery shopper. A client has to know what the aim of the programme is, why he/she wants such a programme, and what the timeframe is for each market. While the initial meetings before the launch help in setting up the right questionnaire and in identifying the correct set of shoppers, the latter help in judging whether the initial decisions were correct, and if there is a need to modify them. A consistent dialogue always helps in a programme being successful.
To round up, mystery shopping is a great tool for the industry if utilised wisely and can be very useful especially for aspiring retailers in India who have larger masses to capture in a market where there is stiff competition. In an era when India is a rising economy with increased brand penetration and higher expectation for the value of money spent, mystery shopping plays a pivotal role.
About the author:
Prerna Sarin Chawla is co-founder of All about Consumer Goods (AACG) and a mentor for its mystery shopping and consulting services. She was initially into footwear manufacturing and retail, and eventually grew interest in mystery shopping. She started conducting mystery shopping exercises first at her own staff in her previous company and then for several global companies herself on the ground. She is trained in Operational Excellence in Mystery Shopping, and helps many brands and organisations. She holds several years of rich on-ground experience in mystery shopping across domains including retail, healthcare, hospitality, automotive, e-commerce, aviation, FMCG, and others.