Present Ev­ery­where

Is an om­nichan­nel pres­ence cru­cial for In­dian re­tail­ers?

Business Today - - FOCUS - BY AJITA SHASHIDHAR @Aji­taShashid­har

Ear­lier this year, on­line retail gi­ant Alibaba picked up stakes in Chinese su­per­mar­ket chains Hema and Bailan; Ama­zon bought out gro­cery chain Whole Foods for a whop­ping $13.7 bil­lion; and, last year, the world’s largest brick- and- mor­tar su­per­mar­ket chain Wal­mart bought out US- based e-com­merce com­pany for $3.3 bil­lion. These strate­gic deals clearly in­di­cate the need (both on­line and off­line) for an om­nichan­nel busi­ness model. “Re­tail­ers who don’t have an om­nichan­nel busi­ness model will lose cus­tomers,” points out Ra­jat Wahi, Part­ner, Deloitte.

The Ama­zon- Shop­pers Stop deal (Ama­zon’s in­vest­ment arm, Ama­zon NV Hold­ings LLC, picked up 5 per cent stake in Shop­pers Stop for `179 crore) is a move to­wards an om­nichan­nel strat­egy, which Govind Shrikhande, MD, Shop­pers Stop, has been ad­vo­cat­ing for a while now. The com­pany took baby steps in the om­nichan­nel busi­ness with Shop­pers stop. com and at­tracted just 4.5 mil­lion cus­tomers per month.

“Be­tween 80 phys­i­cal stores and on­line stores we man­age over 8 mil­lion vis­i­tors per month, while Ama­ gets 400 mil­lion vis­i­tors per month. There­fore, the mul­ti­plier ef­fect will build in for us. So, we will build the cat­a­logue, and Ama­zon will bring in the traf­fic,” ex­plains Shrikhande, who is op­ti­mistic that on­line retail will con­trib­ute 10 per cent to his rev­enues by 2019, from the cur­rent 1 per cent.

Shop­pers Stop is not the only In­dian retail com­pany build­ing an om­nichan­nel busi­ness model. Oth­ers such as Land­mark Retail and D’Mart have joined the race, too. Even on­line re­tail­ers such as Ur­ban Lad­der, Pep­per­fry, Carat Lane and Len­skart now have an om­nichan­nel strat­egy. While Shop­pers Stop wants to reach out to more cities and con­sumers through on­line retail, on­line play­ers are launch­ing off­line stores to get cus­tomers to touch and feel their prod­ucts. Len­skart, for in­stance, has over 500 phys­i­cal stores where con­sumers can come in, take a look at their of­fer­ings and then trans­act on­line.

How­ever, the de­bate now is whether it makes sense for a multi-brand store such as Shop­pers Stop to have not just a ro­bust om­nichan­nel pres­ence but also a part­ner­ship with Ama­zon which is also multi­brand. “Om­nichan­nel works well for pow­er­ful brands which are both brands as well as re­tail­ers ( such as Zara and H& M),” points out Arvind Sing­hal, Chair­man, Technopak Ad­vi­sors. Sing­hal is re­fer­ring to sin­gle-brand re­tail­ers, and only 15 per cent of Shop­pers Stop’s rev­enues come from its pri­vate and exclusive brands.

An om­nichan­nel strat­egy in food and gro­cery will not be easy in In­dia as con­sumers want fresh food, and the cost of de­liv­ery is quite high. Ama­zon’s in­vest­ment in Whole Foods in the US may be bang on, as gro­cery stores there are not eas­ily ac­ces­si­ble. “In In­dia, there are ki­rana stores and veg­etable ven­dors, lit­er­ally at the doorstep. So, an on­line gro­cery busi­ness in In­dia will be dif­fi­cult,” says Wahi of Deloitte.

In fact, Kishore Biyani, Founder and CEO, Fu­ture Group, once a staunch ad­vo­cate of the om­nichan­nel model, has now shelved his plans. While om­nichan­nel is surely the next wave of re­tail­ing, one needs to see how deftly In­dian re­tail­ers crack the code. Till then, all eyes would be on Shop­pers Stop and Ama­zon.” ~

Om­nichan­nel strat­egy in food and gro­cery will not be easy in In­dia as con­sumers want fresh food and the cost of de­liv­ery is high

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