HOW TO CREATE A THRIVING RETAIL ECOSYSTEM FOR THE FUTURE
Retailing has undergone a sea change over the past decade. The easy availability of capital and the transformational impact of technology have had a profound effect on the industry. Increasingly, online shopping is being combined with traditional shopping trips to brick-and-mortar stores. Now, even though omni-channel and e-commerce are coming up in a big way, there is still a lot of scope for the ecosystem as a whole to grow together. “I am sure the trade would find a good synergy. Traditional shops have to be taken care of because at the end of day any person would love to go out and actually experience the shop front. People might actually buy it online, but would still like to go to the shop. I think these are values that India will definitely keep on,” said Arvind Varchaswi. He added: “I think the future of retail in India is going to be a love marriage between e-commerce and physical store. I think a lot of it has actually happened.”
While online is set to grow, the majority of sales still come from stores. This is the reality, in the Indian context as much as it is in the US where 90% of retail is still brick-and- mortar and is estimated to remain at 80% level even in 2020. This creeping increase in online sales has more to do with the rapidly increasing digital influence than with the actual cannibalization of sales. The majority of customers who come into stores have actually researched online about what they want to buy. They have made the comparisons in terms of features, prices and other benefits they want to derive out of the product. So the time they spend in the store is very less. They are purposeful when they come into the store, know exactly want they want, buy and leave. Also the increase in the valuation of online players despite their losses and the concomitant decline in the valuation of physical retailers despite the sales and profitability are because of the prevailing perception that the future belongs to online business. “Really speaking, it is all about how the buyer and analyst are looking at it. Definitely, the online trend is going to grow faster but there is space for both to coexist, to collaborate and to grow together and satisfy the customer,” said Govind Shrikhande, .
“I think the collaborative model has almost become the way to live. If you look at Amazon Now, Paytm Mall and Shopx, they are combining modern retail with the traditional. The collaboration is not necessarily about the money to be invested but more about collaboration of ideas, infrastructure, people and skills. In my view, the next five years is the best opportunity for India to collaborate, whether it is collaborating with small or big players. The important thing is to really capitalize on this opportunity,” said B.S. Nagesh. “The window to expand is in the next five years; it a huge opportunity and franchising is a big part of being able to move fast and utilize capital in a very efficient way. Partnering with someone in a particular market helps to bring in a lot of useful background information on how to operate on a day-to-day basis,” said Philip Auld.
Going forward, there is also a perceptible drive towards the omni-channel model by many pure-play retailers. Omni-channel business is becoming increasingly relevant and has its roots in the connected customer equipped with smartphones, tablets and computers. Customers expect a seamless experience and do not tend to distinguish between online and physical channels when shopping. After the initial period of doubt and hesitation, the realization has finally set in that each channel has its fair share of challenges and opportunities and adopting the right combination of omni-channel retailing is the way forward. Those really quick to adopt the omni-channel play can expect to be a winner in the retail universe.