Flip­ping The Script

In­dus­try ex­perts have of­ten cited that e-com­merce is eat­ing out of the profit pie of the mall in­dus­try. As Shubhra Saini re­ports, an in­creas­ing num­ber of e-com­merce play­ers, are now open­ing brick and mor­tar stores, which throws a new light on the syn­ergie

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Ir­re­spec­tive of how con­ve­nient on­line shop­ping is, con­sumers still like to vi­su­al­ize, tryon and feel prod­ucts be­fore pur­chas­ing them. That’s one of the ra­tionales be­hind why many on­line re­tail­ers are now open­ing their phys­i­cal stores. Even to­day, around 85-90 % of shop­ping is done from brick and mor­tar for­mats. On­line re­tail­ers have warmed up to the idea of hav­ing a phys­i­cal touch point with their clien­tele. Many of the e-com­merce brands are in­ter­lac­ing dig­i­tal apps with their phys­i­cal pres­ence. E-brands such as, Clovia, Zi­vame, Fa­bal­ley, Len­skart, Carat­lane, Myn­tra among oth­ers that be­gan their jour­ney with on­line re­tail­ing, are fast mov­ing to­ward omni chan­nel re­tail­ing.

back to ba­sics

If a brand can af­ford it, there are a lot of ben­e­fits to oc­cu­py­ing a re­tail lo­ca­tion. Not only do phys­i­cal stores cater to dig­i­tal gen­er­a­tions at­tracted to ex­pe­ri­ences, but con­ver­sion rates in stores are also higher than on­line. Brick-and-mor­tars also ben­e­fit when it comes to web search. Google pri­or­i­tizes brands that have phys­i­cal lo­ca­tions. Type in a topic or prod­uct

Al­though con­sumers do rel­ish the con­ve­nience avail­able via on­line shop­ping, they still crave the tac­tile ex­pe­ri­ence of the re­tail store. Be­cause of this, many brands that be­gan on­line are now open­ing off­line stores, merg­ing the on­line and in-store shop­ping ex­pe­ri­ences.

into Google, and the search en­gine will sur­face a brand that has a re­tail store higher than one with only an on­line pres­ence. Neha Kant, Founder and CRO of Clovia, shared her per­spec­tive on the im­por­tance of hav­ing phys­i­cal re­tail pres­ence “The chal­lenge that on­line re­tail faces is that it is a frag­mented mar­ket with many un­or­gan­ised play­ers cater­ing to a large user group. It is now with the en­trance of new play­ers in the seg­ment that qual­ity of of­fer­ings and ser­vices have im­proved. Plus, the cus­tomer can­not look at and feel the prod­ucts be­fore pur­chase which af­fects the over­all cus­tomer ex­pe­ri­ence, a chal­lenge that is over­come in off­line re­tail.”

em­brac­ing experiential re­tail

Many big do­mes­tic and in­ter­na­tional re­tail­ers have closed down their stores in key lo­ca­tions in their home turf. Many malls too go­ing in losses have shut. So, when phys­i­cal re­tail ac­counts glob­ally for 90% of sales then why is re­tail bleed­ing? The an­swer to it is the fail­ure of many re­tail or­gan­i­sa­tions in em­brac­ing experiential re­tail. The ever-chang­ing re­tail land­scape re­quires stores to trans­form as des­ti­na­tions, of­fer­ing in­no­va­tive ex­pe­ri­ences. Kant, added, “In to­day’s world, the abil­ity to en­gage with and in­flu­ence cus­tomers through­out their jour­ney is para­mount for con­tin­ued suc­cess. On­line and off­line be­hav­iours of cus­tomers feed into each other, af­fect­ing their over­all cus­tomer jour­ney. E-con­sul­tancy says that 2 in 5 on­line searchers de­cide to pur­chase af­ter be­ing in­flu­enced by an off­line chan­nel. Brands to­day can no longer re­strict them­selves to a sin­gle or lim­ited num­ber of chan­nels, as they will miss out on pro­vid­ing their users with a seam­less brand ex­pe­ri­ence they de­serve and de­sire, and thereby the op­por­tu­nity to make a sale.” In­deed, to be suc­cess­ful, on­line re­tail­ers are look­ing to experiential mar­ket­ing cam­paigns and Omni-chan­nel shop­ping ex­pe­ri­ences to cre­ate an ag­ile store. In other words, they are bring­ing the ameni­ties of the on­line world into

Whether it’s a per­ma­nent store, pop-up or short-term space, hav­ing a brickand-mor­tar pres­ence of­ten strength­ens the trust be­tween brand and con­sumer. Pretty much any­body can sell some­thing on­line

these days, but to have a phys­i­cal lo­ca­tion, there is def­i­nitely brand le­git­i­macy in that. It gives the sense to the con­sumer that the busi­ness is go­ing to be in it for the long haul.

brick and mor­tar stores. No won­der, Mum­bai based Pep­per­fry, the on­line fur­ni­ture store cur­rently has 18 stu­dios and is look­ing to ex­pand to 46 stu­dios in 15 cities by the end of FY18 through the fran­chise model.

age Of OMNI chan­nel re­tail

The di­vide be­tween phys­i­cal and on­line re­tail for­mats is blur­ring. Each of these worlds has its own strengths and value de­liv­er­ance. Brick and mor­tar re­tail gives cus­tomers the touch and feel of prod­ucts and the ex­pe­ri­ence of liv­ing the brand. E-com­merce of­fers greater choice and con­ve­nience. While each of them is de­liv­er­ing to its own strengths, they both fall short of de­liv­er­ing the per­fect cus­tomer ex­pe­ri­ence. The phys­i­cal store of to­mor­row will no longer be just a point of sale. It will be a true ex­pe­ri­ence zone, where tech­nol­ogy will be used to trans­form cus­tomer jour­neys. Per­son­al­ized ser­vice and rec­om­men­da­tions through lo­ca­tion-based ap­pli­ca­tions, dig­i­tal sur­faces that will help you select from end­less op­tions, sin­gleclick pay­ments, quick home de­liv­ery to nearby lo­ca­tions, in­te­gra­tion to on­line por­tals and buy-on­line pickup in store. On the on­line side, brands will need to learn how to reach out to dig­i­tal na­tives and make them trans­act with­out deep dis­count­ing. It will mean im­prov­ing the ex­pe­ri­ence of buy­ing on­line through a bet­ter of­fer­ing, en­gag­ing con­tent and in­creas­ing con­ve­nience through quick de­liv­ery and easy re­turns. The merger of these two worlds is what Omni chan­nel com­merce is all about. On­line eye­wear re­tailer Len­skart plans to open 2000 off­line stores across In­dia and have a ro­bust Omni-chan­nel pres­ence. In a quote to me­dia Peeyush Bansal, CEO and Founder, Len­skart.com had said that E-com­merce with­out doubt helps one to scale up the busi­ness, but some con­sumers still need to be as­sisted and en­cour­aged to buy on­line. Eye­wear is more of a planned pur­chase done once in two years. A healthy mix of both on­line and off­line will in­crease the touch points and be able to reach max­i­mum num­ber of con­sumers. Whether a cus­tomer vis­its the store, calls for home ser­vice or di­rectly buys on­line, the pres­ence of an off­line store helps the cus­tomer to look at and feel the prod­ucts and ser­vices. Thus, de­vel­op­ing a sus­tain­able busi­ness model with a seam­less in­te­gra­tion be­tween on­line and off­line mod­els is im­per­a­tive for the eye­wear cat­e­gory. Talk­ing about how Clovia is tak­ing on the Omni chan­nel re­tail­ing in its own stride, Kant, said, “We use smart tech­nol­ogy and big data an­a­lyt­ics to plan con­sump­tions and pur­chase pat­terns. All our prod­uct de­signs are based on con­sumer feed­back - both on­line and off­line. We stock the max­i­mum num­ber of SKUS in the in­dus­try with min­i­mum in­ven­tory hold­ing. That’s some se­ri­ous dis­rup­tion in a legacy mar­ket. Also, us­ing tech­nol­ogy for ge­o­graph­i­cal un­der­stand­ing of tastes, we’re bring­ing struc­ture to a tra­di­tion­ally un­or­ga­nized mar­ket.”

Re­tail ther­apy is tak­ing on a whole new mean­ing. Exclusive on­line re­tail­ers with loyal cus­tomers are shift­ing to shop fronts to com­ple­ment their thriv­ing on­line pres­ence.

Re­tail­ers have seen that when a cus­tomer shops via just one chan­nel, on­line or off­line, they shop at 1x. But when they go for both forms, shop­ping in­creases three to five times. Pres­ence across chan­nels has be­come crit­i­cal for both - ac­quir­ing new cus­tomers and re­tain­ing ex­ist­ing ones.

get­ting the Nu­ances right

All the pro­gres­sive re­tail­ers un­der­stand the core value of in­vest­ing in Omni chan­nel, but what they don’t un­der­stand is that Omni chan­nel in­vest­ment is not just an ex­ten­sion of their e-com­merce busi­ness. Con­sumers dis­cover a prod­uct on­line and pur­chase at the store or on­line. A suc­cess­ful Om­nichan­nel strat­egy drives con­sumer from clicks to bricks and back again. Dig­i­tally in­no­va­tive re­tail­ers, strug­gling to main­tain mar­gins now that con­sumers ex­pect free next day de­liv­ery, are re­al­iz­ing that ful­fil­ment costs are dra­mat­i­cally re­duced, if you per­suade your cus­tomers to buy on­line, but col­lect in-per­son from a store. The added bonus of this ap­proach is that bas­ket size of­ten in­creases, as cus­tomers pur­chase ad­di­tional items when col­lect­ing their or­der-in-store. For in­stance, on­line lin­gerie re­tailer Zi­vame with off­line ex­pe­ri­ence stores in three cities, plans to scale up to 50 such cus­tomer touch points. Ac­cord­ing to the com­pany, these stores will only be cus­tomer touch points and will not store in­ven­tory. The fo­cus will be on tech­nol­ogy to show cus­tomers prod­ucts in a unique way. At Zi­vame flag­ship fit­ting lounge in Ban­ga­lore, cus­tomers can en­ter their de­tails on a tab. The pro­fes­sional fitters help them dis­cover their right size and pro­vide ex­pert ad­vice. The lounge also al­lows cus­tomers to make an on­line pur­chase right then and there. For an on­line brand en­ter­ing the brick and mor­tar for­mat, they need to un­der­stand where their cus­tomers are lo­cated, and be­come closer to them, thereby en­hanc­ing brand salience and aware­ness. The lo­ca­tion should meet the pre­mium po­si­tion­ing of the brand. The de­sign should res­onate with the user’s taste in trend, style and com­fort. Per­son­al­iza­tion has emerged as an im­por­tant lever in en­hanc­ing cus­tomer ex­pe­ri­ence.

fu­ture Of re­tail

Not all e-com­merce brands can af­ford to open their own phys­i­cal lo­ca­tions. Re­tail space is ex­pen­sive in In­dia. This is­sue has spurred the emer­gence of mar­ket places for short-term re­tail spa­ces, which of­fer on­line brands as a way to reach con­sumers out­side of the in­ter­net for a spe­cific time pe­riod. Some of the in­no­va­tive ways to drive cus­tomer’s in-store in­clude • En­abling stores to act as mini­ful­fil­ment hubs • Or­der on­line to pick up in store or at curb side, ful­filled from store or ware­house • Or­der in-store for home de­liv­ery, from a ware­house, same store, or an­other store • Or­der in-store for pick up from store, from same store or an­other store • Equip­ping sales as­so­ciates to act as Omni chan­nel evan­ge­lists

Glob­ally, luxury ap­parel brands like Burberry, Tommy Hil­figer, are us­ing chat bots to drive user en­gage­ment and im­prove cus­tomer en­gage­ment. Ama­zon’s am­bi­tion to open re­tail stores un­der Ama­zon Go brand, pro­vides an in­di­ca­tion of mo­bile’s fu­ture as an in-store tech­nol­ogy by elim­i­nat­ing the store check­out com­pletely. Many e-com­merce brands in In­dia are ex­per­i­ment­ing with types of lo­ca­tions or pop-up shops be­fore own­ing or rent­ing their own real es­tate. The “stores-within-stores” are also on the rise. It’s a win-win for smaller brands and big-box re­tail­ers alike since e-com­merce brands can get their prod­ucts to con­sumers in well-traf­ficked stores, and it gives con­sumers an­other rea­son to step into larger chains. Omni chan­nel is and will con­tinue to be the buzz­word in In­dian re­tail land­scape. The end goal of ev­ery re­tailer is sales and all the re­tail­ers jump­ing on the Omni chan­nel band­wagon, should in­vest in tech­nol­ogy for bet­ter in­te­gra­tion. Smart ap­proach to dif­fer­ent re­tail chan­nels will cre­ate di­verse op­por­tu­ni­ties to con­nect with the cus­tomers. As con­ve­nience re­mains the driv­ing force, the ‘one size doesn’t fit all’ the­ory gains a stronger foothold in the world of re­tail­ing.

Whereas click & col­lect is one of the pop­u­lar trends in om­nichan­nel, one of the hot in­vest­ments in the past one year was the launch of real-time vis­i­bil­ity of in-store in­ven­tory, es­pe­cially in the luxury sec­tor where stores may only stock a hand­ful of each item.

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