Brick & mortar retailers raise their game with omni approach

Written by Vaishnavi Bala | Mumbai | Updated: Feb 16 2014, 05:49am hrs
BricksWith stiff competition from online players, brick-and-mortar retailers are now looking to beef up.
With stiff competition from online players, brick-and-mortar retailers are now looking to beef up their online presence through e-commerce, social media and mobile apps. Buoyed by growth rates of more than 15%, large retailers are leveraging non-store channels to reach tier-2 and tier-3 cities and far-flung areas where they do not have a brick-and-mortar presence, says a report from Tata Consultancy Services (TCS) on retail operations benchmarking.

And while most retailers have begun their multichannel journey with non-store revenue less than 3%, according to the report, they are hopeful of better gains.

In such an approach, a company is able to communicate and facilitate a purchase across various channels, integrating the physical stores with online websites, apps, tablets and social media. The customer can experience a brand seamlessly through this approach.

Omni-channel is here to stay, as it offers the same benefits, value and shopping experience across formats, and at Croma we are providing consumers with products with the same prices across different formats. We have also started to include our website, cromaretail.com, in marketing campaigns to help us tap customers both online and offline, says Ajit Joshi, MD & CEO, Infiniti Retail, which runs Croma.

Retail baron Kishore Biyani launched Big Bazaar Direct last year, which is a franchisee-based model where franchisees personally visit consumers and take orders for products on their tablets. The company is now aiming to have 50,000 franchisees by the end of this year, as per Big Bazaar Direct director Vivek Biyani.

Interestingly, in case of more than 70% of retailers surveyed by TCS, the CEO or COO drives the multichannel initiatives, indicating its strategic significance.

Shoppers Stop, which gets less than 2% of its sales from its website at present, has big plans for its online foray. Over the next 24 months we will ramp up our online business and are working on a model that will enable us to become a bigger player in the entire online space, says Govind Shrikhande, MD, Shoppers Stop.

Tatas Croma, which launched its online operations in April 2012, is already clocking R80 lakh to R1 crore of topline per week. Our growth has been over 100% on y-o-y basis. Our average sales price is between R4,000-R5,000 and we are able to maintain this. Our prepaid order contribution is very high (close to 76%), unlike any other e-tailer, says Joshi.

Aditya Birlas Madura Fashion and Lifestyle launched trendin. com last year, which sells merchandise from Louis Philippe, Allen Solly, Van Heusen and Peter England. Over the last 10 months, we have seen a double digit compounded growth on a monthly basis, says Shivanandan Pare, the companys general manager (e-commerce). About 35% of the websites sales come from tier-III cities.

The TCS reports points out that the average transaction value in a store is Rs 7,666, on an e-commerce website Rs 9,350, mobile channel at Rs 3,000, while it is Rs 2,250 in a market place. Even food and grocery retailers are taking the online route. Godrejs Natures Basket ventured online a couple of years back and now receives more than 200 orders per month with a monthly average bill of Rs 1,000 per order.

We plan to invest heavily in the next two years in the omni-channel space, rather than being just in the online space, Mark Ashman, Hypercity MD, told analysts on an investor call recently.

Pure-play online players in this category include LocalBanya, which raised series A funding from Mumbai-based realty development group Karmvir Avant Group last month. The company, which operates in Mumbai, Navi Mumbai and Thane, plans to expand to two more cities by mid-2014. Another player in this space, BigBasket, raised $10 million funding in 2012.

Internationally, companies like Walmart and Tesco have managed to run successful ventures online too. But in India, companies have just begun to warm up to the idea.

Leading online retailers like Flipkart, Jabong, Snapdeal and Myntra have seen an uptick in sales as they are focusing on increasing their market share at the expense of their bottomline. This means that e-tailers have resorted to giving deep discounts and offers.

There are some challenges in the Indian online model as of now. But this space will evolve over the years and the right players will finally emerge and stay within that space, says Shrikhande of Shoppers Stop.