By Hema L
E-commerce isn’t new. It is and has been, a channel to reach customers for retailers and brands alike. Although many simply consider it a disruptive channel, e-commerce today has grown into a crucial step in an urban Indian’s buying journey, especially since the D2C boom in 2020. The pandemic altered buying behaviours and patterns, leading to discussions about the demise of brick-and-mortar retail as people were forced indoors. Consequently, significant changes have occurred in the last two years — customers want the convenience of both online and offline. They want seamless, integrated buying journeys at multiple touchpoints and for brands that don’t provide seamless experiences, they risk their customers moving on to their competitors. This is perhaps why we see many pureplay D2C going offline. One thing is clear — omnichannel is here to stay.
Let’s examine the current landscape: Among urban Indians, 96% of customers buy groceries online. At the same time, 86% of customers also purchase groceries in-store. Customers want it both ways and this omnichannel demand is central to the steady proliferation of D2C brands that are going offline. Companies can’t have an isolated approach to online selling anymore. Instead, India is witnessing brands fully adopting an integrated omnichannel strategy built on data, in-depth analysis, and a crucial understanding of customers.
How does offline retail benefit D2C brands?
Market differentiation: At a modern retail level, especially in the groceries and fresh segment, most businesses are undifferentiated from the customer’s point of view as the products they sell are the same. Unlike premium grocery retailers, most modern grocery retail is a 3000-sq ft store format that came out of the need to replace local kiranas. With low overheads, compared to larger stores, retailers have been offering the same products across the board and struggle with differentiation. For online grocery retailers, the differentiation came with customers being able to purchase online from the comfort of their homes. But this differentiation too ended with customer preference for omnichannel and it’s up to businesses to give customers what they want, leading many players to open offline stores. At the same time, many are selling products with in-house brands for better margins. While grocery is the most challenging segment for an omnichannel approach, there are segments like fashion and wellness, where brands have the opportunity to gain ground and many are capitalising on it.
Multiple touchpoints: Businesses today have to be where their customers are, anticipate their preferences and offer them more channels to purchase from. A D2C brand selling skincare and makeup would want to have strategically selective offline stores not just as another touch point but also to improve customer experience. A core part of any grocery retailer’s existence is omni-channel and many players resorted to it as a necessity 2 years ago while at SimpliNamdhari’s this has been the strategy even before the new normal demanded it. And a significant amount of customers now want all these conveniences. From quick commerce to purchasing on websites, apps and even on WhatsApp, many retailers have pivoted to change over the years and this trend will only continue.
Personalisation: For D2C brands that remained purely online players, personalisation was largely the fruit borne from the software they deployed at the backend to understand every customer’s preference and deliver tailor-made products just for them. And as these brands go offline, they are suddenly challenged with delivering personalised experiences. This is because personalisation in brick-and-mortar stores is far different from personalisation online. For instance, a D2C grocery retail brand based out of Delhi would experience a disconnect in understanding what customers in their offline store in Bengaluru would want to purchase. Largely because retail as a business is very catchment specific. Customers in one part of the city may have different preferences from a customer in another part of the same city, this difference would be stark in another state altogether. Offline expansion gives D2C brands knowledge of customers’ local preferences and spending patterns. This valuable data can in turn be used for personalised marketing strategies effectively.
Personalisation comes with understanding local customer sentiment and intent and utilising it can help D2C brands establish trust and credibility among consumers who may be sceptical of online shopping. The physical presence of a store reassures customers about the authenticity and quality of the products. When customers can visit a physical store, it reinforces that the company is legitimate and invested in delivering a great customer experience. Offline stores are also a great way to provide immersive experiences which is especially important for grocery, apparel, beauty, and home goods companies. Customers can touch, feel, and try products before making a purchase, which could lead to increased customer satisfaction, increased conversion rates, and reduced product returns.
But there are challenges to this shift to offline. The biggest one is the cost of offline retail. Retail space is expensive, especially for brands accustomed to low-overhead online-only models. The challenge lies in balancing the benefits of offline and online. Another major concern is managing offline retail locations, especially as D2C brands need to establish a holistic and robust system to forecast customer demand, handle inventory, returns and exchanges, warehousing, oversee staff in physical locations and ensure timely delivery of products to stores.
Another major concern is adapting to what customer experience means offline as it is radically different from online. Striking a balance can be challenging for D2C brands. A seamless experience across channels requires consistent branding, visual identity, integrating systems to synchronise inventory, pricing, promotions, service, and policies across online and offline stores. If D2C brands fail to do so, the risk of losing customers is great.
Conclusion
The post-pandemic retail boom is only indicative of how crucial brick-and-mortar is to the retail sector. D2C brands are realising the importance it physical stores provide for greater brand visibility and discovery, especially when the competition is fierce in the online marketplace. Attractive, experiential store design is fast becoming a great way for D2C brands to create buzz and word-of-mouth marketing. Besides, offline stores provide an additional sales channel and revenue stream. While e-commerce will likely remain the primary source of sales for D2C brands, physical retail presents an opportunity to reach new customers and increase new customer acquisition. For established D2C brands with a loyal customer base, physical stores become a destination for customers to interact with your brand on a deeper level and provide deeper personalisation to cultivate brand loyalty that transcends a single-channel model. Ultimately, an omnichannel strategy is essential for a brand’s growth.
The author is the head of brand marketing, Simpli Namdhari’s
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