Just after recovering from the devastating pandemic blows this year, the Indian retail industry is once again staring at uncertain times with localised restrictions back in many places to curb coronavirus infections even as the industry players are turning ‘phygital’ to cater to customers.
With omnichannel approach gaining currency, technology will remain a key enabler for the retail industry and in 2022, the focus is likely to be on building an agile and sustainable supply chain that provides the convenience of ‘phygital’ shopping.
Concepts like video shopping may become more mainstream and companies will continue to adopt advanced analytics to improve sales and gain granular actionable insights on buyer behaviour.
Moreover, with social media and influencer marketing coming to the forefront, creativity and content push, especially with regional languages, will gain more importance.
Metro Cash & Carry India MD & CEO Arvind Mediratta said COVID has changed consumer behaviour and buying patterns drastically.
He also pointed out that health and safety concerns predominantly led to consumer decisions that resulted in people looking for essential products, especially the ones with health benefits.
“Customers now decide ‘when to shop’, ‘where to shop’ and ‘how to shop’ be it online, offline or a mix of both. They are looking at a seamless omnichannel experience. Hence, phygital has emerged as an intrinsic part of customers’ shopping experience, and this integration between offline and online retail is likely to grow,” Mediratta told PTI.
According to him, retailers have to imbibe an integration strategy to enhance customer value proposition and experience.Deloitte India Partner Rajat Wahi said COVID has defined a “new normal” for retailers and has altered the business dynamics forever for them.
However, the retail industry, which is now leveraging technology to engage with and reach their end customers, are also grappling with certain implications.
“We are seeing a major erosion of brand loyalty across everyday categories as new products and brands are being launched by both retailers as private labels and by the ‘from home’ entrepreneurs, leading to rapid commoditisation across categories,” he said.
According to Wahi, health and sustainability will continue to be the focus for the immediate future. Wahi noted that fragmentation and consolidation are likely to continue, with the bigger retailers getting bigger and the smaller ones being bought over or closing down due to various disruptions.
With the emergence of the Omicron variant and localised restrictions put in place by various states, there are rising concerns that the retail industry’s recovery might be hit in the near term, according to analysts.
Recent data from the Retailers Association of India (RAI) showed that retail sales in November 2021 was up 9 per cent growth over the pre-pandemic levels of November 2019 and 16 per cent growth compared to November 2020.
“Business is improving and we hope this will sustain. However, there are still worries around Omicron and the third wave, leading to a feeling of cautious optimism,” RAI CEO Kumar Rajagopalan said. ICRA AVP & Sector Head Sakshi Suneja said the spread of the Omicron variant poses a key downside risk to the recovery path.
KPMG Partner and Head – Consumer Markets and Internet Business Harsha Razdan said investments in digital technologies, platforms and customer-centric technologies such as chatbots and dedicated websites have increased significantly.
“I believe that we are now gradually moving away from ‘retail’ into ‘consumer commerce’, a phenomenon where consumers are at the centre stage and are responsible for generating demand and shaping the value chain. Going forward, companies will continue to adopt advanced analytics to improve sales and gain granular actionable insights on buyer behaviour,” Razdan said.
EY India National Leader – Consumer Products & Retail Angshuman Bhattacharya said with increasing consumption, growth of e-commerce and quick commerce, the industry is expected to come back to pre-COVID growth levels.
The pandemic has made retailers resilient and efficient, and many of them have embarked on a home delivery model. Despite looming threats of another wave, the industry is now better prepared to deal with business continuity risks, he said.
“Notwithstanding another pandemic wave, the sector is poised for a multi-dimensional growth over the next 5-10 years, as new multi-pronged omnichannel models would create a unique retail model in India, ahead of the curve than most developed countries, and integrating the fragmented retail network in the country,” he said.
Commenting on 2021, CEO of Future Retail, country’s leading retailer, Sadashiv Nayak said it would be summarised as one of Pace , Proximity and Perseverance. It had deployed the omnichannel presence and inventory across 285 Big Bazaar and 85 independent fbb stores.
According to Bhattacharya, with a revival of the economy and consumer confidence, discretionary segments such as jewellery, durables, personal care have already come back to pre-COVID levels. Now retailers are adopting multi-channel models.
“The integration of modern trade and e-commerce, driven by investments by retail majors into e-commerce companies, and the converse is leading to an integrated business model and a changing role of modern trade into a hub for consumer and retailer integration in a catchment,” he added. Retail companies like Ikea have expanded their retail presence both offline and online.
Ikea India Country Communications Manager Nivedeeta Moirangthem the economy is showing signs of gradual recovery and during the last two years, the home has taken center stage.
“There has been an increase in home furnishing interests among the many people as an essential need… Affordability, coupled with good design and functionality will remain key growth drivers in shaping the growth of the home furnishings industry,” she said.
According to her, with many more taking to online shopping, the digital footprint of retailers accelerated and many, including Ikea, found new ways to meet the customer. “This hybrid shopping behaviour is here to stay and companies need to continue innovating to meet the customers when, where, and how they want”.
During the year, the Rs 24,500 crore-deal between the Future Group and Reliance Industries’ retail arm could not be completed. Reliance Retail Ventures Ltd (RRVL), the retail arm of Reliance Industries, had – for the second time – extended the timeline for completing its Rs 24,713 crore deal with Future Group to March 31, 2022 as it still awaits regulatory and judicial clearances. Future Group is also engaged in a bitter legal with Amazon, which is opposing the deal.