Retailers’ online game plan in age of e-commerce; what happens to stores that don’t make money

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Updated: May 12, 2020 10:57 AM

Retailers are looking to double down on e-commerce to drive sales since consumers are more likely to click their way to shopping from within the safe confines of their houses.

Although discounts or end-of-season sales may not be on the cards for sometime, promotional offers and special pricing may be in the offing for consumers.

Retailers are looking to double down on e-commerce to drive sales since consumers are more likely to click their way to shopping from within the safe confines of their houses. Although discounts or end-of-season sales may not be on the cards for sometime, promotional offers and special pricing may be in the offing for consumers. Plans are also afoot to shut non-profitable stores and carry forward inventory as loss of over a month of business has prioritised conservation of cash.

Siddharth Bindra, MD at Biba, said the company will sharpen its focus on e-commerce as it provides the convenience of contact-less delivery. The share of e-commerce to overall sales is expected to rise to about 25%-30% in the next three months from nearly 20% at present. Biba is awaiting a formal nod from local authorities, following which e-commerce deliveries will start in about 35% pincodes. While discounts and end-of-season sales will be considered only once the consumer is confident enough to step out for shopping, the company may give promotional offers like add ons to in-store customers once the lockdown is lifted.

There is a huge inventory build-up and brands need to liquidate the existing stock first; fresh products will be added only before Diwali, added Bindra. “March and April are high season months and we have lost at least 15% of the selling time. For the whole financial year, business would be down by 40%, that too if normalcy is restored by July,” Bindra told FE. Business is going to be tough for the next 12 months and the company will be open to exit stores where landlords are unwilling to support. Nearly 80% of the markets are in the red zones and 15% in orange zones as of now, Bindra said. Biba has opened about 28 stores in parts of the South and North-East India as of May 8.

Nikhil Mohan, founder and director at men’s apparel brand Blackberrys, said the contribution of e-commerce to total sales is likely to increase to 50% in the current FY from a mere 10% last year. The company is planning to open about 10% stores in green zones on high streets as of now; production units are not completely operational at present. Blackberrys has decided to introduce “special pricing” for customers wherein products will be priced lower than what it used to be in regular times. “There is an economic downturn and customers will tighten their purse strings,” said Mohan.

Blackberrys is looking to shut non-profitable stores, prune product portfolio and check the size of its autumn-winter inventory. The April-June quarter which forms 20% of its annual sales has taken a considerable hit. “We were planning to add 50 stores this year but that is on hold now,” Mohan added.

Umashan Naidoo, head of cosmetics and customer at Westside, said sales will be tougher compared to previous seasons. But the company will continue to offer new collections to customers every week.

Metro Brands CEO & MD Farah Malik Bhanji said the firm expects the percentage of online sales to grow by three to four times. As of February 2020, the percentage of e-commerce’s share in total sales stood in single digits. “To make brick-and-mortar stores relevant to the new Covid customer, we will work on facilitating home delivery and giving offers to the elderly who may be impacted by the lockdown for a longer period,” Bhanji said. The company will focus more on casual, basic and washable footwear at attractive price points.

VLCC said promotions and discounts will continue to be tactical and seasonal as was the case earlier. MD and group head Jayant Khosla said the focus for Q1 is more on strengthening the bottom line than chasing revenues.

Mumbai-based Viviana Mall’s CEO Manoj K Agarwal said the company has already moved its on-ground events and activities online. The firm believes that social media campaigns and promotions will drive footfalls even when malls reopen. Agarwal is nonetheless bullish that stores selling smartphones, electronics, kitchen appliances and those providing maintenance services for home products will see immediate demand once the lockdown is lifted. Viviana Mall houses stores like Big Bazaar, Home Centre and Miniso.

DLF Shopping Malls executive director Pushpa Bector said contact-less shopping and serving will be the new normal. To bring back customers to malls, the firm will communicate with them via DLF Shopping Malls’ Lukout app and in-house digital media platforms. “We are also setting up norms on the number of people entering the malls,” Bector said.

Ankit Mehta, co-founder at The Walking Tree Group that owns premium jewellery brand Her Story, said the firm is investing heavily into digital mediums to drive sales.

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