Today, customers don’t distinguish between channels — they demand the same experience across all touchpoints. And clearly, offline retail brands are upping their game when it comes to the digital revolution.
India has witnessed an e-commerce boom in the past decade or so with the entry of national and international marketplaces fighting each other to woo customers. From user-friendly websites/apps to eye-popping discounts, we have seen it all. This indeed has made big bricks-and-mortar retailers take stock of their strategies, as millennials often choose e-tail sales and convenience at a click of a button over the hassle of going to a store. Today, shoppers are living in a time-starved and tech-enabled economy. Thus, the need for retail businesses to be omnipresent is a necessity. While brands are present in malls to get desired footfalls, digital helps by becoming yet another storefront, albeit online. “Today, millennials are always connected; if not shopping online, they do their research online before heading to a store,” says Shabori Das, senior research analyst, Euromonitor International. The fight, earlier put up by bricks-and-mortar retailers against e-commerce players, has slowly and steadily morphed into quite something else, as many of them have entered the online space. For instance, take Future Group’s CEO Kishore Biyani, who till a couple of years ago was vocal about how online will not work, but has recently launched Retail 3.0 — a business model in India to enable customers to place orders using WhatsApp! Physical retail brands, over time, have realised that the new digital world is something they need to be a part of. Apart from joining hands with e-commerce majors like Amazon or Myntra, many have unveiled their online presence as well — a step that is important to survive as today customers don’t distinguish between channels.
Loving your customer
Fashion, one of the biggest gainers of the offline-online game plan, has seen many bricks-and-mortar retailers bolster their online presence. Talking about Future Group, it launched Cover Story, backed by Future Style Lab in April, 2016, to bring the latest in women’s clothing and accessories to its stores. But soon after launching six standalone stores and having a presence in multiple shop-in-shop formats across India, it explored the online space through its own e-commerce portal (Coverstory.co.in), in addition to a presence on Myntra and Jabong. Manjula Tiwari, CEO, Future Style Labs, says, “It was a natural extension of our business — a necessary step we have been planning to take, to ensure visibility of the brand and to make Cover Story accessible across the nation.”
According to a recent study by Hansa Cequity, more than 65% of consumers search online before walking into an offline store. Also about 55% tend to look at consumer reviews and about 47% of them tend to check company websites. So, there is a lot of movement happening between offline and online. Consumers today are getting used to ‘hybrid’ shopping behaviour. Also, what’s noteworthy is that some of these brands are either not present or have limited presence in tier II and III cities. The online platform, according to experts, helps these brands to tap these markets as well as give a seamless experience to their customers.
For instance, Max Fashion, which provides affordable fashion through its 200 stores across India, went online in 2016 under Landmarkshop.in, which had launched in Dubai in 2015. However, it soon realised that the Indian market and its requirements are quite different. “In 2017, we went for our own website and app,” says executive director of Max Fashion, India, Vasanth Kumar. Kumar acknowledges that unlike others, the brand cannot compete with the likes of Amazon, but he agrees that to stand out, one cannot only depend on discounts. “We have a large base of loyal customers who we want to convert to online through customer experience when they shop offline or online.” Currently, 1.5% of its revenue comes from online, which the brand hopes to increase to 10% by next year.
Evolution of the ecosystem
“We don’t believe in the narrative of offline versus online. We believe in being an omni-channel retailer. Today, Shoppers Stop has 80 physical stores, an online shopping website as well as a mobile app,” informs Govind Shrikhande, customer care associate and MD, Shoppers Stop. So far, it has invested Rs 60 crore in its omni-channel journey and aims to achieve 10% of sales from online by 2020. Most brands have adopted multiple technologies, such as warehouse management system (WMS), data management, etc to enable them to have one view of the customer, order and inventory. Apart from this, some of them use their offline learnings for their online businesses and vice versa; for instance, adopting easier online no-returns policy for offline customers.
Consumers are also benchmarking online experiences across several emerging categories such as cab aggregators (Uber, Ola) and travel and hospitality brands like Airbnb, MakeMyTrip, etc. So, they expect similar shopping experiences such as ease of ordering online or having the convenience of click-and-collect. “The pros for retail brands is that they get a ‘share of real estate’ in the consumer’s mobile phone and therefore are able to engage in newer ways like in-app messages, browser notifications, etc. The con really is lack of human interaction and experience. So, they need to balance both experiences to keep consumers with them,” says S Swaminathan, co-founder and CEO, Hansa Cequity.
Another thing which experts believe that a brand needs to keep in mind is — if you are an already established brand, you have to remain consistent in your messaging to the customer, across mediums, because different propositions can confuse the customer and not help the brand in expanding. However, these brands face a two-way competition — from bricks-and-mortar as well as pure online sites. While some are trying to balance the act and use the learnings on both, there are some who are happy about the competitive growth.
“Logistics have evolved thanks to these online majors. The ecosystem is evolving and should help all players if they learn to use it to their benefit and evolve with time and customer preferences,” highlights Kumar. Many also think that going online to set up a store is only meant for established brands with funds to spare. That couldn’t be further from the truth, as setting up a digital presence may not be that difficult; the challenge essentially is to compete effectively in a cluttered environment.
Roadblocks for e-tail
Absence of e-commerce laws
Low entry barriers leading to reduced competitive advantages
Rapidly changing business models
Shortage of manpower
The silver lining
Reduction of money transactions in all sectors
Improvement of net banking facilities across the country
Implementation of demonetisation policy spurred online transactions
Government policies on banking and financial sectors
Source: ASSOCHAM-Resurgent India study