Modern retail in India is expected to double in size in three years to Rs 1,71,800 crore from the current Rs 87,100 crore across the top six retail markets of the country, largely driven by omni-channel retailing, said a report jointly published by property consultant Knight Frank India and lobby group Retailers Association of India (RAI).
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According to the report titled ‘Think India. Think Connected Retail’ based on a survey of 45,000-50,000 shops (including malls and shopping streets) across top six cities, retail stores across the country (online and offline) are reinventing themselves to embrace the idea of omni-channel retailing. Consequently, penetration of modern retail is expected to “see a substantial rise from the current 19% to 24% in three years.” Omni-channel retailing extends to brick-and-mortar stores, smart-phones, computers, tablets, direct mails and television.
Factors Driving Growth
The emergence of technology and increased digital transactions has been the key divers behind the growth of omni-channel retailing.
Moreover, with initiatives like foreign direct investment (FDI) retail policy and state-level retail policies where “government is taking up the role of a facilitator to create an environment conducive to the retail business” has further helped the cause.
“The concept of shopping has undergone a tremendous change in terms of retail format and consumer buying behavior thereby bringing in a new era of modern retail across the country. With the boundaries between offline and online stores blurring, omni-channel retailing is an idea whose time has come,” said Aditya Sachdeva, director, retail at Knight Frank India in a statement.
Offline Brands Moving Online
Brands which maintain an offline presence across the country have adopted or aspiring to adopt omni-channel strategy in the near future.
Department store operator Shoppers Stop Ltd recently launched a Shoppers Stop mobile application and had re-launched its online shopping portal. The company is also looking to increase the contribution of online sales from current 1% to 10% in the next three years.
“Today’s time-poor customers are demanding a seamless navigation across channels. We are working proactively towards delivering an omni-channel experience to the customers,” said Govind Shrikhande, managing director at Shoppers Stop Ltd, in the report.
While brands like GAP, Woodland and Bestseller India-owned Jack & Jones, Vero Moda, Only & Selected Homme are following the same strategy, there are others like Swedish fast-fashion brand Hennes and Mauritz AB (H&M) who have decided to focus on just offline stores right now.
“With H&M offering online shopping in 35 markets out of the 64 markets that we are present in, online platform is a natural expansion of our business. We see a great potential for future growth in India in the online space but prefer to focus on retail stores for the moment,” observed Janne Einola country manager, H&M India Retail Pvt Ltd, in the report.
Modern Retail: The Way Forward
Although etailing may seem the new way of shopping, brick-and-mortar is also here to stay. Indian consumers continue to find physical stores appealing and allow them to touch and feel the products. So there has to be a seamless integration of digital and physical touch-points to create a satisfying shopping experience. Lenskart, Pepperfry, Freecultr and Firstcry are some of the etailers that have opened physical stores to showcase their products and service online customers.
On the other hand, brick-and-mortar players have gone online, either with their own websites or tying up with already existing etailers such as Amazon, Snapdeal, Jabong or Myntra. Several brands are leveraging technology into their physical stores with kiosks to showcase products and using augmented reality in virtual trial rooms.
India is one of the important retail markets for global retailers. Nearly 400 international brands are already present in India; some of the recent entrants in the Indian market include Ikea, H&M, Gap, Aeropostale and Massimo Dutti. Retailers need to revamp infrastructure in order to cater to the shopping needs of the new-age customer who has limited time and a plethora of options to choose from.