India’s retail market is expected to cross US$1.3 trillion in value by 2020. Multichannel retailing is an emerging model for Indian retailers to make this trillion dollars consumption dream a reality. Sales through digital channels, which is a miniscule percentage of modern retail today, will increase to 6 -8 percent of total modern retail amounting to about US$13.3 billion – US$17.6 billion by 2020 – and will power the future of Indian retailing.
Indian Retail and its Evolution
Today, retailers are not announcing expansion plans, and their focus has largely shifted towards consolidation and profitability. At the same time, the Indian customers are on an evolutionary journey. They are looking forward to channels which can enhance their overall shopping experience and bring value to them in the form of lower prices, wide assortment or sheer convenience.
Digital has become the new mantra of success for businesses today. The emergence of Digital Channels (3 Screens i.e. laptop, smartphone and flat panel televisions) can augment a retailer’s physical stores, for not only in reaching the customers but also in engaging with them across relevant channels and throughout the shopping journey. A feasible model that can address integration of multiple channels to realise optimisation benefits – is taking the best of offline as well as online retail, would be ‘integrated multichannel retail (IMR)’.
Why Brick and Mortar Retailers are Being Compelled to Invest in Digital Commerce?
The clock can’t be turned back on digital commerce, it can only be embraced. Here are the reasons why traditional retailers are being forced to take digital commerce seriously:
1. Expensive real estate rentals
2. Disconnect between assortment width and shrinking format size
3. Multichannel customer with shifting loyalty
4. Optimizing inventory carrying cost
5. Increased use of internet:
Driving Indian Consumption Through Multi-channel Retailing
Past experience has already shown us that the answer to profitable retail and addressing demand cannot be just through store growth but needs new operating models. Some of the key trends that will influence retailers to re-look at their operating models are:
• Smaller urban centres fuelling growth
• Increased internet penetration in lower SECs
• Mobile phone emerging as the preferred device to access internet
• Youngsters and smartphone users driving the usage pattern
• Multichannel environment has created multichannel shoppers
• Individual channels plays specific role in consumer shopping journey
Strategies to Go Multichannel and Succeed in it
Though organisations are increasingly becoming multichannel, the efforts are largely towards creating new channels. The greatest challenge for retailers, seeking sustainable growth, is to develop a model which aligns their current brick and mortar practices with their multichannel initiatives which compels them to have a credible framework for embarking on this journey.
Benchmarking with global best practices has been the most effective way of addressing this challenge. The “4I Model” given/presented here has been developed on the same premises. The model allows a retailer to assess, where does their organisation stand, benchmark with leaders, identify gaps and monitor progress in the journey to improve maturity towards become the best in today’s digital era.
How Can Multichannel Retailers Embrace E-commerce?
There should be two separate teams for e-commerce and physical store with requisite specialised skills. Infuse new and dynamic resources – retailers will have to infuse fresh blood into their organisation. Create option value – e-commerce is a difficult road to succeed. With an easy entry into this business, it is very important for a retailer to test the water and start small to decide if they want and can play big.
Learning from doing – If a retailer is planning to embrace e-commerce, s/he is embarking on uncharted territory. When you are dealing with too many unknowns, the best is to learn and absorb everything around you and eventually start connecting the dots.
Digital commerce is expanding itself by including TV Shopping, phone shopping and mobile commerce. The customer has progressed from just using the Internet as a medium of e-commerce. In fact, the growing use of social media websites these days has led to what we can call as “social commerce”. Online shopping is getting integrated with social media as it serves as a platform to interact and seek opinions about the products or brands before making a purchase.
The Future of Indian Retailing is Very Promising
Indian retail has the tremendous potential of 1.2 billion consumers, but is constrained by its relatively inadequate and expensive customer connects points in the form of physical Stores. The emergence of Digital Channels (3 Screens i.e. Laptop, Smartphone & LCD TV ) can augment retailer’s physical stores in India, for not only in increasing customer reach but also engaging him through channels which are relevant during his shopping journey.
A shift of small percentage of the business to digital channels can bring in much needed efficiency in the retailer’s business leading to significant improvement in profitability. For a retailer to make this happen, it needs to collaborate very closely with its suppliers and synchronize its operations with their key partners.
The journey towards becoming an integrated multichannel retailer has begun. The trillion-dollars opportunity will get realised, through a million customer touch-points!