As someone whose journey in India’s retail landscape started way back in the 70s, MD Titan Company Limited, Bhaskar Bhat, says that things have transformed significantly in retail…
The mills of erstwhile Bombay is where the idea of selling products in retail chains was first born in India. While textile players mastered this concept, manufacturers from other industries soon followed suit. This was the era of slow and steady progress as India continued to be a closed economy with License Raj and limited or no foreign direct and foreign institutional investment.
With liberalisation in the 90s, things changed for good. Towards the end of this decade, struggling to make an impression in an age where local kiranas and mom-and-pop stores dominated, seeds of the mall culture were sown in Delhi and Mumbai. Soon, this wave spread to other cities, including Kolkata, Chennai, Pune and Hyderabad, among others.
By 2021, India will be the youngest nation with 64 per cent of its population in the working age group of 20-35 years. By default, this section of the population will also be the biggest consumer base for any business including retail.
A recent report by Boston Consulting Group (BCG) indicated there will be three times increase in average household income from $6.393 in 2010 to $18,448 in 2020. Rising incomes, urbanisation and attitudinal shifts will ensure exponential future growth in the retail space.
Even with higher FDI limits allowed in multi-brand retail stores, growth in India’s retail sector will continue to be driven largely by domestic funding. Additionally, over the last few years, e-commerce companies have left a mark by altering India’s retail landscape.
According to a study conducted by Google and AT Kearney, about 25 per cent of the total organised retail sales by 2020 will be contributed by the online channel. The report titled ‘Digital Retail 2020’ says that online shopping in India will reach a gross merchandising value (GMV) of $60 billion by the end of 2020.
Expansion of mobile infrastructure and integration of mobile payment gateways have pushed fence sitters to jump to the online shopping bandwagon.
The report also predicts that the total number of online shoppers will grow to 175 million and about 33 per cent customers will drive two-thirds of total shopping. Initially, businesses, which thrived on networks of physical stores criticised the new crop behind startups for backing unviable business models. The backlash ebbed as players in online retail managed to attract multiple rounds of funding from private equity companies.
The good thing is today there seems to be a correction in the overall retail landscape. Here’s how: traditional businesses have understood the importance of online shopping for Indian consumers and adopted an Omnichannel strategy. They are also going an extra mile to elevate the in-store experience with the help of technologies like virtual and augmented reality.
Giving up the madness of offering massive discounts – a major reason why books of many e-commerce companies are in red – online players are exploring differentiated partnerships with brick-and-mortar retailers.
Both, online and offline retailers have realised the importance of ‘experience’. While physical stores are doing this by creating a high-tech retail experience, some online players have invested in large-format centres recently where customers, after looking at the product, have the option of placing the order online. Eventually every player wants to connect with customers when attention spans and dwell time are at an all-time low.
Phygital, which is all about blending the physical and digital to create an ecosystem between the brand and consumer across the two worlds, is the biggest reality that must be embraced by established and new businesses. Today, customers are not loyal to any channel – online or offline – and they expect a seamless experience. Today, a customer can both shop in the store or online, and get delivery of products at home or in the store nearest to them. With more than 1300 outlets across the country, Titan Company Limited is creating unique retail experiences for its customers in different age groups. Our online destination for all Titan products, titan.co.in, further adds to our journey towards improved margins and, more importantly, help us grow our presence as a lifestyle company.
The future definitely lies in the direction of Omnichannel retailing, providing companies with both the unrivalled reach of the internet as well as the opportunity to offer after-sales services such as exchange and return of goods through their brick-and-mortar stores. With evolving consumer preferences, the players that can offer a touch point anywhere, anytime will be the ones to reap the best rewards.