With the Omnichannel phenomenon fast catching up, shopping centres in India are encountering the need to complement physical ambience with online stores. So what really has been the effect of the onslaught of e-commerce on physical, retail space?
Says CBRE Senior Director, Joel Stephen, “We conducted a survey last year. Out of the 1,000 participants polled in India, we found that 84 per cent of customers check prices on their phones, 85 per cent access the social media to find out more about products and offerings. People are very, very connected. Half of the people still buy in stores though, after researching online.”
CBRE Group, Inc. is an American commercial real estate company with headquarters in Los Angeles, California. As of its successful 2011 bid to acquire part of ING, CBRE was the world’s largest real estate investment manager.
Stephen feels that physical location will always dictate how people will use the Internet.
“If you see other Asia-Pacific regions, Hong Kong in particular hardly has any online market, whereas China has a particularly buoyant e-commerce set up. The reason is simple. In Hong Kong, the distances are very small – you can drive across the entire city in about 10-15 minutes. Brands are literally at your doorstep, there are no duties, there is range, there is really no need to go online,” says Stephen.
Partner, Shopify Vargab Bakshi says, “It’s not very easy for small online retailers to suddenly decide to go into the brick-and-mortar model. It’s very expensive. We generally encourage such e-tailers to take to the pop-up model – in malls, galleries, events. These will help the retailer decide whether he needs to go in for the brick-and-mortar model or not.”
“The millennials may buy a lot online, research online on products and offerings but they will still want to go to physical stores – mainly for the experience, but also for some niche categories like footwear. So, it’s necessary to have a healthy mix of both,” he adds.
Co-founder and CEO, CREIndia, Ajay Rakheja says, “This kind of a trend is more visible in Tier I cities – where people prefer e-commerce to physical stores. In India, Tier II and III cities will always be dominated by physical brick-and-mortar models.
CREindia.com is one of India’s largest marketplaces for commercial real estate. It integrates innovative technology, inventory data bank and research on macro and micro markets thereby offering a marketplace for all related audiences.
“I think the electronics segment has really struggled to maintain a physical presence over the last ten years or so. In the West, books have gone online, but in markets like China, there are some very strong lifestyle book stores that are making a comeback. I feel that markets which have a huge tariff difference between online and offline will feel this more than any other. If people can order cheaper goods, same quality online, they will move towards e-commerce and vice-versa. This is very country specific,” says Stephen.
Creating A Digital-Real World Balance
“Investors will not back down, since they have already poured in a lot of money. It’s an exciting time for e-commerce in India,” adds Bakshi.
The era of online commerce does not necessarily signify the death of brick-and-mortar outlets. Instead, it is bound to herald in a positive change. Retailers will need to think carefully about what the real world provides and what the digital world provides, and how they can be coupled together with customer need.
Successful companies should be able to blend the digital with the physical in order to drive sales and create brand advocate relationships.
Rakheja concludes saying that to survive, a retailer has to embrace both offline and online – especially in terms of real estate. Bakshi agrees, saying that e-commerce and brick-and-mortar will co-exist and finally reach a level of maturity, translating into sound business sense for Omnichannel players.