Change has become the only constant for the retail sector in India. Rapid growth in online retail has meant significant losses for firms trying to woo customers. But, eventually, they are afoot to find ways to cut losses. Offline retailers, on the other hand,have steeped ahead and find a convergence between traditional and digital channels.
Meanwhile, Government on their part, has taken several moves to stabilize the economy with solid economic reforms as a whole. Whether its opening-up of foreign direct investment (FDI) for single-brand retailers, the introduction of level-playing rules in the e-commerce sector, Delhi’s getting approval for round the clock retail policy with several other states contemplating it, or recent clearance of historic GST bill.
In a scenerio, where opportunity is gigantic and the stakes are high, Indiaretailing Bureau ask retail leaders of India about the future of the world’s fastest growing major market. What’s your take?
11 Krish Iyer, President & CEO, Walmart India
Pure play format is passe, Omnichannel is the way!
There is a lot of focus in India today on the fast-growing retail/wholesale sector. Industry experts see it as India’s next big opportunity in terms of investment, employment, consumption, supply chain growth and lifestyle changes. Through the last two decades, economic liberalization in India has opened up new avenues for every economic class, albeit in varying degrees. Clearly, there is no stopping India’s newly awakened consuming class, whatever be the level of consumption.
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This change is not limited only to the rich and well-to-do. Down the income pyramid, changes are equally astounding. Who would have thought that mobile phones, once considered toys for the rich, will grow at such a phenomenal rate! India is an extremely attractive market for organized retail industry, both brick & mortar and eCom to service the traditional retail and also the end-consumers.
The next five years will belong to those who commit to provide the seamless omni-channel experience to customers. There is less likelihood of any pure play format as it looks imminent that offline and online retail will merge and hence in order to become viable business in the digital age, retailers must–
- Constantly strive to understand consumers
2) Define value proposition and ensure it stays relevant
3) Make the experience seamless, fast, and efficient across channels
4) Drive decision through continuous analytics and respond to local needs
5) Accelerate investment in new technology, but keep it focused to make it work and
6) Last but not the least, build a risk strategy to protect the customer, image and brand in the digital world.
22 Mohit Khattar, Head – Retail Strategy and Branding, Godrej Industries Limited
5 years from now the Indian retail landscape would be a lot more exciting and different from the current scenario. Here’s a low down on what we can expect in the future:
1.More players: I expect there to be churn within existing retail businesses while many more international players across
segments would certainly be in india – both in the single brand format as well as the multi- brand format. Some of the existing players could sell out or merge completely.
2.Heading to a costumers’ market: As the customer and the retail market in general matures and the intensity of competition increases; one can expect to see many more interesting formats and concepts emerge and get established in almost every retail segment – including food & grocery, electronics, beauty and cosmetics, apparel, furniture, entertainment, even health care, among others. Retailers would be working harder to attract repeat footfalls into their stores. The significance of adding true value to the customer would be understood – while retail theatre would be adopted increasingly to sustain interest and create greater engagement with customers in store.
3.Technology integration: Technology would get better integrated across retail formats leading to focused analytics and better targeting of customers at one level and superior in-store and on site experience at another.
Extended shopping hours: Easing of policies that govern retail would ensure that customers get extended hours to shop.
4.Protection for consumers and employees against fraudulent practices: We could also expect policies against unfair trade practices getting strengthened over the next 5 years as well as the concept of trusted stores emerging and gaining traction.
5.Online sales improving the revenues: Online sales would possibly grow multiple times over in the next 5 years across segments, helping manufacturers reach out to consumers more easily and directly.
33 Vineet Gautam, Country Manager, Bestseller India
Competence to trump over price
With new brands coming to Indian market almost every quarter, consumer preference to a price for the perceived value of a product/ service will be a key driver to the growth of retail business. Which is definitely a good thing: as it will push the retailers to invest resources in customer insight for converting ideas. But only ideas won’t suffice, rapid prototyping of product and service models with robust execution will be pivotal for actual business success.
Also, price will cease to offer competitive advantage and brands will identify key generic strategies like cost leadership, customer accessibility, product differentiation, customer service etc. based on core competence. Retail industry will mature and brands will get positioned not only by marketing initiatives but also on customer perceptions. Growing relevance & importance of Social media marketing further validates this theory as brands strive to increase their Validation Share in the collective space of Facebook, Instagram, Twitter etc.
44 Neha Shah, Senior Manager – Marketing, Pepe Jeans India
Rural consumers to replicate Urban consumption
Urban India’s contribution to merchandise retail will possibly grow considerably by 2021. An increasing share of merchandise retail will come from urban and semi-urban clusters. This development is primarily an outcome of the rapid urbanization that India has recorded in the past two decades, along with sustained economic growth.
Going forward, rural consumers will continue to increasingly absorb trends from urban India. This is because the aspirations of consumers in smaller cities and towns beyond the top urban cities are increasingly converging with the aspirations of consumers in the metros and mini metros, thanks to the increased exposure to diverse products and cultures, and to the affordability thereof.
The changing characteristics of India and impact of alternate retail will drive the growth of retail in India.
55 Vishal Malik, DGM, Retail, Intex Technologies
Service integration: Key to customer experience
The Indian retail industry has been witnessing double digits growth annually. The surge in online retail, mobile commerce, omni-channel marketing et al are catalysts to the increments. India being a youth oriented economy driven by the young workforce has 50 per cent of the population in the age bracket of 25 and below.
Also every month nearly a million teenagers are attaining the age of 18. The next big market will be meeting the ‘settling in’ demands of the young workforce. Soon they will enter the workforce, live in nuclear families, will settle down, and this is where the market lies – catering to the needs of young working population of the future.
Services along with products will play a critical role in enhancing the role of offline retail to take it the new level of experience. Hence, retail has to be redesigned to have service integration.
These will be key factors for retail success in India :-
1)Branded multi-product stores will be better positioned to stand out among the increasingly crowded competition
2)Cost control and best practices implementation will always be important
3)The ‘Me-Too’ stores will not last long, unless they are backed by strong and smart logistics and supply systems
4)Retailers who will focus on merchandising will succeed: It means always attune to the needs and demands of the market, finding the right products sold at the right price point to the consumers. Most importantly, doing this exercise on quick turnaround basis, month-by-month (even faster) instead of annual/bi-annual cycles.
66 Suchi Mukherjee, Founder & CEO, LimeRoad
E-commerce will run on ‘real’ business matrixs
While the headline story stacks up, there are clear challenges as witnessed by the various ups and downs.There are lot of stories in the Indian lifestyle space with not-so-glorious-endings that prove, building a successful lifestyle business here needs more than what meets the eye – Yebhi, FashionandYou, UrbanTouch, Zovi, Fashionara, Myntra’s sale to Flipkart after seven years of independent life and more recent Jabong acquisition. Here are two important mantras that have come out:
Capital is necessary, but not enough: Lot of money has been pumped up into the businesses which have either shut down or are struggling.
Globally the most successful businesses are driven by loyalty: The core question is whether your LTV (long term value) more than covers your CAC (cost of acquisition of a customer) so that you eventually make money on a user. In short, it boils down to how many times a user repeatedly buys from you. And that ultimately boils down to why they should keep coming back to you.
Indian fashion e-commerce today is mostly about “discounted pricing”, with the core consumer behavior being ‘where can we get this the cheapest’. Great consumer brands are built from building a tremendously passionate loyal base of customers, who love something fundamental about the product that is beyond simply “discounted prices”. If you simply put up products on discounts, the customer loyalty is towards discounts. So where the customer finds better discounts, they will go. Online shopping has to grow beyond deal-hunting. It should be about having a great experience while shopping.
We are on a mission to build the most extensive discovery platform, where consumers come because they get to discover simply great product at affordable prices. And this discovery is best led through social channels. At LimeRoad, users repeat 10x per month on the app, with 13.5 per cent conversion rates for repeat users, and 7.5% for new users. These are clearly best-in- class stats.
77 Pushpa Bector, Executive Vice President and Head DLF Mall of India
Global best practices to take centre stage
The Indian retail landscape is evolving at a rapid pace and this swift transformation can be attributed to the changing customer preferences, demographics and proactive government initiative to create customer friendly retail environment. We anticipate that globalization will have a major influence on the Indian retail landscape and way retailers operate. Global retail formats will spread rapidly and retails will adapt global best practices to cater to the discerning Indian consumers.
With FDI in single brand retail we will see influx of large international retail players making entry in the Indian market, some of them are already in the pipeline. Recent announcement made by the government to provide round the clock access to retail will definitely change the dynamics of retail segment in
88 Yogeshwar Sharma, Executive Director, Select Infrastructure Pvt. Ltd
Over the years, the mall business has grown extremely fast, but it is really just the beginning. The current retail scenario in India is evolving, and soon it will be comparable to any other international destination.The number of malls coming up may be less, but many people are planning new malls. It may take some time, but we would see more shopping centres coming up in the next five to ten years. While its true at the moment that there is a shortfall of quality retail spaces and we can’t deny the fact. Finding a suitable retail space is a challenge for the retailers. However, things are improving gradually, and we would see more malls in future, for sure.
Moreover, with recent passing of the Models Shops and Establishment Bill, there will be a positive effect on the market, as it will lead to increase in employment opportunities. This will also enable level playing for brands across online as well as offline retail platforms. Currently shops that close by 9 pm can now remain open till about 11 pm, which will be good for customers who only get a chance to shop after they return home from work or people working late shifts. Though some people have raised alarm for security and safety, but I believe that will be managable.
99 Anupam Bansal, Director- Retail and Marketing/Executive Director, Liberty
The Indian retail industry is expected to reach US$ 1.3 trillion by 2020 (IBEF, 2012). With an approval of 100 per cent FDI in the single brand retail and 51 per cent in multi brand retail, the sector is expected to project a better growth in future with fashion & lifestyle, footwear, food and groceries and electronics being emerged as the prominent sectors.
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Today, footwear and fashion industry is dominated by the millennial aged between 21-35 who are not so brand loyal and have high disposable incomes as compared to generation Z. They have become the focus group for many retailers,including us. Due to their changing behaviors, we are trying to inculcate the latest fashion and latest technologies in our product collections for the contentment of this new customer base. These consumers are not so brand loyalists and are driven by their wants instead of loyalty and do not compromise on quality and comfort in lieu of price.
Additionally, small screens(smartphones) have become the first point of contact between the retailers and the consumers. With the rising mobile and internet penetration, the millennial consumers have not only changed the way they shop but have also become extremely informed consumers. They compare process, discounts, products and schemes online before prefer picking the best deal.
The coming year for Indian retail would see a complete metamorphosis in technology pertaining to technological innovations, closer connectivity’s with consumers via smart phones and CRM, click and collect model, seamless integrated shopping experience online and in offline stores.
1010 Lalit Agarwal, CMD, V-Mart Retail Ltd.
Organised retail to reorganise India
Biggest opportunities and challenges in Indian retail sector is its structure. While it’s been getting organised, it is still very fragmented. It is surprising that close to 90 per cent business is coming from unorganised sector like traditional mom and pop stores.
Considering that India has the largest number of young population and is one of the fastest growing economies, we have barely scratched the surface as far as retail is concerned. However, I believe, in the next 5 years we will be witnessing much organised retail in Indian markets.
With the surge in the buying capacity of Indian youth, increase in the disposable income, aspirational buying habits of consumers, development in rural market, among others will drive this change.