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IRF 2016 Curtain Raiser: Prepping for the future

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On September 21st and 22nd, retail and allied businesses from India and overseas will
gather at India’s largest retail intelligence business event, India Retail Forum (IRF) 2016.
Chaired by Walmart India President & CEO Krish Iyer, the 13th edition of the mega
event promises to offer a crisp barometer of the rapid changes sweeping retail in India, the world’s fastest growing major market, and also in-depth insights on navigating the future.
So, what are the major macro developments over the past year that IRF 2016 will be taking stock of?
An online edit
The correction in online retail that many had predicted finally started showing up in 2015. Or at least, a re-examination of sorts, manifested largely by a rapid downsizing of food-centric formats – in both retail and foodservice sectors.
Under the grocery delivery format, two distinct e-grocery delivery models – hyperlocal and marketplace delivery – exist in India. Where marketplace models such as BigBasket, UrDoorstep, among others, maintain own inventories, hyperlocals such as PepperTap, Grofers, Zopnow, revolve around marrying the unique advantages of neighbourhood momand-pop stores with a technologydriven delivery model.
Read: Why e-grocery firms are walking the path of doom
Of these two, hyperlocal was one of the hottest buzzwords in the Indian startup space, with several e-commerce majors, including Amazon, Flipkart also launching separate verticals for hyperlocal grocery delivery. However, hefty outflows on customer acquisition, cash-back schemes and fundamentally rocky business models soon resulted in cracks. PepperTap, which has been in business for less than two years, announced its intention to stop operations across the country by May 2016 following continued losses and weak cash flows. This despite the company raising over $51 million in risk capital from blue chip investors, including Sequoia Capital, SAIF Partners, and e-commerce
major Snapdeal.
This followed the earlier closure of on-demand grocery delivery service ‘Nearby’ by e-commerce major Flipkart, and was followed in turn another hyperlocal outfit Grofers scaling back operations. Was 2016 going to be about the end of the hyperlocal?
“Any business in any form – physical or digital – runs on gross margins and operating costs,” says Founder and CEO, Urdoorstep.com, Dinesh Malpani.
“Hyperlocals who have shut down or rolled back operations were sourcing products from kiranas, the weakest link in the entire supply chain. Kirana stores buy products on the low margins from brands and the manufacturers and get only of 9-10 per cent for themselves. Besides that, they have the lowest assortment due to lack of space, which is again a disadvantage from the customer’s point of view. And if you are tying up with the weakest link, you have any way weakened yourself.”
“Most startups that entered the food tech space are novices who don’t understand the business. They understand the technology and even technology to the extent of creating an app, which can be replicable by anybody and everybody. So they fundamentally had no understanding of the business,” explains Malpani.
“Offline supply chains are not fully developed and hence relying on them does not deliver a great customer experience. This has led to the shutdown of models based on them,” says National Head – Buying and Merchandising BigBasket, Seshu Kumar.
The future will be about investors understanding business in minute detail and using technology to be able to disrupt the market effectively, Malpani says.
But the hiccups haven’t dampened India’s new-found entrepreneurial spirit, with most tech startups now focusing on ‘retail support’ solutions, rather than retailing itself. Many of such new-age enterprises will be visible at the IRF Startup Innovation Zone at IRF 2016, which will showcase innovations in retail and allied sectors in India. In partnership with a NASSCOM initiative — 10,000 Startups — the show promises to be a vibrant
display of ideas and technologies that are quite literally, transforming the ease of operating a data-led retail business.
The Omnichannel Imperative
Is pure online retail a sustainable proposition in India? Many believe that given the current climate of unrealistic discounting by Indian e-retailers, the model is essentially flawed. “The pure online model is unsustainable because the model thrives on selling below cost,” says J Suresh, MD & CEO, Arvind Retail & Lifestyle.
Having said that, the mass movement towards online shopping and the consequent etailing sales figures cannot be denied; in the first few seconds of Amazon’s Great Indian Sale on August 8, over a lakh units were sold, including mundane items such as Surf Excel Matic detergent. Since online commerce clearly is here to stay, how should brickand-mortar retailers navigate the road to omnichannel excellence?
Read: Walmart’s dominance of biz world reflects enduring proposition of physical retail
“There is no question that all brick-and-mortar retailers today need to be Omnichannel retailers. It’s not like there is a choice,” explains Suresh.
“If you look at the top 20 US online retailers, only one – Amazon – is a pure play. All others are Omnichannel retailers who started out as brick-and-mortar formats,” he adds.
But it is easier said than done. Simply embedding e-commerce technology will clearly not cut it, as many global retailers the world over are finding out. Despite the fact that Walmart is now the number two online retailer in the US – after Amazon – only seven per cent of its sales revenues are accounted for by online sales.
Addressing the imperative of profitable Omnichannel strategies, the conference at India Omnichannel Forum (IOF) 2016 – the concurrent show at IRF 2016 – features targetted discussions: Capitalising on growing retail traffic on mobile devices, the IOT revolution, customising an online supply chain systems, optimising Big Data and analytics to track customer behaviour 24×7, perfecting cross-channel experience, and driving revenues and experience in an omnichannel world.
Taking the omnichannel story beyond stores to shopping centres, an IRF session on ‘Omnichannel Requisites for Retail Spaces – What the Future of Retail Holds for the Malls of Tomorrow’ will focus on the path for malls to become immersive, digitallysynced lifestyle destinations. Meanwhile, many Indian retailers are already showing evidence of smart deployment of technology — be it in in-store displays, intuitive customer experiences or making rapid transitions to online channels. Many among these will be honoured at the 2nd Annual IMAGES Retail Tech Awards on September 21st.
What’s a ‘marketplace’?
Hoping to diffuse some of the ambiguity surrounding e-retail models — while also addressing strident calls for E-commerce regulation from physical retailers, in March this year, the government allowed 100 per cent foreign direct investment (FDI) in online retail of goods and services under the so-called ‘marketplace model’ through the automatic route, the intention being to legitimise existing e-commerce companies operating in India.
It also notified new rules that would prohibit marketplaces from offering discounts and capping total sales originating from a group company or one vendor at 25per cent. So far, India had allowed 100 per cent foreign investment in business-to- business (B2B) E-commerce but none in B2C.
To comply with this, companies such as Flipkart and Snapdeal had been following the marketplace model – which had hitherto not been defined – and attracting significant foreign investments. Despite the announcements, investors do appear to have become circumspect about ecommerce startups, given the recent slew of failures in the category. And consolidation looks ready to take off; Flipkart-owned Myntra’s acquisition of Jabong points to a future where creating critical mass will be key and only the fittest will survive.
At both the IRF and IOF conferences, the outlook for pure online retail will be, as expected, among the main discussion points, as in a major IRF session will be on ‘10 Disruptors That are Bound to Set the Course of Future for the Retail World’.
Brick & Mortar rules, still
In the overwhelming atmosphere of internet retail, the fact that the planet’s retail ecosystem continues to be led by a physical retail format came as a shot-in-the-arm for brick and mortar retailers worldwide. In fact, as of December 2015, the world’s top 8 retailers are conspicuously brick-and- mortar chains, although all have growing online retail operations. While Walmart’s adaptation of tech has been slower than that of some of its rivals, it has also initiated a major focus on its food business, which accounts over 50 per cent of its sales. Expanding the offer on organics and offering customers the choice of order pick-ups are some of the fresh strategies under roll out.
Plus, to show that it is more aligned with 21st century commerce, in December 2015, Walmart became the only US retailer to offer its own payment solution that works with any iOS or Android device, at any checkout lane, and with any major credit, debit, pre-paid or Walmart gift card – all through the Walmart mobile app. The mobile payment feature has now been introduced at all its US stores. While its dominance in the global retailing universe continues, sustaining its leadership — and indeed ensuring its profi table existence — in the Ifuture will clearly depend on how nimbly Walmart navigates the digital commerce space, and how intuitively it evolves beyond the ‘Every Day Low Price’ magnet. The rush to online shopping platforms has been pushing brick-and-mortar retailers to up their game in every conceivable way.
The tools include everything from superior customer engagement and servicing to awe-inspiring in-store environments. And that is driving consumer and lifestyle brands across the globe to design next-generation retail stores embedded with a sense of ‘adventure’, storytelling and stunning tech embellishments; all delivering breathtaking visual and sensory experiences that cannot be replicated on online channels.
Retailers such as Raymond – among others – continue to believe strongly in the physical retail proposition, having opened 43 additional stores in the October 2015-August 2016 period. India needs to deliver evolved, innovation-led retail concepts and experiences that draw not just Indian consumers, but also help boost it as a global retail tourism destination.
Three distinct exhibition areas at IRF 2016 – Retail Concepts Zone, Retail Support Zone, Retail Real Estate Zone – will be showcasing some next-generation retail store differentiation, design and location ideas that can incubate truly market-ahead retail addresses in India. There are some trends that are no longer in the distant future; evidence of intuitive technologies such Internet of Things and Beacons are already being tested by scores of retailers across the globe.
An IRF conference session on ‘5 Future Trends that are Here Today’ promises to engage delegates with a live audio visual demonstration.
Among other highlights at the two-day event will be the IRF Rising Star Challenge, presented by Tommy Hilfiger. An undeniable annual highlight of the event, the Challenge will feature over two dozen B-schools from across India, including Indian institute of Management, Indian School of Business, NIFT, Symbiosis Institute of Business Management, among others. Over a hundred teams will be presenting viable but out-of-the-box retail concepts to the industry’s who’s who.
Read: IRF 2016 Rising Star Challenge: Battle of retail’s smartest prodigies
The event will culminate with what can be called Indian retail’s biggest night – the IMAGES Retail Awards 2016 ceremony, recognising excellence in the business through over 20 honours for retailers and professionals across Categories.
With Inputs by Mehak Sharma

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