As we stand on the cusp of a new year, and we think back on the year that is gone, we realize that the predicted retail apocalypse never came. And we wonder why. Sure, at least a dozen international retailers declared bankruptcy this year and some even shut down. J.C. Penney, RadioShack, Macy’s and Sears announced large numbers of store closures. Sports Authority went out of business, and Toys “R” Us, which is $4.9 billion in debt, filed for bankruptcy.
Shopping malls were purportedly an endangered lot in the year gone past due to these closures and with the advent of e-commerce. 2017 was the year of the death of brick-and-mortar. Or was it?
Despite many international setbacks, traditional retail continues to survive – and even thrive – in our country. So, what happened? We’ll tell you what happened. Overall retail spending continued to grow steadily in 2017. The face of shopping may have changed some with too many malls, and e-commerce, but the fact of the matter is that physical stores represent the overwhelming majority of all sales, and will continue to do so for decades – especially in the Indian retail scenario.
The Indian Retail Industry – one of the most dynamic in the world – is growing at a pace faster than ever before. It accounts for over 10 percent of the country’s GDP and around 8 percent of the employment, making India the world’s fifth-largest global destination in the retail space.
The sheer size of the Indian market, penetration of the Internet, rapid urbanization and an affluent middle class leading to booming consumption rates has shown immense potential in as far as the retail industry is concerned –for Indian retailers, international brands and e-commerce portals alike.
Here’s Indiaretailing.com’s rundown of how 2017 shaped the face of Indian retail – and what to expect in 2018
The E-Commerce Boom
E-tailers grew significantly to tap the burgeoning online audience through offers and innovations including easy accessibility and affordability. And although Flipkart was at the top of the online game with the highest top-of-mind recall among consumers, Amazon has been closing the gap fast, and both companies are preparing to go to war with Alibaba, which is all set to tap the serious potential of the Indian market.
But despite this zooming growth chart of e-retail, online giants want physical stores. Amazon, Google – they are all branching out to the traditional. Looking at the trend, we strongly feel 2018 will be the year when Omnichannel will come of age.
2018: The Year of Omnichannel
While 2017 was all about the e-commerce boom in India, I strongly feel 2018 will be the year when brick-and-mortar emerges victorious, for after all, while Internet may have penetrated the heart of India, the hearts of Indians (and their trust) still lies with the physical retailer. In fact, a recent AT Kearney study states that 95 per cent of all retail sales are captured by retailers with a brick-and-mortar presence while two-thirds of consumers who purchase online use the store before or after the transaction. So, we foresee a union of offline and online in 2018.
There will be no such thing as online vs offline experience. There will be a single touchpoint, focusing on the consumer. Offline stores will become extensions of online businesses and vice versa, with traditional retailers tying up with bigger, horizontal players to extend their brand reach.
Take for example Future Group CEO Kishore Biyani, who is a firm believer in brick-and-mortar retail and has a digital strategy based on the same.
He feels that there will be no competition between channels in the future since all mediums of sale will converge. In keeping with the same, the Future Group has unveiled a 30-year vision, Retail 3.0, by when it plans to become Asia’s largest integrated consumer retailer by 2047 with revenue of in excess of $1 trillion.
In his quest for reaching more consumers, Biyani is taking over regional retail brands to strengthen his store network in India. He has already successfully expanded his grocery retail footprint in the country – the latest in his line of acquisitions being Hypercity – the grocery chain which was a perfect example of what can go wrong when a retailer doesn’t understand the perils of not having an Omnichannel strategy.
It is retailers who understand the significance of, and adapt to, channel-agnostic and seamless commerce to try and better serve the consumer who will thrive and be the future of retail in 2018 – nationally and internationally.
A prime international example of this is the takeover of Whole Foods by Amazon Inc. The Amazon-Whole Foods merger will force companies like Target and Walmart to figure out a new model of grocery delivery – including online ordering, delivery and drive and pick up. Indian retailers too are growing up to the challenge, with many of them being hired by international brands in high positions like Sanjeev Mohanty – who has been promoted from MD & SVP, Levi Strauss South Asia to Managing Director & SVP – South Asia, Middle East & North Africa.
2017 was a monumental year for India, as it surpassed China to secure the top position among 30 developing countries on ease of doing business, on the back of a rapidly expanding economy, and relaxation of FDI rules. In the past year, the Government has allowed 100 per cent foreign ownership in B2B e-commerce businesses and for retailers that sell food products.
This was a watershed year in the retail real estate industry too, especially with the roll-out of game-changing policies by the Government such as GST and RERA. Government efforts to boost cashless payments and reform indirect taxation with a nationwide goods and services tax were a virtual red carpet for foreign retailers, welcoming them to India.
The Age of Technology
And then come the biggest disrupters of them all for the year 2017 – consumer data and technology. These disruptions took retail towards a new phase of growth where consumer experience was the focal concern for all retailers and brands. The use of smartphones, apps, web, social media led to a boost in Omnichannel retail and as a result, brands increased spend on digital marketing.
When we reflect back at retail in 2017, we see that a large part of the sector was dominated by new and exciting technologies like Virtual Reality, and Artificial Intelligence, and with good reason. The rise of AI will allow retailers to run targeted campaigns and market their products a lot more effectively using data analytics. Companies and brands will understand where their consumers will be and target them specifically through the channels that they are consuming.
Apart from this, robotics, drone deliveries, anti-fraud tools, bitcoin and blockchain like technologies took the retail industry by storm.
With tech-savvy retailers on the lookout for new ways to connect with consumers all the time, we look forward to more innovations in 2018, and technologies that will change the way we know retail.
Happy New Year … We wish the retail community more empowerment in 2018.