By the end of 2018, even though the global online retail sales surpassed US $2.8 trillion, more than 82 percent of overall sales still happened via brick-and-mortar stores. In India, the e-commerce contribution to the overall retail sales is still barely at 5 percent. However, according to a report by brokerage firm Jefferies, for organised retail the figure is currently 25 percent of the overall market, and this is expected to jump to 37 percent by 2030.
According to the same report, online retail market in the country will touch US $170 billion amounting to 8 percent of the overall retail, growing at a CAGR of 21 percent – higher than the growth of offline retailers during the same period. Despite this, and even as pure-play physical retailers are going Omnichannel for consumer convenience, introducing features like click-and-collect, endless aisles etc. – pure-play e-commerce players are investing into brick-and-mortar network.
Online Retailers in the Offline Space
Look closely at online retailers in the country who decided to expand their capabilities to physical stores, and you will notice that they are spread across a wide spectrum of retail segments.
It is interesting to note that in a country like India, where organised retail amounts to just about 20 percent of overall retail, the last decade has been a breeding period of e-commerce brands who have come to trade in categories which have been dominated by unorganised players – think Lenskart in eyewear, Pepperfry and Urbanladder in furniture, Caratlane in jewellery, Nykaa in beauty, Zivame in lingerie and so on.
These clicks-to-bricks brands had the advantage of closely mapping customers online and used their most successful private labels – as per data available with them – to open offline stores. For example, Myntra went with Roadster and Faballey chose Indya when they decided to launch physical stores.
While digital-first brands have entered the fray with a deep consumer understanding and shopper data – something which offline-first retailers are still striving to achieve – but are they really in tune when it comes to creating a wholesome customer-centric brick-and-mortar experience? While their entry to offline space is carefully timed and their brand story is already registered in shoppers’ minds through online channels, what are these clicks-to-bricks brands learning in terms of store experience?
Store Format – Shrinking to Grow
Reaching upon a store strength beyond 20 or so, most digital-first retailers are choosing categories to deliberate upon their store formats.
Take for example Nykaa, which jumped on to the clicks-to-bricks bandwagon much before most had even thought of it in India. The multi-brand beauty retailer clearly demarcated its store formats – Nykaa on Trend and Nykaa Luxe.
Typically, Nykaa on Trend stores span across 500 sq.ft., offer the brand’s 1,000 top selling products. Meanwhile Nykaa Luxe stores are almost double the size of Nykaa on Trend, have more premium offerings, most of them international bestsellers.
Often times, these brands carve larger, experiential formats for their debut stores and often times, for the metro cities but an expansion beyond metros usually calls for leaner formats.
Once known for launching 100 stores in 100 days, organised eyewear major Lenskart chose a store model, Lenskart Lite, to expedite rollout in smaller towns.
This format was lean and profitable and was mostly based on plug-and-play fixtures. Turnaround time here was as brief as taking just a few days to build a store. Later, Lenskart – which is now selling approximately 30,000 spectacles everyday and enjoys a whopping 70 percent sales from the offline route – also came up with a premium store setting for its upmarket private label, John Jacobs. Ambient lighting, a smart mix of metal and wooden fixtures became the talking point of the store design, although it carried Lenskart’s brand ethos carefully.
Aside from Lenskart, two iconic Indian Omnichannel furniture retailers, Urban Ladder and Pepperfry, shrunk their store sizes to grow their network. Pepperfry recently emphasised on their mattress category with a much smaller studio format – Pepperfry Snooze.
Fitting the Brand’s Design Narrative
After garnering much comfort and love in the online space, when fashion retailer The Label Life came into store existence last year in Mumbai, the idea was to actively interact with customers in the physical space and one of a few learnings that the brand woke up to was that the store design was too formal and premium for their customers’ understanding.
Preeta Sukhtankar, Founder, The Label Life, 30 percent of whose overall business comes from offline channels, says, “Our first store in Mumbai was a high street location and it was way too premium for our price point. Since most of the customers who walked into the store were already familiar with the brand, we missed that personal connect through our store design. Therefore, in our new store in Select Citywalk, Delhi, we have added various personalised elements like social media inspirations, postcards made by customers etc. for a different experience.”
Most of these brands, though very certain of their customer preferences, usually take a few stores to lock into their uniform design ID.
Only couple of years old into the clicks-to-bricks journey, lifestyle brand Vajor, with 4 physical stores in existence, is already clocking 65-70 percent of its overall business offline. Founder Natasha AR Kumar shares, “With category expansion and aggressive interaction with customers, we are still refreshing our store design with each new store that we launch.” Bringing the Visual Story from Online to Offline
Online Visual Merchandising (VM) may have been easy to create, but, often times, the offline VM is also continuous learning process for lot of these clicks-to-bricks brands.
As per Nishant Gupta, VP – Marketing, Urban Ladder, “In terms of Visual Merchandising, the earlier format that we used to follow was a vertical layout of our products. After observing how this layout was working in the store, we decided to change it up. We switched the layout to showcase a mini-living room.
This attracted many more customers and showcased how our products looked in the overall picture. In terms of visual merchandising, we first started by incorporating many items that were not for sale. These elements helped to brighten the space and create a certain mood. Soon after, we began selling these elements thereby increasing our return per sq. ft. We also altered how we displayed our window merchandising. We incorporated a living room setting in a narrow space.”
Interestingly, these clicks-to-bricks brands are creating their visual story as independent offline brands and many a times, influenced independently by the physical retail data.
With close to 60 stores in their network, Caratlane went a few notches above what physical-first brands usually do with their series of kinetic windows.
“We took the kinetic approach only over a year ago and it’s still an experimental approach. We are currently doing kinetic windows at 25 percent of our stores, which are mostly located at metro markets,” explains Radhika McGregor, VP – VM & Projects, Caratlane.
The Tech (Dis) Connect
The popular notion is that when online stores embark on an offline journey, in-store tech touch-points almost become indispensable. E-commerce behemoth Myntra proved this wrong with their store, Roadster Go, which blends fashion and tech to form a winning combination. Roadster’s 3,200 sq. ft., fully-RFID-enabled store in Bengaluru is a perfect example of this.
However, while Myntra may have struck technology gold with Roadster Go, investing highly on in-store technology is not proving to be an ROI-friendly model for many retailers.
For example, Urban Ladder launched a Virtual Reality technology concept in their first flagship in Bengaluru, but it turned out to be difficult to actually make that technology accessible in such a large format and high footfall store.
On the other hand, for smaller stores, where footfall is lower, but every walk-in has a bigger ticket value, people actually have the time and inclination to invest that time in tinkering with in-store technology since they walk in with the intent of buying. Upon building similar technology in small format stores, Urban Ladder is, today, enjoying 60-65 percent conversion rates.
All in all, many digital-first retailers have accepted that heavy in-store technology often ends up looking gimmicky. While in-store technology is today largely reduced to tablet screens, retailers are all talking about how to invest into more profound technology which adds ‘value’ for both retailers and shoppers.