The Retail Industry is going through a massive transformation globally. With changing preferences, way consumers shop has drastically evolved over the past few years. Today, shoppers demand experiences and smart brands are making an honest effort to provide them with that exceptional experience.
In the US, renowned brands like Payless ShoeSource, Gymboree, Shopko – which have failed to reinvent themselves – have become the victim of mass closures and bankruptcy. According to a Coresight Research, in the US year-to-date announced closures have already exceeded the total recorded for the full year 2018.
Coresight Research estimates announced US store closures could reach 12,000 by the end of 2019. So far this year, US retailers have announced 7,888 store closures and 3,239 store openings. This compares to 5,844 closures and 3,258 openings for the full year 2018. Year-to-date, UK retailers have announced 427 store closures and 626 store openings, says research.
Traditional Retail: More Alive Than Ever?
Store closures have indeed outpaced store openings across the US market in recent years. And, yes, retail foot traffic in both mall stores and stand-alone stores has been, and continues to be, on a downward trajectory. It’s also true that the retail landscape is littered with bankruptcies.
Yet, at the same time, Amazon and other digital disruptors had a massive run-up in share in a slew of retail categories. Brands are getting into the retail game themselves and going directly to the consumer.
So, is traditional retail dead? Or is it undergoing a metamorphosis – and more alive than ever?
How Can Businesses Survive the Retail Apocalypse?
While doomsday naysayers are convinced that brick-and-mortar retail is losing its sheen and it’s accurate that malls are working doubly hard to attract customers globally, what is also true is the fact that e-tailers like Amazon are still bullish on opening brick-and-mortar stores. They are placing their bets on personalising consumer experience to bring lustre back to the traditional method of retailing.
Meanwhile, it is also true that traditional retailers – whether ailing or not – have the same opportunities to attract consumers that e-tailers are adopting. They can do this by tweaking their retail strategies and by investing in the right technologies to meet consumer expectations and encourage repeat visits and impulse purchases.
Apart from this, there is plenty of room in the digital economy for traditional retailers, as long as they shift focus from the products they offer to the experiences they provide. They can do this by blending the physical and digital worlds to offer distinct and personalised shopping experiences, regardless of the touchpoint. With an increasing focus on convenience, community, curation and immersion, these retail experiences will become synonymous with the retailer’s differentiated brand promise and, therefore, core to building consumer loyalty and advocacy.
Moreover, they will need to make artificial intelligence (AI) and advanced analytics core operational competencies, capitalise on the combined strength of physical and digital assets, and invest in integrated and adaptive digital platforms that unlock the power of emerging new ecosystems and help to better serve consumers.
Recently, CB Insights outlined some of the trends and technologies that can help retailers to continue to grow:
– Enhance the experience with technology
– Be the right size for your market
– Target new demographics
– Create a new niche
– Repurpose Physical Stores
– Leverage Automation
Understanding the Indian Retail Industry
According to an IBEF Report: “E-commerce is expanding steadily in the country. Customers have the ever-increasing choice of products at the lowest rates. E-commerce is probably creating the biggest revolution in the retail industry, and this trend would continue in the years to come. Retailers should leverage the digital retail channels (e-commerce), which would enable them to spend less money on real estate while reaching out to more customers in Tier II and III cities.”
“It is projected that by 2021 traditional retail will hold a major share of 75 percent, organised retail share will reach 18 percent and e-commerce retail share will reach 7 percent of the total retail market,” says the report.
Point-of-View Of Indian Retailers
Keeping in view the changing retail scenario, Indian retailers shared their points-of-view with IMAGES Retail on what the future holds – a Retail Apocalypse or a Retail Revival…
“Retail will continue to grow, consumption will continue to grow, and the way of doing business will continue to evolve, and we will be a part of it. The three top innovations that are going to change retail going ahead is knowing more and more about the consumer, creating experiences and personalisation through data.”
“There seems to be a temporary blip in the way consumption is happening – whether it is FMCG or its retail per se – but I think it’s going to change. For a country of this size, the way movement is happening in retail development index, we are still in the top few countries in the world. These temporary blips perhaps cannot send a good signal to the market but personally, I’m an optimist and I am sure that we are definitely going to make a come back.”
Krish Iyer, President and CEO, Walmart
“The Indian retail industry has now arrived, whether its brick-and-moral or Omnichannel or pure play e-commerce. In all sense, the sector has really arrived, and it has a long way to go.”
Govind Shrikhande, Retail Mentor and Adviser
“Everyone is talking about the retail apocalypse, but I think retail is getting re-imagined. Every retailer in the retail industry should be looking at creating romance in retail rather than talking about retail being over.”
Vasanth Kumar, Managing Director, Lifestyle International Pvt Ltd
“Retail revival is the direction that India is taking. Retailers have adopted both trends – e-commerce and malls – in a fashionable way, understanding the emerging needs of the consumers. At Landmark Group and Lifestyle, we make sure that we stay in touch with the consumers, be on top of fashion trends at all our stores, also service the online customers well, so that the we will be a part of retail growth and revival as we build the next decade of the of the Indian fashion industry.”
Lalit Agarwal, CMD, V-Mart Retail
“Indian retail is going through an exciting and excellent time. Nothing could be better than this stage where in the next 5 years, the Government is looking at growth of the economy to double what it is today. That is the opportunity that we are trying to catch up. Much of the Indian demographics want to consume, aspire and want to upgrade its lifestyle, so it is time for organised retail to experience an excellent time ahead.”
BS Nagesh, Founder, TRRAIN
“Retail is a continuous effort. It is a momentum which has started to take off and will carry on for years. Yes, ups and downs are are a part of it. If you look at the last 25 years, this is probably the best time when the retail sector is growing and may be in the next 10-15 years you will see the industry becoming much bigger. Some very big players are expected to emerge.
Omnichannel is going to play a big role in retail. Tier II, III and IV cities are going to emerge.
So, anybody who is in retail, do not give up hope. It is a tough time and it requires lot of patience and lot of perseverance. However, there is huge optimism in retail because a lot of people say when a country crosses 2000 per capita, the retail really booms.”
Abhishek Ganguly, Managing Director, Puma
“At present, overall consumer sentiment is a bit low. It is time for retailers to become more efficient and focus on their basics. They should also focus on innovation as innovation is the key to success. This slowdown is not going to last for long. In the next 6-8 months, the retail scenario will definitely change.”
Shailesh Chaturvedi, CEO, Tommy Hilfiger India
“The industry is seeing lot of comoditisation and whenever I see slowdown, it is often led by internal industry factors. When everything looks the same like a commodity – the consumers then wants discount or the channel wants discount, what we believe is to give a differentiated offering to the consumer, the story telling has to be of an international level, and that’s why we have seen fantastic business growth at both Tommy Hilfiger and Calvin Klein in recent times.”
S Ramesh Pothy, Managing Director, Pothys
“The retail industry is growing day-by-day. In my experience of 20 years, there has not been a single year when the retail industry did not grow.
The big-brands that have entered the Indian retail industry have bags full of money, so they are opening stores left-right-and-centre and after opening the stores they realise that a few of the markets are not doing well for them. If they do a proper market study before opening the stores, then the number of store closures will definitely come down. It is not an apocalypse, rather it is a correction that they are doing.
The spending power of consumers is growing, and the economy is also growing. As a retailer, we are experiencing the growth every year.”
Vijay Jain, CEO, Ritu Kumar
“The opportunities in retail are very large. We are very fortunate that we are witnessing this time. It is going to be a defining moment in the next 5 years for Indian retail. We just need to reinvent a lot of things that we have known in the past and technology will be a big growth driver.”
“At present, the retail is going through both – bad phase and good phase. There is a bad phase because sales are down, but the market has become so big that if somebody makes an effort and sells good products at good prices, s/he can increase the sales anytime.
A shake down in expected in next couple of years and it is going to be really tough for all those who do not buck up with time.”
Sagar Daryani, Co-founder and CEO, Wow! Momo
“Retail is all about consumerism and India being a consumer-oriented country, we are right at the cusp of growth. Retail thrives on consumerism and our consumer is our biggest strength. I don’t see it is slowing down. I am very bullish about the Indian retail market.”
Sahil Malik, CEO, Da Milano
“It is definitively revival time for Indian retail. This festive season, the brands with great product and presence are going to experience huge spur in demand.”