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Indian consumer behaviour towards online raises marketing spends over mall lease rentals

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Indian brands outspent on their marketing campaigns compared to their lease rentals incurred on shopping malls as online sales or D2C (direct to consumer) is seen increasingly becoming dominant in the retail space of Asia’s third largest economy, according to a cross-section of industry experts.

At the concluding session of the two-day Phygital Retail Convention, Inorbit Mall CEO Rajneesh Mahajan pointed out that brands were seen incurring 27-38% spend on marketing while lease rental spend at shopping malls was 18% of the topline.

The significant shift in the Indian consumer shopping behaviour tilted towards online buying during COVID-19 and post-pandemic has also seen a drop in discount offers.

The lower lease rentals in the mall are also a result of increased preference for high street over shopping malls.

Neerav Sejpal, vice-president, Spencer’s and Nature Basket pointed out that 60 % of their physical presence was on high street and the balance at shopping malls.

Similarly, wow Momo, which has close to 500 outlets across several cities, spends higher on food aggregators compared to 25 percent of the revenue on food courts.

Another key trend reversal seen in the physical to online movement is seen in the discount space. 

“Consumers are no longer looking for discounts and our discounts offers have dropped to 20 percent from 33 percent earlier,” said Tarun Vashistha, country head – retail business development at Aditya Birla Fashions, adding that two of their brands have already started experience with metaverse.

All is not lost for physical retail. Nykaa has moved from digital to brick and mortar and has seen an increase in its sales while Salt Attire – an online apparel brand is planning three physical stores with intention to add another 5-6 stores, industry experts said.

Earlier, at the convention, experts pointed out that India’s merchandise retail is set to undergo a paradigm shift in the next decade with the introduction of 5G network and rising per capita income of Indians in sync with the surging economy over the next decade.

Speaking at the inaugural session of the two-day Phygital Retail Convention, Arvind Singhal, Chairman, Technopak – a management consulting firm said, “Open Network for Digital Commerce will be the biggest transformation in Indian retail as the 5G network penetrates and facilitates product discovery much faster.”

India is also set to become the second largest e-commerce market by 2034 globally from its current ninth rank led by increased internet penetration, said Akshay Gulati, Co-founder, Shiprocket – a logistics software platform.

“By 2030, 1.3 billion Indians will have access to the internet and smart phones with 500 million online shoppers,” Gulati said at the convention.


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