Indian E-commerce baby is just 5 years old and is already running sprint. Online commerce is giving sleepless nights to the brick & mortar daddy and if things continue with the same pace, it will not be surprising to see many old players breathing heavy even before the finish line.
The growth story of e-commerce industry in India is one that of a celluloid. The current market size is approx. $20 billion and need not to say, it’s just the beginning! The industry is poised to grow 36% in next 5 years.
In contrast, shopping malls are suffering from lesser footfalls leading to around 25% vacancy rate, along with a 30% drop in rentals in the last one year, according to the study. It is observed that the trend in Indian malls is in line with the declining number of footfalls in retail space in over 200 shopping malls across the US, the UK and other countries. In the US, malls are facing a 46% vacancy rate whereas it stands at 32% in the UK.
There are tectonic shifts that happen once in a few decades. Digital commerce surely is one of them, matched only by the telecom revolution 10 years ago that connected corners of our country like never before.
If one were to hear it on the grapevine, people have already written off the physical retail. But is it really over for the retail industry in India? While even the biggest sceptics are not ringing the death knell of the physical stores, the cheese has clearly moved for this industry.
I believe for retail industry, Elvis has not yet left the building. Retail industry can turn the tables around; they just have to re-invent their game.
It’s important for the physical store retailers to understand the reason behind the changing behaviours .The E-commerce industry is playing the trump card of convenience. Hell Yes, online shopping is convenient; you can buy almost anything under the sun while sipping cardamom tea and watching ‘Diya Aur Baati Hum’ in your living room.
But the joker in this game can be ‘experience’. No matter how hard an e-commerce company can try to make the experience better, they will not be able to match that of physical store. And if brick & mortar players can play their ‘experience’ card right, it would be a Perfect Trail.
It would be interesting to see few industries where experience plays to the gallery and where retail players can draw a leaf out of the book :
1. Movie Industry: In spite of the convenience of watching movies on TV, CDs, DVDs and Online streaming, the experience of watching in Multiplexes ( or single screen ) hasn’t faded. In fact, multiplexes are growing at a very healthy rate in India.
2. Food/Drinks: The way Indian restaurant industry is experimenting with various themes and formats; the experience of dining out has gone to the next level and cannot be eclipsed by the convenience of home delivery.
The retails stores will have to be ahead of the curve when it comes to building a new retail model that addresses the new consumer demands and create great experiences.
Imagine walking into your favourite sports shoe brand store, and they make you run on a treadmill in a pair of shoes to experience the fit and feel. It would be even more interesting if a running expert can guide you and share running and health tips. Think of another situation where an apparel store has equipped their changing room with various light settings (such as bar/pub, outdoor, wedding etc ) you can select the lighting to check how your outfit is looking in those light settings. Another great example of the retail model of the future is to provide value-added services attached to a product. For example, if a consumer is buying a new phone then the retailer should automatically offer in-store classes to train the consumer on the device.
The retail landscape has changed globally and it is changing in India too. Over a decade ago, it was the large-format stores and malls that redefined the way people shopped in India. People started buying groceries from malls because it was a superior experience as compared to shopping from mom&pop store around the corner. Today, it is the digital platforms that are again creating a natural evolution: how people shop and how businesses sell.
Though the convenience of online shopping looks like the best thing since sliced bread, but can it actually overtake the experience? Your guess is as good as mine.
Written by Mukesh Ghuraiya,Marketing Professional