by Soumik Ghosh

How Retail Can Prevail in 2016

Jan 27, 2016
BudgetingBusinessE-commerce Services

The verdict’s out: The Retail sector will never fizzle out. But with E-Comm going all guns blazing, Retail can do more than just seeking a bomb shelter. It can win. 

Retail in India has historically been a market dominated by small ‘kiraanas’ – our version of ‘Mom & Pop stores’.

A smart learner, the retail segment marched in tandem with technology, adapting quickly. Over the years, this evolved into what we call “Organized Retail” – A term that promptly conjures up images of stores and supermarkets in the minds of the average city-dweller.

Now here’s a curve-ball: Organized retail contributes to only eight percent of total retail-related activity in the country.

So, our understanding of the retail segment is restricted to barely a tenth of the country’s population. Over the last decade, urbanization has created a second, sub-segment – the ‘independent modernizing retailer’. These are either family-owned or entrepreneurs who have upgraded and modernized their stores. They now form the third segment, sort of ‘under-the-radar’, true, but significant enough for FMCG majors to take notice.

These independent retailers combine the shopping experience of their larger so called ‘organized’ counterparts and the convenience of value added services (like home delivery, or loyalty programs).

Bolt From the Blue

Less than seven years ago, a new kid on the block came along and changed the entire concept of shopping as we know it – E-Commerce. A David-takes-on-Goliath scene ensued, and the underdog gave the dominator a run for its money.

With the influx of smartphones and greater number of internet users in the country, digital devices’ influence on in-store purchases is expected to grow significantly, highlighting the need for retailers to adopt an omni-channel strategy.

The key to survival, however, is for ‘brick & mortar’ businesses and e-commerce to co-exist. Both channels ought to continue to complement each other.

“If a retailer decides to be present across channels for the customer (omni-channel), leaving the choice to the customer as to which channel he prefers to shop from,” believes Vidya Laxman, Director of Technology – Tesco HSC.

In many respects, the continued growth of e-commerce is likely to depend on goods consistently arriving on consumers’ doorsteps on time and at the right price, this challenge is not existing for ‘brick and mortar’ stores. This would continue to remain one major challenge for growth of E-Commerce and opportunity to traditional retail.