E-tailing success forces traditional retailers to rethink strategy

The phenomenal clip of growth of the e-tailing sector in India is prompting traditional retailers to rethink their strategy and evolve newer models.

E-commerce and e-tail companies have been very successful, but traditional large-format retailers have been trying to compete by pushing discounts and adopting technologies to enhance the in-store experience of customers. Modern retail penetration in the top seven cities of India stood at 19 per cent in 2014, with brick and mortar modern retail at 17 per cent and e-tail a miniscule two per cent, according to Retailers Association of India (RAI)-Knight Frank India report which estimated that e-tail market spending will grow several-fold from Rs.7,200 crore to Rs. 83,900 crore by 2019. “The role of physical store will continue to evolve into a sleeker, more customised and less transactional model,” Rachna Nath, Retail and Consumer Leader, PwC India, said. “As online shopping continues to grow at the expense of store visits, the premium in the future will be on creating unique, brand-defining store experiences that keep customers coming back for more.”

Success of online marketplaces has put the onus on brick-and-mortar retailers to reinvent their business models. “The current wave of disruption will push stores to reshape not just strategies but also customer orientation,” Kumar Rajagopalan, CEO, RAI, told this correspondent, adding that retailers had accepted the potential of e-commerce and would adapt to it in various ways.

Multi-channel is the way forward. “E-tailing is both an opportunity and threat for retailers. Customers now expect the anytime-anywhere of online and the touch-and-feel of products, service excellence and the personal touch of retail,” he said.

Retailers seek level-field in budget

Today, traditional retailers feel the need for a level-playing field between them and e-commerce players. Most e-tailers are market places and yet have the benefit of foreign direct investment (FDI), which, retailers feel needs to be clarified.

“FDI in retail has been hotly debated, and India is the only country that distinguishes retail by brands (multi and single brand),” Mr. Rajagopalan said adding that there was a need to create a retail policy “that addresses FDI in such a way that it creates a level-playing field and hopefully, this year’s budget will give a direction for a more healthy internal trade policy.”

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