Why retailers must be omnipresent, all knowing and all wise
The future of retail may no longer be about retail. It could be about being omniscient, omnipresent and always wise
For most retailers and e-tailers, the buzzword for the past 2-3 years has been omni-channel, or allowing consumers to click and shop online or on a mobile app as well as in-store seamlessly.
So, e-tailers like Pepperfry, Urban Ladder, Nykaa, Zivame and Myntra have in the past couple of years opened retail stores. At the same time, retailers like Shoppers Stop Ltd and Kishore Biyani-led Future Group have partnered with e-tailers to launch their own e-commerce portals.
The journey has not been smooth. Aditya Birla Group recently exited its online venture Abof.com in less than two years of launch. Even the Future Group is undecided on its omni-channel strategy.
The group partnered with Amazon, and later switched to Paytm and even made an acquisition in the online furniture space. It’s even made a couple of attempts at going omni-channel on its own.
However, the results are yet to be seen. For Tata Group’s electronics retail business Infiniti Retail Ltd which runs Croma, online sales account for less than 0.5% of overall sales. For Future Group, it’s less than 1% and for Shoppers Stop, 1.2%. Likewise for most e-tailers, sales from brick-and-mortar stores is minimal right now.
This, though, is just one half of the story. The reason a presence across different platforms like web, mobile and stores is required is due to the influence they wield on each other.
For Future Group, 7-8% of its total sales is from consumers who have visited it online and bought at the store subsequently. In categories like electronics, it’s much higher.
Nearly half of the consumers buying at Croma have visited the retailer’s website, says Ritesh Ghosal, chief marketing officer, Croma. Croma’s omni-channel strategy includes its website directing people to visit the nearest Croma store. This allows the retailer to differentiate from e-tailers like Flipkart and Amazon and also up-sell and cross-sell.
Even when it comes to digital advertising spends, the impact is seen across channels. For every dollar spent on digital advertising, the return is $2 online and $3 on in-store spends, says Govind Shrikhande, managing director, Shoppers Stop.
Additionally, digital’s influence on sales and its contribution to revenues is only going to grow. By 2020, online sales will grow nearly ten-fold to contribute 10% for Shoppers Stop and its influence will be even higher on revenues, at 30-40%, says Shrikhande.
Meanwhile, brick and mortar still constitutes over 90% of overall retail in India. For e-tailers, it is too big an opportunity to miss.
Globally, Amazon has thrown its hat in the ring with the $13.7 billion acquisition of supermarket chain Whole Foods Markets Inc.
In India to, it has been exploring the offline market since 2015. Most recently, it has taken a 5% stake in Shoppers Stop.
Even billionaire Jack Ma’s Alibaba Group Holding Ltd has been growing its retail footprint with investments in department store chain Intime Retail Group Co. and partnerships with electronics chains Suning and Haier.
Yet, even as retailers and e-tailers try to make their businesses omni-channel, the market is changing fast.
Led by digital organisations like Amazon and Alibaba, the quest has moved beyond anywhere, anytime shopping. It includes fulfilling almost each and every need of the consumer. Amazon and Alibaba are not just e-tailers but platforms that are in businesses from retail to media, entertainment and even banking.
They have over the years built the entire ecosystem comprising of logistics, payment and cloud data centres. They are even building expertise in enterprise artificial intelligence, machine learning and blockchain services.
So, for instance, Alibaba Pictures was an investor in Tom Cruise’s Mission: Impossible – Rogue Nation. A group affiliate company Ant Financial Services, which operates online payments platform Alipay, is looking to escalate its use of blockchain technology this year, which would provide its businesses, partners and customers a more trustworthy and reliable way of transacting, according to an April report.
While Amazon’s Dash Button device allows you to refill groceries from its website at the press of a button, its Echo Dot along with virtual assistant Alexa can help you to control the lights in the house, order a pizza online, book an Uber and even order items on its website.
In India, the likely challenger, unsurprisingly, could be Reliance Industries Ltd’s Jio telecom business in which Mukesh Ambani has invested over $30 billion till date.
A late entrant, Jio has already caused much disruption in India’s telecom market. Additionally, group companies have also built might in media, entertainment and retail. However, it is still to be seen how all of these distinct businesses come together.
Given these advances, the future of retail may no longer be about retail. It could be about being omniscient, omnipresent and always wise.
This means knowing each and every need and desire of the consumer and even being able to predict their next purchase. It entails owning the technology and the consumer experience. This though is true for almost every traditional business. After all, getting Amazoned is no longer limited to retail.
Shop Talk will take a weekly look at consumer trends, behaviour and insights.
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