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Retailers in India and across the globe are realising the importance of being present across all retail channels and formats. With decreasing brand loyalty amongst consumers and an increasing number of available options, the bargaining power resides with the consumer.In order to tap into this increasingly affluent and newly-empowered consumer base, retailers will need to have a presence across all channels.
The concept of omni-presence in retail is a global phenomenon, with the prime objective of reaching as many consumers as possible. On 3 November 2015, Amazon opened its first completely offline book store in Seattle. A similar trend is increasingly evident across many countries around the world, where online retailers are going offline and vice versa. Omni-presence is expected to drive the growth of retailing and help attract not just repeat customers but new ones. The same phenomenon is expected to be utilised by Indian retailers as well, in order to keep up with the empowered consumers.
In the financial year 2014-15, majority of the retailers in India were present across offline, online and mobile platforms. This was observed as retailers wanted to tap into the growing consumer base, who had high disposable income, and low brand loyalty. However, the primary challenge for retailers in 2014-15 was not “how to attract consumers”, but how to attract repeat consumers, when consumers no longer had that loyalty towards a brand or channel.
Over the last 5-7 years, consumers have steadily moved from offline to online shopping. This transition was slow and non-disruptive, which allowed retailers to undergo the change with ease. This made the concept of “small screen viewing” extremely important even for well-established brick and mortar retailers, who traditionally considered the online media not so important. Retailers such as Tata’s Croma, Bata, Metro Shoes and Aditya Birla’s fashion and lifestyle companies, amongst many others, launched online portals between 2012 and 2014.
Any successful retailer in India will already be present in more than one channel. Big conglomerates in India, that were essentially traditional retailers such as Tata Group, Aditya Birla Retail Ltd, Titan Company Ltd, Shoppers Stop Ltd, and Future Group, all are present in more than one channel. Reliance Retail Ltd, already present online with its grocery and electronic retail outlet, namely reliancefreshdirect.in and reliancedigital.in, is also planning to enter the channel with its fashion and lifestyle brands in 2016.
Leading retailers such as Lifestyle International Pvt Ltd, Marks and Spencer Reliance India Pvt Ltd, and Avenue Super Marts Ltd, amongst many others are expected to enter other retail channels apart from the ones, in which the retailer is already operational. These retailers are especially expected to make the move, as the concept of omni-presence was picking up quite fast amongst retailers, namely, apparel and footwear, departmental stores and grocery retailers.
As the number of retail options increase, it became difficult for any single retailer to attract new consumer base in a successful manner, which has led to the recent phenomenon where internet retailers started to go offline.
Though consumers were completely comfortable in buying known products online, irrespective of prices, when it came to products which required more attention to details, consumers visit bricks and mortar stores. This was most obvious in the case of electronics and furniture. As a smartphone will be a known product, which will be the same irrespective of the retail channel, consumers were comfortable purchasing even expensive phones online. However, in the case of home décor, where it is important to see the colour, or feel the comfort and appreciate the design in person, consumers tend to prefer an offline furniture store.
Subsequently, non-impulse purchases priced above Rs5,000, are typically bought offline. For these higher-priced items, it remains important to get the touch and feel of the product before committing to what is widely regarded as a high level of expenditure.
Pepperfry.com by Trendsutra Platform Services Pvt Ltd launched its first offline store in Mumbai in December 2014. The company quickly launched its second store in Bangalore in 2015. The move of online stores to offline was common throughout the year. The phenomenon of a pure retailer entering multi-channel or omni-channel has become a popular strategy for online companies to maintain their growth and increase share.
Source: Euromonitor International
The transition is not limited to online retailers going offline. The online retailer Babyoye.com by Mahindra Internet Commerce Pvt Ltd launched its vending machine at Garuda Mall, Bangalore. The company with the help of this new move is now present in more than one retail channel. Furthermore, vending machine allowed the retailer to save on rent and other costs that a full scale store based retail outlet requires, and hence was a more cost efficient move for the company.
Source: Euromonitor International
Due to strong smartphone penetration in India, retailers have started to make mobile applications a key focus for engaging consumers. In May 2015, Myntra.com, one of the leading online apparel retailers, went completely mobile. However, six months after this change, the company is planning to relaunch its mobile website, in order to attract consumers who do not wish to download the application. This move by Myntra re-iterated the importance of omni-presence amongst retailers, as even a successful retailer like Myntra, had to give more than one option to consumers to shop from, otherwise consumers would shop elsewhere.
Amazon, since 2014, has made two attempts to establish an offline presence, with its Kirana Now and Amazon Pick Up services. Though neither of the services performed very well India, in October 2015, the company made a third attempt to enter the offline retail space. Amazon set up assisted shopping points namely “Amazon.in Kendra” in smaller cities and towns in Maharashtra, where consumer with no internet enabled device could go and shop at Amazon, and the product will be delivered at the same store, for the consumer to pick up.
Being present in more than one channel by a retailer was no longer just an added bonus. Omni-presence became a necessity to have a successful business in retail. This trend will grow significantly in the coming year as in 2015 itself, eight out of 10 leading retailers in India had both online and offline presence. Omni-presence is a win-win for both consumers and retailers; it will allow retailers to maintain their consumer base, and consumers to have the best option to buy. Eventually, the war between online/offline stores will no longer exist, as each retailer will have presence in both.