Livemint: August 27, 2015
New Delhi: Nearly 74% of Indian consumers shop across all channels—local retailers, modern trade outlets and online, according to a study by customer marketing firm Hansa Cequity and lobby group Retailers Association of India (RAI). And, modern trade is growing fast, with about 40% of urban shoppers using it regularly, almost twice what it was in 2012.
Released on Wednesday, the omni-channel shopper study shows that a large chunk of Indian consumers still prefers to touch and feel a product before buying despite the fact that e-commerce has made shopping convenient. This is a reason why e-commerce companies are looking at establishing physical stores while brick-and-mortar retailers look to leverage the fast growing e-commerce channel.
According to the study, based on responses from 1,368 consumers across 86 cities, three out of every four shoppers today are comfortable shopping across formats, and have done so in recent weeks. One-third of the consumers surveyed said they have shopped at both physical and online stores of the same retailers, it said.
Kumar Rajagopalan, chief executive officer, RAI, said today customers have multiple options to shop and retailers need to adopt an omni-channel approach to interact with consumers.
Omni-channel is a model that has worked in developed countries like the US.
According to a recent report by AT Kearney, some of the biggest e-commerce companies in the US are brick-and-mortar retailers, and about 90% of the sales happen in stores.
In Australia, omni-channel retailers such as Myer, David Jones, Woolworths and Coles account for 50% of the e-commerce market and are growing at almost double the rate of pure play e-commerce companies.
In the UK, physical retailers such as John Lewis, Tesco and Sainsbury’s are among the biggest online sellers.
Some Indian e-commerce companies have already started adopting an omni-channel strategy.
Flipkart has launched 20 stores in 10 cities. Snapdeal has also announced plans to follow an omni-channel strategy.
On the other hand, brick-and-mortar retailers have started investing in online channels. In September 2014, Future Group said it would invest Rs.100 crore in its omni-channel retail strategy.
According to Abhishek Ganguly, managing director, Puma India, the Indian arm of the German sportswear maker, has started implementing an omni-channel retail strategy in India.
Adidas AG, another German sportswear and apparel maker, is transforming 200 physical outlets into omni-channel stores across India by March 2016, and all 750 by 2017. The firm expects omni-channel to increase its annual revenue by 10-15%, said Abhishek Lal, senior director (e-commerce), Adidas Group India.
According to an April report titled Future of E-Commerce: Uncovering Innovation by the Associated Chambers of Commerce and Industry of India and Deloitte India, the digital commerce market in India is likely to touch $16 billion by the end of 2015 as more people gain access to the Internet and become comfortable with shopping online.
On the other hand, retailers such as Future Group, Shoppers Stop Ltd and Lifestyle International Pvt. Ltd have partnerships with e-commerce companies Amazon, Snapdeal, Myntra and Jabong to reach a wider consumer base, essentially to tap markets where they do not have a physical presence.
According to a February report by property adviser Knight Frank India Pvt. Ltd and RAI, the share of modern trade in retail will slip from 17% in 2013 to 13% in 2019, while that of e-commerce companies will jump from 2% to 11% in the same period.
According to the Hansa Cequity-RAI report, e-commerce has also impacted consumer behaviour.
About 60% of consumers surveyed are asked for personal information while they shop, and about 88% of them are okay sharing personal details with retailers, noted the study.
“Changing consumer behaviour is a key driver of change. With concepts like showrooming and webrooming becoming adopted practices by shoppers, retailers have had to transform themselves and the way the business is run. By leveraging technology, retailers are working to provide outstanding customer service and increased personalization to grab a share of the shopper’s wallet,” added the study.
Almost 96% customers look for product information before shopping, and 76% of them search for it online, the study found.
“As consumers embrace new technologies, the shopping experience has become increasingly sophisticated, enabling new ways for leading retailers to reach their audience. By integrating and aligning channels—stores, e-stores, mobile apps and social media—omni-channel retailing provides a flexible and seamless shopping experience to customers,” said Ajay Kelkar, co-founder and COO, Hansa Cequity.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.