Given the current trend in retail marketing, a winning strategy should be adopt all the channels in order to increase the basket size and revenues, suggests Shipra Bansal, Senior Manager – Consulting & Strategy, Francorp
Over the past few years, the retail sector in India has undergone a tremendous change with the advent of smartphone, increasing urbanisation and growing per capita income. This has prompted the traditionally unorganized Indian retail sector to move towards online and organized retail. The customer today is more aware of his or her needs, is brand aware, and shops for the preferred brand through multiple mediums. In the next five years, organized retail in India is expected to grow at a CAGR of 32%, which is four times more than the pace at which the overall Indian retail market is expected to grow. And online retail is expected to grow at a whopping rate of 63%, although it has a low base.
In the current environment, it is imperative for retailers to not just be present in one medium but offer a holistic experience to their customers. It is the right time for Indian retailers to adopt omnichannel strategies – such as Click-n-Collect – and implement them on a large scale to reap their return on investment (ROI) benefits. Multi-brand outlets like Lifestyle have started offering services supporting their online platform – ‘purchase online and collect offline at the stores’. This concept not just helps increase revenues from the online medium, which is increasingly becoming a much popular shopping medium, but also ensures effective payment queue management during a busy discount season.
Also, in online retail, fulfillment cost, i.e. cost associated with packaging, shipping and delivering product to customer, is very high (15-25% of the revenues) and is a major reason why none of the e-commerce players are able to achieve positive operating margins; fulfillment cost will dramatically reduce if you persuade your customers to buy online but collect in person from a store. The added bonus of this approach is that the basket size often increases, as customers purchase additional items when collecting their order-in-store.
Adopt New Technologies
Retailers have also started to explore certain new concepts as well, such as ‘Endless Aisle’. Adidas, Reebok and Max have recently equipped their stores with iPads under the aegis of this new technology so that shoppers can browse and order for items that are not in stock at the physical stores. In conclusion, one may say that omnichannel strategy offers a win-win situation for both customers and the franchisee retailers in the market.
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