Traditional brick-and-mortar stores should revisit their business models keeping the customer at the core, in order to stay relevant. This year, my pre-Diwali shopping turned out to be a pleasant experience— considering that I did not have to wait in a long queue at the billing counter. I was in and out of a popular national department store in an upmarket Mumbai suburb in less than 45 minutes.

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COVER
STORY
T
his year, my pre-Diwali
shopping turned out to be
a pleasant experience—
considering that I did not
have to wait in a long queue
at the billing counter. I was in
and out of a popular national
department store in an upmarket Mumbai suburb
in less than 45 minutes.While I was happy with the
experience, it also set me thinking on the changes
that were taking place, especially in retail in India.
While the change is largely being driven by
technology, the emergence of the 24/7 culture
and a large youth population willing to spend have
fuelled the demand for many products and services.
The country has also witnessed a new breed of
entrepreneurs, and startups which are garnering
Awake-upcall
Traditional brick-and-mortar stores should revisit their business models keeping the customer at the
core, in order to stay relevant.
SWAPNA PRADHAN, WELINGKAR INSTITUTE OF MANAGEMENT DEVELOPMENT
AND RESEARCH
record venture capital investments and increased
valuations. In an age of constant connectivity and
social media influence, retail to say the least is being
revolutionised and for once the consumer is actually
emerging as the king.
E-commerce is not new to the country and it
was in the late 1990s that one first encountered
online trading in India. Companies such as Rediff,
Indiatimes, Indiaplaza, and Fabmart were among
the first ones to sell products online.Their efforts
met with limited success due to the lack of internet
penetration and poor infrastructure (payment
gateways/logistics, etc). In fact, IRCTC,
www.irctc.co.in, launched in 2002, had
booked merely 27 tickets on the first day of
commencement of its e-ticketing service.Today,
it is among the largest in the country with more

2. I N D I A N M A N A G E M E N T D E C E M B E R 2 0 1 5 15
will overtake the US (as the second-largest base).
The increased availability of smartphones across
price bands and competitive mobile internet tariffs
have helped increase usage.We have moved from
using mobile internets for music downloads only
to paying bills for utilities, taxis, and restaurants.
E-commerce companies such as Flipkart, Jabong,
andYepme as well as leading banks have introduced
mobile versions of their websites. Similarly, the
Immediate Payment Service (IMPS), an initiative
of the National Payments Corporation of India,
allows bank customers to use mobile instruments
as a channel for accessing their bank accounts and
remitting funds and making payments simple.2
Not so long ago, a key challenge faced by
online retailers was that of trust—this was with
reference to the customer’s unwillingness to
than four lakh bookings per day
in terms of online ticketing,
leaving behind several high-profile
e-commerce sites worldwide1
.
Between 2010 and 2015,
internet penetration in India
underwent a phenomenal change—while internet
in India took more than a decade to grow from 10
million to 100 million and three years to reach 200
million from 100 million, it took only a year to
move from 300 to 400 million users.The number
of internet users in the country is expected to
reach 402 million by December 2015, registering
a growth of 49% over last year, according to a
report by industry body IAMAI.At present, India
has the third-largest internet user base in the
world but it is estimated that by December, it
©shutterstock.com
Not so long ago, a
key challenge faced
by online retailers
was that of trust.

3. reveal his/her credit card details.
The online retailers came up
with the option of cash-on-
delivery to deal with this.They
also started offering discounts
on certain product categories
and a 30-day replacement
policy was introduced to gain
customer trust.The cash–on–delivery option was
a pioneering move in online retail and remains the
most popular payment option to this day.
The convenience of buying after comparing the
products online, avoiding the hassle of travelling,
and the ability to buy even at midnight were
among the key factors that have enabled the
acceptance of e- and m-commerce. Retailers such
as Flipkart,Amazon, and Snapdeal, to name a few,
are constantly creating a buzz around product
categories and enticing people to buy. Moreover,
a price discount in the form of cashback is often
on the cards. Initiatives such as the Great Online
Shopping Festival (GOSF) and Flipkart’s much-
awaited‘Big Billion Day’ have helped keep the buzz
alive.This year, the‘Big Billion Sale’ was a five-day-
long app-only shopping event for customers to
avail themselves of exciting offers and unbeatable
discounts across 70+ product categories. Unlike
2014, when the sale was for a day (October 6)
through its portal, which the company claimed
had a billion hits, in 2015 the sale was extended
to five days to celebrate the ensuing festive season.
Having faced flak last year for operational glitches,
the company had started planning six months in
advance in terms of products, offers, and supply
chain.Amazon registered four times the sales
during the 2015 festive season, compared with the
corresponding period last year.The company has
had on offer 40,000 products a day on its platform
so far this year, and the number of sellers has grown
more than 250% year-on-year.As part of its Diwali
sale, it rolled out new deals every 30 minutes across
categories.This was a welcome change for many a
customer who did not feel like a king in many retail
stores which offered loyalty cards only on the basis
of what you had purchased in the previous year.
If for some reason you chose to buy from another
This was a welcome
change for many a
customer who did not
feel like a king in many
retail stores.
©shutterstock.com

4. Showrooming and
webrooming are here to
stay and customers will
shop around even if they
have a store loyalty card.
RETAIL
REINVENT
©shutterstock.com
Swapna Pradhan,
Professor-Retail
Management,
Welingkar Institute
of Management
Development &
Research.
ABOUT THE AUTHOR
store and your points did not add
up, you actually ceased to be a
privileged customer!
The acceptance of e- and
m-commerce by customers
has served as a wake-up call,
and many are now looking at
integrating the two and moving
towards omni-channel.While many of them
operated websites to sell products online, there
was lack of integration between the brick-and-
mortar and online interface. Most have today
realised the need for an integrated approach and
are moving towards it. Brick-and-mortar retailers
are also consolidating and hiving off product
categories and businesses that are unviable.
For example, recently theAditya Birla Group
announced the consolidation of all its branded
apparel businesses under one company; similarly,
Bharti Retail announced plans to merge with the
retail operations of Future Retail.A few others
such as department store chain Shoppers Stop
Limited have moved to selling their products
in the online marketplace Snapdeal in all north
Indian cities where it has a presence, apart from its
own website. It also sells its private label brands
onAmazon, Flipkart, and some other e-commerce
companies.According to the management, this
partnership is in line with Shopper Stop’s so-called
omni-channel retail strategy and its objective of
increasing its online sales to 10% from the present
1%. It has also launched an augmented reality-
based dressing room, the Magic Mirror—while
this is not new to the world, it is a first of its kind
in India. It is an intelligent photo booth that gives
customers the option to select and view apparel
and accessories on themselves without having to
physically‘try on’ the desired products.
Consumer electronics companies such as LG,
Samsung,Videocon, Sony, and Panasonic, which
were up in arms against online retail’s deep
discounts, are now instructing their trade partners
that products sold through online marketplaces
without their knowledge during flash sales would
not get the benefit of after-sale service and
warranties.They are also talking to e-commerce
players, persuading them to be fair in pricing and
not to go for discounts unfair to physical stores.3
Most brick-and-mortar retailers need to wake
up to the impact of e-commerce and need to focus
on a consumer-centric business model. Retailers
need to recognise that the customer is now in
control. Showrooming and webrooming are here
to stay and customers will shop around even
if they have a store loyalty card. It is no longer
about understanding what they are buying, but
about realising that they are buying elsewhere.
Many are exiting unviable product categories,
rightsizing stores, increasing focus on private
labels, undertaking cluster-based store expansion,
and revisiting their business strategy, adopting an
omni-channel approach. In the years to come,
retailers will have to focus on the long-term
horizon and also deal with pressures on margins,
market saturation, ageing of the population, and
the emergence of newer channels of reaching the
consumer.The next ten years will undoubtedly
hold even more challenges than the last decade.
1 http://www.iamwire.com/2011/11/irctc-face-of-e-ticket-in-
india/1862.
2 http://www.npci.org.in/aboutimps.aspx.
3 Will e-commerce overtake physical retail? Business Standard,
November 13, 2014.
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