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Delhi need specialised retail shopping areas

admin

August 1, 2015

KNN Bureau
New Delhi, 1 August 2015

Minister of Industry, Health and Power Government of NCT of Delhi Satyender Jain said Delhi need to have specialised retail shopping zones for different products to enhance the overall shopping experience in the city.

Inaugurating the CII Delhi Retail Summit here on Friday, Jain urged the retailers in Delhi to be more competitive in terms of pricing, which will in turn increase sales for them.

He further stated that the retail in Delhi has a lot of potential, which needs attention in terms of customer satisfaction.

Retail sector in Delhi has potential to grow up to three times even though there is tough competition from the online segment. The city has tremendous scope for growth in the area of health, education and retail sector, he said.

The minister also informed that the state government is planning for infrastructural development to provide competitive price on rental space compared to the neighbouring states to promote retail sector in Delhi.

On the occasion, Past Chairman, CII Delhi State Council, and Executive Director, The Bird Group, Ankur Bhatia said with increase in urban population and changing consumer behaviour, Delhi has a lot to look forward in terms of retailing in the city.

He added that the retail development in the city has largely been scattered with numerous small shopping zones mushrooming all across the city which need to be organized through single ownership for better management and experience. He also emphasized the need for organising an annual Delhi Retail Festival.

He also said that retailing continues to be a good business model across the country and also stressed on the need for single ownership of malls for better management.

The summit also witnessed various leading retailers and institutions coming together for a day, including Head, Ambience Mall, Deepti Goel; Managing Director, STARCENTRES, Pranay Sinha; Managing Director and CEO, Bharti Reality, S K Sayal; Chief Executive Officer of Third Eyesight, Devangshu Dutta; Head of Retail, Unitech Group, Munish Baldev; Chief Executive Officer, Select City Walk, Yogeshwar Sharma; Senior Vice President, DLF Luxury Retail & DLF Promenade, Dinaz Madhukar and Chief Executive Officer, The Beer Café, Rahul Singh were among other eminent speakers at the summit.

(Source: KNN Bureau .)

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Ecommerce, tech companies are the biggest lessors of office space

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July 29, 2015

Ravi Teja Sharma & Rasul Bailay, The Economic Times
New Delhi , 29 July 2015

Riding on the back of humongous investments and rising valuations, ecommerce companies and technology startups outpaced IT/ITeS firms for the first time as the biggest office space taker in the country in the first half of the year.
Companies in this segment leased more than 6 million square feet of office space, or over 35% of the total, according to property research firm Knight Frank. Flipkart leased 3 million sq. ft. in Bengaluru with Embassy Office Parks, Amazon took 1.3 million sq. ft. in Bengaluru, Snapdeal 5 lakh sq. ft. in Gurgaon, Housing.com 1.5 lakh sq. ft. in Mumbai and Zomato recently leased 1.2 lakh sq. ft. in Gurgaon.
"The difference between startups of 1999-2000 dotcom boom and now is that this time these startups have raised large sums and business is actually happening. This is propping up the commercial office space market in India at the moment," said Viral Desai, national director – office agency at Knight Frank India.

The ecommerce industry has attracted large amounts of funding over the past few years. Funding in the sector increased to $4.3 billion in 2014 from $800 million in 2013. In the January-June 2015 period, investors have already put in $1.8 billion in ecommerce companies.

Flipkart has so far raised $3.4 billion in the eight years since it was formed, with the latest $700 million infusion valuing it at $15 billion. Amazon is readying a $5 billion war chest for its Indian operations.

Desai said Bengaluru and Gurgaon are where the most action is from these ecommerce and tech startups.

The money raised by ecommerce companies has been deployed essentially in two places, marketing and backend infrastructure, which includes people, said Devangshu Dutta, chief executive officer of retail consultancy Third Eyesight.

"A lot of them have widened their product portfolio and deepened the markets access and their businesses have grown tremendously. So while we may say it is a technology-based business, the execution of the business is dependent on people to a large extent, in terms of product sourcing and in terms of vendor management, supply chain, customer support, etc. With that growth in the team, it is very natural, and it is also an indication of what they expect in terms of future growth," he said.

(Published in The Economic Times.)

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Flipkart launches 20 stores across India

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July 29, 2015

Sharan Poovanna, Mint
Bengaluru, 29 July 2015

India’s largest e-commerce firm, Flipkart, has launched 20 stores in 10 cities to let its customers collect the items they ordered online at their convenience, mimicking similar moves from Amazon.com Inc.

The initiative aims to address issues such as unavailability of customers during delivery and restricted entry of delivery boys into IT parks, gated communities and educational institutions.

The stores will also be a centrepiece of Flipkart’s rural expansion strategy and will provide a reliable alternative to door delivery in small towns.

“We also plan to offer several value-added services at these experience zones to enhance customer engagement. Services like instant returns, spot trials, open box deliveries and exclusive product demos will also be rolled out in the near future,” said Neeraj Aggarwal, senior director of delivery operations. Flipkart plans to open 100 such stores by March 2016, he said.

The launch, made in partnership with Flipkart’s logistics partner Ekart, comes after the firm saw more than 80% of shipments picked up through the stores during a six-month pilot programme.

The “click and collect” model is not new. Amazon, which has no physical stores, has installed lockers in places ranging from grocery stores to gas stations in several US locations to hold items ordered online. The move improved customer service as it avoided the need for them to have to wait around for ordered items due to a missed delivery.

The first 20 Flipkart “experience” stores will be opened across 20 cities—Bengaluru, Mysore, Ahmedabad, Delhi, Kolkata, Pune, Vellore, Gurgaon, Vadodora and Surat. They will service only Flipkart customers and not those of its Myntra unit. They will be about 500-1,000 sq. ft in size, 70% of which will be used to store goods.

A host of other online chains have also been keen to have some sort of physical presence. FabFurnish, PepperFry, Caratlane and LensKart, among others, already offer offline touchpoints as part of customer engagement efforts.

The trend is here to stay, said Devangshu Dutta, chief executive of retail consultancy Third Eyesight. He expects firms to continue trying to find the right mix of online and physical presence as they look to provide a seamless customer experience.

“Some products are better handled in the physical environment,” said Dutta.

(Published in Mint.)

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Whoever said anti-ageing creams and iPhones are urban fads

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July 20, 2015

Soumonty Kanungo, Daily News & Analysis (DNA)

Mumbai, 20 July 2015

Buying an anti-ageing or anti-wrinkle cream online is no longer an urban phenomenon. A growing number of women from smaller towns are busy placing orders for such products these days, thanks to the increasing rural penetration of e-commerce companies.

If e-retailers are to be believed, customers from tier-3 and tier-4 towns and beyond are growing aspirational and on their shopping lists are products like microwave ovens, dishwashers and high-tech smart phones.

Sridhar Gundaiah, founder and CEO, StoreKing, a Bangalore-based assisted e-commerce company having a large rural and semi-rural target base, told dna, "Around 70% of the country’s $600 billion retail market is in rural belt. People in small towns and villages too are aspirational and have spending power, though the consumption pattern could be different."

The company, which came up with a hybrid model to reach out to rural areas with poor internet connectivity, sells about 100 of anti-ageing creams per day and 100 of microwave ovens per week. Gundaiah said another fast selling product is smartphones, which includes iphones as well.

Expensive smart phones in areas with low net connectivity? Gundaiah says they are mainly purchased for the sake of a good camera. "They want a phone with a good image and video recording option," he said.

Another best selling items are garments. Harish Bijoor, brand-expert & CEO, Harish Bijoor Consults Inc., said, "Rural folk are very excited about two things today – garments of every kind and the mobile phone. Expect this to deepen to adjacent categories very fast."

Thanks to its population and economic development, the small towns and rural India offer a huge growth opportunity which marketers cannot afford to overlook.

Devangshu Dutta, chief executive, Third Eyesight, said, "Rural markets are enormous in terms of population, but there is a supply-side gap in terms of retail stores, brand mix and product range available. E-tailers can expand outreach and create demand among customers who are otherwise under-served."

Ankur Bisen, senior vice-president, retail & consumer products division of Technopak, said, "Nearly 50% of the country’s retail of $589 billion comes from rural India. Right now, the penetration of e-commerce in rural India is zero. So the market opportunity is nearly $300 billion."

In reality, the relevance and fit of the e-commerce model of business, is best attuned for rural markets, feels Bijoor. "Rural people have the money and desire, but are distanced from markets physically. E-commerce can bridge this gap and deliver. The model needs to be tweaked a bit though," he said.

To tap this potential, most players in the e-commerce space are trying to enter the rural market. However, logistics being a challenge, most of these companies have been able to reach out only till tier III and IV towns, which are different from the actual rural markets.

Bisen of Technopak pointed out that rural is defined as clusters where more than 50% of the households depend on agriculture as the primary source of income. Bijoor also said, "Rural is deeper still, tier 3-6, and then R1 to R6. E-commerce can go up to R1 and R2. Beyond that, it is unviable to reach."

The logistic challenge is the main reason why the vast rural market is still under-served by e-commerce companies. Gundaiah of StoreKing said the last mile reach is a challenge and thus cracking it through assisted e-commerce route, where a customer goes to a kiosk, place order and then collects it, is the best way. StoreKing has developed its own logistic network as a third-party courier will never reach a rural market.

Assisted e-commerce, according to Bisen, is a thought in the right direction because it takes care of user experience, customer literacy and helps the customer to overcome many barriers retailed to technology, device, and language, etc. "Such out of the box thinking can only enable initiation of e-commerce in rural India. A cookie cutter urban approach for rural markets will not cut ice," he said.

To bridge the gap, leading online marketplace player Snapdeal is also actively assessing partnerships opportunities in logistics space. The company is betting big on the rural opportunities as well.

According to Dutta of Third Eyesight, to service the demand created by webstore, a cost-effective fulfillment infrastructure is required. "The government-run India Post, with its countrywide delivery capability, has been pitched at various times as a potential delivery partner, but has its own challenges and restrictions," he said.

(Published in DNA.)

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The O2O Retail Model: Will the reverse strategy work?

admin

July 17, 2015

Mehak Sharma, Indiaretailing.com

New Delhi, 17 July 2015

"Shopping is as much an experiential occasion, as it is a transaction comprising products and money. It is a social, participative activity, which is not replicable to the same degree by online social sharing of browsed products, wishlists and purchases," says Devangshu Dutta, CEO of retail and market analyst firm Third Eyesight.

Dutta’s analysis appears to be echoed in today’s retail environment, where several e-tailers are increasingly looking at establishing offline presence.

In the past few years, a slew of pure-play e-tailing companies, including Lenskart, Healthkart, Fabfurnish and Caratlane, among others, have already or are in the process of opening physical stores.

So why are these online retailers embracing offline stores? Also, will this Online to Offline (O2O) model be an important game-changer for the future of retailing in India?

Why are the reverse traffic?

In the current retail scenario, where developing an omnichannel identity is a must-do for most brick-and-mortar retailers, the rationale for the reverse strategy can be to either augment their online sales or to deliver a more real, ‘five-senses’ experience for customers.

"For products that have a touch-feel element, the physical retail environment continues to be attractive for the customer. Also, an offline store can help to create more credibility and a more direct customer connect, especially in an environment where online sales are dominated by discounts and deals," explains Dutta.

For instance, for the five-year-old kids’ products’ portal, FirstCry, the offline store serves the purpose of providing a ‘touch-and-feel’ experience. "About 85 per cent market is going to remain offline even after five years, however hard we try to push e-commerce. Online shopping is convenient but it does not give that touch and feel experience, which customers in my segment would want," Supam Maheshwari, CEO and Co-Founder, FirstCry, was quoted as saying recently.

FirstCry started its online portal in 2010 and soon went on to launch its first brick-and-mortar store in 2011. The company currently operates through 100 offline franchise stores and has recently raised Series C funding of Rs $ 10 million to fuel its plan to set up 400 offline stores by December 2017.

Given the more engaging experiences that an offline store provides, experts too are convinced about the superior draw of physical stores.

"There are more offline consumers today than online ones," asserts Harminder Sahni of Wazir Advisors.

"While retailers can choose to be exclusively online or offline, the consumers aren’t going to get classified like that. Consumers will shop across offline as well as online. Thus retailers will have to have a mix of both and find their own profitable balance," Sahni adds.

Where FirstCry has opened stores to induce brand trials in a touch-and-feel environment, others have used marketing kiosks in high footfall strategic locations in malls and office spaces. There are other players who have incorporated “try at home” for consumers, prior to making a purchase decision.

E-retailers like Caratlane (jewellery) and Lenskart (eyewear) have opened offline stores to provide hassle-free online purchase options. Through Lenskart’s offline stores, consumers can get their vision checked and enjoy the freedom to buy products from either channel. The modus operandi at Caratlane is similar.

Both Lenskart and Caratlane also provide ‘try at home’ facilities to customers; a customer can choose products online, try some options at home and then place the order online.

Best of both worlds

While some e-retailers are trying their hand at offline retail, experts feel that merely opening offline stores will not deliver substantial benefits; e-tailers must sync online convenience with offline experiences in a useful way.

"Online retailers need to ensure two things before opening offline stores. First, it is imperative for an online retailer to define whether the offline channel’s primary objective is to complement and/promote the online channel or it being a sales driver in itself a primary objective. The offline experience will then need to be built-up accordingly. The other important factor for players will be to figure out the ways in which the offline and online channels can leverage each other and can operate as an integrated multi- channel business," explains retail analyst firm Technopak in India Retail Report 2015.

While time will tell how the O2O model may evolve, experts feel that the future lies where offline and online shopping aren’t two separate business models."The split between offline and online channels is visible currently because traditional offline retailers have been slow to adopt online and mobile shopping environments," Dutta points out.

"As more and more brands and retailers move online, there is bound to be a convergence between channels. Retailers need to — and will — see themselves logically serving customers across multiple channels that are appropriate for their product mix as omnichannel evolves from being a buzzword, to being a reality."

(Published in Indiaretailing.com.)