7 in 10 retailers plan to increase their physical presence in future
FinTech BizNews Service
Mumbai, 1 November, 2023: More than 80% Indian retailers do not see e-commerce as a threat, finds the NeoInsights study – ‘Click & Mortar: The Evolution of India’s Retail Ecosystem’ – released today by NeoGrowth, the MSME-focused NBFC in India, leveraging the digital ecosystem.
The study, covering around 3,000 Indian retailers and shoppers across more than 25 top cities in India, has analysed how physical and online retail experiences complement each other. Arun Nayyar, Managing Director and CEO of NeoGrowth, said: “India’s retailers have stood the test of time and have always innovated to keep growing and enhancing customer experience. Their remarkable business growth is a testament to their creativity, persistence and long-term engagement with customers. Our study revealed that Indian shoppers have a strong preference for shopping at physical stores and enjoy the personalized approach of their local retailers.
With customer-centricity and competition from e-commerce in mind, retailers are upgrading the in-store experience with technology. Offline retail will continue to occupy a larger share of the Indian retail sector, elevating itself to a ‘Click and Mortar’ model by adopting digital tools. At NeoGrowth, our mission has always been to empower MSME retailers by providing them with timely financial support. We are positive about the future of India’s retail ecosystem and are committed to supporting retailers in their growth journey.”
Resilience of Offline Retail:
Despite the rapid growth of e-commerce in India, a significant majority of retailers remain confident about their physical storefronts. Only 18% say that their sales have been impacted by online selling platforms.
The top industries witnessing the highest contribution from offline sales are FMCG & Retail (97%), Food & Beverage (95%), and Consumer Durable & Electronics (93%).
Special Offers, At-Home Delivery Enabling Offline Retail:
Indian retailers are bringing the best of both worlds to shoppers by integrating digital tools with specialised in-store offers to encourage offline sales. The top 5 strategies used by offline retailers are: Specialised offers, discounts, using instant messaging apps to connect with customers, doorstep delivery, and multiple payment options. 60% retailers have adopted digital payments at their stores for ease of payment and a hassle-free buying experience for their customers.
At-home delivery remains a top priority for shoppers, with 60% offline retailers receiving customer requests to start home delivery services. Retailers have initiated free home delivery services for their customers, taking orders via phone or through instant messaging apps for products available at their physical stores.
The top industries with the highest number of home delivery requests include Food & Beverage (73%), Healthcare (68%), Fashion & Lifestyle (63%), and FMCG & Retail (55%).
Ability to Touch and Feel the Product, Indian Family-Oriented Value System Drives Indians to Shop at Offline Stores:
Physical stores remain the most popular mode of shopping for Indians despite the proliferation of online marketplaces. The ability to touch and feel the product is the top reason for the popularity of in-store shopping. 54% prefer offline shopping due to the assured authenticity and quality of products. Approximately 50% respondents are loyal to their local stores, with multiple generations of a family often shopping from the same retailer leading to trust and familiarity. 35% Indians shop from their local retailer to encourage and support small businesses.
Popular segments for in-store shopping in India include Consumer Durable & Electronics, Food & Beverage, Fashion & Lifestyle, and Healthcare.
‘Shopping Only Online’ occupies a minimal share of India’s shopping channels:
Only 10% Indian shoppers are shopping exclusively on online selling platforms. This contribution further varies by generation. While only 14% Gen Z population shops only online, this number falls to only 5% for the Gen X population. 11% millennials shop only online. Online shopping sees a spike during flash sales and times when higher discounts are offered by e-commerce platforms, with nearly 35% of shoppers preferring online shopping only during flash sales.
Festive Season Increases Offline Retail Sales:
Festive shopping is a family affair in India when all members of the family across age groups get together to celebrate. More than 70% Indian shoppers value a family shopping experience in a physical store. Indian retailers see the maximum footfall at their stores during special occasions such as festivals. During this time, they ramp up product inventory, introduce differentiated offers and aggressively promote their businesses.
Industry segments that see maximum offline sales during the festive season include FMCG & Retail (80%), Consumer Durables & Electronics (79%) and Fashion & Lifestyle (75%).
Click & Mortar - Path Ahead for Indian Retail:
Almost 60% retailers want to focus on physical stores with assistance from digital tools in the future to drive in-store sales. The relevance of offline retail is evident from the study with one in two retailers receiving requests from their customers to replicate products based on online reference images. Fashion & Lifestyle and Consumer Durable & Electronics retailers receive the majority of such requests.
Online selling is yet to pick up among India’s retailers, with 46% saying that they are at the nascent stage of understanding the workings of online retail. 16% retailers are yet to find digitally savvy staff to use online selling platforms.
The study revealed that 7 in 10 retailers plan to open new stores to strengthen their physical presence. This expansion and growth of offline retail will be facilitated by digital building blocks including digital payments, digital order fulfilment, digital in-store operations.
