‘Customer is the king’ is an old saying, but it’s true that the actual decision-making coin is eventually in their hands. Furthermore, marketers are a bunch of smart people who carefully evaluate and understand the direction of the coin flip to pre-set the upcoming trends about how people buy and engage with brands, whether it’s online or offline or to be precise ‘both’.
Currently, there is a wildfire of online-only brands foraying into offline formats and this is not a surprise, as this was bound to happen. The physical store is always on the brand’s to-do list as they are very well aware that customers are real people who crave a tangible, multi-sensory experience when buying products—the so-called dopamine rush of ‘let’s go shopping’.
Brands throughout the online-to-offline spectrum are now focusing on expanding their physical presence in order to improve the retail experience they deliver to their customers. D2C brands are increasingly seeing physical locations as a competitive advantage.
“With the increasing competition in the online space, it’s becoming harder and harder for brands to stand out. The bricks-and-mortar format gives brands an opportunity to create an environment that is unique to them and helps them differentiate themselves from other companies. In addition, physical presence in India also allows brands to provide more personalised service and visibility, and of course, we cannot ignore the touch and feel factor among the customers. These are a few key reasons why a physical presence in India is so important,” said Anuj Mundhra, Founder of Jaipur Kurti.
Experts say that a brand cannot be built only online. It can be a kickstarter for visibility, but it needs to jump into the crowd to grow and prosper because the store is not just a place to sell, it’s also a ‘brand-building’ tool.
According to some reports, rise in customer acquisition cost (CAC), the cost of online advertising and new conscious buying pattern continue to increase, and offline stores are becoming a more efficient way to reach out to new customers. Moreover, physical stores allow customers to connect with brands on an emotional level with the opportunity to share their company culture through immersive elements in their showrooms and even concept stores. Therefore, becoming an important part of increasing brand awareness and customer loyalty.
As per TimeTrade’s State of Retail report, 85 per cent of consumers prefer to shop in physical stores because they want to see, touch and test products before purchasing them. According to the report, one-third of customers prefer to receive product advice from sales associates, and a whopping 90 per cent of shoppers are more likely to buy after receiving assistance from knowledgeable staff in-store. Offline retail provides consumers with instant gratification as well as a level of variety and novelty that they will not find online.
“There are two key reasons for this strategic move by online-only brands. First, these brands have realised that there is a limit to their growth potential if they only exist in the virtual world. Secondly, customers seek the ‘touch and feel’ experience before making a purchase decision. To become a loved brand of Indian consumers, it’s very important that the brand has an offline presence. So even if you have the best range of products online, people would love to touch and feel them to understand more about the product and somewhere they associate the physical store with brand loyalty. Additionally, the product discovery also gets easy,” said Ashmeer Sayyed, CRO, DaMensch.
It is very evident that the Indian retail market is going through a big wave of change and consolidation. Retailers are adopting various strategies to keep afloat amidst the competition of opening offline stores such as investing in technology and data analytics, focusing on customer experience, product discovery, experiential offerings, etc., in order to survive and thrive in this competitive environment. Retailers are in full swing to awe the customers.
For example, to make the discovery-to-checkout journey seamless, Reliance Retail’s tech-enabled store Azorte has several industry-first tech-enabled interventions including mobile checkout, smart trial rooms, fashion discovery stations and self-checkout kiosks. RFID-enabled interactive screens strategically placed around the stores serve as virtual style assistants and smart fitting rooms assist customers in completing the look and requesting additional sizes and products at the press of a button. In addition, shoppers apparently have the option of using self-checkout lanes rather than standing in line at counters.
“According to Azorte, while the smart stores boost the customer experience with technologically-aided solutions, they have also tried to keep the human touch existent by appointing in-store consultants and advisers.”
From big giant retailers such as DMart opening 50 stores, Reliance Retail’s 6500 to 7000 outlets, ABFRL’s plans expansion of 300-400 lifestyle stores with Allen Solly targeting 500 store openings in three years. Pantaloons plans to add 250 stores, young brands such as DaMensch plan to add 100 stores in 5 years and online brands such as Libas, Jaipur Kurti, Snitch, Berrylush, SuperBottoms, Suxus, Faso, Zymrat, Souled Store, Bombay Shirt Company, Suta, Clovia, Zivame, Fable Street, Fab Alley, Miniklub, CloudTailor are expanding their offline presence to spread pan-India. A lot of online brands are now focusing on their bricks-and-mortar stores in India because that’s where customers spend most of their time. In fact, the online sales figures depict huge chunk of sales coming from people who have visited the physical store first.
We see quite a noticeable statement these days beginning with “X D2C brand secured Y amount of funding.” Be it DaMensch raising US $ 16.4 million from A91, Matrix Partners and others; BlissClub securing US $ 15 million in Series A funding; Bombay Shirt Company raising US $ 11 million to date, or FabAlley and Zymrat raising US $ 14.02 million and US $ 500K respectively, CloudTailor raising US $ 1 million, these completely online-only brands are now moving towards offline having one thing in common – their plan for smooth omnichannel strategies. Some are already in to this format and some definitely plan ahead for the same.
“Truly digital-first brands know that they are missing out on customers by only being online, and while the change can be daunting, the reward is well worth it.” – Jeff Kreshek, Federal Realty’s Senior Vice President of West Coast Leasing
The opening of a new store also boosts traffic to an online store as the number of people searching for the brand increases. This is because people who go to physical stores frequently look for them online. Additionally, online retailers can capitalise on the data from the tech integrated and as a result, the opening of a new store will almost certainly result in higher profits by increasing the number of purchases. Also, the increasing trends of malls across India are giving a pump to stores to open up in these formats. Furthermore, the influx of investments has propelled the retail potential of Tier-2 and Tier-3 cities which are soon in the process to become Tier-1 cities. The goal is to establish an offline presence in order to increase penetration and volumes, lower customer acquisition costs and increase sales.
“The bubble online is about to burst as there is a mismatch between demand and supply because demand is less and supply is more and this is also a reason that online sales are getting decreased. Survival on online platforms is difficult for brands that have massive production power, so they have to be available offline,” stated Anuj Mundhra.
In terms of offline bandwidth, the online bands are quite ambitious and their strategies are in place. Businesses are engaging with solution providers and developing in-store technologies to enable a more seamless customer journey and improved product discovery, as well as the benefit of leveraging the stores as mini-warehouses or fulfilment centres. The fast-growing list of brands planning offline expansion is a clear indication that despite the e-commerce boom in India, bricks-and-mortar retail is far from dead. In fact, it is very much alive and kicking! In the near future, we will see more of online-only brands setting up offline stores. This trend is here to stay as it is simply too profitable for brands to ignore.