Who will concede first? Will the fight between Reliance and Amazon end soon? No matter who gets what, this fight from the consumer point of view is one of ‘Vast’ and ‘Trust.’
The Future Group has been in the Indian market since 2001. It has acquired a sizable number of consumers through its extensive network that connects customers through the brick and mortar format. Though it is not the same as what India traditionally relied on for ages — physical formats like mom & pop stores, it gained popularity quickly.
Amazon, on the other hand, started 11 years later in India – though it debuted in 1994 with an online bookselling proposition and gradually expanded into other sectors. It has acquired a sizable business in many cloud-based sectors, but in India’s retail space, it is yet to earn the trust of a large number of average consumers.
Recent anti-trust challenges in court by traders indicate that the journey of trust-building will not be a cakewalk for the e-commerce platform. It is still miles away from being the mass consumers’ choice in India due to poor internet connectivity, fear of failed digital payments and refund on time, doubt about exchange policy, amongst others.
The Indian consumer demographic includes millennials and baby boomer generations. Amazon has the advantage of having 65% of the population under 35 years with rising disposable income as its customers. But the bad news is that 67% of the Indian population lives in rural areas with poor internet connectivity, thereby preventing Amazon to exploit physical retail fully.
Serious buying in India always needed the tacit effect of touch and feel. Even today, high-value transactions are not done online. Jewellery is rarely bought online. Though the pandemic made the market for online shopping ready much before it was estimated, it does not preclude physical shopping from growing. The format of online and in-store shopping will see a new paradigm called BOPIS (Buy online and pick up in-store) as envisaged by Harvard Business Review.
With this change, the online and physical will live as doppelgangers. The form of physical retail space that could stand firm against the digital media during lockdown was the traditional neighbourhood stores on the street corners. These groceries remained incredibly supportive when e-shopping delivery was disrupted by the lockdown. The digital supermarket provides ease of buying sitting at home, but it may not be so when life goes back to normal after the pandemic.
A survey (by Retail Dive) indicates that shopping in malls is being missed by most consumers who enjoy buying with family and friends and find it a stress-buster outing. Mall shopping is a weekend activity in many cities. Although all visits to malls do not necessarily result in a deal, browsing through stores to have more information and pleasure might stimulate the shopping spree.
Lan Xia, professor of marketing at Bentley University in Massachusetts, indicated that window-shopping ends up with something although there was no thought of buying in the first place. Mall markets will be repurposed to become a place of social networking and a place of happening.
Management consultancy firm Deloitte predicted some critical changes in the new age post-pandemic mall, repurposed to become a new destination embracing new technology to focus on safety, changed store’s role, and the food revolution. Post pandemic, the visitors of ‘in-store buying’ will be more informed due to strong digital visibility of products on merchandisers’ e-portal.
Hence, the chances of information asymmetry are doubtful. Each item’s transaction time will come down because extensive product browsing may not be necessary at the store level. Stores can also act as a back-end inventory storage point for online delivery support, which a pure-play warehouse can provide. So leveraging the fungible opportunity of the mall stores may reduce backend expenditure of the merchandisers.
Driven by Data
No doubt, the new paradigm of shopping, the digital way, will improve the market for mobile data business further. Still, the imminent need for a decentralisation approach in the digital payment ecosystem cannot be ruled out. Unknowingly, consumers are patronising the data business enhancing the future growth of the mobile banking economy. Digital payment supported by online payments bank through mobile banking companies will need a developed and robust data infrastructure.
The complementary role of telecom infra will help the ecosystem both ways. Retail stores at malls can connect seamlessly with their backend stores’ inventory digitally to reduce rack space on the shop floor by creating a digital trial room concept. This will enhance the interactive deliberation between the merchandisers and customers on the shop floor level.
Currently, this is not possible in an online format. The volume of digital transactions may need infrastructure to handle such amounts of Big Data, including financial and non-financial. For faster settlement, a few trusted settlement partners are required to support the entire ecosystem.
Wallet-to-wallet transactions are slowly picking up. Dependence on a few settlement centres may not be sufficient to support the growing requirement. More players are expected to invest in this ecosystem of digital payment gateway. Currently, Paytm, LazyPay occupy the major space, and the opportunity landscape is vast.
Post Bank of India may pitch in this field since no one is blessed to enjoy people’s trust like Indian Post. Unless some strong entities are available, online shopping growth will be suffocated slowing down digital transactions. Contemplating new consumer trends, Reliance Jio has already declared the launch of 5G infra.
Conclusively, who will win this race? ‘Trust’ or ‘vast’? Time will tell, and how consumers will respond to this is a matter to be seen in the coming days. Already Amazon is facing an antitrust challenge in the court.
But the end-users perceive these two platforms differently. For hedonic items, destination shopping at a mall brings immense thrill and partial endowment effect, influencing consumers during mall trials. Utilitarian purchase may witness a strong dependence on online options. So product line balance between these two is required while going for any business proposition. Optimising inventory-carrying cost is a subtle need to make the business economically viable in the physical retail format.
Therefore, it is clear that evolving consumer behaviour will change the retail space, and both will mutate in a different format leading to a new dawn of shopping. Days are not far when both on and offline brotherhood shopping formats will address wider consumers’ choice, instant delivery, and both trust and vast.
(The author, an IIM [Indore] & NTU [SGP] alumnus, is an MSME Strategist & Mentor, Energy Expert [BEE])
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