The sector has remained buoyant amid the pandemic, but better still—it is set to take off on democratized digital commerce.
According to various sources such as the India Brand Equity Foundation, Statista and Mordor Intelligence, India is the world’s fifth-largest global destination in the retail space: ranked at Number 2 in the Global Retail Development Index and set to grow by 84% in three years’ time.
All this despite, or due to, the COVID-19 pandemic of the past two years. How did this growth come about? One appropriate authority to consult is Kumar Rajagopalan, CEO, Retailers Association of India and who is also a council member of the Open Network for Digital Commerce (ONDC, India) under the Department of Promotion for Industries and Internal Trade.
DigiconAsia: Can you summarize how India’s retail sector was impacted by the pandemic?
Kumar Rajagopalan (Kumar): The first year of the pandemic went on and off for the retailers where everything was uncertain. This removed the liquidity buffer, which reduced their ability to buy and trade easily.
Super and hypermarkets have not been impacted as much because they were open all the while despite control measures. In the cities, consumer durables and the IT sector were functioning because people still needed the supplies even if they were stuck at home.
The two sectors that were highly impacted were garment and footwear (wearable accessories). That is where we are now, moving forward.
There is a possibility of a return to normalcy and I believe that retailers have also learned from the pandemic. They have learnt how to do business in an omnichannel approach. They also have created new ways of partnerships and collaboration.
However, as of now, there are two worries we have in front of us:
- Inflation on almost all products, which impacts customers’ buying power and intentions
- Supply chain constraints due to political and pandemic factors. This is also creating a huge amount of pressure on the supply chain, especially internationally.
Kumar: The power lies in knowing their customers. The same customer could buy something really cheap/discounted in the morning and buy something really expensive in the afternoon because in the morning he/she was trying to be thrifty, but in the evening had to cater to a special occasion.
Now, how do you perceive these needs of the customers rather than putting them into the traditional method of segmenting? How do you then enhance the customer capability; how do you create the concept called retailing, which means you are retailing to that individual—you are not retailing to the masses.
Traditionally, the local ‘kiranas’ (neighborhood) and the local guys know their customers in their catchment very well. We need to ensure that they use technology to scale their business.
Concepts like ONDC, video commerce and digitalization will help. For example, offline items manufactured in the remotest parts of the country can now be retailed online because of digitalization.
Know their customer, know their products well and make sure they understand the needs and quirks of their customers.
DigiconAsia: Amid the current good recovery levels, what are upcoming trends in the country’s retail sector?
Kumar: The biggest trend will definitely be speeding up e-commerce and the accessibility of merchandise. Customers want to have the touch and feel of a product immediately. They do not want to wait. This has always been the problem with e-commerce. The waiting time is more when exchanging any product—unlike what happens when they buy from physical retail.
- Another trend: customers now expect the retailer will have all the items that they want to buy. If the retailer does not have it in stock, they expect that the retailer would be able to find whether it is available elsewhere and supply it to the customer. This concept of the ‘endless aisle’ has become really important nowadays. This means enabling customers in your stores to virtually browse or order a wide range of products that are either out of stock or not sold in-store and have them shipped to the store or their home.
- Another important aspect in the country’s retail sector is payment options. It has to be exceptional because more and more customers are getting digitally enabled.
- One more important factor is digital technology such as video commerce. There is a difference between the buyer, the influencer, the payer, and the user. Sometimes an item is bought by somebody, but influenced to do so by another person; payment could also be done by somebody else, and the end user could also be someone totally different. Video commerce and social media will become even more important in India as they can be used to address all four categories of people in the transaction.
- Another exciting initiative happening in India is ONDC. This is about creating a common, open, protocol so that customers can easily buy from multiple platforms without needing to worry about whether or not an item is available on a single platform. Sellers can make themselves visible easily across multiple platforms without needing to do multiple coding.
Now, this is exactly what happened to UPIs for payments. You could have an account somewhere and somebody else could have an account somewhere. You can easily transact because of an open protocol. This is a big thing, and my belief is that this is going to completely change the way commerce will be conducted in India. It will help a lot of smaller retailers to also get more visibility, compared to the a situation where power is dominated by only two or three aggregators.
DigiconAsia thanks Kumar for his contributions to our readers.