Press Trust of India
New Delhi, Dec 25: As a year of David vs Goliath in retail market draws to a close, the newbies’ gang of Flipkarts and Snapdeals are forcing Ambanis and Birlas of supermarket chains to join the burgeoning e-commerce landscape. At the same time, a knockout round is at play in the online as well as offline retail worlds, where ‘survival of the fittest theory’ is forcing weaker and smaller players to either close the shop or get merged with stronger rivals – a trend that is likely to consolidate further in 2016.
The year passing-by has also seen overseas players joining the ranks on both the sides — be it the likes of Amazons with online marts or H&Ms with brick-and-mortar shops bolstered by a liberalised FDI policy. This was also the year which saw major mergers involving homegrown supermarket chains including the one between Future Group and Bharti Enterprises. Besides, Aditya Birla group also consolidated its operations.
From abroad, foreign brands such as Hennes & Mauritz (H&M), Gap and Aeropostale kicked off their India journey, while German sportswears major Adidas Group geared up to open its own stores from next year after getting nod for 100 per cent single-brand operations. Yet, the multi-brand retail remained a no-go zone for foreign retailers. The retail sector which is pegged to grow to $1.3 trillion by 2020, clocked a growth of 13 per cent in the year from last year’s $560 billion, despite factors such as availability of good retail space remaining a major challenge.
Looking back at the year, Retailers Association of India (RAI) CEO Kumar Rajagopalan said, “Year 2015 was a year of challenges and opportunities. Biggest challenge for retailers was unavailability of good retail space due to fall in number of new malls.” The challenges notwithstanding, retailers are bullish about the sector doing well in future, as Rajagopalan said that out of the estimated size of $1.3 trillion by 2020, only about 20 per cent is estimated to be modern retail. “This also means that traditional retailers will continue to be important part of retail in India,” he said. For the next year, he said factors like GST, expansion of mobile-based electronic payment systems and infrastructure development will be keys for the retail sector. “The other main expectation in 2016 is the announcement of retail policy by various states, including Andhra Pradesh, Telangana, Maharashtra and Gujarat,” Rajagopalan said.
As for the opportunities during the year, he said the retailers experimented with technology and focused on operational efficiency to increase margins. “E-commerce was also a big opportunity. Most retailers either began selling their product themselves or through a tie-up with an e-commerce player,” he said. More than 60 per cent of the brick and mortar retailers have developed their e-commerce capabilities and the trend is definitely redefining the shopping experience for customers. This was exemplified by the likes of retail chain Shoppers Stop tying up with Snapdeal and Amazon besides ramping up its own website to increase its online sales. Mahindra Retail, which acquired Babyoye.com in February this year, integrated its entire e-commerce business into Babyoye.com and later rebranded its offline retail network from Mom & Me to Babyoye by Mahindra.
Likewise, Aditya Birla Group launched its e-commerce portal for apparel, abof.com as a one-stop fashion portal for apparel, footwear and accessories for men and women. “The e-commerce sector is a sunrise sector from an investment point of view… We plan to stay focussed on seeding and growing specific businesses in areas where we have specific strengths which we can play on extensively. We see fashion e-commerce as one such space,” said Aditya Birla Group Chairman Kumar Mangalam Birla.
