The panelists in this discussion were J Suresh, managing director of Arvind Fashions, Rishi Vasudev, CEO of Lifestyle & Home Centre, Kavitha Rao, Country Commercial Manager of Ikea India, Adeeb Ahamed, managing director of Lulu Financial Group, Twenty14 Holdings, and Tablez, Sachin Jain, managing director of De Beers India and Ramesh Narasimhan, CEO of Ingenico ePayments India.
According to Suresh, the current situation will definitely change the equation as in how retailers look at the online and offline channels. E-commerce was growing even earlier, but what this pandemic has done has accelerated the growth of e-commerce by 5 years, he said.
“Before the pandemic, we used to do 15 percent of our business through e-commerce which has now moved up to 50 percent. But I believe once things get back to normal, probably we will end up at around 25 percent-35 percent. So it definitely going to be much more than 15 percent. When you have a situation like this, you need to create the right balance in terms of opening stores. Going forward e-commerce will guide the opening of the stores. The focus will be more on e-commerce while providing a balance from physical stores,” said the top executive.
If you look at the retail industry, we can very clearly see that the physical retailing has been adversely impacted, said Rao from Ikea India. According to her, the larger the retail store, the severe has been the impact on business.
“We can very clearly see online retailing has gained in a big way. But it is also important to know that for those of us who are omnichannel retailers, while online can compensate to an extent, its the loss of sale in a physical format that it can never compensate in its entirety. In general what we have seen for most online retailers that maybe e-commerce contributes 8-13 percent in their sales turnover and then comes a 4x growth in e-commerce due to pandemic but it can still not compensate for the loss in the physical retailing.” For Rao however, one positive development has come from the fact that since all of us now spend so much time at home and home has become the center stage, Ikea has witnessed that needs related to home have become very predominant.
Although Vasudev from Lifestyle had a slightly different view when it comes to the accelerated pace of the online channel during the pandemic.
“Come pandemic, everybody said that online has come back very strongly and offline is struggling. But if we go a little deeper into the data and I am talking about fashion retail, online had penetrations of about 6 percent. Now when 94 percent of the market was closed, the best online could do was to come back at pre-COVID levels. Whereas if I was on the other side, I would think that if 94% is closed then why this 6 percent should not be 10 percent,” opined Vasudev.
According to him, customers are saying that there are certain things that they want to buy online, and for some things they would prefer the offline channel. I don’t think going forward we can straightaway say that this much of my business come from online and that much from offline, he said.
“It is going to be a mix of many things. The consumer’s behaviour has definitely moved forward based on the COVID situation, however, the success in the future will be determined by how we imagine both the channels together and how we leverage each other’s strength in the coming times.”
According to Ahamed of Lulu Financial, the company has always followed the omnichannel strategy and were aiming to garner 30 percent of its total sales turnover from the online channel, which was at a large single-digit percentage.
“As the lockdown happened we thought the numbers will start to shoot up in the online space but that was not the case. There was a very slow increase in the online space. But once the lockdown started to slow down and the stores started to open up, the pickup pace on the brick and mortar stores was much faster than the e-commerce sites, which shows us that the consumer still wants to have that interaction with us and wants to visit the store.”