Even as the traditional consumer-facing brands in India battle it out for new customers and explore strategic alliances with online platforms to get future-ready, offline retail is here to stay.
“Phygital (a mix of digital and physical) is the new future of retail” said Kishore Biyani, founder and group chief executive of Future Group. Biyani says he believes that the future lies in building effective ecosystems through alliances and partnerships to offer what a consumer wants in addition to the core commerce, on the lines of Alibaba and Tencent.
According to media reports tech giants Amazon and Google might invest in the Biyani-led Future Retail, one of India's largest offline retail chains.
The company aims to open 10,000 small digital stores within 2 kms of every consumer in India, wherein they will be selling to only members and track their buying patterns, Biyani says.
“It is a one-year-old programme and we have close to 1,100 members already. By next year, we will have 3,500 stores and 70% of what we sell in the food business will be our own brands,” said Biyani, who sees a scope of reducing operating costs by at least 5-6% over the next six years, with effective use of technology.
FDI in retail: good or bad?
According to think tank India Brand Equity Foundation, Indian FMCG sector will grow at a compounded annual growth rate of 27.86% to reach $ 103.7 billion by 2020.
Fast-moving consumer goods (FMCG) and retail giants are using technology like never before to optimise operations and serve consumers in the heterogeneous Indian consumer market. Experts at an event organised by the All India Management Association on September 26 in New Delhi agreed that there’s enough headroom for growth.
Sanjiv Mehta, chairman and managing director of Hindustan Unilever Ltd (HUL), says, “Wherever the shopper wants to shop, our brands will be there...as a marketing company, we know how to get pull for the brand… the potential for growth is immense in India.”
HUL is targeting savings of 6% of turnover through various initiatives, according to analysts at Macquarie Research. According to an August 2018 report by the research firm, “There is a strong focus within the company to cut costs, (which) we believe is in line with Unilever’s (parent) target to increase margins through targeting higher returns on brand marketing investments, efficiency in logistics and manufacturing, and tight control on overhead. This has already started delivering results, and we believe it is sustainable.”