Can brick and mortar retailers beat e-tailers in their own game?

Flipkart, Snapdeal, and Amazon – these are some giant e-commerce players, among a few others, that have dominantly overhauled the physical retail space in the past two-three years in India. Whether physical stores can withstand the online onslaught, is still a raging debate in the retail industry. However, we can certainly not overlook the fact that web, social, and mobile technology has significantly impacted how the customers prefer to shop these days.

While e-commerce stores are witnessing a notable boom in their sales, physical retailers on the other hand are struggling to deal with the gradual decrease in the footfalls. Let’s understand the reasons that have prompted the shift in the buying behaviour of the customers, that is, why they are moving from offline to online purchases.

  1. E-commerce sites offer low prices as well as continuous and heavy discounts that offline retailers find hard to match. Of course, these prices and discounts are predominantly backed by venture capital financing. But, these ‘behind the scenes’ dynamics do not really matter to the customers. Eventually, all they care about is a genuine good deal.
  2. The lack of customer friendly logistics and infrastructure also act as barriers for the offline retailers. In a country like India, hopping from one market to another amidst traffic congestion and parking woes is nothing less than a nightmare. So, why would customers want to face these physical hassles, when they can shop at their fingertips from the comfort of their home, or while sitting in a coffee shop or travelling in a train?
  3. Unlike physical stores which are open for only certain hours or days in a week, their online counterparts give flexibility to shop 24/7 and on the go, irrespective of the customer’s geographical location.
  4. Another factor that is putting a dent in the sales of the physical stores is the lack of an informative and customized ‘in-store’ experience. Most of the retailers fail to add that ‘wow’ element to the customer’s shopping trip to their stores.

A recent study conducted by Ipsos MediaCT and Sterling Brands alongwith Google, on an online survey has revealed some startling facts. It says that two in three shoppers who tried to find information within a store say they didn’t find what they needed, and 43% of them left frustrated. And 71% of in-store shoppers who use smartphones for online research say their device has become more important to their in-store experience.

Now, does this shift in customer’s buying behavior indicate that it’s time for the offline retailers to pack their bags and accept their defeat from e-tailers? Well, not yet and not exactly. Because, physical retailers still have four distinctive advantages over e-tailers.

  1. The ‘touch and feel’ factor. There are customers who would want to touch, feel or experience the product before buying it, and that is possible only if they walk into the stores.
  2. The physical retail would be more price competitive as compared to the online retail in the long run. A low cost product price offering to the customers is not a sustainable model in the retail industry. Eventually, e-tailers would have to develop an internal cost effective price model that doesn’t make them reliant on external funding.
  3. The human behaviour also plays a crucial role. Man is a social animal, and his trust factor in human dealings is higher. So, the customers would also want to visit physical stores for interactive and social experiences. Pleasant interiors, friendly customer service staff, in-store web based facilities (product browsing kiosk, automated check-outs, etc.), free home delivery and attractive offers & discounts are some value added services that can give customers a feel-good factor about store visits.
  4. Exclusivity is another area, which physical retailers leverage. There is a certain segment of customers who prefer premium, niche or exclusive products and services. They prefer to buy a product and a brand or experience a service only from a store, they have a trust on. This is called store loyalty, something similar to brand loyalty.

Having said this, physical store retailers need to cash on these pluses, and sooner. They definitely need to reinvent their existing retail format.

The study mentioned above also revealed that three out of four shoppers who find local information in internet search results helpful are more likely to visit stores. This is a clear indication that physical retailers need to adapt an omni-channel strategy to keep pace with the digital retail trend. They cannot lash or run away from technology. Rather, they should look at linking their physical stores to a web-based model.

Home Plus, Tesco’s South Korean discount grocery chain, is a fine example of this. They have put up large, wall-length billboards, resembling supermarket shelves on the glass walls of subway stations. These billboards display the products and their prices, along with a unique QR (Quick Response) code. A subway commuter, with the help of their smartphone, can quickly scan the code of any product they want to purchase, add it in their shopping cart and make a purchase, post which the nearest Home Plus store delivers the product to the customers in less than a day’s time. This strategy smartly utilizes the user’s waiting time and also saves them a trip to the market.

Now, if you have carefully studied the changing landscape of the retail market, it wouldn’t be incorrect to say that the inability to offer the ‘convenience factor’ to customers is exactly which hinders physical retail to become a front runner. And, a digital strategy can help them cross this hurdle.

The offline retailers have to adopt technology to be able to inform and offer the customers what they have in their physical shops. That is, regardless of the customer’s geographical location or any particular hour of the day. They have to ease the customer’s pain of “discovering” the particular shop which might be carrying the product or offering a service of his interest. Once this ‘discovery’ problem is resolved, the buyers would be more than happy to visit the physical shops.

The new keyword in this space is ‘hyper-local’ or ‘n-commerce.’ There is a good amount of buzz and activity in this area, wherein the attempt is to connect the consumer to the physical stores in the neighbourhood. There are some innovative concepts being created and speedily executed.

The offline retailers should also note that shopping is possibly the most common form of ideal “family outing” in the Indian context, where other leisure and entertainment alternatives are still lesser. So if the mom and pop stores can make it convenient for shoppers to discover what they carry, without having had to visit the shop, they can possibly beat the e-commerce players in their own game.