Extra Butter has six stores in the United States – most located in New York City. Last month, the brand opened its first international store in Mumbai. The store displays around 120 SKUs of footwear and 150-160 SKUs of apparel and accessories.
“Less than 5 percent of our total assortment is generally available in our brick-and-mortar stores at any given point in time. Our online store naturally serves a much wider customer base. Last year, we shipped to every single state in the US. We expect the same to be true in India,” said Ankur Amin, Chief Executive Office, Extra Butter India.
Extra Butter shops have some signature elements such as theater seating, velvet curtains, and a monochromatic background, which lets the product become the main focus of the store. But, at the Mumbai store, it also highlights Indian artisans and local materials. Hence, the brand worked with A Wicker Story for the beautiful handmade benches that look like shoe laces. For the flooring, they went with Kota in the showroom, which is about as Indian as it gets. For the cafe flooring, hand-laid mosaic tiles were used.
The brand plans to open a second store in a year or so. “We’ll probably use our proprietary e-commerce data to decide where and take our time to make the right decision. What we know for sure is the appetite for retail concepts like ours is real - India needs more premium multi-brand retailers. Whether it’s Extra Butter or another brand, the Indian customer deserves to have the best of global brands curated for them in a premium, experiential shopping environment,” he concluded.
India’s retail industry is undergoing an unprecedented transformation driven by technological disruptions, evolving consumer behavior and new innovations redefining the retail experience. As Deloitte’s ‘Future of Retail’ report observes, these pivotal forces have set the stage for online retail to surge 5X over the next 7 years. With projections indicating e-commerce growing at 25 percent annually until 2030 compared to offline retail’s 10 percent, digital channels are primed to dominate India’s $1.5 trillion retail market in the years ahead.
Decoding the Underlying Market Drivers
As per the latest retail industry data, India’s Tier II and III cities have begun overshadowing metros as the next e-commerce frontier. In 2022, order volumes from Tier III cities witnessed 65 percent year-on-year growth, and Tier II cities saw 50 percent expansion. In contrast, Tier I cities clocked a modest 10 percent increase over the same period. Given this divergence, industry projections indicate Tier II and III cities will continue dramatically outpacing their Tier I counterparts in online order growth rates over the next decade.
Attractive value propositions like wider product choices, discounted offerings, convenience, and personalized engagement are driving smaller cities to warm up much faster to e-commerce adoption even within an inflationary climate. For retailers chasing the next wave of growth, the writing is clear – India’s underpenetrated towns and cities housing over 900 million people hold the key to market leadership.
Rising Data Analytics Creating Asymmetric Advantages
As consumer interactions increasingly shift online, data is creating radical differentiation between legacy retailers and digital-first brands leading tech-driven transformation-commerce majors are setting new benchmarks in leveraging analytics across areas – from inventory planning aligned to local consumption patterns to predictive demand forecasting models minimizing stock-out situations.
Delivering Relevant and Personalized Experiences
Hyper-personalization represents the new battleground as customers expect communications, recommendations, and experiences to reflect their individual preferences. Indian shoppers are willing to spend more with retailers who can effectively tap into the power of data to tailor offerings aligning with their needs and interests. Brands leveraging AI and ML to deduce insights from purchase journeys and browsing behavior hold an edge in continually customizing engagement across channels.
The Way Forward: A Roadmap for Retailers
Adopt Omnichannel Strategies Aligned with Evolving Consumption: As smaller cities drive more than 60 percent of e-commerce volumes, retailers need a presence across online and offline channels with a hyperlocal outreach to tap into growth opportunities beyond metros. Localization, vernacular interfaces, and experiential stores are key.
Build Intelligent Supply Chains Resilient to Disruptions: Invest in data integration across the value chain to obtain end-to-end visibility. Leverage analytics for demand planning, inventory optimization, and predictive maintenance. This can minimize stock-outs, and ensure faster deliveries while improving supply chain profitability.
Deliver Personalization through Customer Analytics: Capture every customer interaction and apply analytics to discern behavioral patterns. Offer contextually relevant recommendations via multiple channels. Personalize communication and marketing content based on purchase history and search trends.
The Pivot to Experience-First Retail Powered by Technology
As the Indian shopper gets more evolved and demanding, customer experience across retail journeys is emerging as the biggest differentiator for both customer acquisition and retention. Retailers unlocking the power of analytics and technology to elevate personalized engagement, and minimize friction while tailoring experiences to align with local preferences will lead to market dominance in the future. The secret sauce for success lies in using data and innovation to blend online convenience with offline experiential retail - a trend that will further accelerate as India ascends into a trillion-dollar consumer market.
Prerna Kalra, Co-founder & CEO of Daalchini Technologies
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