The retailers are extremely resilient and this has been highlighted by the pandemic. As lockdowns and social distancing restrictions dried up in-store footfalls in April 2020 and thereafter, many switched to digital modes to keep BCPs (business continuity plans) going. Within weeks, numerous retailers replaced brick-and-mortar (B&M) storefronts with digital ones.
A digital storefront denotes an electronic visual depiction of a brand and business, reflecting the physical properties that offer a personal experience and maintaining a one-on-one link with the typical B&M outlet.
Digital Gains Traction
While affluent customers were already shopping online during the past decade, consumers in non-metro areas were either wary of doing so or lacked proper connectivity to make this a habit. But the COVID-19 black swan event transformed the scenario almost overnight, nudging millions of consumers across India to embrace digital for buying daily necessities and other items, including perishables.
Some small retailers who remained reluctant to deploy digital before the pandemic suddenly found themselves struggling to keep operations running. The importance of having a digital storefront was all too apparent to the laggards. Once this became clear, the drive to adopt digital gained momentum among retailers.
Simultaneously, more consumers have begun embracing online transactions with each passing day. A survey by LocalCircles reveals almost 50 percent of respondents opt for apps and e-commerce websites as preferred shopping modes. Besides, another 18 percent said they placed orders with local retailers who offered home delivery. Many of these orders went through WhatsApp and other digital channels.
The unmistakable message to all retailers – digital is here to stay. Earlier, small retailers were unwilling to utilize technological tools since these required robust upfront investments, apart from trained human resources to operate them. Today, this is no longer a barrier because myriad cloud-based SaaS (software as a service) tools are available at affordable rates, boosting access to technology for small players.
As per a McKinsey study, many retailers and SMBs (small and medium businesses) have undertaken measures to replicate and boost the in-store experience online. About 45-50 percent of these retailers plan to prioritize a digital point-of-sale experience or other online solutions.
Meanwhile, another element is driving the transition towards a hybrid model and digital storefronts – millennials. Given that these cohorts value the experience more than the price or product, retailers must push greater brand engagement and increase the conversion of new shoppers into loyal customers through digital avenues.
The potential for the retail sector is vast when one considers that mobile Internet penetration in India touched 600 million users in 2019, almost double the 2015 figure of 320 million. In 2020, 53 percent of the country’s entire population are said to have used their mobile phones for Internet access.
In the years ahead, this number will keep growing, presenting a vast opportunity for retailers, e-commerce entities as well as Kirana stores, and others adopting digital channels for doing business. Indeed, recent reports indicate one million Kirana stores went online in 2020. What’s more, a leading SaaS platform, Dukaan, plans to host the digital stores of 20 million merchants in the first half of 2022. The start-up even has a novel feature that allows retail stores of every size to simplify inventory management and digital cataloging.
Significantly, the pandemic has accelerated the penetration of e-commerce players to even tier III and tier IV cities and towns. As this digital penetration grows, the non-metro regions are slowly catching up with the metros in online transactions. Brands such as Flipkart, Snapdeal, Paytm Mall, and Amazon, among others, have recorded a major rise in consumer transactions from non-metro regions.
The convergence of conventional offline plus online modes into a digitally-enabled hybrid ecosystem benefits both retailers and consumers. An SMB player dealing in consumer electronics and durables reveals that 80 percent of its sales are now happening online, two years after it launched B&M operations.
For the nation too, this represents a tremendous opportunity in the ongoing decade whereby millions of employment and entrepreneurial openings will be generated in the retail sector as well as upstream and downstream domains.
As retailers increasingly use AI, ML, VR, AR, NLP, big data analytics, cloud, and more, the level of device-agnostic personalization keeps growing. Since digital operations and experiences are integrated with inventory management and other backend systems, it fosters greater customer satisfaction and better transaction experiences. As lockdowns since April 2020 have shown, local delivery capabilities have been immensely enhanced through integrated supply chains.
Even as markets gradually return to normalcy – although the Omicron variant has seemingly put a temporary spanner in the works– all the above factors will ensure digital storefronts are here to stay. Nevertheless, retailers should maintain a hybrid or omnichannel model for better customer outreach. The integrated offline-and-online approach will ascertain retailers always keep their BCPs running in the post-pandemic phase.