In many ways the year 2018 was a watershed for retail in India. The year also marked a coming of age of the internalization of the GST and demonetization impacts with the retail sector exhibiting resiliency in its onward march to embrace and understand digital challenges. With this, not only has the sector begun to show signs of maturing, but also the rules of the game have evolved considerably. While many trends and shifts in the retail landscape have been visible to the discerning eye, the strongest contour that can be identified relates to the customer and his attitudinal shift to retail needs and experiences. It is this construct that will be the biggest identifier for 2018—the Year of the Buyer.
What were then the top five dimensions of 2018 in the retail landscape? Firstly, the luxury segment came in for a bit of a rationalization. With India’s luxury retail share at hardly 1.5 percent in the global pie, the tale here is far from being told fully. Due to various cultural, regulatory, and legal issues, for instance, people still prefer foreign destinations for luxury shopping. High import duties, challenged quality retail spaces, and of course the devil of counterfeit, all have put the brakes on this segment for the moment. But with great potentialhere things shouldbegin to improve soon.
The second trend in Indian retail for 2018 was the consolidation and growth in the premium retail segment. Industry estimates put the growth of the premium market share in overall retail in the next five years at 15 percent, up from the current 10 percent. As buyers now face a better choice spectrum with higher price transparency and an improved disposable income spread, premium retail is healthily growing and in absolute terms will account for more substantive mix in various markets across the country.
The next trend that we witnessed in 2018 was the movement of convenience retail towards digital. With almost 42 percent of India’s population expected to go digital by 2022, brick is rapidly marrying click. A whole slew of goods, from daily essentials to luxury, and even realty, now available on this platform, digital shopping is becoming a major option in retail for buyers. A variety of factors plus the strong push towards experiential purchase through technology using AI, VR, etc., shoppers and sellers are both gravitating towards the digital platform bounty.
The fourth key trend witnessed in 2018 was the arrival and growth of the Omnichannel model. With customers being more and more weaned away by the pure-play digital platforms, retailers are resorting to an integrated offering where shoppers can experience and engage with products and brands prior to committing a purchase. Assured delivery channels, highly enriching brand immersions, and high-level quality assurance, omnichannel marketing formats are set to differentiate between the modern and the old retail.
The final trend of note in the Indian retail segment last year was the emergence and establishment of experiential retail. From mere selling to providing a complete life experience, retail has now become more of a journey rather than a destination. Smart marketers are focusing on providing families as well as the individual with entertainment, dining, and relaxation options. In almost all major retail hubs, buyers are now looking to spend on thigs that add to the fun and relaxation quotient and not necessarily on purchase of material goods. With mall owners and brand store operators innovating the maximum in this category, it is expected that this trend will continue in the coming years.
The article has been penned down by S. K. Sayal, MD and CEO, Bharti Realty