Brands focused on customer experience will boost the Indian retail market
The Indian retail industry has gone through tectonic changes over the past two decades, according to a report by RedSeer, with a slow transition from the unorganized sector to organized one.
Customer Experience Focused Retailers will benefit in the Indian market
The report found that the expected growth in organized retail penetration will go from 9% in 2016 to 15% in 2025, and will see increased penetration into tier two and three cities which were previously untouched by organized retail sector.
Online channel growth jolted traditional retailers and the government’s push towards ‘Digital India’ may have helped the cause. Online retail growth in India has leapfrogged traditional path of organized retail growth, with some $30bn of India’s fashion market to be digitally influenced by 2020, according to a BCG-Facebook report.
Omnichannel will be the new norm as pure-play online or pure-play offline won`t be able to cater to evolving consumerism. The Drum earlier spoke with CEO of Indian retailer Raymond who predicts a time when clothing will become “irrelevant” due to technology.
Shubham Anand, head of Retail & CPG at RedSeer Consulting, said: “The report focuses on the issues faced by the online sellers due to the tax change (GST), seller's overall view of the tax change, the efforts made by the marketplaces to smoothen the transition the sellers, train the sellers and lastly the satisfaction of the sellers with the support provided by the marketplaces
He also mentioned how GST has led to a brief initial slowdown in the marketplace business as a good percentage of sellers (78% understand partially) do not understand the GST tax structure. Some sellers have stopped acquiring new stocks due to lack of clarity of taxes, as well as due to not being sure of the margins post-GST implementations (57% of the sellers believe margins would go down post GST implementation).
Due to lack of clarity, some of the sellers have also decided to stop the online business temporarily, which might affect the marketplace business of the etailers.
As to what it would mean for the brands and brand association, he pointed out that there would be a price increase due to reduced margins. He also said that the reduction of paperwork per order for online commerce would result in faster deliveries and therefore higher customer satisfaction. Finally, he said that while each order was simplified, GST has to be filed three times a month, which may create a greater workload for some ecommerce businesses.