C&L October 2017_LR (5)

Cover Story
from every Indian state. In terms of traffic to the
website, we are witnessing a 3X growth since the
launch date with a 15% repeat rate amongst customers,”
said Ashutosh Pandey, CEO, Tata CLiQ,
in an interview published on tata.com.
In the past, the organized retail sector has disappointed
the Indian consumer - both in terms
of price and products. First it was Future Bazaar
and then Big Bazaar Direct, Future Group’s
much-hyped e-commerce venture, which shut
down after almost 3 years of its launch in September
2013. The recent casualty has been USD
41 billion Aditya Birla Group’s flagship e-commerce
site Abof.com, which will close down its
operations by the end of 2017, after being unable
to compete against the heavy discounting model
of online rivals such as Flipkart and Amazon.
Abof.com is the only exception to this trend.
As against USD 3.1 billion Future Group, which
is suffering a loss of around USD 38.46 million
on their e-commerce ventures, such as Future-
Bazaar.com, Big Bazaar Direct, and Fab Furnish,
you would expect the retail major to swear off
e-commerce retail. However, the company is
playing it safe by not talking about its investments
in the online space.
Tata CLiQ, on the other hand, has gone one
step ahead by stating that the company has
got into the e-commerce space to play the long
game. Shoppers Stop also, is looking at generating
10% revenue from online sales by 2020.
Mukesh Ambani-led Reliance Industries Ltd’s
retail arm Reliance Retail is preparing to capture
the top spot as India’s top online grocery
retailer by 2020.
We anticipate that the retail giants are gearing
up for a second coming into e-commerce and this
time they won't go down without a fight. How?
Read on to find out.
In the year 2007, the Indian retail sector was
estimated to be worth USD 350 billion. It was
also around the time when 97% of the Indian
retail market was dominated by traditional
'kirana' or 'mom and pop' stores. India's vast
geographic, cultural, and economic diversity
has encouraged traditional retail to prolifer for
centuries because of a strong need and preference
for personalized shopping requirements.
The organized retail sector by that time, had
developed a business model and was expanding
very rapidly to get scale, but was badly hit
by e-commerce. It was the year when Flipkart
launched its business as an online bookseller
"In many ways, the
businesses are trying to
bring up their play in all
channels - online and
social - and prominently
stay available there."
—Anil Shankar
Customer Care Associate and
VP – Solutions & Technology,
Shoppers Stop Ltd.
in India. Since then, the world of retail has been
the same again.
Today the Indian retail market is estimated to
cross USD 1.3 trillion by 2020 from the current
market size of USD 500 billion. According to
Anurag Mathur, Partner-Consumer and Retail
at PriceWaterhouseCoopers (PwC), organized
retail will observe a 28% growth whereas
e-commerce would be about 46%.
“Both e-commerce and organized retail will
grow fast although it is only in the last one and
a half years that offline retail players got serious
about online retail,” said Mathur.
The Big Trigger: Demonetization and
the Rise of Digital Payments
One of the major reasons why this was possible is
the Modi government’s November 8 demonetization
drive in 2016, which has had a positive impact on
organized retail unlike several other sectors.
According to E&Y’s Mishra, several industries
including food and groceries benefitted
-- because citizens didn't have cash to pay at local
October 2017 | CIO&LEADER
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