What are Indian Retailers Thinking?

From physical to digital and now Omnichannel, the retail sector has witnessed a massive transformation in the past few years. While physical retail was hit the hardest at the onset of the pandemic with the shutting down of physical stores due to lockdowns, e-commerce came forth and brought balance to the equation as people shifted to online shopping during that period. However, as the lockdown restrictions eased and people started adapting to the new normal, retailers started realizing the strong correlation between the brand’s physical and online presence. As a result, retail leasing increased by about 166% Y-o-Y to touch 1.5 million sq. ft. during the first half of the year.

The retail sector is making strides as it continues the path of growth through innovation to create a better customer experience.

The Current Scenario

In the past few years, the retail sector has undergone a dramatic shift and non-store retail which used to hold a small proportion of the industry is now expanding—it is expected that by 2024, 20% of buyers will prefer to shop from non-store retail and the numbers may increase in the years ahead.

That said, the brick-and-mortar model is here to stay as well—a mix of both is becoming prevalent across brands. However, retailers need to rethink their physical presence to drive customer engagement and build better experiences. While the experience was already a critical factor in retail space design before the pandemic, it has become important now more than ever to counterbalance the widespread availability of e-commerce.

According to research, the in-store experience is one of the top factors driving customers to stores, besides the convenience of getting the product right away and the ability to touch and feel the product. Thus, technology is going to play a crucial role in the years ahead in integrating online and offline experiences and creating seamless experiences for customers.

The Retailers POV 2022

Moving forward, 65% of retailers want more stores and 55% of retailers want better locations. With people adapting to e-commerce, it is inevitable for retailers to transform their stores into destinations where people want to go—this way, they can increase their footfalls and generate better outcomes. Brands need to find new ways to bring back customers to the traditional brick-and-mortar stores by exploring the possibilities beyond “pure retail” with multi-functional stores. Here are some top trends that are growing in 2022:

1.?Diversification of Store Formats: Pop-up outlets, a relatively new trend, can be a great entry strategy for retailers—it is inexpensive and provides relevant feedback to retailers, giving them a fair idea of whether their store is a good fit in the neighborhood. Moreover, retailers need to part ways from standard stores and consider various formats like pop-up stores, open areas, unique concept stores & other formats that speak their brands’ language and provide an engaging experience to customers.

2.?Data-Driven Location Decisions: Consumers are generating data at every step of their journey—retailers need to leverage it well to make the right decisions. Analyzing demographics would become an important metric for site selection and location strategy, especially with the easy availability of analytical tools and data. A recent survey suggests that a majority of retailers are considering shopping malls in city centers for their store location, followed by prime high streets and then suburban neighborhoods & community malls.

3.?Repurposing of Stores: Store design needs to evolve to meet changing consumer expectations—we are expecting that the future of retail will be driven by the redistribution of spaces for fitting rooms, pickup counters, stockrooms, and product testing zones. Stores are going to leverage technology for predictive demand analysis to optimize inventory management and reduce wastage. Also, PoS systems might replace checkout counters for faster processing and convenience.

4.?Personalized Experiences for Consumers: A study by a leading software giant suggests that 73% of consumers today expect companies to understand their needs and 56% expect offers to always be personalized. Retailers need to focus on various touchpoints and improve consumer journeys by analyzing data to create personalized offers & communications and equipping staff with this data to enable personalized selling.

5.?Collaboration with Digital & Traditional Retail Brands: To expand offerings, retailers can partner with D2C brands; this can improve their foot traffic and establish a presence for emerging retail brands.

FINAL THOUGHTS

The traditional brick-and-mortar stores need to differentiate themselves with a sharp focus on experience to lure customers back. Thus, thematic stores, huge display areas & showrooms, and promotional events will become an essential part of their approach moving forward. Retailers will try to improve space productivity at their current locations by utilizing these stores/spaces as fulfillment centers as well. One big change we see is in ESG; retailers will strive hard to address the growing sustainability concern amongst the audience. As customers are becoming environmentally conscious, factors like recycling, using renewable energy, or sustainable materials in production might be important in the years to come.