Close to three years since the festive season in India was rocked by the emergence of e-commerce, a clutch of multi-brand consumer durables retail chains are fighting back. Several, including the Tata group-owned Croma, Future Brand’s EZone, Mumbai-based Kohinoor and Bengaluru-based Sangeetha Mobiles, are offering hefty discounts, innovative schemes and personalised shopping experiences this season; the flip side is that margins are likely to dip amidst lower volumes.
Subhash Chandra of Sangeetha Mobiles, (340 stores across South India) says that the industry has been impacted significantly and his chain is ‘holding on’ despite competition from online players. But this year, he hopes will be different, given that most retail chains have learnt from the experience of being mowed down by the e-commerce juggernaut. “We (mobile phone retailers) are used to it (the impact of e-commerce players on them),” says Subhash Chandra, managing director of Sangeetha Mobiles.
The festive season which brings in close to 20 per cent of the total sales of his store, is the mainstay of most brick and mortar retail chains and hence they are rushing in to reclaim their space in festival sales. Sangeetha has offered to bear the entire interest cost of mobile phones that have been paid for in instalments. It has also come out with a scheme that protects customers from loss if the price of a phone falls within a month of its purchase. Chandra is hopeful. “Online retailers are incurring heavy losses and we believe things will settle down and sanity will prevail. (Also) Online cannot provide you touch, feel, personal attention and so on,” he adds.
The Tata group’s, Croma is banking on a similar sentiment. It believes that shoppers look for a special experience from the stores every festive season and, “People who do not have stores have to pretend there is nothing more to shopping than closing the deal at the lowest possible price. However, if one just pauses for a moment and reflects how we as individuals behave as shoppers, one will realise that there is much more to the act of shopping than just haggling over prices,” said Ritesh Ghosal, chief marketing officer, Infiniti Retail which runs Croma.
While Croma is creating what it believes is a unique shopping experience it is also playing the discount game. It has launched a 5+5+5 scheme where shoppers get five per cent cash back on select debit and credit cards, five per cent off on the second purchase and a five per cent value back which is the amount given back as a gift card. It also has the #MyWishAtCroma programme, which aims at fulfilling more than two million customer wishes with specially curated offers, pre-approved loans and pre-viewed catalogues the company says. Ghosal says that, last Diwali Croma did better than the previous one, and from all indications, this year will follow a similar trend.
“What works in our favour is that in our category, the consumer really wants to shop at a physical store, especially in the ‘festive’ season when they are buying for their home,” he says. Besides Croma has an omnichannel presence – its 100 odd stores serve as ‘landing pages’ for their digital catalogue. He is clear that the e-world has to co-exist with the physical world and says, “Our website does not compete to sell versus e-tailers it actually exists to drive traffic to our stores. Consequently, more than half our e-commerce sales are actually omni-channel sales – which either initiates on the web and closes at the store or the reverse,” he adds.
The Chennai based electronic and durable chain Vivek’s has a similar strategy. It plans to launch an online portal and is focusing more on expanding its reach, increasing size of its stores and launching new offers to compete with online players. The 50-year-old chain opened three stores between December 2014 and October 2015,. “We are innovating, expanding, and refurbishing our stores besides launching our promotions and campaigns,” said B A Kodandaraman, chairman and managing director of Viveks.
Interestingly, even as the retail chains build a stronger physical presence and offer huge discounts, the large e-commerce brands are changing tack. Recent advertising campaigns have focused on bringing happiness, efficiency and on thelarge choice of goods on offer; discounts are on, but online shopping is more than deals, the companies seem to say. Pinakiranjan Mishra, national leader, retail and consumer products, at consultancy EY India says, “Online deals and discounts have come down compared to last year. It is a respite for offline retailers.” This festive season could well mark a new turn in the war between the online and offline retail brands.