Many casualties in modern retail as clicks kill bricks

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Ahmedabad: While the number of online shoppers in India is expected to go up to 3.80 crore by 2015 and e-commerce would grow to $24 billion, in the last five years e-retailing has adversely affected some categories due to increasing preference for online retail.

Brick-and-mortar retailers which so far sold books, music, gift items, mobile phones, computer accessories and lifestyle products have already been hit, and even stores of major business houses have either shut shop or reduced by half the space within the modern retail format of these categories, Vishal Mehta, Founder and CEO, infibeam.com, said.

ONLINE BOOST

Apparel, shoes and electronics stores could take the next big hit. The last one year has witnessed a 46 per cent increase in online sales of apparel, followed by consumer electronics. There has been a steep increase of 34 per cent and 25 per cent in online sales of shoes and accessories, respectively.

‘Fulfilment centres’

After 2005, with the advent of the retail revolution, , kirana shops were seen as probable victims. These small shops survived. And with online shopping picking up now, instead of kirana shops, it is modern retail which is expected to shrink faster. The reason: The cost of carrying inventory and tough price competition by online offers is likely to bleed them.

Mehta said modern retail would either reduce its inventory by 70 per cent, exit some categories, embrace online sales and make offline just a ‘fulfilment centre’.

Industry watchers predict that the expected launch of 4G services could be one big growth driver. With the deepening penetration of mobile phones, m-commerce has already taken a huge leap, compared to the spread of Internet.

According to the statistics available, offline bookstores have seen sales plummet by 90 per cent, followed by travel and ticket agents, gifts, toys and flower sellers (80 per cent each), consumer electronics and apparel (45 per cent each), shoes (35 per cent) and lifestyle accessories (25 per cent).

DIGITAL REVOLUTION

Even sale of music accessories has been hit by 25 per cent as mobile phone manufacturers are launching devices inbuilt with music downloading application-based services, he said.

A chunk of online shoppers are tech-savvy 18- 35 year-olds who spend hours on the Internet every day. Unlike the West, which is credit-card crazy, they prefer to pay cash on delivery or shop via Net banking. But the use of credit and debit cards is also on the rise.

Source- Business Line

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