Cracking the channel conflict for fashion retailers

Gone are the days when offline stores were the only stops to shop for consumers, with no channel dilemma to deliberate over.

The present-day, it cannot be ignored that the proliferation of the online channel has changed the game. What would be exciting now, is to see how the retailers plan to play by the new rules.

According to India Business of Fashion report 2019, physical stores or offline channels accounts for the ‘elephant’ share of 92.8% in the total fashion market revenue in India. Top names like Titan, Big Bazaar, Reliance Trends, Shopper’s Stop and Westside are some prime examples of big fashion retailers striving to ride the elephant. Taneira, the ethnic clothing brand from Titan, is on its way to open 50 stores in the top 20 towns in the next five years. Zara currently has 22 nationwide outlets while H&M operates 46 stores all over the country.

The increasing number of stores as a conscious decision on the part of the retailers in India reflects the need and importance of strengthening their physical presence in the market. However, the growing online fashion market pushed by favouring logistics and demographics has compelled the fashion retailers to examine their business strategy.

From $26.9 billion in 218, the online retail market in India is expected to reach $84.6 billion by 2023, while the online fashion market in India is expected to touch $14 billion by 2020.

In what could be called a shred of evidence suggesting massive outreach in the country, online sales festival by Amazon and Flipkart recorded orders from 99.4% of pin codes in the country.

Internet penetration is also termed an important facet to understand the growing consumer base in the online channel — from 524.9 million in 2013, the number of mobile phone users in the country currently stands at 813.2 million (CAGR of 7.57% as against the world’s average of 3.05%), while from 2015 to 2019, the number of internet users in India has doubled from 259.8 million to 525.3 million respectively.

Furthermore, online shopping spending figure of Rs 12,800 per person per year in the country is projected to almost double to Rs 25,138 by 2030; Apparel continues to remain one of the favourite online shopped categories for Indian customers.

Preferences, process transparency, control, convenience and pricing economics are some of the other reasons, the report mentions, that have guided the Indian fashion market over the years, and continue to do so.

Stating that the Indian story for department stores has been bumpier than smooth, the report explains that growth for some key offline stores like Shoppers Stop, Westside, Pantaloon etc. at best matches the growth of overall organised retail in India, while it could be much higher given that the format was an easy favourite.

“Going forward, if offline stores wish to remain relevant to the consumers and grow, they are required to transition to become an experience and service-driven format. The stores also need to rethink and reinvent on the lines of stimulation, selection, satisfaction, contact and connect,” says the report.