Retail Chronicles - November 2021 Edition by Retail Lab SIMSR

Retail

Chronicles

Monthly Newsletter | Volume 6 | Issue 10 | November 2021

CONTENTS 03

20 21

TRADITIONAL RETAIL

WRITERS

In India, traditional retail accounts for more than 95% of total. But now its changing as the supply chain is becoming customer centric and owners of stores are investing in store modernisation to provide better customer experience.

Aayush Ghildiyal | Harsh Gupta | Akshita Kulshreshtha | Raghav Khandelwal |

BRICKS & CLICKS

SENIOR DESIGN TEAM

Business models are evolving day by day. With the rise of e-commerce business in the last decade, retail companies working in the brick and mortar format had to think strategically to cope with the competition brought up by ecommerce business.

MELAS TO MALLS Highlights wonderful insights on how shopping malls have evolved over the years not only in India but also in the world and also shows a comparison to the malls we have currently.

IMPACT OF COVID-19 ON RETAIL Location plays a vital role in the growth of a franchise business. A similar store at highway and residential area perform differently. Location includes customer demographics, visibility of stores, accessibility, and competition.

PODCASTS TRIVIA QUIZ

EDITOR Riya Shah

TRADITIONAL RETAIL

Aayush Ghildiyal - MBA RM Retail Chronicles | Page 03

November, 2021

For centuries, Indians have bought goods from small local merchants and have established this style nationwide. India is known as the "Nation of Shops." Retail is India's second-largest employer after agriculture. There are about 12 million stores in different parts of the country. These stores are completely unorganized, independent, ownermanaged stores. In small towns and cities, where "Kirana" shop pushcart vendors, "Melas" and "Mandis" are the leading players, the presence of chaotic and traditional retailers is very strong.

part of the Indian retail format, primarlya small family-owned company. The Kirana stores are very small shops located near residential areas; this is one of the significant advantages of such shops. The shop owners can easily build a strong personal relationship with the customers and even go to the customers' houses to get orders. Credit facility accounts for another advantage Kirana shops have over the modern retail stores, customers reliability and the strong relationship is enough to avail the credit facility. Retailers’ suggestions and recommendations regarding products play a significant role in the customer's purchase decision; they understand the requirements of their customer base and only keep goods suitable for them.

Traditional retail continues to be the backbone of Indian retail, with traditional/unorganized retail accounting for more than 95% of total retail sales. The typical "Bania" outlet or corner store format forms an essential Retail Chronicles | Page 04

November, 2021

The traditional supply chain model is lengthy and not flexible enough to adapt to the changing customer preferences. The entire supply chain is based on production and product characteristics and is unable to provide differentiated services to the consumers. There is a change happening now, where the entire supply chain is customer-centric. Products currently available at the Kirana stores are precisely according to the requirements of local consumers. With better transportation facilities, products that were once unavailable in the semi-urban and rural stores are now readily available. Even the fruit and vegetable cart vendors are now adapting to the changing consumer requirements; they now have products like avocado, broccoli, Kiwi, etc. They were once not demanded often by the consumers but are now selling in large quantities.

According to Bizom, sales growth in the standalone modern store segment in March 2021 increased 13.9% yearly. Rural India's contribution to the independent segment of contemporary trade is estimated at 42 percent. According to the Bizom report, the emergence of this new class of stores can be attributed to successful Kirana owners or their second-generation investing in store modernization to provide a better shopping experience. The value proposition of these stores lies somewhere between the choices offered by organized modern retail chains and the services of local Kirana stores, providing customers with the best of both worlds. This has emerged as a new face of modern Indian commerce as it is superior to the business format. The brand provides robust programs and promotions to attract the attention of customers in such transactions.

With time traditional retailers have changed their outlook; they have recognised the changing needs of the consumers, not only in terms of products but also the aesthetics of the store itself. The new age Kirana stores are based on the supermarket model; they allow the customers to choose their favorite product from shelves arranged in an aisle shopping format with a modern trade-like checkout experience. Retail Chronicles | Page 05

November, 2021

The Indian retail market is changing rapidly, with people wanting products to be delivered instantly to their homes and ordering through an app. However, the traditional retailer still occupies a significant share of the retail market. Cart vendors and Kirana stores have an emotional connection with the people of India; with various discussions and the complete randomness outside these stores, they will continue to remain an integral part of the Indian market.

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November, 2021

BRICKS & CLICKS HISTORY OF RETAILING

Raghav Khandelwal - MBA RM Retail Chronicles | Page 07

November, 2021

Introduction: Business models are evolving day by day. With the rise of e-commerce business in the last decade, retail companies working in the brick and mortar format had to think strategically to cope with the competition brought up by e-commerce business. According to Statista, the market size of the ECommerce industry is estimated to be around 30 Billion US Dollars and is expected to reach about 200 Billion Dollars by 2027. To tackle this challenge, businesses have innovated their models and have adopted the "Bricks & Clicks" approach, i.e., Omnichannel retail strategy. This model combines a physical retail store (Brick) with an online e-commerce store or an online sales channel (Click).

Examples of Businesses:

Bricks

Clicks

Some of the companies that have adopted this strategy are given below: -Van Heusen Van Heusen has levelled up their Business by adopting an omnichannel strategy. Recently, they have launched their first digital immersive store to address every consumer's concern of not finding appropriate fitting & size. Apart from this, they have implemented technical measures such as a digital display at the front of the shop, look of the daily updates, new fashion updates and many more. -Zivame

This model allows small businesses to leverage the two unique sales channels through a unified retail strategy. This model enables retailers to offer more options to their customers, increasing their Business's earnings and potential brand reach. Retail Chronicles | Page 08

November, 2021

The idea to have a fitting lounge similar to Victoria's Secret is new in India and has good opportunities. Taking this into consideration, Zivame recently launched its first appropriate fitting lounge in Bangalore. It was aimed to help women to make the right choices in their purchases. A Brief Timeline: Around the 2000s, retailers began to work on brick-and-mortar stores. This was also the time at which the dot com boom happened. Layer after layer, companies built towers and buildings, and it gradually separated their businesses' digital and physical aspects. This phenomenon led to a disconnection between online and offline sides among each side's different departments like sales, marketing, and fulfillment units.

VARIANTS Some of the variants of omnichannel stores that the retailers have adopted have been given below: Online Shopping Instore One of the best examples of this variant is Oasis Stores. The introduction of iPads across the stores enable consumers to browse, select and pay online while being in the store. They have the option to check and try the product of their choice rather than being in the queue to pay for it. Also, if a clothing style is not available in the store, consumers can order it through an iPad. After Oasis implemented this strategy, they saw initial sales from iPad as 20 % of the total sales from the first week.

Retailers in these times spend huge capital on online brands and consider offline stores as separate business units. After the economic bubble burst in the late 2000s, retailers understood how this barrier limited future growth. To differentiate their Brand offerings from others, retailers need to create a unique & integrated experience, i.e., pursuing an omnichannel retail approach. Instore Experience Online Marks & Spencer, British Multinational Retailer, used this variant of omnichannel for their stores. They introduced the 'at home' app in 2011, which focused on home items from the catalogue and provided a visual journey, which replicates that of an instore. The app enhanced customer experience by providing an easy path for browsing Homeware products before making a purchase. Retail Chronicles | Page 09

November, 2021

Cardholders availed of these offers, and also, they obtained exclusive personalized offers based on their points. Even if these tactics are not new, it is still being used by Boots to enhance customer experience and enable omnichannel retailing. Click and Collect Service In this variant, customers can select and buy items online and collect it from the local store. John Lewis introduced this strategy way back in 2008, but this has been spread across other sister companies, namely Waitrose and other 300 stores. The net result of the strategy was a success and John Lewis, in 2012, reported 25% of all orders made through johnlewis.com to belong to click and collect. This example shows that how much potential this variant holds for retailers.

PROS AND CONS After knowing how Omnichannel has emerged and what types of variants and strategies companies are using, let us understand the pros and cons of adopting the 'Bricks & Clicks' approach. Pros Instore Digital Kiosk Implementation of omnichannel through Digital Kiosks have been used frequently nowadays. Boots, UK's leading health & Beauty retailer, used this variant for the stores. They installed Kiosks around their stores which enabled them to get loyalty points and extra offers.

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1. Offers competitive advantage Omni Channel retailing enables retailers to target a broad audience and, at the same time, engage customers through an integrated user experience through a variety of platforms, offline and online, media, internet, etc. November, 2021

2. Increased conversion rate One of the most critical insights that the examples of 'Bricks and Clicks' provide is how significant it is to focus on customers instead of being an inspiration. Improvement in customer experience and better conversion go hand-in-hand, but retailers need to look deeply into what customers expect from a brand.

2. Software requirements Having the right software is very important for an omnichannel approach to work. The right tech enables retailers to carry out processes efficiently. Budget constraints can come up for a company as well for procuring software. Hence, it is significant to have the right platform made for omnichannel support.

THE ROAD AHEAD

Cons 1. Complex Marketing Strategy As we saw the advantages of omnichannel retailing for a retailer, implementing this approach is not easy. An omnichannel marketing strategy is quite complex as it considers all the channels to deliver customer experience.

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In this world of offline and online mediums, they can collide. It is the work on the retailer's side to cope up and manage both worlds. Customers today are looking for an experience that is seamless and integrated from all mediums. The 'Bricks and Clicks' approach provides a smooth and personalized experience which ensures more customer loyalty, better conversion rates and many more advantages to explore.

November, 2021

MELAS TO MALLS

Akshita Kulshreshtha - MBA RM Retail Chronicles | Page 12

November, 2021

Image: Country Club Plaza, 1950s Introduction A mall is a collection of retail stores, services, and other associated activities all under one roof, that is conceived, constructed and maintained by a separate management firm as a unit. The associated activities include parking spaces, food joints, movie theatres, banks/ATMs, offices etc.

While the world of traditional retail saw how Market Places were developed and organized throughout the world, the modern adaptation of these market places had started taking places in the early 20th century.

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Terms like Shopping center, shopping plaza and later, Shopping Malls were adapted to used in place of a marketplace. The term “Shopping Mall” was first introduced in late 1950s. Before the concept of Indoor shopping arenas was introduced, the first outdoor shopping mall opened in 1922 in Kansas City. It was called the Country Club Plaza. It was more of a plaza than a mall. However, the malls we know of today are indoor space having a cluster of retail stores. The first such space was opened in 1956 in Edina, Minnesota.

Image: Country Club Plaza, 1950s November, 2021

It was called as South Dale center and covered an area of 800,000 square feet. It was conceptualized by Victor Gruen who is also known as Mall Maker, as described by M. Jeffrey Hardwick in his book of the same name.

Image: South Dale Center, 1950 Covered shopping arcades were not a thing in the industry before 1920s. The mid-20th century brought in the culture of shopping arenas that were covered and a passage to walk through. This culture was first introduced in Europe.

As America saw urbanization, shopping centers were introduced. One of the first shopping centers that used the word “Mall” was the Kalamazoo Mall in Michigan, United States in the year 1959. Other malls that followed suite were the Lincoln Road Mall in Miami Beach and the Santa Monica Mall.

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It was Bergen Mall that opened in 1957 in New Jersey, USA that started the trend of adding the suffix “Mall” in the name of a market place. Shopping Malls in India Organized retail in India was a scarcity up until the 1980s. When the Indian Economy opened up in the 80s, the textile sector starting booming. Brands like Raymond’s, Bombay Dyeing, Titan started establishing their retail outlets throughout the country. The evolution of retail started in India with Ansal’s Plaza in Delhi in the year 1999. It was opened on an area of 178,000 sq ft. This was followed by Crossroads in Mumbai and Spencer Plaza in Chennai.

Image: Ansal Plaza Upon introduction, the mall culture was readily accepted in India, specially in the metro cities. The year 2003 saw the start of expansion of mall culture where new malls started getting introduced rapidly in cities like Mumbai, Delhi, Chennai, Bangalore, Hyderabad, Kolkata. While the next few years were a smooth sail for the Organized retail sector in the country, it was hit by the recession in 2008, that saw empty walls in all the malls.

November, 2021

However, the downtrend also came with its own perks. The retailers took that time to understand the mall business and put in expert domain knowledge in order to create shopping spaces that were profitable and rewarding. The Indian retailers starting focusing on viable locations, malls design, flooring, merchandising extra to ensure increased footfalls in the malls. 2020s – Malls in the World While the mall culture had started in the United States, several countries today have developed in order to harbor huge shopping centres and malls. The largest shopping mall in the world today is the South China Mall in Dongguan city of China. This mall had opened in the year 2005 and carries around 2350 shops. The total leasable area for this mall is 71,000,000 sq ft. In terms of number of shops, the SM Tianjin Mall in Tianjin, China is the largest mall that leases to more than 2500 shops. It had opened in 2016 and is one of the most successful malls in the country.

Image: SM Tianjin Mall, Tianjin, China Countries like China, Thailand, Philippines are the big players in the mall business around the world and have been producing some of the largest malls.

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2020s – Malls in the India India has seen its own steady growth when it comes to malls. The largest mall in India is the Lulu International Mall in Thiruvananthapuram, Kerela. It has 225 outlets and 100+ largest brands. It has opened in the year 2021 and has an area of 2,000,000 sq ft. This is followed by the DLF Mall in Noida, Delhi NCR. This mall has over 330 brands. The area is the same as Lulu International Mall.

Image: DLF Mall, Noida DLF is also planning to build a Mall of India in the city of Gurgoan, which will be around 4,500,000 sq ft more than the current mall in Noida. What the future looks like With the pandemic, malls saw a major slowdown. Many entertainment centers were forced to shut down due to the pandemic. However, it remains to be seen whether the malls in the world and in India pick up the same pace where it was left off when the world stopped going offline.

November, 2021

IMPACT OF COVID-19 ON RETAIL

Harsh Gupta - MBA IB Retail Chronicles | Page 16

November, 2021

According to Newton’s laws, an object always remains in its current status until and unless some external force is applied, i.e., the external factor is required for any change. The change in the acceleration is directly proportional to the change in the force applied to a body, i.e., the strength of the situation is directly proportional to the response.

The shift of offline stores to online services and online presence was slow, and there is a drastic increase in this rate due to Covid 19. According to IBM, Covid 19 (strength of situation) accelerated the shift to e-commerce (response) by about five years. Hence the second law can also be applied to non-physical things. The Covid 19 had an impact on almost each and everything under the sun. It aggressively fueled the digitalization and drastic shift in consumer shopping behavior, which are permanent. There could have been a return to old ways if the impact of Covid 19 was for a short duration of time. Let’s discuss the implications of covid 19 on different aspects:

Apart from physical objects, these universal laws can be applied to non-physical aspects as well, like buying behavior, business growth, customer preferences, etc. The reason behind and innovation, new business, expansion, etc. (change) and be anything like (demand, change in laws, decrease in raw material cost or operational cost, etc. (external factor). Retail Chronicles | Page 17

• Buying Behavior Because of the pandemic, there was a decrease in the GDP growth rate and hence the income level. The consumer became more conscious and started avoiding luxurious and unnecessary items. Saving was the priority. There was a change in government laws. Everyone was expected. November, 2021

To avoid all these, the people who used to prefer only brick and mortar stores for quality reasons also started using ecommerce platforms. The majority of the population followed better safe than sorry. There were products and services on ordinary people spend more than usual like Health and hygiene, household cleaning products, Home entertainment, h energy, maintenance, investments, insurance, etc. Apart from these products, there were other products on which people spend less than usual like traveling, services, clothing, consumer electronics, hobbies, electronic products, luxury products, etc. Apart from this, there was a shift in customer loyalty. The people used to stick with the new brands they recently discovered. Another evident change was an increase in the expectations of the customers. People expect more from brands and retailers than ever before, like great products, exceptional customer service, convenience, amazing customer experience, and much more. Hence there was a change in buying behavior as well as buying pattern.

• E-stores During the pandemic, people spent more time on social media like whats app, Facebook, Instagram, and YouTube. They were expected to stay at home unless there was some emergency. Hence they were forced to explore more e-commerce websites to fulfill their demands. They discovered new online brands, became more aware, started comparing products online, and much more

Retail Chronicles | Page 18

Thus there was a drastic increase in the demand for online shopping. The companies like Amazon, Flipkart, Dominos, Uber Eats, Zomato, etc., had an advantage of a strong online presence; however, many businesses identified the gaps and came up with new online products and services. The shift to ecommerce was more than 50%.

• Brick and Mortar Stores As discussed changes like government laws, social distancing, fear of infection, etc., people were reluctant to go to brick and mortar stores. Thus the demand from offline stores started decreasing, and most companies decided to shut down the brick and mortar stores to reduce the operational costs. Here is the data given by Statista, which shows the number of stores shut down by some companies worldwide and the percentage of consumers avoiding stores due to social distancing in different countries.

November, 2021

Hence, a decrease in offline stores' demand (external factor) reduced offline stores (response)

This helped them follow social distancing and enabled them to smoothen the supply chain as it gave them time to fulfill the consumer demand. Apart from that, the record keeping of demand was more structured and there was a boom in online transactions, thus fueling “Cashless India.” To conclude, the 360-degree impact of Covid 19 on retail stores, both online and offline, is evident, and it is not temporary but permanent.

• Operations Because of the pandemic, there was a considerable change in the operations of retail shops and other businesses. There was more inclination towards the concept “Buy online, pic in the stores (BOPIS)” or curbside pickup models to follow the social distancing. Here, you can order online and pick the product at a suitable time physically from the stores. Brick and mortar stores used to take orders via phones, Business WhatsApp, other social media, their apps, etc.

Retail Chronicles | Page 19

November, 2021

PODCAST

TRADITIONAL RETAIL

-AAYUSH GHILDIYAL

MELAS TO MALLS -AKSHITA KULSHRESHTHA

Retail Chronicles | Page 20

BRICKS & CLICKS

-RAGHAV KHANDELWAL

IMPACT OF COVID-19 ON RETAIL

-HARSH GUPTA

November, 2021

TRIVIA

QUIZ

Retail Chronicles | Page 21

November, 2021

Q1. What percentage of the Indian retail sector is still unorganised? a) 75% b) 80% c) 95% d) 65%

Q5. The observed changes in buying behavior after covid 19 were all of these except a) More inclination towards brick and mortar stores for quality purpose. b) Preference of e-commerce sites c) Shift in customer loyalty d) Increase in expectation of customer

Q2. What is the main advantage of a Kirana store over the modern supermarkets? a) Small size of the store b) Credit Facility c) Better Product mix d) Cleanliness

Q6. The survival strategies followed by brick and mortar stores were all of these except: a). Buy Online, Pic In the Stores (BOPIS) b). Contactless stores c). 100% cashless transaction preferred by offline retail owners d). Increased presence on social media

Q3. Who is known as the Mall Maker? a) Victor Herbert b) Jeffrey Hardwick c) Victor Gruen d) Victor Cousin

Q7. Oasis Stores are an example of which type of Brick & Click Store? a) Online Shopping Instore b) Click & Collect Service c) Instore Digital Kiosk d) Instore experience Online

Q4. Which city is the home to the largest mall in the world? a) Bangkok b) Istanbul c) Dongguan d) Dubai

Q8. Which of the following is an example of Omnichannel Store having Instore Digital Kiosk as their strategy? a) Van Heusen b) Raymonds c) Boots d) Pepperfry

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November, 2021

REFERENCES https://www.forbes.com/sites/lisakim/2021/11/13/thisweeks-most-disliked-youtube-video-highlights-negativesentiment-toward-covid-vaccines-for-kids/? sh=279859d8733f https://www.statista.com/study/71767/coronavirus-impacton-the-global-retail-industry/ https://www.investopedia.com/terms https://explore.openaire.eu/search/publication? articleId=doajarticles::924428c0c6b70cdaa4b9d9a77559d9e9 https://www.forbes.com/sites/forbescoachescouncil/2018/0 8/02/yes-franchising-has-its-freedoms/?sh=70f192a23382

/retaillabsimsr @Retail_Lab @Retail_Lab