Shoppers Stop, Lifestyle & Spencer's eyeing bigger online presence
New Delhi: The giants of retail chain such as Shoppers Stop, Lifestyle International and Spencer's Retail now aim to tie-up with the e-commerce websites like Flipkart, Amazon, Snapdeal and Jabong to sell their products to
New Delhi: The giants of retail chain such as Shoppers Stop, Lifestyle International and Spencer's Retail now aim to tie-up with the e-commerce websites like Flipkart, Amazon, Snapdeal and Jabong to sell their products to counter offline sales "disruptions" caused by online shopping boom in India.
"It is clear that Indians are adapting to online space faster and this adoption will only grow in the years to come," said Govind Shrikhande, MD at India's oldest department store chain Shoppers Stop.
"Also, it is becoming clearer that discounting is going to be the norm of these (e-commerce) guys because they are getting funded and you can't really face this disruptionist. So, either you join the battle or leave it. You can't be a bystander anymore,” he added.
In the coming weeks, Shoppers Stop aims to sell their private label fashion brands including Stop and Haute Curry among other labels on the online marketplaces. In a bid to maintain different products for online and physical stores, it plans to create entirely separate products to be sold only on online.
Lifestyle and Spencer's Retail will enter the online space as well in this calendar year and are currently finalizing the plans for their own online shops as well as e-commerce marketplaces.
Kabir Lumba, managing director at Lifestyle International, said the company does not plan separate entry-level product line for online or to offer much discounts, pointing out that the Dubai-based Landmark Group firm has maintained its same-store growth at double digit pace despite an economic slowdown and increased competition from online players.
Shashwat Goenka, who heads Spencer's Retail in the RP-Sanjiv Goenka Group, said it is flexible with its online strategy which is currently evolving. "We already have non-food merchandise such as apparel on opening price points like Rs 99 and Rs 199 which could be extended into online," he said.
Online companies like Amazon and Flipkart have grown their market enormously particularly during the festive season last year, offering huge discounted offers and backing it up with heavy advertising.
Kishore Biyani, whose Future Group last year announced plans to sell its private brands on Amazon, estimates that online retailers are spending about 20% of their sales on customer acquisitions and another 30% in discounting products.
"So totally whatever sales they are doing they seem to lose 40-50% to discounting and to customer acquisitions," said the Future Group CEO.
Shrikhande of Shoppers Stop estimates that ecommerce companies shelled out about $600 million, or about Rs 3,720 crore, in discounting products to woo consumers during the crucial shopping quarter of October to December last year. He said they would have spent Rs 300 crore in advertising alone that quarter while top brick-and-mortar retailers together would have spent anywhere between Rs 15 crore and Rs 20 crore. That quarter, as a direct impact from e-commerce companies, Shoppers Stop's profits declined 20% to Rs 14 crore.
According to a report by Edelweiss, Shoppers Stop doubled the number of sale days to 65-70 days last year from 34 days in the year before due to early start of seasonal sales to keep up with discounts offered by online companies. Lifestyle too, had increased the number of sale days by around seven days last year and expects it will remain same this year.
Aggressive online discounting and subdued consumer demand have forced most traditional retailers to advance their end-of-season sales from January 16 to the last week of December, while the second such sale has shifted from around mid-August to end-July. This is despite their best efforts to reduce dependence on discounts and even reducing the merchandise which goes under sale.
Shrikhande said the online retailers' strategy is disruptive for the entire industry.