Brick And Mortar Must Fight Back

After playing a defensive game against the onslaught of ecommerce there are now signs of brick-and- mortar waking up. Witness the amazing response Ikea received at the opening of their new stores in Bengaluru and Hyderabad. In Bengaluru, the crowds were unmanageable on the first weekend, forcing them to tweet to customers that the waiting time was two to three hours.

Of course, Ikea is a huge international brand which had an oversized image even before its’ new openings. They were also cleverly seeding the market on portals like Amazon, introducing their products to customers unfamiliar with their range.

On top of all this, they had a unique, well-funded launch. The drone ballet was probably one of the most reshared posts in recent days and the huge queues at the opening were no surprise. Even surrounding businesses were not complaining, reporting a 50 per cent increase in sales, especially at eateries and the closest metro station had a big spurt in traffic.

But this cannot be a one-off event. After all, with the ending of months and years of restrictions, people are beginning to rediscover the pleasure of shopping as fun, entertainment and even therapy.

In the last few years, it was almost as if high street and mall stores had given up the fight against a rampaging ecommerce which notched up unprecedented growth rates. Online shopping filtered down even to small towns where customers began enjoying its range and convenience. But even diehard ecommerce supporters know that this growth was situation driven and cannot continue at the same rate going forward. In the melee, however, brick-and-mortar stores seem to have lost sight of their own inherent advantages which online stores still cannot counter.

Immediate delivery of purchase – Despite their service and logistics clout, online customers still have to wait.  On the other hand, a customer entering a store can walk out with her purchase in a bag.

Product knowledge and information – Only the larger portals are able to provide what they call A grade product information, which of course, they get from suppliers. Smaller sites struggle to display even a proper list of specifications. In contrast, the sales assistant in even the smallest store, can provide all the knowledge and information the customer needs and more, to make an informed decision.

Shopping is coming back into vogue after a break of two years and customers are no longer hesitant to enter shops.

A lot of retailers have, however, frittered away these advantages – they don’t keep stocks on hand and depend on suppliers’ stocks to make deliveries. This was perhaps expected while people were spooked with physical shopping, but now it becomes a major deterrent. Furthermore, sales staff are simply not trained to provide the level of service that is really required to outdo ecommerce shops.  In the case of departmental stores, the situation is often worse as most staff on the shop floor are more shelf stuffers than actual sales advisors equipped with skills to assist in making informed choices. As a result, shopping becomes a frustrating chore instead of the pleasure that people really want.

In the matter of pricing, brick-and-mortar stores find it difficult to match the clout of large ecommerce shops with their large volumes and their successful use of loss leaders or limited models to create the illusion of always low prices. In the case of electronics and white goods, suppliers are so volume driven that their best prices go to only their largest customers which makes competition with large suppliers to ecommerce difficult. This is a tough nut to crack but it calls for a rethink of pricing strategies for the manufacturers, wholesalers as well as the retailers.

Creating and hyping mall wide events such as a Black Friday also works. But change is needed in the way stores operate.

Most retailers decide their offers based on the stocks that they are holding and their sales targets for that month or period.  So, in every location or area you could end up with some Sale or Offer practically around the year. Retailers need to start thinking as a group with a common interest, rather than only as individual stores with their own limited objectives.

Offers and sales in a particular area or mall should be coordinated for specific periods. This happens to some extent for example around festivals like Diwali. But could be synchronized for other times in the year as well. This means, that there would be non-promotion periods when customers don’t get any offers, providing a respite from offer overdose and increasing the credibility of offers when they do happen.

Sales and offers should be genuine. Larger chains probably have kosher pricing policies, but the practice of first increasing tag prices and then putting up big ‘percentage off’ signs is unfortunately not unknown. This is actually self-defeating as the real competition today is not with other physical shops, but rather with ecommerce portals and for this, confidence and trust are big factors. Ecommerce is very clear that any sale happening in brick-and-mortar is a sale that they have lost and they do their utmost to protect this. Brick-and-mortar retailers should be thinking similarly with regard to online sales, working together instead of trying to upstage each other. The mantra should be that brick-and-mortar wins when any physical store makes a sale.

When customers know that they will only get the best offers in specific periods, their purchases will be planned around these milestones.

All this calls for some kind of coordination and control of physical stores. It also means that first and foremost, service levels need to be upped. In a porous market where staff keep leaking away this is no small challenge, but strategies are needed to ensure that trained and knowledgeable staff are retained. Retail sales should be seen as a desirable career option attracting better talent and greater commitment. Physical retail still has a lot of potential and when it is done right, it is highly successful.

It’s time for brick-and-mortar to fight back.

The writer has over 30 years’ experience managing brands and retail and ecommerce businesses internationally. He also comments and consults in these areas.

Ajai Kumar Dayal

Guest Author The author has over 30 years’ experience in managing and consulting on big brands, retail, and ecommerce. He has been a commentator and columnist in many publications.