Shoppers Stop will start selling its private labels on sites like Amazon and Flipkart in the coming days.
Big brick-and mortal retailers Shoppers Stop, Lifestyle International and Spencer’s Retail plan to sell their products on ecommerce marketplaces such as Amazon, Flipkart, Snapdeal and Jabong, following top retailer Future Group in embracing the reality of online shopping boom in the country.
“It is clear that Indians are adopting 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 disruptionists. So, either you join the battle or leave it. You can’t be a bystander anymore.“
So, in the coming weeks, Shoppers Stop will start selling its 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 online. Similarly , Lifestyle and Spencer’s Retail, too, will foray into online space this calendar year and are currently finalising plans to sell on their own online shops as well as on e-commerce marketplaces.
Kabir Lumba, managing director at Lifestyle International, said the company does not plan separate entrylevel 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 . 99 and ` points like ` . 199 which could be extended into online,“ he said. E-commerce companies such as Amazon, Flipkart and Snapdeal have grown their business enormously , particularly during the festival season last year, offering huge discounts 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 discount ing and to customer acquisitions,“ said the Future Group CEO. Shrikhande of Shoppers Stop estimates that e-commerce companies shelled out about $600 million, or about ` . 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 ` . 300 crore in advertising alone that quarter while top brick-and-mortar retailers together would have spent anywhere between ` . 20 crore.
. 15 crore and ` That quarter, as a direct impact from e-commerce companies, Shoppers Stop’s profits declined 20% to ` . 14 crore.
A report by Edelweiss said 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. “At the end of the day if customers only get used to discounting, who will shop at full price?“
Source : ET, Feb, 2015