Over 80% Retailers Don’t See E-Commerce As Threat: Study

The e-commerce sector has been expanding significantly for the last few years. Going along with it was a notion pertaining to the threat to the offline market’s existence. A recent study has debunked that notion by claiming that more than 80 per cent of retailers do not view e-commerce as a threat to their businesses.

According to a survey conducted by NeoGrowth, a digital lender focused on MSMEs, over 80 per cent of retailers, out of a pool of around 3,000 retailers and shoppers, do not find e-commerce as a threat to their businesses. The study, titled ‘Click & Mortar: The Evolution of India's Retail Ecosystem,’ included participants from various sectors, including auto, healthcare, infrastructure, services, FMCG & retail, consumer durables, food and beverage, fashion and lifestyle, and others. Interestingly, only 18 per cent of retailers reported a decline in their sales due to the presence of online selling platforms.

The sectors that appeared to be least affected by e-commerce were consumer durables & electronics, food & beverage, and fashion and lifestyle. The study also revealed that 90 per cent of retailers generate over half of their sales through offline channels, and 7 in 10 retailers are planning to expand their physical presence in the future.

Lucrative Steps By Offline Retailers

To stay competitive, approximately 43 per cent of the surveyed retailers have started offering discounts and combo deals, while 34 per cent now provide free and expedited doorstep delivery services. The demand for home delivery was particularly high among customers ordering food & beverage (73 per cent), healthcare products (68 per cent), fashion & lifestyle products (63 per cent), and FMCG & retail products (55 per cent).

Despite the proliferation of online marketplaces, physical stores continue to hold the top spot as the preferred mode of shopping for the Indian population. For 58 per cent respondents, the primary reason for this preference is the convenience of checking the quality of products. In-store shopping remains popular due to the assurance of product authenticity and quality.

Loyalty to Local Stores

Approximately half of the survey participants express loyalty to their local brick-and-mortar stores, often spanning multiple generations within a family. This loyalty is built on trust and familiarity. Furthermore, 35 per cent of Indian shoppers choose to patronize local retailers to show support for small businesses.

The in-store shopping trend in India is particularly prominent in segments such as Consumer Durables & Electronics, Food & Beverage, Fashion & Lifestyle, and Healthcare. These categories continue to thrive within the physical retail space.

Experience of Visiting Physical Stores During Festive Seasons

In India, festive shopping is a family tradition, bringing together members of all age groups to celebrate the occasion. According to the study, over 70 per cent of Indian shoppers place great importance on the experience of shopping with their family in physical stores.

For Indian retailers, the highest number of visitors to their stores is observed during special events like festivals. During these periods, they increase their product inventory, introduce unique deals, and actively market their businesses.

Safeguarding Small Businesses

It's worth noting that the Confederation of All India Traders (CAIT), a representative body for traders, has recently petitioned Prime Minister Narendra Modi to expedite the rollout of an e-commerce policy. This move is aimed at safeguarding traders from what they claim are widespread violations of the conditions outlined in Press Note 2 of the FDI policy by e-commerce companies.

CAIT has accused several foreign-funded e-commerce firms of engaging in predatory pricing, extensive discounting, loss funding, owning inventory, and employing a preferential seller system, all of which they argue create unfair practices that undermine Indian e-commerce businesses.

In conclusion, the study's findings offer a reassuring perspective on the coexistence of traditional retail and e-commerce in the country. The resilience of offline stores is evident with a large number of retailers dismissing e-commerce as a threat. Loyalty to local businesses, the significance of in-store experiences during festivities, and a commitment to supporting small enterprises underscore the significance of physical retail, even in the digital age.