Prof. Mohit Maurya*, Professor of Marketing at NIILM CMS writes:
The author can be contacted at [email protected]
E-commerce will soon become everything from something. We are witnessing how the line between e-commerce and store Retailing is gradually fading, and by and by e-commerce and online retailing is just becoming a natural part of retailing. The consequences are huge as a USD 500 billion online world is transformed into a USD 8–10 trillion global Retail market.
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Retail sales in the US and many European markets are still below the levels seen before the onset of the financial crisis in 2008. Moreover, labor costs in China are increasing rapidly while the price of oil and other raw materials has soared. This has created an environment in which Retailers are competing within a shrinking space looking for answers to procurement options, geopolitical scenarios and scalable formats.
There is a slugfest amongst retailers with different formats to gain market shares and to push competitors out by attracting customers either with better value for money (substantial discounts) or convenience. And with the online commerce thriving, the idea is that you need not big to succeed. Ebay and Amazon have brought retailers like Target and Comet on their toes. The double-digit growth of online retail sales seen in U.S. and other places is part of this change. Online retail is evidently growing at the cost of traditional retail outlets. The reality that this is happening at a time when the industry is under pressure is likely to expedite the metamorphosis that is already happening. This is not just a simple question about e-commerce replacing traditional stores, but a complex process involving several interacting trends.
The drivers of change include a concoction of deleverage and prudence in the face of lower economic growth, demographic change and shifting consumer behavior and expectations, combined with new technology and social innovations.
With an unprecedented level of entropy and dynamism retailers can look forward to these change drivers to plan their future strategies:
· Aging and tech savvy.
· JIT - Just In Time even for personal consumption.
· Always online.
· Mobile retailing.
· Social commerce.
· Multichannel or Omnichannel world.
But it is certain that in order to survive disruption, managers of legacy businesses need to know the game to be a part of the changing game. And probably knowing these drivers would equip them in a better way.
*Dr. Mohit Maurya
