A recent study highlights the endurance of traditional retail in India, in stark contrast to the growing influence of online marketplaces. Remarkably, 90% of Indian retailers continue to generate more than half of their sales through physical stores. Particularly noteworthy is the consistent appeal of traditional retail in segments such as Fast-Moving Consumer Goods (FMCG), food and beverages, and consumer durables and electronics, which continue to attract a substantial offline customer base.
As per the NeoGrowth Study report, specific market sectors have displayed notable resilience against the challenges posed by e-commerce, with the top three categories being consumer durables and electronics, food and beverages, and fashion and lifestyle. Additionally, a substantial 82% of offline retailers have managed to maintain their business growth or witnessed an increase in sales, with only 12% of retailers noting a decline in sales, often attributing it to the proliferation of online marketplaces.
The allure of in-store shopping lies in the tangible interaction with products. A significant 54% of those surveyed express a preference for offline shopping due to the assurance of product authenticity and high quality. Furthermore, almost half of the respondents demonstrate a loyal commitment to local retailers, often extending across multiple generations within families, fostering a sense of trust and familiarity. Additionally, 35% of Indian consumers actively opt to support and bolster small businesses by patronising local retailers. To stay competitive, micro, small, and medium-sized enterprise (MSME) retailers are adopting various strategies to enhance their physical store sales, including offering discounts, providing doorstep delivery services, and leveraging instant messaging apps to connect with their customers.
The report illuminates the strategies implemented by offline retailers to attract customers. Significantly, 43% of retailers provide discounts or bundled deals to stimulate sales, and 34% offer complimentary doorstep delivery services. Additionally, 60% of retailers have incorporated digital payment solutions within their stores to augment convenience and improve the overall shopping experience for patrons. Interestingly, despite the surging popularity of online shopping platforms, a mere 10% of Indian shoppers rely exclusively on these platforms for their purchases. Notably, online shopping experiences a spike during flash sales events, with 35% of shoppers favouring online purchases during such occasions.
The report emphasises the key factors that drive in-store shopping for Indian consumers, which encompass a trust in product quality and authenticity, a sense of familiarity with specific stores, and a strong inclination to support local businesses. Additionally, over 70% of Indian shoppers place significant value on the tradition of family shopping in physical stores, with retailers witnessing their highest footfall during special events and festivals. The research also delves into the preparedness of Indian retailers to adopt online selling platforms, revealing that while 46% of retailers perceive themselves as being in the early stages of comprehending online retail, 16% grapple with the challenge of securing digitally skilled personnel for effective platform utilisation. Nevertheless, the report underscores that seven out of ten retailers have intentions to establish new physical stores as part of their strategy to bolster their offline presence.
This study, based on input from 3,000 Indian retailers and shoppers in more than 25 cities across nine diverse industries, emphasises the lasting resilience of offline retail in India. Key factors such as product authenticity, trust, and a penchant for supporting local businesses serve as the foundational pillars upholding the vitality of physical stores amid the rapid growth of e-commerce.
