About 90% of India’s retail market will remain offline even as it reaches $2.2 trillion in size by 2030, according to a joint report on omnichannel companies – operating both online and offline – by Accel, Fireside Ventures and the Redseer market research.
“Today we have at least 100 digital brands worth around Rs 100 crore that would benefit from the tribal knowledge of going offline… At the same time, in my opinion, the timeline to achieve a Rs 1,000-crore brand is roughly halved compared to the 15 years it took they would have occupied earlier,” Prakash said.
The joint report says that in India, users will see a huge shift towards omni-channel shopping. Many major brands such as Nykaa, Lenskart, Mamearth and Caratlane are adopting an omnichannel strategy, relying on exclusive brand outlets to expand brand awareness and enhance sales.
Prakash, however, said that D2C brands should continue to focus on online because this way they will be able to adapt to the product market and build their brand much faster than with an offline approach. Once they achieve a certain scale and brand recognition, such companies may consider offline expansion to enhance sales.
Prakash said venture capital firms such as Accel and Fireside Ventures are betting on technology that will enable such online-first brands to go offline. This technology enablement would assist new-age brands grow offline more effectively and aggressively.
“This opportunity is different from existing players because, unlike before, you don’t have to create different brands for urban and rural apply… In the US, you can simply be in the top 10 metro stations and create a brand worth $300-400 million dollars, but in India, the aspiration for good products goes far beyond metros and in our opinion it is a 110-city game,” Prakash said. Such omni-channel brands are also increasingly investing in setting up physical stores in non-metro cities, where Prakash said these brands were finding “good retail space at the right price, with good economics in terms of demand and faster return on retail investment in cities like Indore, Lucknow, Coimbatore and so on.”
In such markets, a physical presence could dramatically enhance the chances of customer “conversion” because it would assist build brand awareness and trust.
“I think there will be a lot more experiential shopping in these cities compared to urban India where convenience is more crucial. The effort in terms of capital expenditure and the complexity of operating so many branches in dozens of cities is worth it,” Prakash told ET.
