Across regions, states and cities, Indian consumers are increasingly turning towards the Internet to shop for apparel. As the e-retail fever spreads to new geographies, building strength in digital channels will become an imperative for apparel retailers to both secure and expand their customer base.

1.
Why brick and mortar apparel
retailers need to hit India’s e-retail
hotspots

2. Why brick and mortar apparel retailers need to hit India’s e-retail hotspots kanvic.com
Why brick and mortar apparel
retailers need to hit India’s e-retail
hotspots
Across regions, states and cities, Indian consumers are increasingly turning towards
the Internet to shop for apparel. As the e-retail fever spreads to new geographies,
building strength in digital channels will become an imperative for apparel retailers to
both secure and expand their customer base.
In India, online marketplaces like Amazon, Flipkart or Jabong are turning more and
more consumers into digital shoppers. The value proposition of these players, based
on attractive prices, convenience, and choice is answering the needs of a widening
base of customers. So much so that in 2014, only a few years after their entry into
the Indian market, online sales of apparel reached a record Rs. 3,200 crore.
Not only is India’s base of digital consumers expanding in size, it is also expanding in
spread. Early adopters of digital channels were initially concentrated in big metros,
but as smartphone penetration increased and marketplaces strengthened their
logistics capabilities, online shopping has become a pan-India phenomenon.
Today, online apparel shoppers live in more diverse locations - including many Tier II
and III cities, resulting in the dispersed set of e-retail hotspots shown in the map.
With consumers going digital in new geographies, brick and mortar apparel retailers
should look at their store footprint and answer two important questions:
1- How exposed is our business to consumers’ shift to digital?
2- Could our business hit new demand hotspots through digital
channels?
To obtain insights on these questions, our team took a sample of leading apparel
retailers and compared their store locations to India’s top hotspots for buying
apparel online.
Vlad Flamind (vlad@kanvic.com) is an associate consultant with Kanvic Consulting in the France and India

3. Why brick and mortar apparel retailers need to hit India’s e-retail hotspots kanvic.com
Our analysis suggests that leading brick and mortar retailers are already significantly
exposed to the digital shift, and that strengthening their online presence will be
essential to securing their position in existing geographies, as well as expanding to
new areas.
Some leading brick and mortar apparel retailers operate the vast majority of their
stores in e-retail hotspots, where consumers already show a high interest for buying
apparel online.

4. Why brick and mortar apparel retailers need to hit India’s e-retail hotspots kanvic.com
In these locations, buyers will have a higher propensity to navigate between physical
and digital channels throughout their purchasing journey. This poses a serious threat
to those players lacking a strong online presence, as customers will be tempted to
shop elsewhere whenever a retailer cannot serve them across both online and offline
touch-points.
In this context, apparel retailers with a high brick and mortar presence in e-retail
hotspots should make a strong commitment to increase their online capabilities. One
retailer in our sample is a particularly interesting case. This player operates almost
90% of its stores in cities where consumers have a high propensity to shop online.
However, it only offers a limited range of its products through third party
marketplaces. Being unable to consistently follow its shoppers across their
multichannel journey, this retailer could be losing business to its online competitors.
Another compelling reason for Indian apparel retailers to build a stronger online
presence is that this channel can tremendously boost their reach. From our analysis
it appears that leading apparel retailers could leverage digital channels to go much
beyond their current geographies and gain access to a new base of consumers.

5. Why brick and mortar apparel retailers need to hit India’s e-retail hotspots kanvic.com
Through their existing store footprint, each of the retailers in our sample are only
reaching between 5 and 39 of the top 68 e-retail hotspots for apparel. Entering these
geographies with new brick and mortar stores could be an option, but adding outlets
is a slow and costly process, providing only a limited reach. It also requires careful
planning of store roll-out, and adjustments in each store’s product mix.
In contrast, developing digital channels to reach these digitally active customers
could be much more efficient. On a single platform, products and brands can be
advertised and sold across all of India’s e-retail hotspots. And since online offers
unlimited shelf-space, product assortment need not be adapted to a specific
geography. Instead, consumers will use the tools availed by search and
recommendation engines to navigate through the offer and find what suits their
particular tastes.
As the market for apparel moves increasingly online, brick and mortar retailers need
to get ready to hit emerging e-retail hotspots in both existing and new markets.

6. Why brick and mortar apparel retailers need to hit India’s e-retail hotspots kanvic.com
About Kanvic
Kanvic is a management consulting firm helping businesses develop winning
strategies, drive profitable growth and achieve operational excellence
to reap long lasting rewards in the fast growing Indian economy. We work
with C-level executives to develop innovative solutions for the business
challenges of 21st century India by bringing in leading edge management
thinking informed by in-depth research and sound analysis.
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