Post lockdown, online-to-offline strategy to get prominence in retail industry

More and more retailers will be bound to cling to e-commerce platforms and mobile apps as the prevailing situation amid coronavirus lockdown is expected to lead to shift in consumer behaviour, according to LOTS Wholesale Solutions.

Subsequently, there will be a need to have an omni channel strategy -- Online to Offline (O2O) -- for the retail industry in order to cater to the changing needs of consumers.

LOTS Wholesale Solutions, a wholly-owned subsidiary of Siam Makro Public Co Ltd - Thailand's leading cash and carry operator, said there will be an impact on its business due to the current situation as both industry and suppliers are facing problems ranging from shutdowns, labour shortages, supply chain disruptions, etc.

"No doubt, there will be some impact of this current situation in the near future. However, in phase-II of the lockdown the situation will normalise with time and the retail sector will embark on its journey towards recovery, albeit slowly," LOTS Wholesale Solutions Managing Director Tanit Chearavanont told.

He further said that anticipating the challenges retailers might have already started working on several strategies.

"They will also need to optimise their omnichannel approach in order to cater to targeted customers," Chearavanont added.

According to him, the current situation has reinforced the importance of O2O strategy for the retail businesses.

Meanwhile, the government on Sunday prohibited e-commerce platforms from selling non-essential items during the lockdown, four days after allowing the companies to sell all kinds of goods.

The April 15 order had said e-commerce platforms were allowed to sell such items from April 20.

On the prevailing situation and its impact on the retail sector, Chearavanont said, "This situation has also highlighted the importance of the O2O strategy for businesses in India. Retailers will increasingly provide services through e-commerce platforms and mobile applications," he said adding as "more customers are expected to switch to e-commerce options and digital payments".

He further said, "The impact is also visible on suppliers who faced some challenges with production due to mass labour migration and other movement restrictions."

LOTS Wholesale also expects that like China, the Indian retail sector will also recover post this crisis.

"As soon as lockdown restrictions ease, there should be an increase in the overall demand for goods. Economic activity will increase having a positive rub-off across industries," he said.

However, he also agrees that like China, which was the first country to be impacted by covid-19, Indian retailers may also face problem in segments such as fashion, apparels, electronic items as people may cut their discretionary spends post lockdown.

According to him, China has already shown the signs of delayed purchases with over 40 per cent consumers wanting to make major purchases when the outbreak completely settles.

"In India too, purchasing habits could take longer to return to normal. When the situation normalises, people will start coming back to their normal routine and the demand for non-essential items will gradually increase. We are hopeful that demand for apparel, appliances, houseware items will witness growth," he said.

While talking about the challenges during the lockdown, Chearavanont said several retailers and FMCG brands worked together to smoothen the supply chain process.

"For instance, at LOTS, we are directly procuring commodities and ensuring we send our own fleets of trucks and workers to bring provisions from distribution centres of FMCG companies," he added.

The company also foresees that phase 2 of lockdown will see "increased production" as the manufacturing will stabilise.

"Ease in the movement of trucks will also aid in restoring supply chain to an extent. Companies will institute standard operating procedures to ensure the safety of its workforce boosting the confidence of employees," Chearavanont said.

Lots Wholesale Solutions is a wholly-owned subsidiary of Thailand's leading Cash & Carry operator Siam Makro, which is a part of the USD 50 billion Charoen Pokphand Group (CP Group).

Established in 2017, LOTS Wholesale Solutions operates three stores in Delhi NCR and has plans to add three more this year.

Amazon, Future Group in talks over Future Retail stake sale

Kishore Biyani-led Future Group has started talks with Amazon for selling stake in Future Retail Ltd to the US-based e-commerce major, industry sources said. The two parties initiated talks earlier this week for a stake in Future Retail, they said.

"They have initiated talks and these are still in early stages," a person privy to the development said. 

The move came after Future group firms defaulted on loans taken against the pledged shares of Future Retail in March, which also impacted its share price. Recently, rating agencies such as Standard & Poor's and Fitch downgraded the credit ratings of Future Retail after the default. 

When contacted, the Future Group denied any such discussion saying that they are "speculative in nature". Amazon India said the company does not have any comment to offer on this matter.

At the end of December quarter 2019, the promoter Group entities, which include Future Corporate Resources and Future Coupons, held 47.02 per cent share in Future Retail. Future Retail operates over 1,500 stores that cover over 16 million square feet of retail space in 400 cities.

It has large format stores, Big Bazaar, its flagship chain, besides small store neighbourhood retail chains, EasyDay Club and Heritage Fresh.

In August last year Future Retail had informed stock exchanges that Amazon.Com NV Investment Holdings LLC would acquire 49 per cent stake in Future Coupons Ltd from their promoters, led by Kishore Biyani, for an undisclosed amount.

At that time Future Coupons held 7.3 per cent stake in Future Retail.

As part of the agreement, Amazon was also granted a call option, which allowed the US e-commerce major an option to acquire all or part of the promoter's shareholding between the third and tenth year.

Amazon also has a stake in other retail chains in the country - Shoppers Stop and More.

In 2017, retail major Shoppers Stop had announced raising Rs 179.26 crore from Amazon.com Investment Holdings LLC through an issue of equity shares, which translated to just over 5 per cent shareholding for the American company.

In September 2018, Amazon said it has co-invested in Witzig Advisory Services, the entity which had acquired Aditya Birla Retail''s ''More'' chain of stores in India.