Brick-and-mortar retail stores shine again as online sellers avoid heavy discounts

There was a time when brick-and-mortar retail stores were in deep trouble, because of the newfound love that customers had developed for online shopping, or should we say the discounts offered online. However, with online sellers avoiding deep discounts to shore up their finances, customers seem to come back to the brick-and-mortar retail stores, bringing back their days of glory.

Same-store sales were at their highest in four years in the last quarter of 2015, as people came looking for aggressive promotions and strong demand for fresh merchandise.

"The competition intensity has no doubt reduced vis-a-vis online," Future Group CEO Kishore Biyani told ET. "This is just the beginning of their downfall since the ecommerce model of discounting was never there to stay."

While Shoppers Stop and Future Lifestyle recorded an 18% growth in Sep-Dec quarter, Lifestyle International, Arrow and Flying Machine grew at 12 to 15%, a two-year high for them.

In 2014, physical stores reported subdued demand because of ecommerce players attracting consumers with their discounts and ease of shopping. However, for the festive season that went by, offline stores were better prepared, having offered aggressive promotion strategies.
Talking of online retailers, this time, a limited number of brands had discounts running, because e-commerce players wanted to protect margins and turn profitable. The three biggest players in India, Amazon, Flipkart and Snapdeal, had Rs 5,052 crore in FY15 as combined losses.

Also, having hitting the buy button all these years, consumers also have come to understand that low online prices mean out-of-season merchandise or old stock from brands.

However, this doesn’t mark the end of online shopping in India. For example, Amazon sold more goods in the end quarter than it did in all of 2014. The retail space has enough market for both online and offline products.

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