The pioneer of organised retailing in India, Future Group CEO Kishore Biyani now says he wouldn’t invest or operate in the e-commerce space for at least two years.

eCommerceTrendz Thought Corner

The retailer now wants to focus all its energies and cash on the conventional business. Biyani said none of the e-commerce firms in India is making money and losses are as much as their turnover.

“It’s stupid to be in the online space. In lifestyle, the e-commerce industry revenue in India will be around Rs 2,500 crore, and losses too will be of equivalent amount. Mobile and electronics, too, do not make money online. Having burnt our fingers, we have decided to take a break of at least two years before even thinking anything remotely about online,” Biyani said.

The Future Group has sunk around Rs 250 crore on FutureBazaar.com, which was the group’s first venture into online around 10 years ago: Other Web ventures were Big Bazaar Direct and the acquired entity Fab Furnish, which have already shut down.

Biyani said the group will also not invest or focus on the omni-channel business model for its offline stores at the moment. Considered the father of modern retailing in India, Biyani is in the midst of rejigging his business, whereby the group will focus on core categories of fashion and food & grocery.

(Source: ET)

Future Group will further invest Rs 300 crore to open 15 new stores.

“We will invest Rs 300 crore to set up 15 new Central stores this year to take the total store count to over 50. This will trigger our growth rate from this format to 40 per cent where the revenue is Rs 3,500 crore,” Biyani said.

Brick-and-mortar Stores over Ecommerce

Many shoppers still choose offline stores over ecommerce driven by the tactile experiences offered by physical stores.

Some reasons are:

  • Brick-and-mortar holds an advantage for its ability to satisfy shoppers’ needs to try out products and immediately take them home. A compelling in-store shopping experience where shoppers can easily see, feel and try-out products — coupled with stellar inventory management to ensure product is in stock — can make or break physical retailers.
  • Shoppers also want it now and want it fast. It’s why speed to market and figuring out last-mile delivery expectations keeps retail executives up at night.
  • Despite the robust e-commerce movement, roughly another fifth (18%) of consumers still seek the enjoyment — and likely social aspect — of going shopping in stores.
  • Rural shoppers more likely to go to stores. Undeveloped or under-developed logistics and delivery infrastructures in rural areas likely come into play here.

These are some of the reasons why a slew of ecommerce startups includingRatan Tata-backed Teabox, fashion retailer Myntra, cosmetics firm Nykaa—even names that are just over a year old, like custom-made men’s clothing brand Stylior— plan to experiment with offline stores in an attempt to establish a deeper customer connect or as part of their omni-channel strategies.

Offline presence also offers more visibility and customer-experience for online retailers, who witnessed moderate growth last year as they brought down discounts and marketing spends.

Can Brick-and-Mortar Stores Outsell Etailers

Future Group’s Kishore Biyani’s bet on physicalstores could stem from the fact that online marketplaces are still struggling to become profitable. As it turns out, today’s brick-and-mortar businesses have access to many of the very same digital strategies that catapulted their ecommerce competitors to the forefront. After all, there was a time not too long ago when Amazon only sold books. How did it grow beyond that? The company combined excellent customer service with a cutting-edge digital marketing gameplan to grow into the massively successful retailer it is today.

By taking advantage of improving online technology and strengthening their customer relationships, traditional retailers cansupercharge their digital marketing efforts.And, bigger retail players like Future Group banks have in-store capabilities as well, propelling their offline approach efforts.