Retail sector cannot grow with protectionism, says BS Nagesh; asks offline retailers to use Internet to widen reach

The call for banning or asking for action against online e-commerce firms is not going to work but instead, the offline retailers must realise the huge golden opportunity that online retail offers and get on to it, said BS Nagesh, Chairman, Retailers Association of India (RAI), Founder, Trust for Retailers and Retail Association of India on Saturday.

BS Nagesh. Pic courtesy: YouTube

Speaking at a panel discussion on retail and e-commerce at the World Hindu Economic Forum in Mumbai, Nagesh said, “You can’t grow with protectionism. Instead of cursing the online guys for coming to India, view it as a opportunity to reach a wider domestic market and go global as well.”

Traders body urge for 'blanket ban' on deep discount sales

Related Articles

Top executives quit retail giant Flipkart amidst major company rejig

Tech Layoffs: Amazon India lays off around 500 people in HR, tech support and web services teams

The Confederation of All India Traders  (CAIT), a leading Indian trader's body asked the government on Friday to ban upcoming festive sales on Amazon's local unit and its rival Flipkart, saying their deep discounts violate the country's foreign investment rules for online retail. The two e-commerce firms typically hold annual festive season sales ahead of Dussehra and Diwali, which are due this year in October, when consumers make big ticket purchases such as cars and gold jewellery.

“By offering deep discounts ranging from 10 percent to 80 percent on their e-commerce portals, these companies are clearly influencing the prices and create an uneven level playing field which is in direct contravention of the policy," the Confederation of All India Traders (CAIT) said in a letter to the federal trade minister. CAIT, which represents 500,000 merchants and traders in India, also demanded a "blanket ban" on such sales.

Offline vs online retail

He asked offline retailers to ensure their presence on all avenues—online and offline. “An offline retail space of around 520 sq ft space and stock-keeping units (SKUs) offer limited opportunity, ” he said.

Nagesh said, the times are much better now for e-commerce in India. There is an opportunity for growth, he said. India has 10-12 million retailers. There is one retailer for every 120 Indians.

“We are very well-populated and have the best hub-and-spoke model in the world,” he said, adding that the eco system fosters entrepreneurship and growth of consumption.

The Indian e-commerce market is expected to grow to $200 billion by 2026. Much growth of the industry has been triggered by increasing internet and smartphone penetration, according to a study by Indian Brand Equity Foundation (IBEF). The ongoing digital transformation in the country is expected to increase India’s total internet user base to 829 million by 2021, it said.

Fear of technology

Nagesh said, "around 13-14 percent overall business comprises modern retail. There is a huge opportunity for inclusion. However, the [offline retailers] fear is of going online and tackling technology," he said. He asked retailers, especially the younger generation of retailers, to view this as a golden opportunity for the micro, small and medium enterprises (MSME) sector. E-commerce has been a biggest equalizer. Earlier information was the power of the rich but now it is available to everyone, he said.

Nagesh pointed out three ways in which offline can integrate with online:

There is a need for the offline retailer to be active all the time instead of shutting a physical store at the end of business hours. “If the dukandaar’s reach earlier was to a limited number of consumers and he shut his shop in the evening, he has to realise that the consumer is not asleep now. Consumer jaaga hain. If the dukandaar wants to serve more consumers, he has to be awake 24 hours. E-commerce is the channel that can enable round-the-clock service", he said.

There are many online platforms that are now enabling offline retailers with technology and all that is required to go online–be it regarding inventory, payments, etc—at a minimum cost. This can help the smallest retailer to get online with the help of these platforms, he said. There are other platforms that help retailers to sell through their platforms. This is a golden period for retailers, Nagesh reiterated.

There is access to 120 million consumers across the country which offline retailers must use, he said. The government is doing a lot to promote digital economy and the prime minister wants retailers to participate in the transition. “To loosely define MSMEs as an unorganised retail or mom-and-pop stores is unfair. It is time to integrate with online using the wisdom of traditional businesses,” he said.

Many traditional retailers are ensuring that the NextGen is educated. Most of these youngster on returning to the traditional business transform it with their education and modern approach. “When this set of new educated youngsters comes back, they do not want to sell in the old traditional manner. They want to set up franchises, become tech-enabled and improve the business. Here is a young person rich in education, aspiration and desire. He/she should utilise the opportunities to make retail inclusive", Nagesh said.