Riding high on mergers and acquisitions, retail players made a strong comeback this year, taking online giants head-on in doling out deals and discounts, and the trend is likely to continue next year.
However, the Government’s surprise move to pull high denomination notes from circulation on November 8 made a huge dent in retailers’ earnings, with sales falling by up to 70 per cent in early days.
Going forward, retailers expect impact of cash recall to continue for a few more months into 2017, but hope to lure customers with new brands and offerings.
After being hit hard by online retail last year, debates on e-commerce eating into the retail pie somewhat subsided this year, with heavyweights like Reliance, Mahindra and Future Group expanding their own online ventures to take on players like Amazon, Flipkart and Snapdeal.
In May, Aditya Birla Fashion and Retail — which had acquired Pantaloons a few years ago — further expanded its kitty with addition of Forever 21. It bought the Indian operations from Diana Retail, promoted by DLF Brands for $26 million (around Rs 175.52 crore).
Besides, Mahindra Retail merged operations of Babyoye, which had both online and offline presence, with that of FirstCry.com — one of the larger online players in the maternity and babycare space.
“The next couple of years will see more consolidation and a much greater maturity of Omnichannel retail and sustainable retailing practices,” Retailers Association of India (RAI) CEO Kumar Rajagopalan told news agency PTI.
The Mukesh Ambani-led Reliance Industries, which is making a significant push in telecom with Reliance Jio, also forayed into online retail with its fashion portal Ajio.com.
However, gains made by retailers during the year came under pressure due to demonetization.
“Demonetization of Rs 500 and Rs 1,000 notes had an immediate impact on retail, with sales of retailers seeing a plunge of up to 70% in the first few days. Sales of large discretionary items like electronics too plunged. However, essential consumable goods by stores that accept cards/digital money saw an uptake,” Rajagopalan further told PTI.
Giving outlook for the next year, Rajagopalan was quoted by PTI a saying that the impact of demonetization will continue for the first few months of 2017.
He, however, added that demonetization served as a wake- up call for retailers that had not adopted modern retailing practices such as accounting every sale and accepting digital payments.
“The note ban has opened up a host of opportunities for innovative partnerships between digital wallets and retailers to embrace digital technologies,” he was quoted by PTI as saying.