App attack on retail stores

Raj Machhan

Radhey Lal, the patriarch of one of the bigger retail stores in Chandigarh’s Sector 34 market, is a worried man. The conventional brick and mortar business that his family has perfected and operated over the years does not feel the same any longer. “These days, I get customers who try out lipsticks, note the shade number, go home and order these at a discount online. Our sales have dwindled,” he says. 

Elsewhere, in the busy Sector 15, shoe store owner Arun Gupta’s face creases with worry when you ask him about business. “Online shopping has started having an impact on our business. We have our fixed expenses and it’s tough to compete with online deals,” he says in a sad monotone.

In Chandigarh, the population of online buyers seems to have reached an inflection point. Even after accounting for increase in incomes, the fact remains that the flow of money into online buying is the money that would earlier go to brick and mortar stores.

“Owing to sales from digital apps, retailers have been forced to reduce their manpower, and many of the shops, on monthly rental above Rs 1 lakh, have closed down,” says Ramesh, a retailer from Sector 37. 

Shop owners in the city and elsewhere are faced with a phenomenon globally known as the Amazon effect, named after the pioneering e-commerce giant that changed the way people shop the world over. It measures the impact that the digital marketplace has had over conventional businesses.  It led to the closure of over 7,500 retail stores in the USA in 2018 alone. The figure stood at 6,700 in 2017. In India, the Amazon effect is increasingly becoming pre-dominant in tier-II cities. As per a study published in the Indian Journal of Science and Technology, 60 per cent of the population in Chandigarh uses digital apps and e-commerce portals for shopping.

The top selling items online include mobile phones, consumer electronics (laptops, tablets, digital cameras), apparel, books, footwear, jewellery, fashion accessories, beauty products, computer hardware, software.

But what is worrying is the fact that people are turning to online apps to even buy their daily provisions and grocery items, vegetables, and fruits. Reporting a 40 per cent decrease in sales, a grocery store employee says, “The government is forcing shop owners to cut corners while paying taxes. How else are we to survive otherwise?” Good question that.