When SMEs are striving to go digital, why this entrepreneur believes time is now ripe to invest in offline retail
The first wave of COVID-19 was undoubtedly a painful time for offline retailers. Markets shut down overnight due to successive lockdowns, and even when restrictions eased, people were fearful of stepping out.
Online retail, on the other hand, hit the sweet spot. During the pandemic, many Indian SMEs took to the D2C route to sell their products online, in a win-win situation for consumers as well as business owners.
According to a survey entitled 'COVID-19 and Ecommerce', conducted by the United Nations Conference on Trade and Development (UNCTAD), the pandemic has forever changed online shopping behaviours. The survey further revealed that consumers in emerging economies have made the greatest shift to online shopping.
Nevertheless, despite the high prevalence of online shopping in these times, many experts believe offline retail will revive in a big way. SMBStory spoke to entrepreneur Anuj Mundhra, Chairman and MD of Nandani Creation Limited, a Jaipur-based textile company. Anuj strongly believes this lull in the offline sector is a blessing in disguise for entrepreneurs. He foresees the offline market gaining traction soon, and believes the time is now ripe to invest.
Why invest in offline retail?
Under the banner of Nandani Creation Ltd., Anuj runs ethnic wear brand Jaipur Kurti. According to him, commercial real estate is at an all-time low now, and it would be sensible of entrepreneurs, who have the vision to scale their business in the years ahead, to invest in the offline market.
“When entrepreneurs want to enter the offline space, they look out for prime locations. When the market is upright, the rent, purchase, or the leasing costs skyrocket. Right now, the commercial real estate market is at a rock bottom due to the pandemic, and so, it is the best time to invest and get appreciation in the next three to five years,” Anuj explains.
Anuj further adds that if not for investment, the time is also ripe for renting a store because commercial spaces in prime locations are available at competitive prices. A trend that real estate companies have noticed across the nation.
According to ANAROCK Property Consultants, India's most expensive retail hub - Khan Market in Delhi - saw average monthly rentals reduce by 8-17 percent in the first quarter of 2021 (January-March), against the first quarter of 2020. Average monthly rentals hovered between Rs 1,000-1,100 per sqft. as on Q1 2021, as against Rs 1,200 a year ago.
Similarly, the high streets of Kala Ghoda, Bandra Linking Road and Bandra Fort in Mumbai also saw retail rentals decline anywhere between 5-10 percent in the same quarter.
The Retailers Association of India (RAI) in an IBEF report states that the retail industry achieved 93 percent of pre-COVID sales in February 2021 ( a period when restrictions were eased and COVID-19 cases were also low); and consumer durables and quick service restaurants (QSR) increased by 15 percent and 18 percent respectively. The data further indicates that offline retail is poised to steadily grow in the post pandemic times.
Going by this positive outlook, it is no surprise that Anuj is planning to invest Rs 10 crore in the next five years to open around 32 offline stores of Jaipur Kurti across India. He recently opened two new stores in Jaipur, and is planning to expand all across Rajasthan by 2026, followed by Delhi/NCR and other parts of North India.
The two-way approach
Since its inception in 2012, Jaipur Kurti has been an online dominant brand. Its umbrella company, Nandani Creation Ltd., had even raised an IPO in October 2016. Speaking about ecommerce, the entrepreneur says that in the beginning, he did not pay much heed to the company website he had launched because it required a lot of investment in promotion and marketing activities. The brand was already gaining orders largely from marketplaces such as Jabong, Myntra, Flipkart, Tata Cliq, and a few others.
“Initially, we were selling 99.9 percent of the items on other portals. Gradually, our website started generating organic traffic, without us even trying,” he says.
Anuj Mundra, Chairman and Managing Director, Nandani Creation Limited
He adds that while being an online brand has helped the company navigate through the challenges of demonetisation and the pandemic, he cannot ignore the benefits that offline expansion is bound to bring.
“Many customers still prefer to touch and feel their products before making a purchasing decision. This is a habit one will not forego. The best business approach, according to me, is to scale up both offline and online.”
In the last financial year, Nandani Creation clocked a turnover of Rs 43.7 crore. The company aims to become a Rs 100 crore business by 2023.