With the onset of the pandemic, people are less willing to go to a physical shop in order to buy a product, and in fact many reputed brands have even closed down their physical shops owing to this lack of activity. After a year of observing lockdowns, work from homes, and online schooling people have become accustomed to making purchases online. This can be concluded from the all time low attendance rate in physical and the emerging behavior of consumers to buy consumer non-durable goods ( Washing machine, TV, Furniture) as against earlier only consumer durable goods (Mobile Phones, Grocery, Laptops).
This phenomenon can be a result of various factors. One such may be the ever growing advancement on technology, and to be more particular AR technology. AR (Augmented Reality) has come so far that we can virtually try on a dress to see how it looks on us. Online store also boasts a full inventory of all the products versus physical stores that can only hold a limited inventory due to its tight space. Consumers also have easy access to real time information about products, pricing and quality and social media enables them to amplify their options and complaints. Price transparency made available to consumers by online retailers maintain pressure on margins along with whole value chains. Additionally, margins are being squeezed by more frequent markdowns combined with constant discounts, as consumers expect year-round discounts. Prices across different brands can also be compared easily.
One thing coming out clearly is this. brands and distributors would need to spend more on digitally influencing their sales. they should not get overly focused pushing more digital online sales through their own websites as shoppers prefer pure-play e- commerce aggregates like Amazon and noon more than a brand or distributer websites. Their focus would need to be on reducing or rationalizing their brick and motor investments and increasing their digital influencing costs. The timing is just about appropriate. Strong distributors should ensure that they are financially prepared to pounce on an MNA opportunity when it arises specifically by reducing debt and freeing up cash. They should evaluate their portfolios more than once a year close deals quickly and build a robust and integration capabilities. With tech platforms empowering users to control campaigns, companies will be forced to re imagine the costs of their digital campaigns.