Friday, 12 April 2013

Surviving disruption in retail equilibrium

Prof. Mohit Maurya*, Professor of Marketing at NIILM CMS writes:

The author can be contacted at

E-commerce will soon become everything from something. We are witnessing how the line between e-commerce and store retailing is gradually fading, and by and by e-commerce and online retailing is just becoming a natural part of retailing. The consequences are huge as a USD 500 billion online world is transformed into a USD 8–10 trillion global retail market.

This generates a lot of questions about what form of retailing will evolve in the future. What role will bricks-and-mortar stores take up? What business models will be flourishing? Who will endure the technological onslaught and who might perish? But for sure; the world of retail will look very different a decade onwards.

Retail sales in the US and many European markets are still below the levels seen before the onset of the financial crisis in 2008. Moreover, labor costs in China are increasing rapidly while the price of oil and other raw materials has soared. This has created an environment in which retailers are competing within a shrinking space looking for answers to procurement options, geopolitical scenarios and scalable formats.

There is a slugfest amongst retailers with different formats to gain market shares and to push competitors out by attracting customers either with better value for money (substantial discounts) or convenience. And with the online commerce thriving, the idea is that you need not big to succeed. Ebay and Amazon have brought retailers like Target and Comet on their toes. The double-digit growth of online retail sales seen in U.S. and other places is part of this change. Online retail is evidently growing at the cost of traditional retail outlets. The reality that this is happening at a time when the industry is under pressure is likely to expedite the metamorphosis that is already happening. This is not just a simple question about e-commerce replacing traditional stores, but a complex process involving several interacting trends.

The drivers of change include a concoction of deleverage and prudence in the face of lower economic growth, demographic change and shifting consumer behavior and expectations, combined with new technology and social innovations. 

With an unprecedented level of entropy and dynamism retailers can look forward to these change drivers to plan their future strategies:

·         Aging and tech savvy.
·         JIT - Just In Time even for personal consumption.
·         Always online.
·         Mobile retailing.
·         Social commerce.
·         Multichannel or Omnichannel world.

But it is certain that in order to survive disruption, managers of legacy businesses need to know the game to be a part of the changing game. And probably knowing these drivers would equip them in a better way.

*Dr. Mohit Maurya
A PhD in Retail Management, Dr. Maurya has an experience of more than a decade in academics, corporate training and consulting. Some of his previous associations were with Indian Retail School, Siddaganga Institute of Technology, Kirloskar Institute of Advanced Management Studies and ICFAI University. He has also worked for Jubilant Organosys Ltd. He has trained over 200 executives of various companies like JSW Steel Limited, Trident Powercraft Private Limited, GMR Infrastructure, Adecco India, Seminis, Monsanto Agro, Kirloskar Brothers Limited, Kirloskar Oil Engines Limited, Kirloskar Pneumatic, Kirloskar Ebara Pumps Limited, etc. His consulting interests are in Negotiation Skills, Sales & Distribution Management and Services Marketing, while his research interests are in Organized Retailing and Virtual Marketing.


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  2. Surviving disruption in retail.Nice post. Retail sales in European markets are going down whereas labor costs in China are increasing at an alarming rate , oil prices and raw materials are at a high too.

  3. Excellent post. In order to survive this disruption in retail market, all business legacies need to look forward to the above mentioned change drivers to plan their future strategies.

  4. Great insight into surviving disruption in retail.Surviving disruption in the retail market is not an easy task. You have to surely overcome many obstacles like financial crisis, increase in oil prices and raw materials etc. For this you have to plan your future strategies carefully.