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Apart from changing business models, mall\noperators are also benefitting from the challenging times in the\ne-commerce space. Though online sales are expected to zoom to $55\nbillion by FY2018 from $14 billion in FY2015 – according to Retailers\nAssociation of India – investors in e-retailers are tightening the\nreins. They are questioning the business models of e-commerce players,\nwho have been forced to re-think their strategy.\n
\nHedge funds have been actively funding Indian start-ups so far.\nHowever, with economic slowdown in China and rising interest rates,\nthey have scaled back their investments.
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\nWith tightening fiscal environment, the expectations of investors have\nalso undergone a change. “While earlier the expectation was to deliver\nmuch more in terms of growth, now they are asking for better balance\nbetween growth and profitability,” says Alok Mittal, angel investor and\nCEO and co-founder of Indifi Technologies.
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\nTo add to it, investors are also cutting down valuations of e-commerce\nventures. Flipkart’s investor Morgan Stanley marked down the\ne-retailer’s valuation from $15 billion to $9.39 billion earlier this\nyear.All this means investors are now less bullish on e-commerce firms.\nAnd that, mall operators hope, will translate into lower discounts for\ncustomers who will throng the malls.
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\nDevangshu\nDutta, Chief Executive at retail consultancy Third Eyesight, says\ne-retailers have a reach that is unlimited by time and geography.<\/span>
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\nFor standard\nproducts such as diapers, online convenience may win over the need for\na physical experience.<\/span>
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\nHowever,\nnon-standard products such as apparel or jewellery lend themselves to\nexperiential buying, where a physical retail store definitely has an\nedge, he adds.<\/span>
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\nBut all this\ndoesn’t mean that e-commerce is no more a challenge to retailers. “I\nthink e-commerce remains a threat to retailers who refuse to change,”\nadds Dutta.<\/span>
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\nBut for successful malls like Viviana, DLF and Forum, e-commerce has\nbeen a teacher. “It has made us re-think some of the ways we do our\nbusiness. We now know it is important to engage closely with\ncustomers,” says Suresh Singaravelu, Head – Retail, Prestige Group.
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