Ecommerce has shaken up the retail segment. Are the physical stores ready for transformation?

I had gone to a mobile store in my neighborhood to buy some accessories. While my mobile was being done, I was chit chatting with the owner about the business. Before he started speaking, the expressions on his face because of my question said it all. The business was not as good. It is not as good as it used to be earlier before the arrival of online players . He said the top selling phones are not available offline, the online business (e-commerce) has screwed their business.  He continued : "The Shop owners are continuing the stores just because they do not want to lose the shop lease deposit by closing the shop before the lease term ends. Once the lease is completed, half of them will not be renewed".  In short, the impact of e-commerce was significant and bad. His views lingered on my mind and I Googled to check if Analyst views are in sync with his.

Personally,  I have purchased 4 phones (for my family and my use) in last 2 years and 3 of them have been through online channels. The top reason being the price and specifications of the phones sold online. They are good value for money devices. An independent market research says that one of the Top selling product online is Mobile phones and accessories

My research to validate the impact of Online channels is captured in the following infographic. It clearly shows how Phones are selling like Hot cakes on Online channels.

The impact of Online channels is not limited to only SmartPhone sales. These days, the grocery apps are flooding the market. The impact on the supermarket(s) is clearly visible. Earlier, I would have to stand in queue for an hour or so for billing and now the wait time has gone down considerably. 

The Impact of Online sales

With offline sales going down and shops getting closed. I see the impact as follows

1. The real estate market dependent on SMEs will be hit.
2. People employed in offline stores are often less qualified and closure of shop means being jobless. They would find it difficult to get a job somewhere else.
3. The increase in the number of folks in lower middle class looking for jobs. 

What the offline stores should do - Become experience center

For sure, the sales are not coming back to Offline stores like they were earlier. Offline stores have to reinvent themselves. They have been the way they are for the good part of the modern economy and now they are facing the disruption.

So what they can do. I believe they should remodel themselves into experience centers now. The e-commerce still lacks the touch and feel, the human contact.  The offline stores can fill this gap. Instead of competing with e-commerce, they should complement the e-commerce sales  

The Services offered by an Experience center

Some of the potential services that can be offered by Brick and Mortar stores in their new avatar of the Experience centers are:

1. Help people set up the phone by installing my commonly used apps
2. Help and Educate people about the security and storage management
3. Help people in purchasing the right accessory that makes the phone more functional. E.g IR remote based on 3.5mm jack, Camera zoom extender
4. Help people in migrating data between phones

In fact, the e-commerce companies should tie-up with local stores. They should help the retail stores transform into the Experience centers.  The availability of Experience center should become the differentiator, the value added service proposition. 

And following are the strategic reasons for this doing so: 

1.  To be in touch with the customer post the phone purchase transaction
2. The local stores can help the e-commerce companies with intel to improve customer experience. What are the pain points of customer post sale, categorize pain points based on the customer type - educated, uneducated are difficult to capture in the Online channels.
3. The local stores can become the center to cross-sell services like Insurance, Extended warrantyThe local stores can be the entry into selling own brand merchandise. 

Do share your views on the impact of Online channels and what retail stores should do to survive...

Following are the source articles I referred to create the infographic

Over 600,000 Redmi Note 3 Units Sold in India, Says Xiaomi

Flipkart sells 200 million worth of mobile phones during Big Billion Day

Flipkart sold 5 lakh mobile phones in 10 hours during Big Billion day

On Feb 2, 2016, 70k LeEco phones were sold in 10 seconds on Flipkart

In the Q2 of 2015, 22% of the total smartphone sale in India happened through Online channels

LeEco’s Le 2 and Le Max2 create new flash sales registration record of 150,000 in first 24 hours