Brick & mortar won’t be dead by 2023
Extreme comments or views are often a huge hit or miss.
And Niti Aayog’s Mr. Kant’s futuristic sounding comment about how brick and mortar businesses in India will be dead by 2023 was a huge miss, in fact to the point of sounding immature.
Coming from a school or college student in a metro, that would have been ok. Especially, given our views are often influenced or limited by what we do and see in our immediate surroundings. And the recent explosion in number of apps would certainly give a lot of people the impression that that’s how the future will be. But not so fast.
The US has been several years, if not decades ahead of us in terms of some industries and technologies as well as innovative business models and businesses themselves.
As of December 2015 in the US, ecommerce retail formed a tiny 8.6% of total retail. The rest of it happens offline! So ~100% of businesses or only retail ones moving online by 2023 seems like a fantasy.
There are some significant differences between the Americans and us. To start with, they’re one-fourth of our population, living on a land that’s three times the size of India!! Years ago, one could have argued that that itself should’ve led to a majority of businesses serving customers online, to cut the long distances customers need to travel to buy even the basics for home. But that’s exactly the opposite of how things are happening there, as we speak. Though no doubt, technology has played a critical role in simplifying business for them, given the relatively lower manpower levels as compared to us.
Now let’s look at it from a physical store or service point of view.
In the states, a college girl working part-time can single-handedly manage a standard sized clothes store without breaking a sweat. Running between the cash counter, answering customer queries in the clothes section, to checking if the customer trying something in the trial room needs anything. Technology, be it tablets to order faster, or pager-type devices alerting you at your table that your meal is ready to be picked up at the counter, all make it for a more logical way to operate, given the light manpower models and limited manpower. Indians on the other hand, are arguably far more capable. But given our sheer numbers, affordable manpower, efforts to reduce unemployment, etc., often find ourselves hiring more people than we need.
Driving across some of those bridges to New York, you either use an E-Z Pass device, or through coins into an automated basket at an unmanned toll crossing. Many a times when using the Bandra-Worli sea-link in Bombay, there are three people at every toll lane. One taking the money, the other inside the booth printing out your pass/receipt. And a third handing the same to you.
A few years ago, I used to head the regional arm of a robot automation solutions company. There, I was once speaking to an industry colleague of mine who worked for a mid-sized auto ancillary company. I was exploring the possibility of having a part of his company plant automated. He stopped me mid-sentence, and in no uncertain terms told me that they don’t need robots. He said, “We’ve had about 2 crores worth of robots gathering dust for over 2 years now. Because our plant workers won’t allow it on the production line.” And for a progressive, carefully-run, mid-sized company to have ignored a sizable investment like that; doesn’t the idea of most companies being completely online in seven years sound like a pipe dream.
One of the youngest from the online era, Amazon, wouldn’t be opening physical stores now, if they already were one of the first people to sell online.
We in India are nearly the largest, and almost the youngest population in the world. And our country has never looked more promising from a technology, innovation and progress point of view. But I don’t see anything of the sort Mr. Kant mentioned in his comments happening ever. And it perhaps doesn’t have anything to do with technology either.
It’s probably our inherent need for human interactions, that will never make brick and mortar businesses go out of demand.