Accel's Prashanth Prakash: 90% of Indian Retail Market to Stay Offline

The Indian retail landscape is witnessing a significant shift, with direct-to-consumer (D2C) brands exploring strategic expansion beyond their online roots. Here's a breakdown of the key trends:

Dominant Offline Market:

• Despite e-commerce growth, a major portion (around 90%) of the Indian retail market is projected to remain offline even by 2030, reaching a value of $2.2 trillion (as per a joint report by Accel, Fireside Ventures, and Redseer).

Omnichannel Advantage:

• D2C brands can capitalize on this vast offline opportunity by adopting an omnichannel strategy, integrating online and physical stores.
• Established brands like Nykaa, Lenskart, Mamearth, and Caratlane demonstrate the success of this approach, leveraging exclusive brand outlets to enhance brand awareness and sales.

Prioritizing Online-First Strategy:

• Venture capitalist Prashanth Prakash (Accel) emphasizes the importance of D2C brands maintaining an online-first approach initially.
• This allows for faster product-market fit assessment and brand building compared to starting offline.

Technology for Efficient Offline Expansion:

• Accel and Fireside Ventures are actively seeking technological solutions to facilitate efficient offline expansion for D2C brands.
• Such technology will enable a smoother transition and support aggressive growth in the offline space.

Unique Opportunity Beyond Metros:

• Unlike traditional brands, D2C players have the advantage of targeting a broader audience beyond major cities.
• Prakash highlights the potential in 110 Indian cities, where consumers have a growing demand for quality products.

Omnichannel Success in Non-Metro Cities:

• D2C brands are strategically establishing physical stores in non-metro cities.
• These locations offer attractive retail spaces with favourable economics and faster payback periods, as seen in cities like Indore, Lucknow, and Coimbatore.

Importance of Physical Presence:

• A physical presence in non-metro areas fosters brand awareness, builds trust, and significantly improves customer conversion rates.
• This "experiential buying" approach caters to consumer preferences in these regions, prioritizing product experience over pure convenience.

Investment in Offline Expansion:

• D2C brands are recognizing the value of investing in offline expansion, particularly in non-metro cities.
• The complexity of managing multiple stores is outweighed by the potential for growth and market dominance.