Footwear retailer Metro Brands said it was consciously keeping away from the “discounting game” online, even if that meant somewhat lacklustre growth in the e-commerce segment.
The company’s e-commerce operations contribute only around 11% of its total sales, with brick-and-mortar stores making up for the remaining 88% “...because we do not want to get into the discounting game. Which unfortunately is the mainstay of Indian e-tailing today,” said the Managing Director Nishan Joseph during an investors meeting.
Metro Brands registered a sale of Rs 60 crores across various e-commerce platforms, including omni-channel, in the September quarter.
For the first half of the financial year, it was at Rs 121 crores while it had registered Rs 79 crores for the same period last year.
Online vs Offline
Retail being one of the fastest-growing sectors in India, brands are leaving no stone unturned in their quest to lure customers with jaw-dropping discounts and coupons.
However, several retailers are worried about not having a say in the discount rate limits fixed by e-commerce platforms, which eventually ends up hurting their offline stores.
Unlike for a pure manufacturer, achieving a balance between offline and online is important for a retailer-cum-manufacturer like Metro Brands as offline stores form a core part of the overall business.
Moreover, unlike for items such as electronics and grocery, for wearable products such as garments and footwear, e-commerce can often involve multiple dispatches and returns due to fit issues.
The management pointed out that e-commerce is not an easy business considering the overall costs. “If you look at all the pure play e-com players, you get the sense that it's not the most profitable business in the world for most people,” said Joseph.
The company said that it would grow through curating ranges---- adding more collections that caters to the taste of its customers--- so that it will add to both the brand salience while the margin will not be diluted in any way.
The company said that it is looking for ways to ‘nurture its omni-channel business’ so that it has a greater say in the discounting that happens online, apart from increasing its inventory utilization and reducing delivery time.
“...So if there's discounting that is unfavorable to us, we will be able to turn it off very quickly,” said Metro Brands.
However, the company said that its margin profile overall is relatively healthy in line with our regular business.
The company added that its digital investments, presence, and capabilities continue to be a source of strength, contributing to its overall performance.
“We've also been proactive in managing challenges with the first half on a standalone basis, very much within our guidance of 15-17% paths,” said the company.
The majority of Metro Brands’ sales came from its offline stores which stood at 88%, with the remaining coming from digital stores.