The head of Future Group, one of India's largest and most established brick-and-mortar retailer, has admitted that Future can't keep up with online retailers like Snapdeal and Flipkart when it comes to spending money to entice shoppers.
Private investors have poured $2.3 billion into India's e-commerce companies so far this year, giving them muscle to offer shoppers irresistible bargains and deals that retail store chains like Future, which runs a host of chains including Future Retail and Future Lifestyle Fashions, cannot match.
"It's all about money. The e-commerce guys have money to experiment - I don't have this kind of money to blow," Kishore Biyani, who pioneered modern retail in India and is the chief executive of the Future Group, told Reuters in an interview.
This seems something of a turnabout in attitude, as Biyani had earlier said that e-retail would not displace physical stores in India in a hurry. (See: Physical stores will continue to beat e-retail in India: Biyani).
In October, Future Group tied up with Amazon's Indian arm to sell its brands online (Future Group enters strategic partnership with Amazon). A month earlier, electronics retailer Croma, owned by the Tata Group, struck a similar arrangement with Snapdeal.
Organised retail in India is expected to grow to $182 billion in 2020 from the current $46 billion. E-tailing is forecast to expand at a faster clip, to $32 billion by 2020 from $2.3 billion now.
In 2012, then Prime Minister Manmohan Singh's government opened the retail industry to foreign operators, allowing companies such as Wal-Mart and Tesco Plc to own majority stakes in Indian chains for the first time.
Organised retail is still developing in India. More than 90 per cent of shopping is done at informal roadside shops and in bazaars. These small shops are seen as the lifeblood of the economy and successive governments have protected them.
But the same policies have also shielded much larger players like Shoppers Stop, Future Retail and others.