Tag: d2c expansion

  • Quick Commerce Is No Longer About 10-Minute Delivery — It Is Becoming a New Retail Format

    Quick Commerce Is No Longer About 10-Minute Delivery — It Is Becoming a New Retail Format

    When quick commerce started gaining traction in India, the big attraction was simple: get your order in 10 minutes.

    Milk, bread, eggs, snacks, cold drinks, fruits and vegetables — things people needed quickly could suddenly reach their homes without a trip to the neighbourhood store.

    For a while, the entire conversation was about speed.

    Who can deliver faster?

    10 minutes or 15 minutes?

    But I think we are now looking at something much bigger.

    Quick commerce is slowly becoming a new retail format.

    The reason is quite simple. These platforms are no longer trying to solve only an urgent shopping need. They are trying to become part of the customer’s regular shopping behaviour.

    Think about how people actually shop.

    They don’t always wake up thinking, “Today I will visit a grocery store.”

    They think, “We are out of milk.”

    “I need snacks for tonight.”

    “I forgot toothpaste.”

    “Guests are coming.”

    “I need a small gift.”

    These are shopping missions.

    Quick commerce is trying to capture these missions one by one.

    And that changes the game.

    The first generation of quick commerce was largely about groceries and everyday essentials. Today, the assortment is moving into many other categories — beauty, personal care, electronics, gifting, home products and more.

    Once the customer starts buying these categories regularly, the platform is no longer just delivering products.

    It is competing for the customer's basket.

    That is where I believe traditional retailers need to pay attention.

    Because the biggest change is not happening in delivery.

    It is happening in inventory.

    A 10-minute delivery promise sounds impressive to the customer. But behind that promise sits a much more complicated operation.

    The product has to be available close to the customer.

    The forecast has to be reasonably accurate.

    The right quantity has to be stocked.

    The order has to be picked quickly.

    The product has to be packed correctly.

    And someone still has to deliver it profitably.

    If the retailer keeps too little stock, the customer sees “out of stock.”

    Keep too much stock and the business starts carrying unnecessary working capital. Products age. Discounts increase. Fresh products get damaged. Wastage goes up.

    This becomes particularly important in fruits and vegetables and other perishables.

    A retailer cannot solve an availability problem simply by putting more stock into a dark store.

    The quality of the forecast matters.

    This is something I have seen repeatedly in retail. Inventory problems are often treated as a technology problem. In reality, the technology can only work as well as the demand data, processes and discipline behind it.

    That is why I think the next competitive battle in quick commerce will not simply be about who delivers in 10 minutes.

    It will be about who can maintain better availability without carrying excessive inventory.

    That is a very different game.

    Traditional retailers already understand many parts of this equation.

    They have spent decades managing assortment, inventory, margins, store productivity, shrinkage, wastage and working capital.

    What is changing is the operating model.

    A traditional store waits for the customer to walk in.

    A dark store waits for the order to come through the app.

    The traditional store uses shelves to present products.

    The quick-commerce platform uses the app to present products.

    The traditional retailer measures sales per square foot.

    The quick-commerce operator needs to think about sales, orders and contribution from each fulfilment location.

    The customer sees a simple app screen.

    Behind that screen is a fairly complex retail operation.

    And this is where I think the conversation around quick commerce needs to become more mature.

    Sales growth alone is not enough.

    Quick Commerce Retailers need to ask harder questions.

    What is the inventory turn?

    What percentage of orders get fulfilled completely?

    How often does the customer find the product unavailable?

    What does picking cost?

    What does delivery cost?

    How much inventory gets damaged?

    How much money is tied up in local inventory?

    And perhaps the most important question:

    Are customers coming back because the platform is genuinely useful, or only because someone is subsidising the order?

    These questions will become increasingly important as the sector matures.

    There is another change that I find particularly interesting.

    The traditional argument used to be:

    Online versus offline.

    I don’t think that is the right argument anymore.

    A physical store can also become a digital fulfilment point.

    A customer can walk into the store and buy something.

    Another customer, sitting two kilometres away, can order from the same inventory.

    The same store can therefore serve both customers.

    This changes the role of the store.

    It can become a place for shopping, product discovery, experience, fulfilment and local inventory — all at the same time.

    So, rather than asking whether quick commerce will replace traditional retail, I would ask a different question:

    How quickly will traditional retailers learn to operate with the same level of convenience? and How efficiently QUick Commerce companies can run like a Retailer to ensure backend excellence and inventory availability at optimium costs

    Because the customer has already changed.

    Once someone gets used to receiving a product within minutes, asking that customer to wait two days for a basic product can feel very different.

    Convenience changes expectations.

    And expectations eventually change retail.

    I don’t think the future of quick commerce will be decided by the fastest delivery time.

    The 10-minute promise helped create the market.

    But speed alone won’t build a sustainable retail business.

    The winners will need to get several things right at the same time:

    Right product. Right location. Right inventory. Right price. Right availability. Right cost.

    That is retail.

    Quick commerce has simply put that retail equation on a much smaller clock.

    And perhaps that is the real story.

    Quick commerce started by promising to deliver faster.

    It is now trying to change the way we shop.

    The next phase will tell us whether it can also change the economics of retail.

  • India’s Skincare Market: Who Is Winning, Who Is Struggling and What Comes Next?

    India’s Skincare Market: Who Is Winning, Who Is Struggling and What Comes Next?

    India’s Skincare Market: Who Is Winning, Who Is Struggling and What Comes Next?

    India’s skincare market is growing. But the bigger story is not growth. It is the redistribution of growth.

    Consumers are moving away from generic skincare and demanding ingredients, efficacy, transparency and convenience. At the same time, digital-first brands are moving offline, legacy FMCG brands are upgrading their portfolios, and global companies are acquiring successful Indian brands.

    So, who actually dominates the market today?

    And more importantly — which brands are building the strongest position for 2026 and beyond?

    This article looks at the current state of India’s skincare industry, the leaders, the challengers, their key problems, what is driving growth and where the market is heading.

    What you should learn from this article

    1. Who currently dominates Indian skincare?
    2. Which brands are gaining momentum?
    3. What is driving consumer demand?
    4. Why are some D2C brands struggling despite high sales?
    5. What will shape the skincare market from 2026 onwards?

    1. First, understand the market

    Estimates put India’s skincare market at roughly $2.7–3.2 billion in 2025, depending on how skincare is defined. Facial care represents approximately 85% of the category.

    The market is growing at roughly 7–10% annually, but growth is becoming increasingly fragmented.

    The structural picture

    HUL remains the clear company-level leader with around 28% retail value share in 2025.

    But there is an important warning:

    HUL’s share has fallen from around 37% in 2020 to 28% in 2025.

    That tells us something important.

    The leader is still leading — but the market is becoming much more competitive.

    Market leadership snapshot

    HUL                    ████████████████████████████ 28%
    Top 5 players combined ██████████████████████████████████████████████████ ~50%
    Others                 █████████████████████████████████████████████████

    Note: Brand-level market shares are not consistently publicly disclosed. The 28% figure refers to HUL’s company-level skincare value share, not Ponds alone.

    The competitive battlefield now includes HUL, Beiersdorf, L’Oréal, P&G, Honasa and fast-growing independent brands such as Plum, alongside strong Ayurvedic and prestige players.


    2. Who is winning?

    The market can broadly be divided into four groups:

    Legacy FMCG: Ponds, Lakmé, Vaseline, Garnier Global premium-mass: Nivea, Olay, L’Oréal Paris Digital-first challengers: Mamaearth, The Derma Co, Minimalist, Plum Ayurvedic/premium heritage: Himalaya, Forest Essentials, Biotique, Kama Ayurveda

    The interesting part?

    The fastest growth is increasingly coming from brands that combine science + digital discovery + omnichannel distribution.

    Article content

    3. Brand-by-brand: Current State

    Ponds — Strong leader, but facing disruption

    Ponds remains one of HUL’s biggest skincare engines and benefits from enormous distribution across general trade, modern trade, e-commerce and quick commerce.

    HUL has been repositioning Ponds away from its traditional tone/fairness associations toward science-led premium skincare.

    Current state: Strong scale and distribution.

    Key challenge: Defend leadership while younger consumers shift toward ingredient-led brands.

    What Ponds needs to do: Convert its enormous reach into stronger relevance among Gen Z and premium skincare consumers.


    Lakmé — Powerful ecosystem, but skincare must keep evolving

    Lakmé benefits from its strong brand recognition, modern trade presence, salons, e-commerce and mass distribution.

    Its expansion into products such as retinol shows the shift toward science-backed skincare.

    Current state: Strong legacy brand with a powerful beauty ecosystem.

    Key challenge: Maintain relevance as consumers increasingly evaluate products by ingredients and efficacy rather than brand heritage alone.


    Nivea — Mature growth, excellent profitability

    Nivea generated approximately ₹1,540 crore revenue in India in FY25, while net profit jumped sharply.

    That is an important signal.

    Revenue was almost flat, but profitability improved dramatically.

    Current state: Mature but financially strong.

    Key challenge: Reignite volume/value growth in a slowing mass market.

    Its Sanand manufacturing facility also shows how localization can reduce import dependence and improve supply-chain resilience.


    Olay — Strong premium positioning

    Olay remains an important premium-mass skincare player, particularly in anti-ageing and brightening.

    Its challenge is not brand awareness. It is winning the modern Indian skincare conversation against highly visible serum and active-based challengers.

    Current state: Strong premium positioning.

    Key challenge: Deliver enough innovation and local relevance to justify its premium.


    Garnier & L’Oréal Paris — Winning through innovation and accessibility

    L’Oréal is benefiting from strong skincare momentum, particularly through Vitamin C, UV protection, glycolic acid and brightening products.

    Garnier has another advantage: it can take ingredient-led skincare into mass markets through affordable formats.

    Current state: One of the strongest combinations of science, marketing and distribution.

    Key challenge: Maintain innovation while protecting affordability.


    Mamaearth — From growth-at-any-cost to profitable growth

    Mamaearth is perhaps the most important D2C case study.

    Honasa’s FY25 revenue reached approximately ₹2,067 crore, but PAT declined 34% to ₹73 crore while advertising remained extremely high.

    Then came FY26.

    Revenue increased approximately 16% to ₹2,392 crore, while PAT jumped 175% to ₹200 crore.

    This is a major lesson:

    The D2C model is not dead. Undisciplined D2C economics are.

    Current state: Recovery and restructuring.

    Key challenge: Sustain growth without excessive advertising and channel costs.


    The Derma Co — One of the strongest challengers

    The Derma Co represents the new Indian skincare consumer better than almost any other brand.

    Its proposition is simple: actives, efficacy and dermatological credibility.

    It crossed approximately ₹750 crore ARR and was recognized as India’s No. 1 sunscreen brand by Euromonitor for CY24.

    Current state: High-growth challenger.

    Key challenge: Scale offline without losing its science-led identity and profitability.


    Minimalist — A strategic success story

    Minimalist has become one of India’s strongest examples of ingredient-led skincare.

    Founded in 2020, it reached more than ₹500 crore ARR and remained profitable before HUL acquired a 90.5% stake for approximately ₹2,706 crore.

    The acquisition says a lot about the future.

    Global-scale FMCG distribution + D2C innovation is becoming a powerful combination.

    Current state: High-quality challenger backed by HUL.

    Key challenge: Scale dramatically without diluting consumer trust and brand authenticity.


    Plum — Quietly building a healthier model

    Plum grew approximately 28% to ₹515 crore in FY26 and had already turned profitable in FY25.

    Its model is increasingly omnichannel, with offline contributing around 30% of revenue.

    Current state: One of the more balanced D2C success stories.

    Key challenge: Scale while maintaining unit economics.


    Himalaya — Heritage remains a competitive advantage

    Himalaya continues to benefit from strong pharmacy and general-trade distribution, Ayurvedic credibility and international presence.

    Unlike many newer brands, its heritage itself is an asset.

    Current state: Strong mass and international presence.

    Key challenge: Make traditional herbal positioning relevant to a younger consumer increasingly asking for clinical evidence and active ingredients.

    Article content

    4. What is actually driving the market?

    Five forces are reshaping skincare:

    1. Ingredient awareness Consumers now actively search for niacinamide, Vitamin C, retinol, salicylic acid and SPF.

    2. Premiumization Consumers are moving from basic creams toward serums, sunscreens, targeted treatments and multi-step routines.

    3. Social discovery Influencers, dermatologists and social media increasingly shape product discovery.

    4. Quick commerce Beauty sales through quick commerce are growing dramatically. Face wash, sunscreen and other repeat-use products fit the model particularly well.

    5. Omnichannel expansion The winning model is no longer pure D2C.

    It is:

    D2C + marketplaces + modern trade + general trade + quick commerce.


    5. The biggest challenges ahead

    The industry has six major pressure points:

    CAC inflation: Advertising-led growth is becoming expensive.

    Margin pressure: Quick-commerce commissions and visibility costs can erode profitability.

    Channel conflict: Different prices across websites, marketplaces and stores can damage brand economics.

    Generic natural positioning: “Natural” alone is no longer enough.

    Import dependency: Specialty actives, UV filters and other ingredients remain vulnerable to global supply chains.

    Trust: Counterfeits, grey-market inventory and poor storage can damage consumer confidence.

    The next phase will therefore reward operational discipline as much as marketing creativity.


    6. What changes from 2026 onwards?

    I see six major trends.

    1. Science will beat vague claims

    “Natural” will not disappear.

    But natural + evidence will outperform natural alone.

    2. Sunscreen becomes a major battlefield

    Daily SPF adoption is still expanding, creating a large opportunity for brands that can combine efficacy, texture, affordability and education.

    3. Quick commerce becomes a strategic channel

    Brands will stop treating Blinkit, Zepto and Instamart only as distribution channels.

    They will increasingly treat them as media + retail + convenience platforms.

    4. D2C brands will consolidate

    The market will favour brands with strong repeat purchase, healthy contribution margins and differentiated products.

    Revenue alone will no longer impress investors.

    Profitable growth will.

    5. M&A will accelerate

    The HUL–Minimalist transaction and global interest in premium Indian beauty demonstrate the strategic value of Indian skincare brands.

    Expect more consolidation.

    6. India can become a skincare manufacturing and export hub

    Ayurvedic heritage, local manufacturing and cost-efficient formulation can create an export opportunity — particularly in GCC, Africa and other emerging markets.


    The final takeaway

    India’s skincare market is not simply growing. It is changing shape.

    HUL still dominates structurally.

    Nivea remains financially strong.

    L’Oréal is winning through innovation.

    The Derma Co is building serious momentum.

    Minimalist has already attracted strategic acquisition.

    Mamaearth is demonstrating that disciplined D2C economics can work.

    Plum is proving profitability can coexist with growth.

    Himalaya continues to leverage heritage and distribution.

    The real winner of 2026 and beyond, however, will not necessarily be the brand with the biggest advertising budget.

    It will be the brand that can combine:

    Efficacy + Trust + Innovation + Distribution + Repeat Purchase + Profitable Growth.

    That is where India’s next skincare battle will be fought.

    This study is an assessment of a writer. Please do your own research and decide way forward. Don’t depend alone what we are writing and expressing our views.

  • What 5,200 Customer Reviews Reveal About Process Failures in Quick Commerce

    What 5,200 Customer Reviews Reveal About Process Failures in Quick Commerce

    What Customer Complaints Can Tell Us About Quick Commerce Operations
    A customer complaint rarely starts where the customer experiences it.
    A late delivery may not be a delivery problem.
    A delayed refund may not be a customer-support problem.
    A cancelled order may not be a cancellation problem.
    And that is exactly where many organisations get improvement wrong.
    They respond to the visible complaint instead of investigating the process that created it.
    Quick commerce makes this challenge even more interesting.
    The customer sees a simple promise: fast, convenient and reliable delivery.
    Behind that promise, however, sits a complex chain of inventory, store operations, picking, packing, technology, rider allocation, delivery, payments, refunds and customer support.
    When that chain breaks, the customer does not see the process.
    They see the outcome. And they complain about it.
    That makes customer complaints far more than customer-service data.
    They can be early signals of process variation, waste and defects.
    With that perspective, we analysed customer reviews across five major quick-commerce platforms to understand what recurring complaints could tell us about the underlying customer journey.
    The Objective
    The purpose was not to rank companies or identify winners and losers.
    Instead, we wanted to answer three questions:

    What are customers complaining about most frequently?
    What patterns emerge when all complaints are analysed together?
    Which recurring problems may require a structured Lean Six Sigma investigation?

    The study analysed 5,200 recent customer reviews across the five platforms.
    Of these, 1,401 reviews—or 26.9%—contained identifiable complaints.
    The remaining reviews were positive or did not contain a clearly identifiable complaint.
    In other words, roughly one in every four reviews contained a signal that something in the customer journey had not worked as expected.

    What Did the Combined Data Reveal?
    When all five platforms were analysed together, complaints were not concentrated around one single operational problem.
    The major themes included:

    Refund and customer-support issues
    General dissatisfaction
    Unclassified complaints
    Delivery delays
    Product quality issues
    Missing or incorrect items
    Pricing and charge-related concerns
    Order cancellations
    Trust-related concerns
    Technical and app-related problems

    One finding stood out immediately.
    A significant number of complaints were broad, emotional or difficult to classify into one specific defect.
    When a customer says, “Worst experience”, the dissatisfaction is clear. The root cause is not.
    Was the problem delivery?
    Was it the product?
    Was it the refund?
    Was it customer support?
    Or did several process failures combine to create one poor experience?
    This is where complaint analysis alone reaches its limit.
    It can tell us where customers feel the pain.
    It cannot always tell us why the process created it.

    The Pattern Was Not the Same for Every Company
    The most interesting insight was not simply the overall number of complaints.
    It was how differently the complaint patterns appeared across the platforms.
    One platform showed a significantly higher complaint rate, with concerns concentrated around:

    Refunds
    Customer support
    Product quality

    Another showed a stronger delivery-related pattern.
    Another had relatively greater concerns around pricing and charges.
    Another showed a combination of delivery delays and order cancellations.
    This distinction matters.
    These companies operate in the same industry and compete for similar customers.
    But the customer-facing defects are not identical.
    That means a generic “customer experience improvement programme” may be too broad to solve the real problem.
    Each complaint pattern points towards a different part of the process that needs investigation.

    Company Comparison

    Article content


    What Does This Mean from a Lean Six Sigma Perspective?
    The data does not tell us what solution each company should implement.
    And it should not.
    Jumping directly from a complaint to a solution is one of the most common mistakes in improvement work.
    A late delivery does not automatically mean more riders are required.
    A refund delay does not automatically mean more customer-service employees are needed.
    A cancellation does not automatically mean inventory is the problem.
    The visible complaint is the symptom.
    The real question is:
    Where did the process begin to fail?
    Based on the patterns identified in this study, organisations may need structured Lean Six Sigma projects around five broad areas.
    1. Refund and Customer Support
    Key questions include:

    Where does waiting occur?
    Why do some cases take longer to resolve?
    Why are repeat customer interactions required?
    Where do handoffs and escalations create variation?

    2. Delivery Reliability
    The customer sees a late delivery.
    The investigation needs to trace the entire journey:
    Order → Picking → Packing → Rider Allocation → Dispatch → Delivery
    The critical question is:
    At which point did the variation enter the process?
    3. Product and Order Quality
    For missing, incorrect, damaged or poor-quality items:

    Where did the defect originate?
    Inventory?
    Picking?
    Packing?
    Storage?
    Delivery?

    4. Order Cancellations
    A cancellation is often the final visible outcome of an earlier failure.
    The investigation needs to understand what happened before the order reached that point.
    5. Pricing, Transparency and Trust
    Some complaints may reflect an operational defect.
    Others may reflect a gap between:
    What the customer expected and What the process delivered or communicated.
    Both require investigation.

    The Bigger Lesson
    The strongest takeaway from this study is simple:
    Customer complaints are process signals.
    A customer sees the final failure.
    The organisation needs to trace that failure backwards.
    A delivery complaint may have started long before dispatch.
    A refund complaint may have nothing to do with the person speaking to the customer.
    A missing product may have entered the process before the order was packed.
    That is why these findings should not immediately lead to solutions.
    They should lead to better questions.

    Why are refunds delayed?
    Why do customers need repeated support interactions?
    Why does delivery performance vary?
    Why do orders get cancelled?
    Why do incorrect or damaged products reach customers?
    Why do customers perceive some charges or transactions as unclear?

    These are not simply customer-service questions.
    They are process questions.
    And process questions require structured root-cause investigation.

    The Way Forward
    This study is a starting point, not a diagnosis.
    It identifies where customers experience recurring problems.
    The next step is to investigate why those problems occur.
    That is where Lean Six Sigma can provide a structured path:
    Customer Complaint → Problem Definition → Measurement → Root-Cause Analysis → Improvement
    The biggest mistake would be to assume that the visible complaint is also the root cause.
    It rarely is.
    Quick commerce will continue to compete on speed.
    But the next competitive advantage may not come from delivering a few minutes faster.
    It may come from something much harder to build:
    A process that works consistently—even when things do not go as planned.
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  • The Real Challenge in Fashion Retail: Turning Inventory into Profitable Sales

    The Real Challenge in Fashion Retail: Turning Inventory into Profitable Sales

    In fashion retail, the biggest problem is rarely buying merchandise.

    The real problem is what happens after the merchandise arrives.

    A retailer can have experienced buyers, strong vendor relationships, detailed market research, carefully planned ranges and significant seasonal budgets. Yet, at the end of the season, the same retailer may still find itself sitting on unsold inventory and offering deep discounts to clear it.

    That is the fundamental challenge of fashion retail.

    The question is not simply:

    “Did we buy the right merchandise?”

    The more important question is:

    “How efficiently did we convert the merchandise we bought into profitable sales?”

    Because in fashion retail, inventory does not just represent stock. It represents committed capital, planned gross margin, future markdown risk and, ultimately, the quality of merchandising decisions.

    Fashion Buying Is a High-Stakes Commitment

    A fashion buyer or merchandiser does not wake up every morning and purchase inventory based on yesterday’s sales.

    Fashion buying works very differently.

    Merchandising teams make commitments well in advance of the season. They study trends, review vendor presentations, analyse previous performance, understand customer preferences and build product ranges across categories.

    Typically, the merchandise portfolio contains three broad layers.

    The first is core merchandise. These are products that customers expect to find throughout the year. They may not always create excitement, but they provide consistency and predictable demand.

    The second is seasonal or festival merchandise. These products are designed around specific periods—festivals, weather changes, weddings or other demand peaks.

    The third and most challenging category is fashion merchandise.

    Fashion moves quickly. Consumer preferences shift. Colours, silhouettes, fabrics and styles can suddenly become desirable—or lose relevance.

    Retailers cannot ignore fashion because customers expect freshness. However, fashion buying involves significantly higher risk.

    And then comes another complex variable: size.

    The same product may perform differently across geographies because customer body profiles and size preferences differ. A size mix that works extremely well in Punjab may not work in the Northeast. A retailer operating across multiple regions cannot simply apply one universal size curve everywhere.

    Therefore, before the season even begins, the merchandising team has already made a series of critical decisions:

    What categories should we buy?

    Which designs should we select?

    How many options should we carry?

    How much inventory should we commit?

    What should be the size ratio?

    When should deliveries arrive?

    And how much of the budget should we allocate to each product category?

    Everything may appear perfectly planned.

    But fashion retail rarely follows the plan exactly.

    The Problem Is Not Always Demand Forecasting

    When inventory does not sell, the first solution many people suggest is demand forecasting.

    Better forecasting is certainly useful—but it does not solve the entire problem.

    Fashion retailers often place orders months before the merchandise reaches the store. Production has lead times. Vendors require advance commitments. Seasonal products may only be available during a specific manufacturing window.

    A retailer cannot simply wait until the season begins, observe customer demand and then immediately replenish the winning products.

    By the time the demand becomes clear, the buying decision may already have been made.

    Vendor capability also plays a major role.

    If a vendor can manufacture and replenish products frequently, the retailer can operate with greater flexibility. The retailer can test the market, identify winning styles and reorder them.

    But many seasonal and fashion products do not offer that luxury.

    They are produced for a particular season, ordered in advance and supplied according to a pre-decided delivery schedule.

    That means fashion retail is not merely a forecasting problem.

    It is a commitment and inventory-risk management problem.

    The quality of the buying decision depends not only on predicting what customers will buy, but also on understanding:

    How much should we commit before demand becomes visible?

    How much flexibility does our supply chain provide?

    How quickly can we react if the product performs differently than expected?

    These questions often matter more than improving the forecasting model by a few percentage points.

    The ₹100 Inventory Question

    Let us simplify the entire challenge.

    Imagine a retailer purchases merchandise worth ₹100.

    The most important question is not simply whether that ₹100 eventually sells.

    The important question is:

    At what price did it sell?

    That ₹100 worth of inventory can move through multiple stages.

    The first portion sells at full price.

    This is the most profitable outcome. The retailer captures the planned margin and validates the quality of the buying and merchandising decisions.

    The second portion sells during a planned festival or promotional period.

    The retailer may offer discounts, but these discounts are already part of the commercial plan. The retailer expects lower percentage margins but anticipates significantly higher sales volumes.

    This is not necessarily a problem.

    In fact, a well-planned festival period can generate substantial gross margin in absolute value because of the higher sales volume.

    The real problem begins with the third layer.

    This is the inventory that remains after the main selling opportunity has passed.

    Perhaps the design did not work.

    Perhaps the colour was wrong.

    Perhaps the fashion trend moved in another direction.

    Perhaps customers bought only certain sizes.

    The retailer may have sold Medium and Large but still be left with significant quantities of Small and Extra Large.

    Or the retailer may have sold one option within a product line while other options remained untouched.

    At this stage, inventory stops behaving like an asset.

    It begins behaving like a liability.

    Unsold Inventory Destroys Gross Margin

    Once merchandise misses its planned selling window, the retailer faces difficult choices.

    The first option is to offer deeper discounts.

    The second is to carry the inventory into the next period.

    The third is to attempt alternative channels to liquidate the stock.

    Each option carries a cost.

    Deep discounting directly affects gross margin.

    Carrying inventory forward blocks working capital and creates additional risk.

    And alternative liquidation channels require careful execution to avoid damaging the brand or cannibalising regular store sales.

    This is why gross-margin performance should never be evaluated only through sales growth.

    A retailer can achieve strong sales and still destroy profitability if too much inventory eventually moves through deep markdowns.

    The merchandising team’s real efficiency lies in its ability to convert committed inventory into sales at the right margin levels.

    A buyer who purchases ₹10 crore worth of merchandise is not necessarily successful because ₹10 crore eventually sells.

    The buyer becomes successful when a high proportion of that merchandise sells at full price or within planned promotional margins—and only a limited portion falls into distress liquidation.

    That is the difference between buying merchandise and managing inventory productivity.

    Every Fashion Retailer Needs a Margin Waterfall

    Retailers should stop looking at inventory as one large number.

    Instead, they should create a weekly inventory and margin waterfall.

    Every week, the merchandising and leadership teams should be able to answer four simple questions.

    How much inventory have we sold at full price?

    How much have we sold at planned festival or promotional prices?

    How much have we sold through additional markdowns?

    How much inventory is still left and at risk?

    This simple framework can dramatically improve decision-making.

    Because the problem becomes visible before the end of the season.

    If the retailer waits until the annual review to discover that gross margin has missed the budget, it is already too late.

    By then, the unsold inventory has accumulated, markdowns have accelerated and the organisation has lost its ability to take corrective action.

    Weekly visibility changes the conversation.

    The buyer no longer says, “Sales are looking good.”

    The organisation asks:

    Are we selling the right inventory at the right margin?

    That is a far more powerful question.

    Predict Gross Margin Before the Quarter Ends

    Once retailers track inventory through these different selling layers, they can begin predicting gross-margin performance much earlier.

    For example, if the retailer notices that a growing proportion of inventory is moving into deeper markdowns, management can immediately estimate the impact on future gross margin.

    Similarly, if full-price sell-through remains strong, the retailer can protect margin expectations even before the season ends.

    This creates a much more dynamic approach to gross-margin management.

    Instead of reviewing profitability after the quarter closes, the retailer can manage profitability while the season is still active.

    The merchandising team can identify slow-moving categories.

    Stores can rebalance inventory.

    Winning products can receive greater visibility.

    Slow-moving sizes can move to geographies where demand is stronger.

    Promotional activity can become targeted rather than broad.

    And management can intervene before the stock reaches the stage of distress liquidation.

    Alternative Channels Can Protect Inventory Value

    Today, fashion retailers also have an advantage that did not exist at the same scale a few years ago.

    They have direct access to customers through digital channels.

    Video commerce and live product selling have become particularly effective tools for inventory liquidation.

    For example, a retailer operating in the Northeast may find itself with merchandise that is not performing strongly in its local stores. Instead of immediately applying deep in-store discounts, the retailer can showcase the merchandise through video-led selling and reach customers beyond the physical catchment area.

    The objective is not simply to clear stock.

    The objective is to clear stock intelligently.

    A retailer should always try to find the highest-value channel available for unsold merchandise before moving to aggressive markdowns.

    Digital selling, live commerce, targeted customer databases and inter-store inventory transfers can all provide additional opportunities to recover value.

    The key is to act early.

    The longer a retailer waits, the fewer options remain.

    The KPI That Fashion Retailers Should Watch Every Week

    Fashion retail leaders need to move beyond traditional sales reporting.

    The most important weekly KPI framework should connect inventory, sell-through and realised margin.

    A merchandising team should know how much of its inventory has moved through:

    • Full-price sales
    • Planned festival or promotional sales
    • Additional markdown sales
    • Unsold and ageing inventory

    This should not remain a year-end analysis.

    It should become a weekly management discipline.

    Because the moment a retailer understands the composition of its sales, it also begins to understand the future composition of its gross margin.

    And that is where better decisions begin.

    The Bottom Line

    Fashion retail will always involve uncertainty.

    Trends will change.

    Customers will surprise buyers.

    Sizes will behave differently across regions.

    Some designs will outperform expectations while others will fail completely.

    No forecasting system can eliminate these realities.

    But retailers can control how quickly they identify risk and how intelligently they respond to it.

    The strongest fashion retailers will not necessarily be the ones that predict every trend perfectly.

    They will be the ones that build a more efficient system for converting inventory into profitable sales.

    Because ultimately, the real measure of merchandising success is not how much merchandise a buyer purchased.

    It is not even how much merchandise the retailer sold.

    The real measure is much more powerful:

    How much of the inventory sold at full price, how much sold within planned promotional margins, how much required additional discounting—and how much was left behind?

    When a retailer starts reviewing these numbers every week, inventory stops being a year-end problem.

    It becomes a business variable that management can actively control.

    And in fashion retail, where every buying decision carries risk, that visibility can be the difference between meeting the gross-margin budget and watching it disappear into markdowns.

  • The Retail Expansion Trap: Why Growth Between 10 and 30 Stores Matters Most

    The Retail Expansion Trap: Why Growth Between 10 and 30 Stores Matters Most

    Expansion is exciting. It gives a company the feeling of spreading its wings into new geographies, reaching new customers and building a stronger brand footprint.

    And that is exactly where the danger often begins.

    A retailer opens its first few stores outside its original market. The initial response is encouraging. Footfalls look healthy, customers appreciate the brand, and a few locations perform better than expected. Confidence rises. Suddenly, the organisation starts thinking bigger: If five stores can work, why not 20? If 20 can work, why not 50?

    The expansion engine accelerates.

    New locations are signed. Store openings become frequent. Teams become busy. The number of stores becomes a symbol of growth.

    Then, three to six months later, reality begins to surface.

    Some stores are performing well. Others are struggling. A few are nowhere close to the business case that justified their opening. Rentals are high, competition is stronger than anticipated, merchandise is not moving as expected, and catchments are behaving very differently from the original assumptions.

    Now imagine this happening not to one store, but to ten or fifteen stores simultaneously.

    The impact on the bottom line can be enormous.

    Expansion Is Not About Opening Stores. It Is About Repeating Success.

    Retail expansion is often mistaken for a real estate exercise. Find a location, negotiate the rent, sign the property and open the store.

    In reality, successful expansion is a far more complex process.

    Every new store represents a combination of several variables:

    • The right geography
    • The right micro-market
    • The right catchment
    • The right customer demographic
    • The right competition landscape
    • The right store size
    • The right merchandise mix
    • The right price points
    • And, of course, the right rental economics

    A mistake in any one of these variables can affect store performance. A mistake in several variables can turn a promising expansion plan into a financial burden.

    Consider a fashion retailer entering a new city. The company may identify a busy market and assume that high footfall will automatically translate into sales. But what if that footfall consists largely of students with lower spending power? What if three established fashion retailers already dominate the market? What if the retailer has selected a 15,000-square-foot store when the catchment can realistically support only an 8,000-square-foot format?

    The store may look impressive. The location may appear busy.

    But the economics may never work.

    That is why expansion should not focus only on where to open. It must focus equally on why that particular store should succeed.

    Catchments Have Changed Dramatically

    Retail catchment behaviour has also changed significantly.

    Earlier, retailers often considered a three- to five-kilometre radius while assessing a store’s potential. Today, particularly in dense urban markets, the effective catchment can be much smaller.

    In many large cities, customers do not want to travel unnecessarily.

    Why should they?

    There are competing brands nearby. Shopping malls are nearby. Local high streets offer alternatives. Online shopping provides another option altogether.

    In many urban markets, the practical catchment for a convenience-oriented fashion or lifestyle store may shrink to one or two kilometres.

    However, this logic cannot simply be copied across India.

    The situation changes dramatically in Tier 2, Tier 3 and Tier 4 towns.

    Many of these markets operate as self-contained ecosystems. Customers may willingly travel three, four or even five kilometres to visit a strong destination store. If the store offers the right combination of assortment, pricing, brand experience and product availability, distance becomes less of a barrier.

    For example, a well-designed value-fashion store in a smaller town may attract customers from several surrounding neighbourhoods because there are limited comparable options. In such a market, the retailer can build a much wider catchment than it could in a highly competitive metropolitan area.

    This is why a standard expansion formula is dangerous.

    The same catchment assumptions cannot work everywhere.

    The First Six Months Can Make or Break the Expansion Strategy

    The real challenge often starts after the store opens.

    The first three to six months are critical.

    During this period, the retailer discovers whether its assumptions were correct. Is the expected customer actually coming? Is the conversion rate healthy? Are customers buying the right categories? Is the average transaction value sufficient? Is the store attracting repeat customers?

    If one new store struggles, the organisation can usually manage the situation.

    But expansion creates a multiplier effect.

    Suppose a retailer opens 15 stores within six months. If ten of those stores underperform during their initial months, the company faces multiple pressures simultaneously: higher fixed costs, inventory requirements, employee expenses, rentals and working capital pressure.

    By the time the management fully understands what went wrong, the financial impact may already be substantial.

    This is one of the biggest differences between opening five stores and opening 30 stores.

    At five stores, mistakes are manageable.

    At 30 stores, mistakes become expensive.

    Retail History Has Already Taught Us This Lesson

    India has seen this pattern before.

    During the retail boom of the mid-to-late 2000s, there was enormous enthusiasm around expansion. Retailers were opening stores across cities and regions at a rapid pace.

    Growth itself became the objective.

    Stores opened everywhere.

    But not every store worked.

    Many retailers eventually had to close stores, withdraw from regions or rethink their formats. The problem was not that expansion was wrong. The problem was that companies expanded faster than they learned.

    A retailer would assume that a particular catchment would perform well. It would not.

    Another store would struggle because the customer profile was different from what the company expected. A third location would suffer because competition changed after the store opened.

    The most successful retailers were not necessarily those who made the fewest mistakes.

    They were the ones who learned from mistakes faster.

    That distinction is crucial.

    East India Is Entering a More Competitive Retail Phase

    This lesson is particularly relevant for East India today.

    The region has witnessed a significant increase in fashion and apparel retail activity. Numerous local and regional retailers have emerged alongside larger national players. Many of these companies have already expanded to 10, 20 or 30 stores, while some have grown much larger.

    Competition is no longer limited to a handful of established brands.

    A retailer entering a new market today must understand that the customer has more choices than ever before.

    This makes processes extremely important.

    A company cannot depend only on the intuition of its promoters or expansion team. It needs a disciplined operating system that continuously evaluates store performance.

    Regular retail audits become essential.

    Merchandise quality must remain consistent.

    Price points must match local purchasing behaviour.

    Data must reveal what is working and what is not.

    Management needs to ask sharper questions:

    Why is one store converting better than another?

    Why is the same merchandise selling in one town but not another?

    Why has footfall increased without a corresponding increase in sales?

    Is the problem the catchment, the merchandise, the price or the store experience?

    The faster a retailer identifies the real issue, the faster it can act.

    The Most Dangerous Phase Is Often Between 10 and 30 Stores

    Moving from 10 stores to 30 stores is one of the most critical stages in a retailer’s journey.

    The company is no longer small enough to manage everything informally.

    But it may not yet be large enough to have mature systems, strong data infrastructure and specialised leadership across every function.

    This is the risky zone.

    The promoter can no longer personally understand every market.

    The expansion team can no longer rely purely on experience.

    Store managers cannot operate without standardised processes.

    And small operational weaknesses begin to multiply.

    Yet this phase is also the gateway to larger scale.

    If a retailer cannot build strong processes between 10 and 30 stores, scaling from 30 to 100 stores becomes extremely difficult.

    The objective, therefore, should not simply be to open more stores.

    The objective should be to build the capability to operate more stores successfully.

    Growth Requires Better Metrics and Faster Action

    The future of retail expansion will belong to companies that combine ambition with discipline.

    Retailers need to track the right metrics, not just top-line sales. They need to understand store productivity, conversion, repeat customers, category performance, inventory movement, rent-to-sales ratios and local competitive changes.

    More importantly, they need to act quickly.

    A problem identified after six months is expensive.

    The same problem identified after four weeks may still be manageable.

    Expansion will always involve uncertainty. No retailer can predict every catchment perfectly. Not every store will succeed exactly as planned.

    But the goal is not to eliminate mistakes.

    The goal is to reduce the cost of mistakes and increase the speed of learning.

    Because in retail, expansion is not ultimately a test of how fast you can open stores.

    It is a test of how fast you can learn, correct and improve while opening them.

  • The ₹100 Crore Retailer: How Much Inventory Should It Actually Carry?

    The ₹100 Crore Retailer: How Much Inventory Should It Actually Carry?

    A retailer tells me:

    “We are now a ₹100 crore business.”

    My next question is usually not about sales.

    I ask:

    “How much inventory are you carrying?”

    The answer can tell us a lot more about the health of the business than the ₹100 crore revenue number itself.

    One retailer may be doing ₹100 crore with ₹6 crore of inventory.

    Another may need ₹18 crore.

    Both can be perfectly healthy.

    Or both can have a serious inventory problem.

    The difference lies in the business model, category, gross margin, inventory velocity, supplier lead time, assortment and, importantly, how much of that inventory is actually saleable.

    So, if you run a ₹100 crore retail business, what should your inventory really look like?

    There is no single answer.

    But let’s look at the economics category by category.


    Start with the basic calculation

    A simple way to think about inventory is:

    Inventory = Cost of Goods Sold × Inventory Days ÷ 365

    So, if a retailer has ₹100 crore of sales, a 50% gross margin means its annual COGS is approximately ₹50 crore.

    If the business carries 75 days of inventory:

    ₹50 crore × 75 ÷ 365 = ₹10.3 crore

    That gives us a starting point.

    But the interesting part begins when we apply this to different retail businesses.


    Fashion: ₹9–10 crore may not be unusual

    Consider a ₹100 crore fashion retailer.

    Suppose:

    • Gross margin: 55%
    • COGS: ₹45 crore
    • Inventory: 75 days

    The inventory requirement works out to approximately ₹9.2 crore.

    At first glance, that may look reasonable.

    But I would immediately ask another question:

    How much of that ₹9.2 crore is current and how much is ageing?

    Imagine the inventory looks like this:

    ₹5.5 crore — fast-moving/current ₹1.5 crore — normal-moving ₹1 crore — slow-moving ₹700 lakh — ageing ₹500 lakh — effectively dead

    The balance sheet still says ₹9.2 crore inventory.

    But commercially, it is a very different story.

    This is why fashion retailers should not look only at inventory value.

    They need to look at inventory age, sell-through and expected realisation.

    A ₹10 crore inventory number can be healthy.

    It can also be the beginning of a ₹3 crore markdown problem.


    Grocery: ₹5 crore can support ₹100 crore of sales

    Now take grocery.

    Suppose:

    • Gross margin: 25%
    • COGS: ₹75 crore
    • Inventory: 25 days

    Inventory requirement:

    ₹75 crore × 25 ÷ 365 = ₹5.1 crore

    That’s a completely different inventory structure.

    Why?

    Because grocery moves much faster.

    The retailer buys, sells and replenishes continuously.

    Now imagine this retailer carries 60 days instead of 25.

    Inventory becomes:

    ₹75 crore × 60 ÷ 365 = ₹12.3 crore

    The retailer has not generated one additional rupee of sales.

    But another ₹7.2 crore has become tied up in inventory.

    That is the part of inventory management that often gets missed.

    Inventory is not free.

    Every additional rupee sitting on the shelf is a rupee that cannot be used somewhere else.

    core expertise cgrbrands.com

    Beauty: the ageing problem is different

    Beauty is another interesting example.

    Take:

    • ₹100 crore sales
    • 55% gross margin
    • ₹45 crore COGS
    • 60 inventory days

    Inventory:

    ₹45 crore × 60 ÷ 365 = ₹7.4 crore

    So perhaps ₹7–8 crore of inventory looks reasonable as an illustrative starting point.

    But beauty has another risk:

    expiry and product relevance.

    A product sitting in the warehouse for six months is not necessarily the same economic asset as a product that sells every week.

    And then there are:

    • New formulations
    • Packaging changes
    • Seasonal products
    • Shade variations
    • New launches
    • Consumer preference changes

    So the question isn’t simply:

    “How much inventory do we have?”

    It is:

    “How much of our inventory is likely to convert into cash at the expected margin?”

    That is a much more useful question.


    Electronics: inventory can become obsolete before it becomes slow-moving

    Electronics is even more interesting.

    Assume:

    • ₹100 crore sales
    • 20% gross margin
    • ₹80 crore COGS
    • 60 inventory days

    Inventory:

    ₹80 crore × 60 ÷ 365 = ₹13.2 crore

    So an electronics retailer could be carrying ₹13 crore or more.

    But electronics has a unique risk.

    Technology moves faster than inventory.

    A product can be perfectly saleable today and commercially unattractive six months later.

    A new model arrives.

    The manufacturer reduces prices.

    A competitor launches a better product.

    Customers wait for the next version.

    Suddenly, ₹2 crore of inventory may require discounting.

    This is why I would rather see an electronics retailer carrying ₹14 crore of highly productive inventory than ₹10 crore containing ₹3 crore of ageing stock.

    The lowest inventory number is not necessarily the best inventory position.


    Furniture: ₹18 crore may actually be reasonable

    Furniture creates another interesting contrast.

    Suppose:

    • Gross margin: 45%
    • COGS: ₹55 crore
    • Inventory: 120 days

    Inventory:

    ₹55 crore × 120 ÷ 365 = ₹18.1 crore

    That sounds huge compared with grocery.

    But should we immediately call it inefficient?

    No.

    Furniture has:

    • Longer buying cycles
    • Longer supplier lead times
    • Larger ticket sizes
    • Large display requirements
    • Lower purchase frequency
    • Higher logistics complexity

    So 120 days of inventory may be perfectly understandable for the business.

    This is why comparing a furniture retailer’s inventory days with a grocery retailer’s inventory days is meaningless.

    Inventory benchmarks have to be category-specific.


    Footwear: having inventory doesn’t mean having availability

    Now consider footwear.

    Suppose:

    • ₹100 crore sales
    • 50% gross margin
    • ₹50 crore COGS
    • 75 inventory days

    Inventory:

    ₹50 crore × 75 ÷ 365 = ₹10.3 crore

    Again, roughly ₹10 crore.

    But here’s the problem.

    Footwear doesn’t just have SKU-level inventory.

    It has size-level inventory.

    You may have:

    100 pairs of a particular style.

    But if your customers predominantly want sizes 8, 9 and 10, having 40 pairs in sizes 6 and 7 doesn’t solve the problem.

    You can have:

    ₹10 crore of inventory

    and still tell customers:

    “Sorry, your size is unavailable.”

    This is where inventory productivity becomes much more important than inventory value.


    D2C: the problem often starts with the buying decision

    D2C businesses have another challenge.

    Suppose a ₹100 crore D2C brand has:

    • 60% gross margin
    • ₹40 crore COGS
    • 60 inventory days

    Inventory:

    ₹40 crore × 60 ÷ 365 = ₹6.6 crore

    That looks efficient.

    But now look inside the number.

    Suppose the brand has 100 SKUs.

    10 SKUs generate most of the demand.

    30 are average.

    60 are struggling.

    The overall inventory number may still look perfectly acceptable.

    But the problem is sitting at the SKU level.

    This is where I believe many D2C businesses need to move from:

    “How much inventory do we have?”

    to:

    “Which SKUs are consuming our working capital?”

    Because one bad buying decision repeated across 50 SKUs can quietly lock up crores.


    So, what does a ₹100 crore retailer really need?

    Using the illustrative assumptions above, the picture could look something like this:

    Article content

    These are illustrative calculations, not universal industry targets.

    And that’s exactly the point.

    There is no magic number called:

    “Ideal inventory for a ₹100 crore retailer.”


    The bigger question is inventory productivity

    Let’s say two retailers both have ₹100 crore revenue.

    Retailer A carries:

    ₹8 crore inventory

    Retailer B carries:

    ₹16 crore inventory

    It is tempting to say Retailer A is twice as efficient.

    But we need to know more.

    What if Retailer A is constantly out of stock?

    What if it is losing sales because its best-selling SKUs aren’t available?

    What if Retailer B has higher availability and faster growth?

    Now the answer changes.

    The objective isn’t:

    Minimum inventory.

    The objective is:

    Optimum inventory.

    Enough inventory to maintain availability and support growth.

    But not so much that working capital gets trapped in slow-moving or obsolete stock.


    And this is where I would ask a ₹100 crore retailer five questions

    1. How many inventory days are we carrying?

    Not just at company level, but by category and channel.

    2. What percentage of inventory is older than 90/120/180 days?

    Ageing tells us much more than the total number.

    3. Which SKUs are consuming working capital without producing sufficient sales?

    This is where SKU-level analysis becomes powerful.

    4. Where are we overstocked while another store/channel is out of stock?

    Inventory in the wrong location is almost as problematic as not having inventory.

    5. If sales grow from ₹100 crore to ₹150 crore, how much additional inventory will we need?

    This may be the most important question of all.


    The ₹100 crore → ₹150 crore test

    Suppose a retailer grows from ₹100 crore to ₹150 crore.

    The conventional approach says:

    Sales +50% → Inventory +50%

    So:

    ₹10 crore inventory → ₹15 crore.

    But what if better forecasting, replenishment, transfers and assortment management allow the retailer to reach ₹150 crore with ₹12 crore inventory?

    The business has effectively released ₹3 crore of capital.

    No new store.

    No additional borrowing.

    No additional investor capital.

    Just better inventory productivity.

    That is why inventory management should not sit only with the supply-chain team.

    Inventory is a finance issue.

    Inventory is a merchandising issue.

    Inventory is a buying issue.

    Inventory is a customer-experience issue.

    And ultimately, inventory is a CEO issue.


    The number I would like every retailer to know

    Not:

    “Our inventory is ₹12 crore.”

    But:

    “Every ₹1 of inventory in our business generates ₹X of annual sales and ₹Y of gross margin, and we know exactly where the unproductive inventory is.”

    That is a much more meaningful measure of retail health.

    Because the objective of inventory is not to sit in a warehouse.

    It is not to fill a store.

    It is not even to make the balance sheet look healthy.

    Inventory has only one job: to be converted into sales, margin and ultimately cash.

    And the faster and more profitably you can do that—without compromising availability—the stronger your retail business becomes.

    ₹100 crore of sales is a milestone.

    But ₹100 crore of sales with disciplined inventory is a much stronger business.


    What is your view?

    For a ₹100 crore retailer, what is more dangerous:

    ₹5 crore of excess inventory—or ₹5 crore of lost sales because of stockouts?

    I’d be interested in hearing how retailers and D2C businesses are looking at this today.

    Welcome

  • D2C Brands: Stop Chasing Revenue. Start Measuring Customer Profitability.

    D2C Brands: Stop Chasing Revenue. Start Measuring Customer Profitability.

    For years, D2C has been presented as the smarter way to build a consumer brand.

    Go directly to the customer. Avoid expensive stores. Build your own digital identity. Use social media to acquire customers. Scale quickly.

    It sounds simple.

    But the reality is very different today.

    D2C Brands: Stop Chasing Revenue. Start Measuring Customer Profitability.

    Customer acquisition costs are rising. Competition is increasing. Online marketplaces are crowded. Consumers have endless choices. And customer loyalty is becoming harder to earn.

    So the real question for a D2C brand today is not:

    “How do I sell more online?”

    It is:

    “How does my customer actually make a purchase decision, and where should I be available when that decision happens?”

    That requires looking beyond the D2C label.


    The D2C customer is not one customer

    One of the biggest mistakes brands make is treating their online customer as a single segment.

    India has very different consumer groups—from affluent consumers to upper-middle-class, middle-income and value-conscious households.

    But income alone does not determine behaviour.

    Category determines behaviour.

    A consumer may be extremely price-sensitive when buying groceries but may pay a premium for skincare.

    The same person may compare five furniture brands before buying a sofa but purchase a familiar FMCG product almost automatically.

    That is why customer behaviour has to be understood category by category, occasion by occasion and need by need.

    Consider a few examples.

    Fruits & vegetables

    Freshness, availability, convenience and price can dominate the decision.

    Furniture

    Durability, finish, design, comfort, quality, price and confidence in the product become important.

    Beauty & cosmetics

    Product efficacy, ingredients, packaging, reviews, colour, price, trust and brand image can all influence the decision.

    There is therefore no universal D2C customer.

    There are category-specific customers with different reasons to buy.


    The customer knows more—but not necessarily enough

    The digital consumer today has extraordinary access to information.

    With a few clicks, customers can compare:

    • Prices
    • Reviews
    • Features
    • Competitors
    • Offers
    • Influencer opinions
    • Product demonstrations
    • Customer experiences

    But information availability does not automatically create understanding.

    The customer may see ten products but still struggle to decide which one is right.

    That is where trust, reviews, brand credibility, product experience and availability become critical.

    And this is where physical retail still has an important role.

    A customer can touch a product.

    See its finish.

    Try it.

    Speak to someone.

    Understand the difference between two products.

    And sometimes, simply seeing the brand in a physical environment creates confidence.


    The biggest D2C problem today: Customer acquisition

    Digital platforms have made customer access easier.

    They have also made competition much more intense.

    A D2C brand is competing for attention on the same platforms as hundreds or thousands of other brands.

    Meta, Instagram, YouTube, Google and marketplaces can generate enormous reach.

    But reach comes at a price.

    As more brands compete for the same audience:

    Customer acquisition becomes more expensive.

    And if the customer makes one purchase and never returns, the economics become even more difficult.

    This creates a dangerous cycle:

    Higher advertising spend → higher acquisition cost → lower contribution → greater dependence on repeat purchases.

    Therefore, the real question is not how much you spend to acquire a customer.

    It is:

    How much value can you generate from that customer over time?


    D2C and retail: Are the costs really that different?

    This is where I believe many D2C entrepreneurs should take a closer look at their numbers.

    Retail has obvious costs:

    Rent + people + inventory + utilities + operations.

    D2C has a different-looking cost structure:

    Technology + digital marketing + customer acquisition + fulfilment + returns/refunds + inventory + customer service.

    The cost heads are different.

    But the underlying economics are surprisingly similar.

    Both businesses have to:

    • Hold inventory
    • Acquire customers
    • Fulfil orders
    • Manage returns
    • Build trust
    • Provide customer service
    • Maintain technology/processes
    • Generate repeat purchases

    So the assumption that “D2C is automatically cheaper than retail” needs to be challenged.

    It depends entirely on the category, ticket size, margins, repeat rate, geography, assortment and customer acquisition economics.


    So should D2C brands enter retail?

    In many cases, yes—but not blindly.

    Retail can provide something that digital advertising cannot always provide:

    Physical discovery and local trust.

    Suppose a brand establishes a profitable store in a particular catchment.

    It understands the local customer.

    It gets the assortment right.

    Its pricing works.

    Its people are trained.

    Its product mix generates healthy margins.

    And it builds repeat customers within a 3–4 km radius.

    Now the brand has something extremely valuable:

    A proven local business model.

    The next opportunity is to replicate that model in another geography.

    Then another.

    Then another.

    That is very different from simply opening stores because the brand wants a physical presence.


    The future may not be D2C versus retail

    I believe the more relevant question is:

    Why choose one when the customer is using both?

    A consumer may discover your brand on Instagram.

    Read reviews on Google.

    Compare prices on a marketplace.

    See the product in a store.

    Order it through quick commerce.

    Buy again from your website.

    And recommend it to a friend on social media.

    The customer does not think in channels.

    The customer thinks:

    “I want the right product, at the right price, with minimum effort and maximum confidence.”

    Brands need to think the same way.


    But there is a warning for D2C brands

    Do not rush into retail simply because everyone else is doing it.

    Before opening a store, ask:

    Do I have enough SKUs?

    Is my assortment strong enough?

    Can I create a meaningful store proposition?

    Are my margins sufficient?

    Can the store generate repeat business?

    Do I understand the catchment?

    Can I train people to sell the product properly?

    A store cannot become a physical warehouse for your online products.

    It needs a reason to exist.

    The assortment, store experience, pricing, visual merchandising and customer interaction must come together as one proposition.


    The next competitive advantage: Operational excellence

    For D2C brands, the next phase will not be won simply by having a better Instagram campaign.

    It will be won through better execution.

    Brands need systems that tell them:

    Where is the customer dropping off?

    Why is the customer not completing the purchase?

    Why are returns increasing?

    Which SKU is generating repeat purchases?

    Which geography is profitable?

    Which channel is acquiring the best customers?

    Which customers are worth retaining?

    Where is inventory getting stuck?

    And most importantly:

    What does it cost to serve each customer?

    Technology will play a major role here.

    But technology alone is not the answer.

    Data + process + people + execution have to work together.


    My advice to D2C brands

    Before spending the next ₹1 crore on customer acquisition, stop and calculate the economics.

    Compare:

    D2C economics vs Retail economics vs Marketplace economics vs Quick Commerce economics.

    Look at the complete picture—not just revenue.

    Measure:

    CAC Customer Lifetime Value Contribution Margin Repeat Purchase Rate Return Rate Inventory Turns Gross Margin Cost-to-Serve Store Productivity GMROF

    Then decide where your customer should find you.

    Because the future is unlikely to belong to brands that are only D2C.

    It will belong to brands that can move seamlessly across D2C + retail + marketplaces + quick commerce, while maintaining healthy unit economics.


    The final thought

    The D2C opportunity in India is still enormous.

    But the easy growth phase is getting harder.

    Consumers have more choices.

    Advertising is more expensive.

    Competition is intense.

    Loyalty has to be earned repeatedly.

    And profitability can disappear very quickly behind attractive revenue numbers.

    So don’t ask:

    “How fast can I acquire customers?”

    Ask:

    “How profitably can I acquire, serve and retain them?”

    And don’t ask:

    “Should I be D2C or retail?”

    Ask:

    “Where does my customer want to buy from me—and which combination of channels creates the strongest business?”

    D2C may have started the journey by removing the middleman.

    The next stage is about removing the friction between the customer, the brand and a profitable transaction.

    That is where the real scale will come from.

    #D2C #Retail #Ecommerce #ConsumerBehaviour #CustomerAcquisition #QuickCommerce #RetailStrategy #BusinessTransformation #OperationalExcellence #CustomerExperience #Profitability #IndianRetail

  • A case study – D2C 2.0: Digital + Retail

    A case study – D2C 2.0: Digital + Retail

    For more than a decade, D2C meant one thing: go directly to the consumer without traditional retail.

    Build a product.

    Create a digital brand.

    Run Meta and Google campaigns.

    Drive traffic to the website.

    Convert.

    Repeat.

    That model changed how brands were built.

    But the consumer has changed again.

    And this time, Gen Z may force D2C companies to rethink one of their original assumptions: that digital alone is enough.

    The future of D2C is not online versus offline.

    It is online + offline.

    It is Phygital.


    First, understand the Gen Z consumer

    Gen Z does not behave like a purely digital consumer.

    They may discover a product on Instagram, watch a creator explain it on YouTube, compare it online, ask AI for an opinion, visit a store to experience it and finally purchase through whichever channel gives them the best combination of value, trust, convenience and experience.

    Deloitte calls Gen Z the “most authentically omni-shopping generation”—a generation that combines digital discovery with a strong preference for in-person shopping. Its research found that 64% of Gen Z uses social media to research products and 35% uses it to discover products.

    That changes the strategic question for D2C companies.

    The question is no longer:

    “How do we get Gen Z to buy online?”

    It is:

    “How do we make our brand available wherever Gen Z wants to discover, evaluate and buy?”

    That is a very different business model.


    What does Gen Z actually need?

    Gen Z wants value, but value does not simply mean the lowest price.

    They want:

    Good products.

    Fair prices.

    Trust.

    Reviews and proof.

    Personalisation.

    Convenience.

    Speed.

    Experience.

    Identity.

    And increasingly, the ability to move seamlessly between digital and physical channels.

    This matters because Gen Z will become an increasingly important spending force.

    In India, Deloitte estimates that Gen Z will account for 43% of total consumption in 2025, with direct spending power of around US$250 billion. A newer Google-Deloitte report projects Gen Z could command 45% of India’s online spend by 2030.

    This is not a niche customer segment.

    This is the next consumer economy.


    Where are D2C companies going wrong?

    The problem is not that D2C companies went digital.

    The problem is that many of them stopped there.

    They built businesses around paid digital acquisition rather than building a complete consumer ecosystem.

    The model became:

    Advertising → Website → Purchase

    That model becomes vulnerable when:

    • customer acquisition becomes expensive,
    • competitors sell similar products,
    • consumers become promotion-sensitive,
    • marketplaces capture demand,
    • algorithms change,
    • and the consumer has too many alternatives.

    A D2C brand can have millions of impressions and still have very little consumer loyalty.

    It can have excellent ROAS and weak profitability.

    It can have a strong online following and weak physical presence.

    And it can have a great product that consumers still want to touch, try, compare or experience before buying.

    This is where retail re-enters the story.


    Retail is not disappearing. It is changing.

    The old argument was:

    Digital will replace stores.

    The evidence increasingly suggests something different.

    Digital and physical are converging.

    India’s retail sector is expected to grow from approximately US$1.06 trillion in 2024 to US$1.93 trillion by 2030, while online retail is projected to increase from US$75 billion to US$260 billion during the same period.

    Online is growing rapidly.

    But even by 2030, it would represent only around 14% of total Indian retail according to the Deloitte-FICCI projection.

    That means something very important for D2C founders:

    The digital opportunity is enormous—but the physical retail opportunity remains enormous too.

    Ignoring either one limits the addressable market.


    India is already showing the direction

    The retail market is not waiting for D2C brands to decide whether they like physical retail.

    D2C brands are already moving there.

    CBRE reported that D2C brands accounted for approximately 27% of India’s retail leasing activity in 2025. In H1 2026, D2C players accounted for approximately 28% of retail absorption.

    That is a significant signal.

    D2C brands are becoming retail occupiers.

    Why?

    Because physical stores can provide something digital cannot fully replicate:

    Trust.

    Trial.

    Touch.

    Demonstration.

    Experience.

    Visibility.

    Immediate gratification.

    And sometimes, simply:

    “I want to see it before I buy it.”


    Look at what is happening globally

    The transition is not uniquely Indian.

    In the US, digitally born brands such as Oura expanded into physical retail through major retailers including Best Buy and Target.

    Beauty brand Glossier, which built its reputation through digital communities, expanded through Sephora.

    The lesson is not that these companies abandoned D2C.

    They didn’t.

    They expanded the definition of D2C.

    They realised that direct relationships can exist through multiple channels.

    The store does not necessarily weaken the brand’s relationship with the consumer.

    If managed correctly, it can strengthen it.


    Europe is taking this even further

    Europe is showing how technology can actually make physical retail more relevant.

    Deloitte’s 2026 European research found that 56% of European consumers have already used AI for shopping, with product comparison among the leading uses.

    This creates an interesting future.

    Imagine a consumer walking into a store.

    They scan a product.

    AI understands their preferences.

    It compares products.

    The store provides the physical experience.

    The digital layer provides intelligence.

    The transaction can happen either physically or digitally.

    That is not traditional retail.

    That is Phygital retail.


    Southeast Asia provides another lesson

    Southeast Asia has demonstrated the power of social commerce.

    The consumer can discover a product through a creator, interact with the seller, research the product and complete the purchase without following the traditional retail funnel.

    The lesson for India is important:

    Consumers no longer recognise the boundaries between marketing, commerce and retail.

    A video can become a store.

    A creator can become a salesperson.

    A marketplace can become a discovery engine.

    A physical store can become a content studio.

    And an app can become a loyalty programme.

    The channels are merging.


    India has an additional advantage

    India has something many mature markets do not have at the same scale:

    Digital growth + physical retail growth + young consumers + Tier II/III consumption.

    Deloitte reports that Tier II and III cities already account for more than 60% of India’s e-commerce transactions.

    CBRE’s latest retail data shows Delhi-NCR, Chennai and Mumbai accounted for approximately 66% of retail leasing activity in H1 2026, while D2C brands represented around 28% of absorption.

    The opportunity therefore extends beyond the metros.

    A D2C company that builds digital demand in a Tier II city may eventually discover that the same city can support a physical presence.

    Digital can identify where retail should go.

    That is a major strategic advantage.


    The future D2C company will look different

    The first generation of D2C companies asked:

    “How can we bypass retail?”

    The next generation should ask:

    “How can we use digital to build demand and retail to expand the relationship?”

    That changes the role of the store.

    The store is no longer merely a place to generate billing.

    It can become:

    A brand experience centre.

    A consumer acquisition point.

    A product trial centre.

    A content engine.

    A community hub.

    A fulfilment point.

    A customer-service point.

    A physical expression of a digital brand.

    And digital remains equally important.

    It can drive:

    Discovery.

    Personalisation.

    Reviews.

    Community.

    Data.

    Convenience.

    Repeat purchase.

    So the relationship becomes circular:

    Digital → Store → Digital → Store → Digital

    rather than:

    Digital OR Store



    And this is where India becomes particularly interesting

    India does not need to copy the US, Europe or Southeast Asia.

    It can combine the best elements of all three.

    From the US:

    Brand building + D2C + retail partnerships

    From Europe:

    AI + personalisation + experience

    From Southeast Asia:

    Social commerce + creator-led discovery

    From India:

    Digital scale + physical retail + quick commerce + Tier II/III consumption

    That combination can create something much bigger.


    The strategic opportunity for Indian D2C brands

    The real question is no longer:

    “Should a D2C company open stores?”

    That is too simplistic.

    The better question is:

    “Where does physical presence create incremental consumer value and incremental business value?”

    A D2C company should look at retail when physical presence can:

    • increase trust,
    • improve discovery,
    • allow product trial,
    • reduce dependence on paid acquisition,
    • increase customer lifetime value,
    • strengthen brand visibility,
    • open new geographies,
    • improve consumer understanding,
    • and create an integrated online-offline relationship.

    Not every D2C brand needs 500 stores.

    Not every brand needs a flagship.

    Some may need a shop-in-shop.

    Some may need kiosks.

    Some may need experience centres.

    Some may need selective retail partnerships.

    Some may need franchise expansion.

    The format should follow the consumer and economics—not the other way around.


    The next D2C battle will not be fought only on Meta

    It will be fought across the entire consumer journey.

    Who discovers the consumer?

    Who earns their trust?

    Who gives them the best experience?

    Who makes the purchase easiest?

    Who understands them best?

    Who gets the second purchase?

    Who builds the strongest relationship?

    That is why I believe the next phase of D2C will be less about direct-to-consumer commerce and more about direct-to-consumer relationships.

    And those relationships will exist across screens, stores, marketplaces, creators, communities and AI.


    D2C has reached its next crossroads

    The first D2C revolution asked brands to leave traditional retail.

    The next one will ask them to re-enter retail intelligently.

    Not because digital failed.

    But because the consumer has become omnichannel.

    Gen Z is proving that point faster than any other generation.

    They may discover online.

    They may validate through a creator.

    They may ask AI.

    They may visit a store.

    They may purchase online.

    They may return offline.

    And they may recommend the product through social media.

    The consumer sees one brand.

    The company must stop seeing separate channels.

    That is the real meaning of Phygital.

    And for India’s D2C companies, the next phase of growth may not come from spending another ₹10 crore on digital advertising.

    It may come from asking a much bigger question:

    “Where should our digital brand meet our consumer physically?”

    That is where D2C meets Retail Expansion.

    And that is where the next generation of Indian consumer brands can be built.