Grappling with low footfalls for more than a year now, supermarkets across the country are rejigging operations with a renewed focus on home deliveries. Future Retail’s hypermarket retail chain Big Bazaar had announced its two-hour delivery initiative last month in April. The company claims that it is already servicing about 55,000-60,000 orders in a day through various channels such as its app, website, and WhatsApp.
“We have seen a phenomenal response towards this initiative and aim to get about 35-40 percent business through home deliveries in the next six months,” said Pawan Sarda, Group Chief Marketing Officer Digital, Marketing and E-commerce, Future Group. The company is offering home delivery service across its 284 stores in the country.
Other supermarkets such as Avenue Supermarts-owned DMart, More Retail, too, have been pushing home deliveries as they witness a decline in footfalls due to COVID-induced curbs. DMart, over the last year, has expanded its e-commerce offering DMart Ready to four new locations besides the Mumbai Metropolitan Region — Ahmedabad, Pune, Bangalore and Hyderabad.
More Retail is looking at an omnichannel play and pushing deliveries through phone calls, WhatsApp, and beta testing an app at several locations in the country. Reliance Retail, too, through its hyperlocal grocery delivery platform JioMart is eyeing the home delivery space. The company runs hypermarket chains such as Reliance Fresh and Reliance Smart.
The race to the customer’s doorstep
The $3 billion e-grocery segment is at an interesting juncture as Reliance Retail pushes JioMart, while Tata Group, too, vies for the share of the pie through its majority stake in BigBasket. Walmart-owned Flipkart, (Flipkart Supermarket), Amazon (Amazon Fresh and Amazon Pantry), and Grofers are other players in the segment.
Now, with supermarkets, too, entering the fray, the segment is bound to get fiercely competitive. However, BigBazaar, DMart, and other hypermarket chains have work cut out for them.
Sample this, last year, according to BigBasket co-founder Hari Menon, the e-grocery platform was servicing 2.83 lakh orders a day. Grofers, co-founder Albinder Dhindsa announced last year, was clocking 1.9 lakh orders a day. With its 55,000-60,000 orders a day, BigBazaar has a long way to go. Analysts project that BigBasket currently has the highest, about 30-35 percent of the market share in the online grocery segment, followed by Grofers at 20-25 percent share, while Amazon commands a 20 percent share in it. JioMart and Flipkart both have only 5-6 percent share each in it, as per estimates.
“Online grocers have built customer loyalty over time and consumers are sure about the quality of their service and apt deliveries. Others will have to match up to this,” said Sanjeev Kumar, Forecast Analyst, Forrester Research. However, supermarket chains such as DMart and Big Bazaar, Kumar said, have a considerable brand recall, which could work in their favour.
To gain ground in this intensively competitive segment, however, the companies would have to invest significant capital and resources.
“The companies need to invest towards building logistics capabilities, inventory management software, and AI technologies,” said Kumar. Though third-party logistics solutions providers can also be roped in, he added, it would mean an impact on their margins.
According to experts, the supermarket chains also need to relook their approach towards ‘e-commerce or online deliveries.’
“Most of these chains have been trying to make us shop the way Americans do, but in India, deliveries have always been a part of grocery business at local kirana level, where the owner supplies several products to the customer over a phone call,” says Harminder Sahni, founder and MD of management consulting firm Wazir Advisors.
These companies need to think like an online company and allocate resources accordingly, he adds, instead of treating it just as another business avenue.
Dwindling footfalls
The move towards e-commerce is a need of the hour for supermarket chains, as they report a decline in footfalls at their stores due to localised lockdowns across the nation. Reliance Retail, while reporting its quarterly earnings informed that footfalls at its stores, which stood at 88 percent of the pre-Covid levels in the fourth quarter of FY21, dropped to 35-40 percent of the pre-COVID levels in April. DMart, too has been impacted.
“In general, more than 80 percent of our stores are operating for a significantly lower number of hours (not exceeding four hours per day) or are even shut for operations for one to two weeks or shut on weekends. These shutdowns are having an adverse and severe impact on our revenues,” Avenue Supermarts shared while announcing its earnings for the quarter-ended March (Q4FY21).
Modern trade, which includes supermarket chains, was on the verge of recovery in the January-March quarter, revealed Nielsen’s FMCG snapshot. As per the research agency, the channel witnessed over 15 percent contraction between the July-September quarter last year, which improved to 8.3 percent de-growth in the first quarter of the calendar year 2021. It contributed about 9 percent to overall FMCG sales in the country from January-March, 2021 as compared to 10.4 percent in the corresponding period last year.
The new set of restrictions can further derail this growth unless the new omnichannel play comes to the rescue of supermarket chains.
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