At a time when millions of Indians are grounded due to the ongoing nationwide lockdown to contain the novel coronavirus, grocery and everyday essentials has grown to become an enormous opportunity causing large physical retail chains in India to strike unlikely partnerships.
Offline retail companies including Future Group and Spencer’s Retail, among others, are joining hands with e-tailers and consumer internet startups to deliver essential daily goods such as staples, packaged foods, and personal care products.
Mumbai-headquartered Future Group, which runs consumer retail chain Easyday, has been taking orders from customers through phone calls since the lockdown started last month. Now, it is expanding its online ordering capability for its hypermarket chain Big Bazaar, which has over 250 stores across the country, starting from Delhi-NCR (National Capital Region).
Bharati Balakrishnan, senior VP, digital commerce, Future Group, in an interview with local media Economic Times said the company was “able to launch BigBazaar.com within 10 days and since then we’ve scaled it to about 10,000 orders a day.”
The group, owned by Indian billionaire Kishore Biyani, is also servicing orders through Amazon India, apart from phone calls and its own website.
Last year, Amazon had acquired a 49% stake in Future Coupons, a group entity of the conglomerate, which owns 7.3% of Future Group’s retail venture, Future Retail. The arrangement gives Amazon India a stake of about 3.6% in Future Retail, which has a network of more than 1500 stores of various formats including such as Big Bazaar, Food Bazaar, Nilgiris, Hypercity, and Easyday.
Earlier this year, the two giants had taken their collaboration one step further when Future Group’s iconic Indian Republic day sales—touted as Sabse Sasta Din (the cheapest day), was, for the first time, featured on Amazon India.
Now that the healthcare crisis has descended, Future Group, which has been taking calculated steps toward building a digital presence for over a year, is pacing up to capture the online demand.
Although the momentum might be temporary since things are expected to go back to normal once the pandemic is contained, it sure pushes offline retailers one step closer to building a digital presence.
However, creating a digital presence is a bit easier than actually creating a capability to deliver grocery orders in a timely manner.
To serve the rapidly increasing number of orders, Future Group, in addition to utilizing its in-house fleet, has tied up with young Indian startups including Google-backed concierge service Dunzo and Flipkart-backed last-mile delivery startup Shadowfax to leverage their capabilities, according to the ET report.
“We’re running online wherever we’re allowed to operate stores. Some of the stores are adopting online orders faster than others,” Balakrishnan said.
Similarly, Spencer’s Retail, which runs about 200 supermarkets in various cities, has joined hands with food delivery giant Swiggy, cab-hailing platform Uber, and bike taxi startup Rapido, among others, to deliver orders placed by customers on its website.
Spencer’s Retail recently partnered with Walmart-owned Flipkart, giving access to its consumer goods inventory to the latter and making it visible on the e-tailer’s platform. The win-win deal has strengthened Flipkart’s supply chain for FMCG and essentials while enabling Spencer’s Retail to service out-of-store orders.
The Kolkata-headquartered company’s OOS (out of store) business has reportedly shot up significantly to double digits from a low single-digit, riding on online and phone orders.
Over the last few years, online retail companies like Flipkart, Amazon, and Snapdeal, among others, rose to prominence, as millions of tech-savvy consumers moved online. Although big offline retailers in India saw it as a threat and an opportunity, they haven’t been able to successfully create a digital presence to become a truly omni-channel retail company as going online requires companies to make an investment commitment of three to five years.
Now with the COVID-19 outbreak, as physical retail shops deal with a slump in footfalls, they are scrambling to tap the online demand for essential items for the time being.
“We’re chasing incremental revenues and high repeat with our customers,” Balakrishnan of Future Group said in the ET interview. “There are only two things to consider – if the consumer is moving online, we need to move with them, and the second thing is we need to build a viable model.”
Meanwhile, wholesale chains Metro Cash and Carry and Walmart’s Best Price are also exploring digital channels actively. Germany-headquartered wholesale chain Metro Cash and Carry India recently rolled out a B2B mobile shopping app. Earlier, the company, which entered India in 2003, was planning to do a pilot for the app, targeted at retail traders based in Bengaluru only. However, the coronavirus outbreak has forced it to roll out the app across India.
“We are already getting more than 100 online orders from traders per store per day across the country,” managing director Arvind Mediratt, Metro Cash and Carry told ET. “Otherwise it was zero for us as we didn’t have the app earlier.”
Reportedly in March, Walmart’s wholesale store chain, Best Price also revamped its app, to cater to the sudden spike in orders during the lockdown period.
