How Pandemic has Changed Grocery Retailing in India?

When lives and livelihoods were at threat, grocery retailers played a vital role in society.
How Pandemic has Changed Grocery Retailing in India?

It’s tough when the markets change and all sectors are forced to innovate. In today’s social distance minded economy, the game of grocery retail, in particular, has changed a lot. 

When lives and livelihoods were at threat, grocery retailers played a vital role in society. Plagues and pandemics have occurred earlier too but grocery shopping has seen a drastic change approximately after 200 years. The act of buying is not changing, what is changing is how the customer will buy?  

Indian grocery retail has seen many transformations from haat, to weekly bazaar, to neighbourhood stores, to mom-and-pop stores, to new age experiential mall culture. The latest catchphrase ‘new normal’ is bringing new trends and changes in the retail business. Even last year during Diwali, Indian e-commerce has seen the expansion of e-groceries instead of electronics or big items as in the previous year. 

According to Albinder Dhindsa, CEO, Grofers, “Groceries have become the focus in this season where people are staying at home and not mingling with each other.”

The contribution which e-grocery (less than 5 percent) used to make within e-commerce is changing. 

As per the report by RedSeer and BigBasket, “Currently the online food and grocery retail hold a minuscule part of online retail with only 0.2 percent penetration and it is predicted to grow by 55 percent to reach 1.2 percent of the market by 2023.” 

Future Customer

According to a famous saying by George Bernard Shaw, “There is no sincerer love than the love of food.” And despite the struggle, the grocery retail business rose and met the challenges posed by the pandemic. The industry has confronted the changes in consumer buying behavior patterns and saw an emergence of new consumer segments. 

‘Back with a Bang’, ‘Stay Frugal’, ‘Keep Cutting’, ‘Cautiously Extravagant’ and ‘Get to Normal’ are the five new consumer segments as per EY Future Consumer Index. This pandemic has given momentum to the grocery business and these segments have helped in leveraging that momentum. 

The Indian market has the largest consumer segment, and as per the data by Invest India. “The overall retail market is set to cross the $1.75 trillion mark by 2026, and it is set to grow at a CAGR of 30 percent for gross merchandise value to be worth $200 billion by 2026.”

Online grocery space has accelerated and start-ups in the online grocery sector raised $665.7 million funding in 2019. With penetration of the internet, usage of smartphones, disposable income, adoption of 5G, and literacy towards technology, this online grocery dream is expected to reach $1.5 billion by 2023 from the consumer pockets of Tier II and Tier III cities. 

Click and Collect

The biggest change to grocery has been the boom in online ordering - making orders either through phone, WhatsApp, e-mail or website. The consumer is getting all India delivery of branded products through digital India without any geographical constraints. Powerful AI algorithms have given a push to online ordering by creating a personalized experience for customers along with targeted marketing. 

BigBasket reported that the brand has seen a three-fold growth in terms of the order in new customer acquisition, while retention of new customer cohorts has increased by 60 percent. 

On one side where surveys are reporting the inclination of consumers towards online shopping, the fact of maintaining CDP data or using AI for delivering excellent results cannot be ignored. 

Frank Sinopoli, President, Grocery Neighbor said, “Things are changing, the world is chaotic and with that comes opportunity.”

He started a 53-feet long truck with floating carts delivering fresh produce to food deserts and connecting local farmers with their communities. India under its Atam Nirbhar plan has also started ‘Citymandi’ a mobile martin the Uber model. The vision ensures the direct purchase from farmers, innovative technology to manage the supply chain, and an AI-enabled cloud system. Many retail experts have strengthened their delivery services during Covid-19, apps like UberEats, Amazon Prime/ Now, InstaCart have contributed a lot in shipping the groceries straight to the door. 

BigBasket, a unicorn in the field, and Grofers, soon to be a unicorn, with many other players in the online grocery market has seen 76 percent y-o-y sales in 2020.  

Managing inventory through inventory-based model (Amazon, Supermarket, Grofers, Paytm Mall), Hyperlocal model (Dunzo, Swiggy, Instamart), and Mixed model (Flipkart, Reliance Jio) - each player carves a piece of pie with smooth delivery in minimal time. 

A recent partnership of Grofers with Reckitt Benckiser with ‘Deliver Safe Program’ to win customers' confidence in online shopping will break the chain of infection. 

How to Boost Growth

Decisions made by the grocery market in today’s scenario are going to create a competitive advantage beyond 2020. Data is the key and advanced algorithms with next-generation personalization will help in maintaining a loyal customer base for small and big grocery players in the coming time. The frictionless experience encourages satisfaction and can make the consumer purchase repeatedly because of flexibility in terms of preparing the cart (real-time talk to customer support), making it easy checkout (pay online or pick up in-store), or delivery of out-of-stock items to the doorstep. 

Like other online retail businesses, smart-shelf technology to manage the expanded category can be implemented by the grocery business to manage the inventory. 

Pandemic has created uncertainty, grocery retailers that will ensure agility, automation, handling cross-channel assortment, and redress the operations based on emerging dynamics will thrive in the post-Covid world.  
 

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