Retail in India has undergone a change in the past two decades. A lot has changed, yet nothing much has changed, just not the fundamentals, perhaps. To put it in context, one of the oldest bookstores in India in continued operations is Higginbothams at Chennai which continues to operate from the same premises spanning over two centuries. On the other hand, with the entire country eagerly looking forward to the next big e-commerce sale, we know books are to be among the most sold category.
The relevance of Traditional Kirana stores
Cut to 2020, some of those who pioneered the organized grocery retail have either exited or completely shut shop. Around 2010, ‘experts and economists’ opined that the e-commerce onslaught would leave the organised and semi-organised businesses in the lurch. As we speak, we are yet to see any e-commerce ‘giant’ proclaim to break-even, let alone be profitable.
The next wave around 2015-16 was ‘hyperlocal’ retail, which gave rise to the likes of Swiggy and Grofers who were set to deliver food and essentials at the click of a button. ‘Experts’ were worried again that kirana shop owners would be the worst affected. But, we now only wonder how wrong we all are in assessing consumers incorrectly. The naysayers will keep saying, but that will not withhold the evolution of the society, economy, or consumers. Change is the only constant, after all.
The Covid-19 crisis was clear proof of how the Indian retail ecosystem is so strongly deep-rooted and why it shall remain resilient for a long time to come. While we did witness job losses and store closures, the impact was more on the organised trade who had high paying executives and debts piled high from short-sighted bankers who only saw the golden opportunity ahead and perhaps, willingly skipped seeing the downside. The proof is in the pudding now. We have walked a long and treacherous path these six months starting April this year, and we can say now is ‘all is well’. Or will be well, sooner than later.
Digital Integration is the Buzzword
Apple launched their much-awaited online store in September and had scores of fans thronging the website for their much-needed fix of personalized configurations, especially for the high-end iMac and the more professional set-up for computing, gaming, and music. We have also seen how the local kirana shops have reached out to consumers through WhatsApp ordering and hyperlocal delivery. Swiggy and Zomato, who were off to a slow start have now announced that their daily deliveries are back to the same levels as early March. Flipkart and Big Basket, the undisputed kings of Indian e-Commerce, on the other hand, are still grappling with assortments and delivery. Amazon Prime, the most celebrated feature in India’s online ecosystem has fared rather poorly only because the number of hands needed at the DCs is much lesser than before, thanks to an imminent spread of the dreaded infection.
Making Peace with the New Normal
Consumers have embraced newer ways of shopping while retailers have adapted to the ‘new normal’, a phrase that is so overused and abused at this point. Well, life has to move on, and we can see this right from road-side vendors who wear face masks to the more orderly managed retailers, who ensure a temperature check of all the shoppers visiting their stores.
Coming to the FMCG Industry, we have seen how categories such as health and hygiene have an increased takeaway from consumers during this pandemic. Individuals and families who couldn’t care less about washing hands earlier are now carrying sanitizers in their pockets, bags, and cars. The upside I see here is the emergence of micro-players supported by entrepreneurs who are part of the entire chain, from manufacturing to distribution, sales, and marketing. The top players in the industry such as Reckitt Benckiser, Godrej, ITC, and HUL among others have launched several new SKUs to cater to the growing interest in this segment while the lower end of the market has seen so many similar striking names which have helped fuel the market opportunity.
Categories such as beverages and snacks have seen their sales propel to unexpected levels during the consecutive lockdown periods starting late March, with more and more consumers staying at home, either because of WFH or job losses. Market shares of the big boys went astride due to a broken supply chain even as the hitherto unknown local brands and the mighty regional players took the storm on their face and appealed to consumers with the faster turnaround on shop shelves and initiating innovative methods of packaging, price offers irresistible combos and distribution reach. For example, we saw milk delivery persons double up as delivery agents for neighbourhood retail stores and serve their customers with glee whilst adding to their meager revenues.
Dine-in restaurants which have remained closed for the most part of the year have started opening recently, although the number of covers has now halved compared to before. Some, unfortunately, had to close their shutters for good. On the other hand, local cafés and restaurants are reporting a surge in takeaways and home deliveries which shows the light at the end of the tunnel. Malls have started opening up as well, although, customers are yet to fill them in.
As a country, a society, and as a civilization, we have come to terms with the ‘new normal’ which is here to stay. Retail has paved the path for sure.