Why Asset Light Model Does Well in the Grocery Segment?

Tata StarQuik has opened a dark store in South Mumbai as there the penetration of organized retail is not much, real estate is expensive and there are not many grocers in the area.
Why Asset Light Model Does Well in the Grocery Segment?
K Radhakrishnan

Today a consumer wants to shop anywhere, anyhow and anytime and retailers are offering 360-degree options. These days, online services have become complementary to offline stores.

Whole Foods in the US and Amazon have discovered that it is a very good recipe for retailers to extend their footprint at possibly no extra cost. It is rather asset light model.

To keep up with the trend, StarQuik (TATA Group) is also providing 360-degree holistic shopping solutions to the consumers.

Opening Dark Stores

StarQuik has opened its first dark store in South Mumbai.

Elaborating on the same, K Radhakrishnan, CEO, StarQuik says, “We have opened a dark store in South Mumbai as there the penetration of organized retail is not much, real estate is expensive and there are not many grocers in the area.”

“It is my belief that the model should be asset-light to do well in grocery business. All our stores are technologically strong. We drive our profitability through efficiency and we cover reasonably good area around every store,” he further adds.

Categories Attracting Online Consumers

Nothing changes much in the grocery basket whether it is online or offline, however, volume and stickiness differ.

“FMCG goods and branded goods occupy the major chunk in the basket. However, when it comes to volumes and value, staples continue to win the heart of consumers. Fresh fruits and vegetables and non-vegetarian products ensure stickiness of consumers at our stores – online and offline,” he explains.

Product Discovery: Which is a Better Channel?

Offline stores offer consumer the luxury to touch and feel the product, along with getting the detailed info about the product from the store staff.

“Consumers discover the products at store and make repeat purchase online. The number of consumers browsing grocery has reduced to a great extent as products are getting less standarised and FMCG players are introducing less variety,” he states. 

Customer Loyalty

There is not much difference when it comes to customer loyalty whether it is online or offline channel.

“I think disloyalty is little different. It is much easier to become disloyal online than offline. Consumers stick to an outlet not because that is the best, but because that is closest and convenient. So, they stick to outlets in their area. But in online space disloyalty is driven by the fact that you can switch with a click. The ease to change outlets online is drawing disloyalty, therefore the effort of the retailers online to keep customers loyal comes at a very high level of satisfaction,” he says.
 

K Radhakrishnan
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