How this food start-up leveraging SaaS Technology to ease distribution hurdles?

Comfort foods has major off-takes at the neighbourhood stores i.e the unorganised retailers catering to the consumers last minute thirst.
How this food start-up leveraging SaaS Technology to ease distribution hurdles?
Dharit Parikh

HiGrocer, a SaaS Technology enabled Consumer Product Company headquartered in Mumbai. The company has vision is to empower every retailer to compete with organized giants and e-commerce, by last minute SKU range of Quality Products Tethered by SaaS Technology  and simplifying  end to end management system, without compromising on their relations with their neighborhood.  In an exclusive conversation,  Dharit Parikh , CEO  HiGrocer talks about how his venture is addressing the need of urban consumers toggling with the fast changing urbanization.

What is your assessment about consumer product market in India especially if we look at frozen food segment. According to you, what are the factors propelling growth in this segment?

Fast moving consumer goods (FMCG) is the 4th largest sector in the Indian economy. There are three main segments in the sector – food and beverages which accounts for 19% of the sector, dominated by healthcare (~31%) and household and personal care (~50%). Growing awareness, easier access and changing lifestyles have been the key growth drivers for the sector. The urban segment (accounts for a revenue share of around 55%) is the largest contributor to the overall revenue generated by the FMCG sector in India. With food and consumer products being items of frequent consumption, demand is less impacted by slowdown.

 Comfort food and personal products are segments growing at a robust pace. Rising contribution of women to the working force and growing nuclear families led to higher demand for convenience foods, especially in urban areas. As per pour research the urban segment is the largest contributor to the overall revenue generated by the FMCG sector in India.

India has a large base of young consumers who form most of the workforce and, due to time constraints, barely get time for cooking. The initiatives for the growth of sector are expected to increase the disposable income in the hands of the common people, especially in the rural area, which will be beneficial for the sector. One of the very reason we also started with Frozen foods as the market has been gaining traction in India owing to their convenience as they do not need any additional preparation and culinary expertise. Moreover, frozen food products, especially frozen snacks which is our focus, offer enhanced palatability as compared to their home-cooked counterparts, as per study Indian frozen foods market reached a value of around INR 74 Billion in 2018. The market is further projected to reach a value INR 188 Billion by 2024, expanding at a CAGR of around 17% during 2019-2024. Another reason for the increasing demand for frozen foods in India is the fact that these products are available year-round regardless of the season. Furthermore, end-users can buy and use these products as per the convenience, time and palatability. 

What inspires you to launch HiGrocer? What were the initial challenges and how did you overcome those?

India is the young nation with a median age of 28 years, Secondly; the rate of Urbanization has increased to a considerable level since the 2009 census, (as per the United Nations (UN) World Urbanization Prospects 2018 report). These Lifestyle change inspired us at HiGrocer, to cater to the need of Young Urban India with primary needs i.e. Food, getting acclimatized to their fast changing Urban lifestyle, the new trend of living, for multiple purpose, employment being one have eventually resulted to the growing demand of branded comfort foods in India, which is also estimated to grow 12-14% CAGR. And to our amaze the Young Urban Indians aged 16 to 40 years who constitute the major segment of this market, spend over 40 percent of their income on food, are ready to experiment, and are willing to pay a premium for better quality, variety, and taste. And thankfully, we are suiting their taste bud, which is enabling increase in the Desired Demand and Share of Voice for HiGrocer and its Product. 

With our Research and market Canvasing we realise the range of comfort foods has major off-takes at the neighbourhood stores i.e the Unorganised retailers catering to the consumers last minute thirst. As most of the off-takes by consumers erstwhile of their monthly grocery was from these Neighbourhood Kirana Grocers, has moved to Hyper and Online Market and mostly Last mile shopping is only left with them, which results in lesser ticket size and much lesser margin (with current players), hence as per our Businesses model, we aim to provide a Basket of Hi Quality Premium products with On the GO SKU range, which addresses their Challenge. 

All at the palm reach as we are tethered with SaaS Technology, which will enable us to keep our operation cost at marginal and enhance off-takes. Also these retailers command service & margin, we Support the same with our efficient supply chain of ready stock delivery and daily service, which allows them to stock less and do a committed Sales and Less Sales Return. And as we work on Direct to market model with our own distribution we are able to surpass the Marketing Intermediaries providing Better Margin to Retailers. 

 How many markets/pin codes have been covered by HiGrocer? What is your strategy on exploring new markets?

We as per our goals and plans, at the end of 60 months would have our market penetration across 27 cities empowering over 65k retailers. Currently, we Serving 150 plus Pin codes.

  How many categories are operational on HiGrocer? Going forward, what are plans on adding new categories?

Today we have a portfolio of 10 Products, 3 Brands across 2 Categories, and trade across 1350 odd store. We do the tie-ups and ensure product placement, our tie-ups with retailers are made with a committed shelf space named “HiGrocer – Quality Bhi, Dam Bhi”, and we have a dedicated planogram for the shelf. By the end of Half a Decade existence we will have a bank of more then 50 Products and its SKU’s across 6 Categories and 18 Sub Categories trailing each with a minimum existence of 3 years Brand presence.

What is your strategy to empower kirana stores?

Indian FMCG Retail Market (~ $300B) is primarily dominated by traditional unorganized retailers (~91%). Of the overall industry, only 10% is organized till date. The unorganised retail in India is touted to be the most popular purchase destination, catering to the country’s 1.35 billion population. As the result of this humongous growth, the market is seeing B2B segment almost doubling in size vis-à-vis the B2C e-commerce market. Therefore, companies such as Us is endeavoring to help these (un-organised) sellers with an opportunity to grow their business. Undoubtedly, unorganised retail has a humongous opportunity, which is largely untapped.

By on-boarding them on HiGrocer platform, the company ensures accessibility, affordability and assist in better margin by accepting the Footfall challenge created by the market dynamics, which in return enable them to strive for the fittest. Also, these retailers command Service & Margin, we Support the same with our efficient supply chain of ready stock delivery and daily service, which allows them to stock less and do a committed Sales and Less Sales Return. And as we work on Direct to Market model we are able to surpass the Marketing Intermediaries providing much Better Margin to Retailers. 

Technology & Internet have removed the barriers and have flattened the world; as per our Goal partnering with millions of retailers across the Nation by becoming their Trusted Brand and Supply chain partner making it the biggest and quickest go-to-market channel for products and services leading to our focus on solutions for the grocery online end-to-end management system.

Have you raised any kind of VC fund so far or plan to?

We are Bootstrapped company and have decent runway with us, though we are in talking terms with few VC’s who shown Faith and Interest in HiGrocer, we will come back to you on this space soon. 

 

 

 

 

 

 

 

 

 

 

 

 

Dharit Parikh
 
 
 
 
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