MUMBAI: Kishore Biyani’s Future Group will launch a discount scheme on the first eight days of every month at the country’s largest supermarket chain Big Bazaar in the most aggressive attempt yet by a major traditional retailer to compete headon with Amazon and Flipkart that recently entered online grocery retailing.
On Friday, Biyani announced the customer-reward system internally to all employees on Google Hangout, calling it the next wave of growth for the 270 or so Big Bazaar outlets to help acquire new customers, increase the frequency with which people shop and keep them from migrating online.
The company said the programme that starts next month will help ensure higher footfall across the month instead of just weekends or the first few days after people get their salaries.
“We wanted to bring together all the might of Big Bazaar in an effort to get new customers and at the same time reward existing ones,” said Sadashiv Nayak, CEO of Big Bazaar. “Also, this will influence shoppers to look for options across categories instead of just food and groceries.”
Biyani pioneered supermarket discounting in the country over a decade ago but it still mostly revolves around national holidays. The new Monthly Bachat Bazaar initiative will be a fixture for every month of the current financial year.
Every shopper who buys goods for Rs 2,500 will get cash bonuses and vouchers across segments worth Rs 2,000 from June onward.
The vouchers will be redeemable for the rest of the month ensuring repeat footfalls even during otherwise lean shopping periods.
The effort is part of Future Group’s larger strategy to rewire itself into something resembling a startup and reinvent itself in a market where disruptive online companies have been challenging brick-and-mortar businesses.
For its Vision 2021 by when it’s looking to more than treble revenue to Rs 75,000-1 lakh crore from Rs 22,000 crore last year the operator of the Big Bazaar chain has got nearly half a dozen apps to help its 40,000 employees learn, innovate and think out of the box.
In India, food and grocery accounts for almost 50% of the overall retail basket, although online penetration is still less than 1%, an indication of the growth potential.
Morgan Stanley expects the grocery and food delivery market to reach an online penetration rate of 4% by 2020, touching gross merchandise (GMV) of $19 billion, making it the largest category after electronics and apparel.
But the online grocery space in India has already seen a minor shakeout over the past year. Bigbasket is the leader in the inventory-led grocery model, while ZopNow has pivoted to a marketplace model partnering with hypermarkets to source products. Localbanya has temporarily suspended operations.
Some offline players such as Reliance Fresh and Godrej Nature’s Basket have launched so-called omni-channel initiatives, though their scale isn’t sizeable at the moment.
Within the general merchandise players, Amazon India has launched its platform Kirana Now, Flipkart is tapping neighbourhood stores through its logistics arm Ekart, Paytm has launched Zip and Snapdeal has tied up with Godrej Nature’s Basket.
“Online grocery retailing might work mostly at urban centres but one needs significant scale to make it work profitably,” said Ruchi Sally, director at Elargir Solutions, a retail consultancy.
“There is still five to 10 years before online players get into smaller towns with grocery retailing. Big Bazaar may be impacted to an extent but not exponentially.”
Biyani welcomed the policy guidelines and clarifications issued by the government last month regarding overseas investment in online marketplaces, saying this will prevent ecommerce companies from controlling prices and selling below cost.