Economic Times – Elargir Views on Tata Group Online Grocery Business

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GrocerMax, founded by Gaurav Juneja and K Radhakrishnan about two years ago, is a hybrid platform for grocery that keeps only 10% inventory, sourcing the rest from supermarkets and provisional stores in real time. The Tata group is buying out the management team and technology infrastructure of Gurgaon-based GrocerMax to enter the online grocery business as consumers increasingly place orders for their supplies over the internet.

This team will help us to set up the online platform for Trent Hypermarket, an equal joint venture between Tata and British retailer Tesco which will rival Amazon and Bigbasket in the nascent yet rapidly growing segment. Because the Tata group’s grocery business is not present in North India, GrocerMax will shut down its business in Gurgaon.

The Tata group runs three formats under the Star banner—Dailies, Market and Hyper—and has around 42 stores. For Tesco, the world’s third-largest retailer that has nearly 6,800 stores globally, its online business earns roughly £3 billion in sales and is one of the rare such ventures that’s profitable. However, the Indian business is minuscule.

Experts feel omnichannel retail offers consumers more ways to shop and interact with a retailer. It also gives more information about products or categories of products that interest them and greater product availability.

Ruchi Sally, director at Elargir Solutions said, “Having their established physical retail formats and expanding their digital presence would certainly help them having best of both worlds. At the same time, what’s important is right execution of omnichannel strategy by creating a USP in a competitive environment.”

Multichannel offering:
Most retailers are trying to provide a multichannel offering that meets the demands of customers, who easily switch channels to buy products. So far, the omnichannel strategy is most restricted to a few lifestyle retailers including Shoppers Stop, Arvind and Aditya Birla Retail as grocery delivery is more complex than supermarkets. It includes perishable products like food and numerous facilities located close to consumers.

In the UK, Morrisons began supplying goods from its central warehouse to Amazon last year. Orders are picked up at a local store by the supermarket’s staff, then collected and delivered by Amazon. Earlier this month, Amazon said “It was acquiring US brick-and-mortar grocer Whole Foods, highlighting the hybrid omnichannel future of retailing”. Amazon’s proposal to enter food retailing in India is set to get final approval next month. There is speculation that Amazon could also look at a brick-and-mortar buyout. It is reported to be in exclusive talks to acquire online grocery firm Bigbasket.

A retailer who didn’t want to be identified, said, “Indian retail has always struggled to remain profitable. The common refrain is always what is the right model for grocery? Omnichannel may be surmised. Tata may have seen this as a possible way to go. To get a frugal online operation on top of the stores provides an expanded market for every store. This may be the solution.”

The online grocery space in India, has attracted more players as well. While LocalBanya and Pepper-Tap suspended operations, Grofers shut in multiple cities.Though the scale may not be too big right now, Offline players such as Reliance Fresh and Godrej Nature’s Basket have launched omnichannel initiatives.

Click here for original source – Economic Times

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