Consumers flock to modern trade during slowdown

Rate of growth nearly double that of traditional trade in July-sept: Nielsen data

Footfalls at the neighbourhood supermarket are growing in contrast to the kirana or corner shop, considered the backbone of the fast-moving consumer goods (FMCG) market. Nielsen data sourced from the retail i ndustry shows modern trade as a channel for carrying food and grocery products has grown at nearly double the rate of traditional trade in July-September (Q2), coming at a time when the overall market remains weak.

Specifically, the rate of growth of modern trade, says industry officials, in Q2 is 13 per cent versus traditional trade’s 7 per cent. This is the first time in four quarters that the rate of growth of modern trade has outstripped that of traditional trade, they say, pointing to the initiatives that organised retailers are taking to buck the overall slowdown.

“Most modern traders, especially in food and grocery, offer an assortment of products today at competitive price. This increases convenience,” says Arvind Singhal, chairman, Technopak. “They are also pushing more sale days and offers and matching discounts offered by e-tailers,” he says.

When announcing t he company ’s Q2 results this month, Neville Noronha, managing director and chief executive officer, Avenue Supermarts, which runs the Dmart chain of stores i n India, said the company ’s revenue mix was better this year from last year and that the retailer remained committed to opening more stores across the country to improve its reach. It has 189 stores currently.

Dmart’s revenue growth for Q2 stood at 22 per cent year-on-year, which analysts say is due to the chain’s aggression on discounts. Dmart is among the country’s key value retailers in food and grocery and follows the ‘everyday low price’ (Edlp) model, based on sourcing and backend efficiencies. Noronha has said

Dmart’s EDLP model will not change despite competitive intensity.

Future group, which runs the Big Bazaar brand of supermarkets and hypermarkets, on the other hand, has been pushing more sale days in Q2 to get footfalls into its stores, say analysts.

Kishore Biyani, founder and chief executive officer, Future group, say the retailer is focusing on understanding consumer trends and insights during offer periods to get the best out of it.

“While sale periods have become longer and their frequency has also grown across retail chains. The strategy for us is to have interesting tieups with companies, led by consumer insight. This way the strike rate in terms of sales is better," he says.

Big Bazaar also keeps its ears to the ground to understand shopper behaviour and change in habits accurately. For instance, when the price of essential commodities such as potatoes and onions began shooting up recently, Big Bazaar ran an offer saying it would sell these items at ~10 per kg.

The chain runs a regular ‘Wednesday Bazaar ’ offering food and grocery products at even greater discounts than on regular days and has special weekends offers for those planning their shopping trips on Saturdays and Sundays.