Hitch­ing busi­ness to the online wagon

E-re­tail is giv­ing tough com­pe­ti­tion to phys­i­cal stores, gain­ing ground in rev­enue and vis­i­bil­ity as con­sumers dis­tance them­selves from the tra­di­tional su­per­mar­ket model. .

Progressive Grocer (India) - - Contents - By Ra­jiv Ku­mar

E-re­tail is giv­ing tough com­pe­ti­tion to phys­i­cal stores, gain­ing ground in rev­enue and vis­i­bil­ity as con­sumers dis­tance them­selves from the tra­di­tional su­per­mar­ket model.

The com­pe­ti­tion in the food re­tail mar­ket has in­creased in re­cent years. Tra­di­tional food re­tail­ers are fac­ing fierce pres­sure from al­ter­na­tive chan­nels, in­clud­ing ware­house clubs, su­per­centers, drug stores, mass re­tail­ers and con­ve­nience stores, as well as online re­tail­ers and gro­cery de­liv­ery ser­vices. Let’s take a look into how e-re­tail, in terms of food and gro­cery, is win­ning brownie points.

Suc­cess story of e-re­tail so far

Vir­tual bas­kets don’t nec­es­sar­ily mir­ror phys­i­cal ones, with the re­la­tion­ship be­ing in­versely pro­por­tional in na­ture. As con­sumers warm up to the idea of e-gro­cery, re­tail­ers are re­al­iz­ing that some cat­e­gories of prod­ucts are sim­ply bet­ter suited for e-com­merce than oth­ers. This leads to dis­crep­an­cies in adap­ta­tion rates vary­ing from mar­ket to mar­ket. While im­me­di­ate use items like fresh and frozen foods, condi­ments and bev­er­ages are slower in adop­tion for the western mar­ket, the abun­dance of fresh pro­duce farm­ing leads to a spike in pur­chase of these prod­ucts for East. There is also a tremen­dous op­por­tu­nity among niche con­sumer seg­ments — es­pe­cially in the healthy eat­ing space and other cat­e­gories that may be more dif­fi­cult to find on in­store shelves. E-com­merce is well suited to spe­cialty re­tail­ing be­cause it al­lows com­pa­nies to of­fer greater prod­uct se­lec­tion in a cat­e­gory than would typ­i­cally be avail­able in brick-and-mor­tar stores – a fac­tor that forms an in­te­gral bench­mark of glob­al­iza­tion in mar­kets of In­dia and her neigh­bours.

Trends that con­trib­ute to the suc­cess of food e-com­merce

Mo­bil­ity: Mo­bil­ity has risen to be the pri­mary fac­tor, with con­sumers choos­ing the com­forts of home for even the most mi­nor gro­cery shop­ping. For coun­tries like In­dia, there is a great po­ten­tial for

online re­tail­ers that of­fer con­sumers a wide va­ri­ety of high on health-and-life foods and pro­vide guid­ance for con­sumers as­pir­ing to health­ier lives. A num­ber of spe­cialty re­tail­ers have emerged in the tech­nol­ogy space, from na­tional online gro­cery de­liv­ery ser­vices with ex­ten­sive fresh sec­tions to lo­cal pro­duce de­liv­ery ser­vices. Also, spe­cial­ized meal de­liv­ery ser­vices have emerged to pro­vide con­sumers the in­gre­di­ents, de­liv­ered to the com­forts of their homes. Din­ing in and food de­liv­ery is gain­ing mar­ket share and they ac­count for 15-20 per cent of the mar­ket now.

Tech­nol­ogy - a game changer: The rapid widen­ing of food tech­nol­ogy bracket is a very pos­i­tive de­vel­op­ment as far as gro­ceries are con­cerned be­cause one can reach a num­ber of re­tail­ers for de­liv­ery, and it has also made the mar­ket in­trin­si­cally com­pet­i­tive and trans­par­ent. A whole range of food tech con­cepts have come in – be it for food ex­plo­ration, dis­cov­ery, reser­va­tions, de­liv­ery, feed­back, In­ter­net restau­rants among oth­ers. There is in­creased com­pe­ti­tion as well as higher per­for­mance bench­marks for the restau­rant and gro­cery sec­tors. In­ter­net only, and dif­fer­en­ti­ated re­tail­ers are gain­ing trac­tion as they are elim­i­nat­ing acute chal­lenges, like high rentals and man­power at­tri­tion, and con­nect­ing di­rectly with the con­sumers.

Rise of or­ganic food: The de­mand for nat­u­ral and or­ganic prod­ucts has led to in­creased com­pe­ti­tion within the re­tail space, and it has come as an op­por­tu­nity for e-gro­cers. Nat­u­ral or­ganic food has be­come a sta­ple in lo­cal health food stores and in most e-gro­cery stores. Al­most all food stores now carry a spe­cial sec­tion of nat­u­ral and or­ganic food. Con­sumers are de­mand­ing more and more cer­ti­fied or­ganic foods and this has spurred the de­mand for or­ganic to an all-time high. With the in­crease of ven­er­a­ble dis­eases such as E coli, sal­monella, and Lis­te­ria, peo­ple are be­com­ing more aware of the food they put into their bod­ies. Con­sumers want to be healthy at all costs and such food of­fers the as­sur­ance of no pes­ti­cides or tox­ins. This has given im­pe­tus to re­tail­ers to go the online way, mak­ing or­ganic the win­ning for­mula of suc­cess.

Per­son­al­iza­tion: Al­go­rithms and pre­dic­tive an­a­lyt­ics get a greater chunk of at­ten­tion these days, ow­ing to them be­ing valu­able tools for per­son­al­iz­ing of­fers and rec­om­men­da­tions. Yet the “se­cret sauce” that makes them per­ti­nent to e-re­tail sec­tor is data about in­di­vid­ual cus­tomers. With the cur­rent rise of in­no­va­tive mea­sures to mine the vi­ral wagon, gro­cery re­tail­ers have a great strength in that they know how to be ef­fec­tive “fast fol­low­ers.” Yet the key to ex­ploit­ing that strength is in know­ing who to fol­low – and per­son­al­iz­ing ac­cord­ingly. This is an im­por­tant tool that shouldn’t be ig­nored. Past pur­chases, fre­quent vis­its to a par­tic­u­lar sec­tion and data on con­sump­tion pat­terns are help­ing the online play­ers in get­ting the valu­able in­for­ma­tion that they re­quire. In to­day’s world, the com­peti­tor to fol­low is the one that’s fur­thest ahead on the learn­ing curve of un­der­stand­ing and serv­ing their cus­tomers – this makes online re­tail­ers the ones to watch out for. Bridg­ing dig­i­tal with in-store: Although ma­jor force now, e-com­merce is only a sec­tion of the dig­i­tal pic­ture. A com­plete dig­i­tal strat­egy in­cludes in­ter­ac­tion at ev­ery point along the path to pur­chase, in­clud­ing find­ing stores, mak­ing lists, check­ing prices, re­search­ing prod­ucts, shar­ing con­tent and pur­chas­ing. These touch points oc­cur both in and out of stores, and con­sumers are in­creas­ingly us­ing tech­nol­ogy to sim­plify and im­prove the process. In­store dig­i­tal op­tions can bring the ease, con­ve­nience and per­son­al­iza­tion of online into brick-and-mor­tar stores. In­cul­cat­ing dig­i­tal strate­gies into the phys­i­cal ex­pe­ri­ence is a valu­able ad­di­tion as these op­tions can in­crease dwell time, en­gage­ment lev­els, bas­ket size and shop­per sat­is­fac­tion.

Con­clu­sion

The in­dus­try is in­cred­i­bly dynamic and there is con­stant pres­sure to adapt for­mats to ad­dress evolv­ing cus­tomer pref­er­ences. Larger play­ers have been much more re­cep­tive to op­er­at­ing a broad port­fo­lio of store for­mats, in­clud­ing online fac­tions to tap into the dig­i­tal mar­ket. Yet new en­trants are ex­per­i­ment­ing through in­te­grated plat­forms to gain ground. In do­ing so, these play­ers have been able to lever­age their in­fra­struc­tures to drive higher sales, mar­gins and in­vest­ment re­turns.

With the cur­rent rise of in­no­va­tive mea­sures to mine the vi­ral wagon, gro­cery re­tail­ers have a great strength in that they know how to be ef­fec­tive “fast fol­low­ers.” Yet the key to ex­ploit­ing that strength is in know­ing who to fol­low – and per­son­al­iz­ing ac­cord­ingly.

The writer is Founder and CEO, Store­hippo, a Saas based E-com­merce plat­form that en­ables busi­nesses to go online.

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