Big Bazaar forayed into online commerce in April this year. Despite its rather belated entry, the retail chain aims to transform into an “evolved retail ecosystem” given its expansive offline presence. Sadashiv Nayak tells Sheena Sachdeva how Big Bazaar is working on gaining an edge over the more established e-grocery players in the market.
Having entered the online grocery market rather late, how does Big Bazaar plan to catch up with the likes of BigBasket and Grofers who command sizable market share today?
Grocery is a growing segment in the country. Both modern trade, which has 13-14% penetration and e-commerce, with 2-3% share, are growing. We don’t see this as competition, but certainly as an opportunity. There is huge headroom to grow, not just for grocery, but also for food, homecare, personal care, etc, online.
As compared to established players in the online grocery market, we are quite small. However, the existing players are not in more than 15-20 locations. Our optimism comes from the fact that we are enhancing our inventory in 285 stores of Big Bazaar at one go. Companies in the segment have specialised in a selected inventory model. However, we have opened up all our inventory including food, homecare, personal care, electronics, etc. While new to the channel of e-commerce, we are old in terms of serving customers, with an experience of two decades. Future Group has a stronghold due to its 30 million users. It’s just about making people comfortable and familiar with online retail. The idea is to serve the growing consumption in the industry.
Store2Door targets tier II markets where kirana stores have a stronghold. What logistics and inventory management initiatives have you implemented to tackle this?
Big Bazaar already has a presence in tier II markets. We have our stores in the smallest cities in the country. However, with enough grocery and kirana stores, Big Bazaar’s online channel with several segments will be new to smaller cities. Big Bazaar has a healthy hub-and-spoke model for its supply chain. We work through algorithms for every merchandise. For the new channel, we are working hard to make the merchandise fresher and enable daily business for the store. This has opened avenues for us to cross-populate the merchandise based on the customers’ preferences.
Are WhatsApp and phone-based retailing sustainable in the long term?
Yes. We have enabled WhatsApp to an exclusive range of customers, primarily senior citizens, families affected by Covid and disabled people. We have started a missed-call service for easy shopping. We are working on a healthy mix of chatbots, IVR calls and AI to solve customers’ doubts, because while customers are largely familiar with the technology, some hesitate to interact with an app or a website at the first instance.
In the past, your retail formats Future Bazaar and Big Bazaar Direct have had to shut shop. What went wrong?
None of these experiments were a failure, because they have helped us to make our foundation strong. BB Direct was an attempt towards assisted commerce during 2013 when e-commerce did not exist; the first pilot was in the Vidarbha region of Nagpur. Through this initiative, we realised that any transition to technology needs assistance. We made mistakes in cataloguing and in the presentation of the products. We realised that small towns need much more than discounts; familiarity, for instance. These learnings have come in handy. We now know exactly what the needs of small towns are.
Future Retail’s losses have been widening. What are some of the focus areas of the company to spur growth?
We are addressing the opportunity rather than the books. Due to the disruption last year, we are trying to stay leaner and meaner, and decrease costs. Aside from cutting down media spends significantly, we have slashed our inventory to 20-25%, to enable working capital. We aim to achieve our pre-Covid numbers in the next quarter. But several variables are not in our control.
We believe the e-commerce channel has potential to add another 20% to our revenues within six to 12 months, along with a stable turnover. Big Bazaar is poised to become an ideal retail ecosystem.