Online food & grocery retail may touch $10.5 billion by 2023

By: |
Published: October 28, 2019 12:10:50 AM

The online food and grocery retail, which stood at approximately $1 billion in 2018, has been witnessing its accelaration phase since then. The initial growth phase from 2014 to 2018 has seen the vertical clocking a CAGR of 110% from close to $0.05 billion mark.

India’s online grocery space has gone through a significant evolution in last few yearsIndia’s online grocery space has gone through a significant evolution in last few years

India’s online food and grocery retail is likely to touch $10.5 billion by 2023, growing at a whopping 55% from the current 0.2% share of the overall retail to 1.2%. This results from a big push on the digital engagement.

Increased comfort and trust of customers in e-tailing, especially electronics and fashion, coupled with strong value proposition of e-grocery players, varied assortment and good delivery options will drive this growth, said an online food and grocery report by RedSeer Consulting and Bigbasket.

Bigbasket and Grofers are the major firms ruling the industry in India. The online food and grocery retail, which stood at approximately $1 billion in 2018, has been witnessing its accelaration phase since then. The initial growth phase from 2014 to 2018 has seen the vertical clocking a CAGR of 110% from close to $0.05 billion mark.

Hari Menon, co-founder and CEO of Bigbasket said, “The online grocery segment has been one of the fastest-growing e-commerce verticals in India and will continue to flourish in both metro and non-metro cities in the years to come.” India’s online grocery space has gone through a significant evolution in last few years from explosive growth and funding in CY15 to growth challenges and funding winter in CY16, and then kickstart and accelerated growth phase 2018 onwards.

Given the lack of concrete data around user patterns, growth trends and consumer preferences related to online as well as offline grocery retail, we decided to partner with RedSeer Consulting to launch this report.”

India’s online grocery space has gone through a significant evolution in last few years – from explosive growth and funding in CY15 to growth challenges and funding winter in CY16, and then kickstart and accelerated growth phase 2018 onwards. In this stop-start journey, many new business models have evolved, and many themes have been proven and dis-proven, says the report.

Tracing the behavioural pattern, the report said consumers, who are loyal adopters of online platforms, reflect high levels of engagement. A worthwhile observation was that the high engagement metric was witnessed in cities — be it metro, Tier I or Tier II. The evolved Tier 1 city consumers reflect the fastest growth of increasing spend.

“It is a comprehensive study that delves into various customer segments, online shopping trends, city-wise penetration and price elasticity displayed by consumers across different retail channels. It will serve as a comprehensive compilation of the Indian online grocery retail market that can act as a reference to FMCG brands, research companies, marketers, venture capitalists, industry experts, ” Menon said.

Among the basket, snacks and namkeen emerge as the pivotal category, followed by breakfast cereals. Biscuits and cookies is the largest sub-category in snacks and branded foods and recorded a growth rate (compounded quarterly growth rate) of 14.5%. Chocolates and candies recorded the highest growth rate followed by snacks and namkeen.

Biscuits and cookies grew at twice the rate in Tier- 1 cities than in metros and mini metros. Tier-I cities had a marginally higher share of cream biscuits and wafers than other markets.

Breakfast cereals is the second-largest sub-category in snacks and branded food. Increase in demand of sub-categories like granola and cereal bars and muesli mark the rise of premium segment in this category. granola and cereal bars reflect the highest growth rate of 46.5%.

Tier 1 cities are marked by low modern retail penetration vis-à-vis metro and mini metro cities and these modern retail stores are mostly located in the central region of these cities. Online channel has marked its presence across multiple catchments owing to wide product assortment and convenience offered by online platform, it said.

Anil Kumar, founder, RedSeer Consulting said, share of modern retail segment will jump from 3.5% now to 6.7% in 2023 and of the online channel will witness 55% growth lending to a sizable $10.5 billion market by 2023. This retail food & grocery report offers comprehensive coverage across 40 categories marking key consumption sectors of a typical grocery basket. Unique insights garnered cover how online platform facilitate creation of niche sub-categories as well as evolution of challenger brands.

In home utilities, detergent is the largest category with 44% market share. Detergents are dominated by premium category with 60% share due to the highest number of offerings in that segment. All purpose cleaners recorded a 16.1% of CQGR with toilet cleaners being the largest and the fastest growing segment. Toilet cleaners grew at a healthy 17.4% of CQGR, while economy segment accounted for more than 80% of the revenue across all city types. Floor and other cleaners recorded a 15.6% of CQGR, and the economy segment was the largest segment, the report said.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1ArogyaSetu remains among top 10 downloaded apps globally in May: NITI Aayog CEO
2Canara Bank cuts in repo-linked lending rate by 40 bps
3Reddit co-founder Alexis Ohanian quits board, asks for black replacement