Having said that, the offline retail business did get impacted in the early days of the lockdown last year as people were scared to step out.
The past one-and-a-half year has not been easy for retailers. Consumers restricted store visits amid a surging pandemic with many of them shifting online, nudging retailers to craft a sharper omni-channel play. Spencer’s Retail, that managed to gain 3.4 million new customers in the last 18 months, believes both online and offline will continue to grow. Shashwat Goenka, head, retail & FMCG at RP-Sanjiv Goenka Group tells FE’s Asmita Dey and Shobhana Subramanian that the retailer’s offering of a varied assortment to consumers at competitive price points is what gives them an edge. Excerpts:
Given that more and more people are getting accustomed to shopping online, how far has the impact been for a predominantly offline grocer like you?
I would say that we are an omni-channel retail player. Having said that, the offline retail business did get impacted in the early days of the lockdown last year as people were scared to step out. However, we saw a good recovery in Q4FY21 with infections receding and the economy opening up.
But considering the significant shift to online shopping, we do believe that the rate of growth for any offline retail player will start showing signs of slowing down.
There is definitely a shift to the online. If we take grocery, only about 4% of the market in India is online. That 4% is not going to become 50% through the course of the pandemic which in itself is temporary. Yes, there is a subset of people who would have moved permanently from shopping physically to shopping online. There is also a subset of people who have moved online only because of convenience. Currently, they feel safer shopping online but when things open up, they prefer walking into a physical store. And these are the people who came back to our stores during Q4. We were already a 40% online, 60% offline kind of a retail market earlier as well and we are back to that kind of a number. So yes, what will happen is online grocery will go up significantly due to higher adoption. But will it replace offline? Not at all. Both will continue to grow.
How many new customers did your online platform manage to get?
We have gained 3.4 million new customers in the last 18 months. Our online business made about Rs 28 crore in GMV (gross merchandise value) in FY19. That number went up to about Rs 183 crore in FY21, registering a growth of nearly 650%.
It appears that there is a near saturation in terms of catchments. Where would you get your next lot of customers?
For us, we have not seen this to be true. All of our stores have actually been growing. We aim for the catchments fairly early. We do not aim for the catchments when they are generally very saturated. Any city that we operate in, we start opening stores and expanding the radius of the city as we move towards the outskirts which are the areas that are expanding. And if you look at stores where we already have dense catchments, those stores are showing phenomenal growth, primarily due to a very aspirational, upwardly mobile catchment that lives around it. Their purchasing power is increasing. The other way to get growth in these markets is by sharpening the omni-channel experience so that you can cater to the evolving customer preferences adequately.
What is the USP of Spencer’s?
Our USP is to give a varied assortment to the consumers at a very good value price. When you really compare all your everyday items offered by us and the competition, you will see we are at par or most likely better priced. Hence, consumers come back to us.