The past year and a half have not been easy for retailers. Consumers curtailed store visits amid a swelling pandemic, with many of them relocating online and encouraging retailers to develop a sharper omni-channel game. Spencer’s Retail, which has acquired 3.4 million new customers in the past 18 months, expects to continue growing both online and offline. Shashwat Goenka, Head, Retail & FMCG at RP-Sanjiv Goenka Group, says FE’s Asmita Dey and Shobhana Subramanian that the retailer’s offering of a varied range for consumers at competitive prices gives them an advantage. Excerpts:
Given that more and more people are getting used to online shopping, how far has the impact been for a predominantly offline grocer like you?
I would say that we are an omni-channel retail player. However, the offline retail business was affected in the early days of the lockdown last year as people were scared to get out. However, we had a good rebound in the fourth quarter of FY21, with infections falling and the economy opening up.
However, given the significant shift to online shopping, we believe the growth rate will show signs of slowing for any offline retail business.
There is definitely a shift to the internet. When we take groceries, only about 4% of the market in India is online. That 4% will not become 50% over the course of the pandemic, which in itself is temporary. Yes, there is a subgroup of people who would have permanently moved from physical shopping to online shopping. There is also a subset of people who have only gone online for convenience. Currently, they feel more secure shopping online, but when things open up they prefer to go to a physical store. And these are the people who came back to our stores in the fourth quarter. We’ve also been a retail market 40% online and 60% offline before, and we’re back to that type of number. So yes, what is going to happen is that online grocery retailing will grow significantly because of the higher adoption. But will it replace offline? Not at all. Both will continue to grow.
How many new customers has your online platform gained?
In the last 18 months we have gained 3.4 million new customers. Our online business made around Rs 28 crore in GMV (gross value of goods) in fiscal 2019. That number rose to approximately Rs.183 billion in FY21, growing nearly 650%.
Are you interested in partnering with online retailers like Amazon & Flipkart?
We are open to such discussions.
It seems that the catchment areas are nearly saturated. Where would you get your next customers?
For us we did not see this as true. All of our businesses have actually grown. We’re aiming for the catchment areas fairly early on. We don’t aim for the catchment areas when they are generally very saturated. In every city we operate in, we open stores and expand the perimeter 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 a dense service area, these stores are showing phenomenal growth, largely due to a very up and coming, up and coming service area that lives around them. Your purchasing power increases. The other way to grow in these markets is to sharpen the omni-channel experience so that you can adequately accommodate evolving customer preferences.
What is Spencers’ USP?
Our USP is to offer consumers a varied range at a very good price. If you really compare all of the everyday items we offer with those of the competition, you will find that we are equivalent or most likely cheaper. That is why consumers come back to us.