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people 2014-05-13

'Online grocery retail is in infancy'

An interview with Mohit Kampani, President & CEO, Spencer\'s Retail Limited.

By Deputy Features Editor
'Online grocery retail is in infancy'

In an exclusive interview with Restaurant India, Kampani shares insights on the food and grocery retailing industry in India and how it has evolved over the years.

What is your take on the food and grocery retail industry?

The hypermarket trend is still on but it is limited to metros only. However, retailers are moving to Tier II and III cities in some parts of Andhra Pradesh and UP. The high inflation in last few months, especially in fresh foods, has slowed down the industry’s growth a little bit. But since mid March, we have noticed that the growth is back again as the winter crop is good and food inflation has come down. Certainly this year, we will see a double digit growth again, which was single digit for most of the retailers last year. I think this year lots of retailers will become profitable.

 What is your expansion plan?

We are already there in Tier III cities, but mostly in Andhra Pradesh. Other than Andhra Pradesh, we have presence in UP. We have a store in Gorakhpur, and we will be opening a store each at Faizabad and Raibarelly soon.

 How has e-retailers changed the food and grocery retailing over the years?

Right now online grocery retail is still in its infancy. In fact all over the world there is no e-retail format which is successful for grocery. There are a lot of successful e-retailers but they are limited to small catchment areas. There is only one that come to the large national presence is Peapod, which is in the US, but its approach is also B2B and not B2C. So,  I think food and grocery will take time to come in e-retail formats. The fulfilment of the order which is on delivery is the main issue in the grocery retailing. It is very challenging as the costs are high and the products are required to be delivered very fast. Today people are trying a lot of things but I don’t think that anybody has perfect solution.

How has consumer behaviour evolved over the years?

Earlier, consumers were more driven by pricing, but over the years we have seen that the value is driving them. People are now looking at convenience. People want to buy better things for their families, want to indulge themselves into it but today it is only limited to festivals. It started with a trend some two-three years back with international foods but already the early trends of organics or even the premium products in personal care and to some extent in packaged food is on.

How is e-commerce changing the retail scenario in India?

I think the market will change and the retailers will move towards the e-commerce. But where service is importance, for example grocery, I don’t think that anybody will have it because touch and smell are important parts of experience. When you buy a grocery you want to ensure the quality and you are the best charge of it. So, I think parts of industry where there is packaged product which is doing a lot more on pricing those will go to the retailers much faster.

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