Delivering the goods

The country’s original ‘Retail King’—Future Group’s Kishore Biyani— wants to ring your doorbell every morning. Biyani-led Easyday, Nilgiris and Heritage stores are piloting a programme to deliver milk, bread and eggs to consumers living in the two-three km vicinity of its stores across the country.

The retailer thinks the initiative will help each of these 1,000-odd pilot stores to generate an additional Rs 2 million in sales per month — that’s a clean Rs 2 billion a month or Rs 24 billion a year added to the topline! More goods can be added to the delivery basket as it gets going, and the model can be replicated across all Future Group’s existing stores, and another 10,000 small-format stores that it plans to launch in the next few years.

Recollect a similar initiative by the country’s biggest staples marketer Hindustan Unilever in the form of Sangam Direct almost two decades ago. HUL sold Sangam to Wadhawan Retail in 2007, and Future Group bought it from its Mumbai-based peer two years ago. Intended to be an online groceries delivery platform, Sangam, did not make much headway back then, so why should the fate of delivery-based formats by big-box retailers and marketers be different this time, one may ask. Well, put simply, Sangam in 2001 was an idea ahead of its time. In the last five years, the success of ecommerce with the likes of Flipkart, Amazon and sundry others have changed consumer habits to doorstep delivery so much that going forward not trying it may no longer an option for big-box retailers, even staples marketer like HUL. Here’s why.

What the industry currently calls hyper-local delivery—what with the likes of Supr Daily, Rain Can, Milk Basket and Daily Ninja­—is slowing gaining traction and scale. Investments are pouring into these startups — $ 3 million each recently for Milk Basket and Daily Ninja — and they are using the money to expand across the country and build private labels that give them more margins compared to hawking marquee brands from big staples marketers like HUL, Nestle, Procter & Gamble or Marico.

Restaurant-food delivery firms such as Swiggy, too, are getting into groceries delivery. Ecommerce biggie Amazon is about to get into online food retail, and intends to start delivering even fast moving consumer goods (FMCG) at a later stage as and when policy allows for it. In addition, players like Bigbasket, already successful in fruits and vegetables delivery, are also looking at the micro-delivery space of milk, bread, eggs and dairy products.

Partnerships, like the $16 billion takeover of country’s biggest ecommerce firm Flipkart by world’s biggest retailer Walmart or artificial intelligence-based voice-ordering assistants like Amazon’s Alexa and Google’s Home is only hastening the trend to doorstep delivery. Amazon runs an AI-based wardrobe service in US, where it leverages big data and its repository of consumer purchasing patterns to send boxes of clothes to consumers who pay only for the selection they make, and get a full week to decide what to keep and send back.  

So, whether big retailers and staples marketers like it or not, footfalls at neighbourhood mom-and-pop and big-chain stores will go down, and the only way to prevent someone else from poaching their consumer is to go down to the consumer herself. Perhaps that may already to playing up in many a retailer and marketers’ mind. The $ 3 million investment in Milk Basket came in from HUL parent’s investment arm, Unilever Ventures. Though the plans are private and sketchy now, the country’s largest retailer Reliance Retail is also reportedly looking at an online-to-offline model to marry its 8,000-odd retails and telecom stores to its upcoming e-commerce foray.