Businesses have a way to suss out opportunities even during a crisis. Nothing best exemplifies this dictum than to see new grocery stores and supermarkets spring up across our urban neighbourhoods and city limits during the past two years of the Covid pandemic.
Industry observers, retailers, distributors in the food and grocery segment have vouched for the fact that the food and grocery sector was fortunate to have caught the tailwinds in an otherwise adverse business weather, prompting many new converts to enter or make a strategic shift to the sector.
Our Cover Story on Jalan’s Retail (pages 22-26), a well-known regional grocery retailer based out of eastern Uttar Pradesh, highlights the painstaking efforts and diligence required to make grocery retailing a successful business. Unfortunately, a lot of new grocers are content stocking mainly FMCG products that are easier to stock but yield lesser margins compared to the food and grocery range of products. For any experienced grocery retailer, the focus should be more on maintaining a quality range of food and grocery products that can offer the best margins in the supermarket business and a competitive edge as a retailer.
Also, many of these new players, in a bid to acquire customers, are engaged in undercutting prices, which is leading to further erosion of margins of the established retailers. But price undercutting or offering big discounts is not a viable and sustainable business strategy and could eventually put these new grocers out of business besides damaging the health of the grocery ecosystem.