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Covid: Online food retail a hit after shift in consumer shopping habits

Adoption of digital platforms by neighbourhood stores and consumers
Shift in consumer focus to fresh and healthy foods

Our Special Correspondent   |   Mumbai   |   Published 05.10.20, 03:38 AM

India’s e-grocery space is likely to grow more than two-fold this year as the Covid-19 pandemic has led to shifts in the shopping habits of consumers.

According to an UBS report, the gross merchandise value (GMV) of online grocery retail is seen to grow about 2.4 times in 2020 to $0.3 billion (Rs 2,200 crore aproximately) in December 2020 from $0.13 billion (Rs 900 crore) in January.


Further, online grocery, which accounted for around 0.3 per cent of the total retail segment last year, is likely to see its contribution rise to around 1.5 per cent by 2023. The brokerage had hosted a call with Kumar Rajagopalan, CEO of the Retailers Association of India.

The Covid-19 pandemic and the lockdown has not only seen players such as Grofers and BigBasket ramp up their customer base but also the entry of JioMart and food ordering platform Swiggy turning to the delivery of groceries. Retail giants Amazon and Flipkart also have a presence in the market.

The activity is only set to pick up with Reliance Retail turning its focus into online grocery, backed by a series of investments in Reliance Retail Ventures Ltd (RRVL). RRVL has so far raised Rs 32,198 crore from seven investors. BigBasket is also reportedly in talks to raise around $400 million from Temasek and others.

According to Rajagopalan, the shift in consumer focus to fresh and healthy foods, the use of technology to increase efficiencies and enhance consumer experience, the growth of local convenience stores and the modernisation of the local grocery stores have been the key trends that have shaped the landscape. 

Further, there have been other changes in the evolving grocery retail landscape in India. These include a digital leap by neighbourhood stores, consumers’ adoption of digital platforms, the shift towards a touch-free shopping journey, the emergence of mindful shopping and the launch of relevant new products in health, hygiene and immunity space.

A report from consulting firm RedSeer and online grocery player BigBasket is also optimistic of a strong growth in  the segment. It projects that e-grocery will grow very fast to be a $18.2-billion industry by 2024 from $1.9 billion in 2019 — a CAGR of 57 per cent. 

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