Study of grocery supply chain in India

Abstract

India is one among the top five retail markets in the world in terms of economic value and also the world’s second largest producer of food. Being a consumption-driven economy for many decades and the consumer spending expected to increase around 2.5 times by 2025 , India is all set to further its position in the world retail market. The food and grocery retail constitutes about 16% of India’s GDP. But the food and grocery market is highly fragmented and unorganized, mainly comprising of small, family owned business. The organized grocery retail constitutes only 3% of the whole market. The rising middle class population, increase in disposable income, urbanization, changing consumer preferences, increasing working class population, infrastructure development, multi-channel marketing, and easy credit availability are some of the factors that act as major drivers in the transformation of this industry . While fragmented agri-supply base, quality procurement, real estate availability and cost, and manpower availability acts as major challenges on the supply side, diversity in tastes & preferences, extreme value conscious customers are some of the challenges on the demand side. In such a competitive and challenging market, the retailers have to differentiate themselves through innovations to have a competitive advantage over others. Two major innovations in this industry are innovations in retail format and technological innovations . Technological advancements in the past few years have made marked change in the retail supply chain in India. With the advent of e-commerce retailers like Flipkart, Amazon etc., consumers no longer need to visit any physical retail store to purchase things. Broadly, technological advancements include enterprise resource planning, business intelligence and analytics, customer relationship management, e-commerce, mobile apps etc. But many of these can be adopted only by big and organised retailers as the procurement costs are very high and also costbenefits are low when it comes to smaller retailers. E-commerce has picked up in India over the past few years, and many firms have positioned themselves in various parts of the retail value chain. Firms like Amazon, Flipkart act like a marketplace where various sellers can sell their products to consumers. These firms had books, mobiles, durables etc. in the portfolio to start with. Recently, many firms have ventured into groceries, fast moving consumer goods and other items as well. Hyperlocal delivery firms like Grofers are tying up with local kirana stores, organised and unorganised supermarkets to optimise delivery to customers. They are able to use technology in order to optimise pickup and delivery from various such stores to consumers in very less time.