IDENTIFYING TRIGGERS OF BUSINESS

DISRUPTION
IN RETAIL AND E:COMMERCE INDUSTRY.

-AYUSHI
AGARWAL
 Objective
1. Introduction to the topic-Retail and e-commerce industry.
2. Since e-commerce and retail industry is broad major focus
will be on food and beverage retail.
3. Overview- major players of food and beverage, market share
of each player and its importance/impact on people’s life.
4. Comparing India’s food and beverage market with US.
5. Impact of covid-19 on this sector.
6. Behavioural change in customer behaviour due to covid-
19(from offline to online)
7.  Strategic recommendation to 2 groups: Existing player, New
start ups.
 Market Research Methods
1. Primary research:  Information coming directly from the source--
that is, potential customers and focus groups via survey.
2. Secondary research: Abstracts, journals and reports of IBEF India,
PWC, Delloitte etc.

ANALYZE AND INTERPRET RESULTS:

3. Use Microsoft excel tools.
4. Various tests like Correlation and ANOVA.
5. Pictorial representation.
6. Use SPSS software for analysis.
5.Interpretation of the results and preparation of the final report. Also
identify the limitations and conclusions of the project.
 Time frame
1. 1-2 week- Industry research and identification of
objectives.
2. 1-2 weeks-survey and sample data collection.
3. 1 week –data analysis and interpretation.
4. 1 week-preparation of final overall report and
conclusion.
 INTRODUCTION
1. Selling of goods to ultimate consumers/customers for
personal as well as household consumption is referred to as
retailing.
2. Retailers act as an interface between the manufacturers of
products/services and the individual consumers buying for
personal consumption.
3. A retailer stocks the goods of the producer and sells to the
individual consumers at a profit margin.
4. Retail is playing a vital role around the world in increasing
productivity of consumer goods and services.
5. Its effect is visible in countries such as U.S.A. , U.K., Mexico,
Thailand and China, India
 E COMMERCE IN RETAIL

1)The food industry engages in e-commerce through Internet shopping for

consumers called B2Cand B2B market used by food suppliers.

2) It reduce costs and increase efficiencies in procurement, storage and

delivery of food.

3) Allows retailers to share information about consumers purchases and

preferences with food manufacturers and farmers.

4)This circle of information allows high quality and consistent products to be

consumed at lower prices.
 OVERVIEW OF US’S FOOD AND
GROCERY RETAIL INDUSTRY
It is the 2nd largest industry in the US both in number of employees as well as in number of
establishments. It employs over 22 million Americans and generates more than $3 trillion in
retail sale annually. Retailing is a U.S. $7 trillion sector.

WalMart is the world's largest retailer and employs more than 1 million employees. Total
consumption expenditure is expected to reach nearly US$ 3,600 billion by 2020 from US$ 1,824
billion in 2017.

Price and convenience have a significant impact on a consumer’s choice .Thus, in-store or online
price parity influence the market growth.

As a result of COVID 19 outbreak, the food and grocery retail market is witnessing a significant
rise in demand globally. The lockdown in several nations has been causing disruption in the
supply chain. Both brick-and-mortar and online merchants are facing difficulties to meet the
intensified demand for food and grocery products.
 OVERVIEW OF INDIA’S FOOD AND GROCERY
RETAIL INDUSTRY
India’s food and grocery retail market is the third largest in the world with over U.S. $500 billion
in sales.

The F&G retail sector is dominated by traditional store formats like neighbourhood shops or
kirana stores.

The market share held by modern trade formats like supermarkets and hypermarkets is
expected to double by 2020 as stores fulfil the evolving needs of consumers.

Private independent estimates forecast Indian food retail sales to surpass U.S. $800 billion by
2023.
The food retail is in its new stage with many international retailers waiting for venture in India
because of the excellent food retailing system established by the Kirana stores that meets all
the daily need requirements
Organized retailing is although spreading and making its presence felt in different
parts of the country.
OVERVIEW OF INDIA’S FOOD AND GROCERY RETAIL&
E-COMMERCE INDUSTRY

With the entry of very large corporate houses like Reliance Fresh, Vishal,
AV Birla group, Bharati-Walmart joint venture and the existing Biz Bazaar,
Spencer, Food Mart are also in large scale expansions across the country,
the spread of the organized retail is going to reach soon the small towns.

The food business in India is largely unorganized adding up to meagre Rs.

400 billion, with other large players adding another 50 % to that.

Only 5% of the total Indian markets is the aggregate revenues of large food
players and about 15-20 percent of total urban food consumption.
Distribution of food & grocery sector in
india.
Drivers of food and grocery industry
1
2
3 A.
4

1
2
3

4
5
6
7
1 C. B.
8
 A. SUPPLY SIDE DRIVERS
1. Supply side features those factors that act majorly as
change-driving agents. These include:
A1.Infrastructure development
A2.Multi-channel marketing
A3. Easy credit availability
A4. Private labelling.
2. The first three listed factors are significant drivers of
growth on the supply side. The fourth, i.e, ‘Private
Labelling’ is a relatively recent trend, which is gaining
popularity and has enormous potential to drive the
market scenario further.
A1. Infrastructure development:

1. Wholesale grocery distributors have

expanded their infrastructure By increasing:
 
a. grocery store b. Warehouses of c. increasing
chains large c-store chains number of stores
• Big • 7 eleven • Kirana stores
BazaarSpencer’s • tesco • Organized retail
• DMart stores.

Thus the infrastructural development has increased the supply of food and grocery thereby
developing the industry.
 A2. Multi-channel marketing
The supply of the industry has developed by multi-
channel marketing techniques of interacting with
customers like:
Websites direct mail and
mobile
catalogues e-mails.
• Websites of • APPS OF • Emails about
stores like SPENCER,BIG offers and
spencers, big BAZAAR discounts.
bazaar, dmart
as per consumers preferences it increases the likelihood of better customer engagement.
Its increases the revenue of the store.
 A3. Easy credit availability

Credit friendly consumers Increase in online credit cards shopping.

• Easy credits through loyality cards. • Variety of

discounts and cash
backs on credit
card shopping.

Easy credit availibilty has increased the supply as well as demand and
development of food and grocery industry.
 A4. Private labelling.
Private labels have encouraged increase in food and
grocery supply and development of the industry by:
getting the produce locally packed & offering the same at slightly cheaper
prices.

Reduced the shrinkage percentage for retailers

comparatively low price.

selling better quality produce

opened ways for additional employment and income

 B. DEMAND SIDE DRIVERS
Demand side features those factors that are majorly consumer-oriented and are representative of the shifting lifestyles. These include:

B3. Growing
B1. Increasing B2. Increasing
middle-class
B4.Increasing
urbanization disposable income working women
population

B6. Consumer awareness

B5. Inclination and changing
B7.Increasing foreign
towards healthy preferences towards
international trends travel
lifestyle

B8. International TV
shows, food festivals
and Internet
penetration

All these factors majorly hint towards the changing lifestyle of Indian consumers, which translates into uptake of
demand in this industry. These trends will continue to evolve and India being a very fragmented market, the
penetration of these patterns deeper into the society will continue to take place, thereby confirming a sustainable
growth trend in times to come.
 B1. Increasing urbanization
Shift of the Indian populace in terms of rural–urban divide.
population residing in urban areas in India, according to 1901 census, was 11.4%. This
count increased to 28.53% according to 2001 census, and crossing 30% as per 2011
census, standing at 31.16%. In 2017, the numbers increased to 34%, according to The
World Bank

Aspirations of higher income, higher standard of living etc. has drawn more and
more people from villages to settle in towns and cities C.

This transition from rural to urban areas has led to an increase in the
demand for goods.Urban consumers have lower share of food in
total household consumption compared to rural
Consumers but their spending is higher due to high income. As per
survey, only 29% of urban population spend 43% on total market
expenditure of food consumption.
 B2. Increasing disposable income

Today, people
are willing to
As a result the Rising income try new things
Increase in the
increase in levels and and look
literacy level
income has led to education have
has resulted different,
increase in contributed to
into growth of demand for better which has
the evolution of
income among quality consumer increased
new retail
the population. good spending
structure.
habits among
consumer

the annual consumption growth in rural India stood at 9.7 per cent while the urban
consumption grew 8.6 per cent. Rural Indian households are now spending more on
consumer goods like durables, health and personal care, food and beverages and services
than that a few years ago.
 B3. Growing middle-class population

In India the number of middle class consumer is growing rapidly. With rising consumer demand
and greater disposable income has given opportunity of retail industry to grow and prosper.

They expect quality products at decent prices. Modern retailers offer a wide range of products
and value added services to the customers. Hence this has resulted into growth of organized
retailing in India.

the global middle class is expanding rapidly thanks to rising disposable incomes in growing
emerging market economies. By 2020, over 1.5 billion households globally will have an annual
disposable income over US$10,000 measured at PPP, up from 1.2 billion households in 2012;.

As the purchasing power of these middle class households rises, their food consumption
patterns will shift from having only basic staples towards more appetising, nourishing and safe
food.
 B4.Increasing working women

On the backdrop of growing Indian economy during the recent years, the participation of
female workforce in the country’s economic activities has increased considerably. The
proportion of the female workforce which accounted for 26% of the country’s workforce in
FY71 has scaled to 31% during FY11. Notably, the percentage of working women involved in
the organised industrial activities too has increased from 27% in FY81 to 47% in FY11 .

The higher purchasing power in the hands of ‘working-women class Compared to the
housewives enhances the ability of the former to spend much more comparatively

Further the ‘time constraint’ factor also needs to be accounted for by the working women
while making purchases of various day-to-day requirements. Capitalizing on the same, the
organised retailers have increasingly emphasized on the ‘one-stop shop’ concept wherein all
the household requirements ranging from food & grocery to apparel could be met under a
single roof.
B5. Inclination towards healthy lifestyle

With rise in income level of Indian populace and increase in

acceptance of plastic money, discretionary spending has become
important. In the year FY16, Food & grocery and Clothing &
footwear spending was recorded at 62% of the country’s total
spending while that of discretionary category was steady at 38%.

Even with a declining share ‘Food, Grocery and Beverages’

segment remained the largest spending head but the growing
consumer spending under the ‘discretionary heads’ such as
healthcare, personal care products etc marked a noticeable
feature of the shifting consumption pattern
 B6. Consumer awareness and changing
preferences towards international trends

1.The increasing attractiveness of the sector is also

drawing the interest of foreign retailers who are
entering the Indian market of retail through joint
ventures, franchisees etc. as they cannot start
operations on their own.
2. The very first MNC to get into the business was
Spencer’s , a tie up between the RPG group and Dairy
Farm International, a $10 billion Hong Kong- based
company , and a part of the Jardine Matheson group.
 B7.Increasing foreign travel
A few grocery retailers have succeeded in globalizing by developing strategies that take into account the
idiosyncrasies of their industry—and have found new paths to growth at home as well. Extrapolating from their
experience, we propose some retail-specific rules for globalization that may also be useful for any company
venturing abroad.

Retailers wish to enter global markets for a number of reasons. Common ones include a quest for greater
economies of scale and scope, a need to diversify risks, a desire to attract fresh talent and create new
opportunities for existing leaders, and a need to make up for constraints imposed by regulatory agencies when a
retailer becomes too big for its home market.

Imported food items, both fresh and processed, are filling shopping bags in cities and towns as the global food
trade zeroes in on India as a prime market. Many items of regular, if not daily, consumption, from Washington
apples to the Vietnamese basa fish, have insinuated themselves into the palate of Indians, most of whom appear
to be unaware of their growing dependence on foreign food.

In case of edible oils, import dependence has soared from just about 3 per cent in 1992-93 to 50 per cent now,
although India is one of the largest oilseeds producers in the world.
 B8. International TV shows, food festivals and
Internet penetration

There has been an explosion in media due to satellite television and internet.

Indian consumers are exposed to the lifestyle of countries Like having organic food. the
demand for Indian organic food products is on constant increase world wide as India exported
organic products worth $ 515 million in financial year 2017-18, from $ 370 million in 2016-17.

The major demands under the organic product category are for oil seeds, cereals & millets,
sugar, fruit juice concentrates, tea, spices, pulses, dry fruits, medicinal plant products etc

Their expectations for quality products have risen and they are demanding more choice and
money value services and convenience
 A3. REGULATORY DRIVERS
FDI policy in Multi-Brand Retail sector.- India permits FDIin
the multi-brand retail sector with a cap of 51 per cent
ownership by overseas players. So far, only one foreign player,
UK-based Tesco, has received approval for opening stores under
the multi-brand retail policy

Implementation of Goods and Services Tax to reform the tax rates and slabs for this :
being a consumption based tax it will be levied only when food products are sold by the
manufacturer and not when they are manufactured unlike Excise Duty. In addition, full
input credit allowed of prior GST paid on inputs/purchases and the decision of the
government to drop the 1% interstate tax on stock transfers will reduce the amount of
working capital required by companies.
Food retail format in India
 ORGANIZED RETAIL
The organised retail market is valued at US $60 billion, which constitutes about 9
percent of the total retail sector and the unorganised retail market represents
the remaining 91 percent of the sector. The same is the case with the food retail
market where the organized market constitutes only 3 percent in comparison to
the unorganized segment that forms 97 percent of the food retailing market. The
organized retail in India is growing at a CAGR of 20-25 percent per year, which is
a strong indicator of its growth potential in the years to come.

the organized sector includes gourmet stores, department stores, discount

stores, supermarkets and hypermarkets, e-tailers and cash-and-carry formats.
 Gourmet Food Market

The gourmet food market has witnessed a major transformation in recent years
and is expected to grow at a CAGR of 20 percent in the coming years. Prominent
players like Godrej’s Nature’s Basket, Le Marche, Foodhall, Nuts & Spices, Brown
Tree are very positive about the ongoing trend. The segment offers high margins
to retail for high-end products as it caters to premium customers who look for
quality and variety and are willing to pay a premium price.

Chocolates, cookies, juices, honey, sauces and certain fruits are the major
categories constituting the bulk of the gourmet market in India. Also, products
such as truffles, artichokes, asparagus, Australian lamb and Norwegian salmon
have also found their way into the gourmet food and beverage space.
 Imported Food Market

Imported food constitutes about 15-20 % of the total organized retail space. Vegetables,
fruits, and nuts are the major imported categories contributing 80 % of the total food
imports in India. The imported food market in India is growing at a rate of about 30-40
percent per annum from the last 4-5 years.

Rising urbanization, changing lifestyles, increased foreign travel, increasing health

awareness and the boom in organized retailing have resulted in increasing the demand for
imported food products. Relaxed import regulations and reduced import duties have
further increased the demand for imported food products.

The categories showing growth in the imported food segment are dairy items such as
cheese, creams, chocolates and dips followed by wine and packaged food. However, the
imported food business is subject to severe competitive pressure – with the power shifting
to retailers from manufacturers/ importers, resulting in shrinking margins at the back-end.
 Online Retail (E-tail)

Online retail (E-tail) in India has grown immensely in the last five years. Mumbai tops the chart
in online shopping followed by Delhi and Kolkata.

Increased competition among top online players is forcing many physical retailers to have an
online presence, and the trend is no different for the food industry.

In Delhi, an e-grocer delivers approximately 20 orders a day. In Mumbai, about 40 percent of

the groceries are bought through online or via phone. Some of the top e-grocers in the country
are Bigbasket.com, ZopNow.com, MyGrahak.com, Aaramshop.com, Ekstop.com,
AtMyDoorSteps.com and they are continually making people’s life easier.

Best price and on-time delivery, and other exciting features like goods delivered to neighbours
after getting the consent from the customer, are giving consumers more and more reasons to
shift to online channels.
 enormous crowds
Chennai, Big Bazaar and Reliance Fresh are hypermarkets that draw
provide all kinds of groceries and general goods. Saravana Stores in
supermarket and department store. These are large retailers that Hypermarkets
Similar to supermarkets, hypermarkets in India are a combination of
• Department stores are general merchandisers. They offer to the customers mid-
to high-quality products. Though they sell general goods, some department stores Department stores
sell only a select line of products. Examples in India would include stores like
"Westside" popular department stores.
• They offer their products at a discount, that is, at a lesser rate than the maximum
retail price. This is mainly done when there is additional stock left over towards Discount stores
the end of any season. Discount stores sell their goods at a reduced rate with an
aim of drawing bargain shoppers
• self-service shop offering a wide variety of food, beverages and household
products, organized into sections. It is larger and has a wider selection than supermarket
earlier grocery stores, but is smaller and more limited in the range of
merchandise than a hypermarket or big-box market.Example-spencer’s,Dmart
• A  retail outlet that sells a limited range of prepared and ready-to-eat foods,
bottled and fountain beverages, household staples, tobacco products and
STORES
periodicals. Convenience stores are typically small in size, are open extended
hours, and, in most cases, are staffed by a relatively small team of cashiers,
CONVENIENCE
stock workers, and managers
• Most of India's grocery business happens through the unorganized sector,
which mainly comprises of small stores, also known as kiranas. There are over
Kirana stores
12 million small stores in India and account for over 90% share of the Indian
F&G market, which is predicted to reach USD 810 Billion by 2020
• India’s millions of market stalls and specialist shops, kiranas and kiosks -
collectively known as ‘unorganised retail’ - account for around 98% of the
MARKET
country’s grocery sales.
• Important not only because of its size, unorganised grocery retail’s long
UNORGANIZED
heritage brings with it a wealth of experience and shopper understanding.
 MAJOR PLAYERS IN THE INDUSTRY
OFFLINE ONLINE

BIG BAZAAR GROFERS

DMART BIG BASKET

SPENCER’S AMAZON PANTRY

MORE Apps of retail stores

KIRANA STORES
• Competition , govt. Regulation , THREAT • Competition , govt. Regulation , customer THREAT
evolving e- buying mindset
• growth in emerging markets, Rising a OPPORTUNITY • Growing market segments,new technology, OPPORTUNITY-
growth in e-buyers and young population
cceptance of own label products buying behaviour,24/7 availibility
• Relatively expensive , time WEAKNESS WEAKNESS
• Delivery time, Intangible products, no
consuming. shopping experience.
• Quick delivery, Tangible STRENGTH • Convenience, Variety of products, discounts STRENGTH
products, shopping experience. and coupons,low cost,
OFFLINE ONLINE
SWOT ANALYSIS OF MAJOR PLAYERS
IMPACT OF COVID 19 ON THE INDUSTRY
1. Food and grocery sector are facing an unprecedented demand which is straining the
entire ecosystem.
2. In the next 6 months, Food Retailers expect to earn 56% as compared to last year’s
revenues, as per the survey conducted by Retailers Association of India.
3. Lakhs of customers have shifted to online mode and delivery. In reaction to uncertainity
grocery customers are filling their carts with food and other necessities. Once the
situation normalises food and grocery retailers will thrive to realign with supply chains
and redefine resilency.
4. 85% of the retail costs are fixed costs, which is putting several financial pressures on
retailers.
5. The industry is experiencing severe liquidity challenges, which can lead to large scale
unemployment. The cash inflow of the industry has come to a standstill, while the fixed
operating costs remain intact.
6. Manpower rationalization - Small Retailers are expecting to lay-off 30% of their
manpower going forward, this number falls to 12% for Medium Retailers and 5% for Large
Retailers. On the whole, retailers who responded to the survey expect a layoff of about
20% of their manpower.
7. COVID-19 (Coronavirus) has taken a toll on the
economies of various countries 
8. In combination with purchasing staples the traditional
way, e-grocery businesses are also witnessing a rush for
various household supplies. 
9. The concept of “contact-less” deliveries has been
invented which includes making grocery deliveries via
autonomous drones.Example- zomato is using drones
to deliver food.
10. The extent of the pandemic is yet to be discovered.
Thus, it will continue to impact the grocery business
around the world.
SHOPPING BEHAVIOUR
Stocking up of goods
 IMPLICATIONS
1.Sampling—once a key discovery and trial driver for food and beverage—will
not come back immediately, if at all. Rethink in-store sampling strategy (e.g.,
individually wrapped, single serve packages).

2. While in-store activity has stalled, price and promotion will play a big part in
brands getting back in front of shoppers and easing the squeeze felt during
the pandemic period.

3. Brands will need to rebuild loyalty with consumers who may have
temporarily switched to other brands. Premium brands will need to lean into
their value proposition and rebuild those relationships.

4. Retailers will need to re-evaluate how to bring back experience elements

within the boundaries of the new normal.
 Havoc Increases Panic Shopping Spree

1. The total number of people who will be affected by COVID-19

remains unknown. But, the impact has brought the global
stock market down. This is indicative of the fact that your
business will suffer and the conversions will fall. Items such as
toiletries, hand sanitizers, disinfectants, and packaged drinking
water bottles are flying off the shelves, thus, minimizing
supplies.
2. This has resulted in a sudden shortage in the availability of
various commodities. An increase in the online sales of
groceries was witnessed as people started making impulsive
purchases to stock-up and prevent getting infected through
physical contact.
 Transition in Grocery Shopping Habits Amidst COVID-19 Crisis

1. As an outcome of the quick spread of the viral infection, people have

become skeptical about visiting traditional grocery stores and making
purchases to avoid any physical contact.
2. In an attempt to navigate this lethal flare-up, grocery eCommerce
marketplaces need to brainstorm and devise strategies to restore the
confidence of the grocery shoppers. Along with the critical evaluation
of the persistent demand and transition in the consumer’s buying
habits, a strong framework that can handle the influx of orders and
meet customer’s demands is required.
3. Apart from this, eCommerce marketplaces will also have to reconsider
their current delivery strategies. Following a dependable approach like
keeping the customers informed with clear and precise information
about the available products might impact their grocery purchasing
habits.
 Challenges Being Faced 

1. Disruption in supply-chain  
2. Avoid physical contact with shoppers and staff.-Another possible challenge for
the brick-and-mortar stores is to assure customers that they are shopping in a safe
environment. Since coronavirus is contagious, shoppers are hesitant and wish to
avoid any physical contact with fellow shoppers and support staff.
3. What if the delivery workforce falls prey to the infection? This is a potential
challenge for online grocery marketplaces. The delivery staff is a core element that
helps wedge the gap between consumers and grocery vendors on an eCommerce
grocery marketplace. Since the delivery partners work on a contractual basis, they
might not show the willingness to perform in such difficult times.
4. Since the degree of the impact is not yet clear, the grocery industry will continue to
witness a shortfall in the supply chain of consumer goods. Food stocks are breaking
all records as the fear of the viral infection looms. Organizations will have to revise
their stocking capacity and eCommerce grocery business operations to meet
consumer demands.
 Contactless Delivery System or Self-Pickup

1. With new coronavirus cases being reported each day, grocery

delivery service providers have now started making zero contact
drop-offs in an attempt to minimize exposure to germs causing
infection. The importance of making drone deliveries at such
times has also been highlighted. It is a reasonable measure that
can help curb the spread of COVID-19.

2. Shoppers have become cautious since the rise of this viral

infection. Grocery businesses have to thus focus on the practical
application of these delivery methods to ensure on-time delivery
of groceries and meeting consumer demands.
 IMPACT ON VARIOUS GROUPS
1. Impact on Non-Food Retailers –More than 95% of Non-Food Retailers has their shops
closed in the lockdown and are looking at practically no revenues till the lockdown is
in place. In the next 6 months, Non-Food Retailers expect to earn 40% as compared
to last year’s revenues.
2. Impact on Food Retailers – Most of Food Retailers also sell non-essential goods in the
same and / or different stores. The non-food business in the stores has come to a
standstill in the lockdown leading to revenue loss. Additionally, 25% of these retailers
have non-food stores that have been closed leading to further losses. In the next 6
months, Food Retailers expect to earn 56% as compared to last year’s revenues.
3. Overall Business Outlook – 70% of retailers expect the business recovery to happen
in more than 6 months, 20% expect it to take more than a year.· <10% of Medium
and Large Retailers expect to earn any profits till Aug’20, 26% of Small Retailers
expect to earn profits in the same time period.
4. Manpower rationalization - Small Retailers are expecting to lay-off 30% of their
manpower going forward, this number falls to 12% for Medium Retailers and 5% for
Large Retailers. On the whole, retailers who responded to the survey expect a layoff
of about 20% of their manpower.
OPINION OF CUSTOMERS REGARDING
GOODS AVAILIBILITY
Potential long term impacts and future
after covid-19
Permanent shift in
digital shopping.

Changes in
Supply chain
regulatory tax and
realignment.
financial reporting.

New understanding
Open only during
of hiring only
“designated
“essential”
hours.”
workers.