Stores will be the back-end for online orders: Shashwat Goenka3 min read . Updated: 01 Jun 2020, 11:01 PM IST
Over the course of the lockdown, Spencer’s forged tie-ups with Flipkart, Uber and Rapido for last-mile delivery of essentials. Now, as the lockdown eases, Shashwat Goenka says that omni-channel delivery of groceries is here is to stay
NEW DELHI : Spencer’s and Nature’s Basket, with 200 hypermarkets and supermarkets in the country, are the responsibility of Shashwat Goenka, sector head, retail and FMCG (fast-moving consumer goods) at the RP-Sanjiv Goenka group. When the lockdown began on 25 March, Spencer’s, which sells packaged and fresh foods, apart from apparel and electronics, swifty put its entire focus on essential items. Over the course of the lockdown, the retailer forged tie-ups with Flipkart, Uber and Rapido for last-mile delivery of essentials. Now, as the lockdown eases, Goenka tells Mint that omni-channel delivery of groceries is here is to stay. Edited excerpts from an interview:
Has the virus crisis forced a rethink to the business strategy and operations at Spencer’s?
Absolutely. When covid-19 first hit, overnight, our online sales went upwards of 40%, which used to be less than 2% for the company.
We had to gear up for that—so, we actually did a lot of third-party tie-ups to be able to meet that kind of demand in terms of delivery.
We tied up with Uber, Swiggy, Rapido across the country to actually help us do last-mile fulfilment. That is one strategy that I think is here to stay, which is working with other people to meet your ends.
I also think that consumers will move online as well as towards omni-channel—where they will still go to the store, possibly once or twice in the month, but for the rest of the month, I actually believe a lot of consumers will purchase online.
Has this crisis made you re-look at cost structures?
From a business strategy and operations perspective, it has helped us look at costs completely. Things like moving some part of the marketing cost to digital.
Then, because of restrictions in hours of operations, we actually moved to a single shift. That actually led to significant cost savings (on the manpower front).
Because of the focus on essentials, we have also looked at our overall assortment, which was massive—almost over 90,000 articles. We have actually pruned that down significantly.
What does the retail pivot to online mean for physical retail in India?
I definitely see that by the end of the next six months, people starting to go back to a little more normal routine where they will start stepping out a lot more to purchase stuff. So, I don’t see physical retail going down. But, on the other hand, I see online retail becoming larger.
For us, the strategy is going to focus both on e-commerce or ‘out-of-store’ which includes phone deliveries, etc., and the physical store itself. The physical store will serve as a base where customers can come and we will use it as a hub-and-spoke model where each store is the back-end for online orders.
How does Spencer’s anticipate consumer demand in the short to medium term?
In the short term, the increase in demand will primarily be focused on food, plus a few ancillary products. Because of work from home, at least for the next three to four months, there will be demand for products like computers and printers.
In the medium term, three to six months, I expect all the other categories of non-food—be it clothing or everything else that’s used around the house—to actually go up as well.
By the end of, say, five or six months, I anticipate that it will level out and it will go back to what it used to be.
As you enable more deliveries online, would you need to hire people with new skills?
One thing we will be looking for is agility in people that we hire, that is, to be able to very quickly change if business models require you to change. And second would be, of course, people who appreciate and understand the online consumer.
Will you halt any fresh investments scheduled for FY21 for your stores?
We took a call in the first quarter (April-June) that we will not open any of the stores that we had planned. We delayed them to the second quarter. So, actually, we don’t see a reduction in investments in our stores. There will just be some further investments that we will do online.
What sort of consumer changes do you expect, going forward?
In the short to medium term, I actually expect shoppers to spend less time in stores and to actually pick up stuff that they know.
Then, there will be a lot of focus on sanitization, personal hygiene, etc. And that’s a category which has already picked up. I think it will become a full category or a full aisle, going forward.