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Big Bazaar eyes small-town India to unlock next phase of growth, focuses on online channels

Last month, Big Bazaar rolled out its two-hour delivery service and has been working on innovative ways to ensure people spend less time at stores.

Published: 17th May 2021 11:16 PM  |   Last Updated: 17th May 2021 11:16 PM   |  A+A-

A Big bazaar outlet

A Big bazaar store. (File photo)

Express News Service

NEW DELHI: The Covid-19 pandemic has slowed down expansion plans for Future Group's flagship hypermarket chain Big Bazaar, but the company is adjusting to the new reality while continuing to bet on tier-2 cities and beyond for its next phase of growth.

With consumer behaviour beginning to shift after first wave of the unprecedented health crisis, "the online business" has been playing a very important role even in non-metros, Big Bazaar CEO Sadashiv Nayak told The New Indian Express, and going forward the company intends to expand into more cities with a strong omni-channel presence.

"The renewed restrictions in several states have been as severe as the last year in terms of physical stores. The demand has now shifted towards online with customers now sending orders to local store managers using WhatsApp or logging onto our delivery app or website," said Nayak.

Last month, Big Bazaar rolled out its two-hour delivery service and has been working on innovative ways to ensure people spend less time at stores at this point in time. Cities such as Bhopal, Mangalore, Raipur, Ranchi, Guwahati, Kanpur, Lucknow and Varanasi, to name a few, have seen orders climb over the past week.

"We are not really looking to tap the customers who are already compatible with e-commerce, but people who are not used to e-commerce shopping. Tier-2, tier- 3 cities are hotbeds for growth," said the CEO.

Since April 2020, the retail chain has penetrated deeper in smaller towns and cities with small format stores in cities like Gomti Nagar in Lucknow, Madanapalle in Andhra Pradesh, Kidderpore and Serampore in West Bengal, Kollam in Kerala and Ballari in Karnataka.

As for large brick-and-mortar outlets, pandemic-induced curbs have largely delayed construction and opening of new stores but the company aims to come up with 5-6 stores by August-September.

Currently, the retailer is fulfilling around 60,000 deliveries per day and aims to touch the one-lakh figure by the end of next month.

"We are now clocking 200 orders per store a day on an average and our ticket size per order is around Rs 1,400. Our customers seem to be replicating their in-store behaviour in our e-commerce platform, which possibly has played as an advantage unlike e-commerce players which start from a low-ticket size," Nayak said.

The supermarket chain has close to 290 outlets across the country, competing directly with the likes of Big Basket, Grofers, Amazon, MilkBasket and Flipkart. In fact, Swiggy is also providing a two-hour grocery delivery service in over 125 cities during this pandemic.

As for revenues, Big Bazaar expects overall sales to be further impacted if localised lockdowns continue for a longer period. "April was a big shock as many states announced lockdown-like restrictions. But, the next two months are likely to be stable given there are no material changes to future economic conditions. Overall, we don't see a major divergence in performance from the last quarter," said Nayak.

Financials hit hard by Covid

Future Retail Ltd, which operates retail chain stores under several formats including Big Bazaar, saw its net loss widened to Rs. 846.92 crore during the quarter ended December 2020 from Rs. 692.36 crore in the September quarter of the current fiscal and a net profit of Rs. 164.56 crore in the year ago period. Revenue from operations was down 71 per cent to Rs. 1,506.87 crore during the quarter as operations continued to face Covid-induced significant disruptions. The homegrown retail major lost nearly Rs. 7,000 crore revenue in the first three-four months of the first Covid-19 wave last year.

Tussle with Amazon impacts debt

There are broader concerns that Future Retail Ltd’s legal tussle with Amazon may continue to weigh on the debt. Analysts at Fitch Ratings have said that the resurgence in new Covid-19 infections will impact Future Retail, on the backs of a long-running weakness since the first quarter of 2020-21.

In addition, Future Retail's access to credit remains problematic, as evidenced by the lack of new institutional grants under the "one-time restructuring" program, the analysts added.



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