How Grocery Retailers Are Raising Their Prices to Meet Changing Consumer Needs, ET Retail

Consumer grocery shopping behaviour in India continues to change dramatically compared to most countries in the world, especially when it comes to online shopping.

Abhilash Patil, Associate Director – Partnerships, Yango Tech, said, “Omni-channel presence is no longer a luxury, it is a necessity for grocery stores in India. Today’s consumers expect a seamless experience, whether they shop online or in-store.”

Yango Tech, a provider of proprietary technology and expertise to e-commerce businesses and retailers, part of the global technology company Yango Group, has entered the Indian retail software market in 2023. Their partnership with Bombay Gourmet Market is expected to launch soon as Yango Tech continues its expansion in India.

“Technology is playing a key role in improving the customer experience in the Indian grocery sector. User-friendly mobile apps are essential – they allow customers to browse a wide range of products or schedule deliveries at their convenience. All this builds loyalty and retention,” he adds.

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We interviewed Mr. Patil on the current state of consumer needs, the solutions needed, the impact of technology on grocery retailers and the potential of Kirana stores.

How have you noticed a change in consumer behavior when grocery shopping?

The Indian grocery shopping behavior continues to undergo a drastic change in terms of online shopping. We are witnessing a huge growth in online grocery shopping and continuous requests from customers for new delivery services and online presence. While the pace of growth in other countries has slowed down significantly, the Indian market seems to be still growing.

A recent report by Kantar suggests that online grocery sales in India are set to reach a staggering $18.2 billion by 2025. The convenience factor is key, especially given the growing penetration of smartphones and the internet – India now boasts over 850 million smartphone users. Another key factor is busy lifestyles. Consumers no longer have time for traditional grocery shopping. There is also a growing demand for variety, organic options, private labels and premium products, which online grocery stores can effectively cater to.

Why do you think grocery stores need to pursue omni-channel sales?

Omni-channel presence is no longer a luxury, it is a necessity for grocery stores in India. Today’s consumers expect a seamless experience, whether they shop online or in-store. Omni-channel ensures maximum accessibility for shoppers, whether it is various delivery services like click and collect or home delivery, in-store product research with the ability to check availability online, or loyalty programs that work across platforms.

A 2023 McKinsey report found that 78% of Indian consumers use multiple channels to shop. Omnichannel caters to these diverse behaviors and allows grocers to leverage data from online and offline interactions to achieve maximum personalization. So, here are the 3 main reasons: accessibility for shoppers, convenience, and personalization.

Imagine being able to recommend spices that a customer often buys online for their next visit to the store, or recommend selling a product in-store to a customer who often buys that particular product – that’s the power of omnichannel.

The grocery industry is in a state of flux, grappling with price inflation, supply chain disruptions and other variables while evolving technology. So how is technology helping grocery stores improve the customer experience?

Technology is playing a key role in improving the customer experience in the Indian grocery space. User-friendly mobile apps are essential – they allow customers to browse a wide selection of products or schedule deliveries at their convenience. All this builds loyalty and retention – a loyal customer who buys often and spends more. Loyalty programs that reward omni-channel engagement keep customers coming back for more.

And AI-powered recommendations are a game-changer. By suggesting products based on previous purchases and browsing history, retailers can create a more personalized and enjoyable shopping experience.

Let’s not forget about operations, as real-time inventory management is also key. There’s nothing more frustrating than placing an online order only to find out the product is out of stock. This technology provides transparency and builds trust.

How can grocery store owners use technology to improve their business?

In this dynamic environment, technology can significantly improve grocery operations. Supply chain optimization is key: optimizing purchasing, warehousing, and logistics to increase efficiency and control costs. Demand forecasting through data analysis helps predict future demand, enabling informed inventory management and preventing stock-outs. Automating repetitive tasks, such as reordering frequently purchased items, frees up employee time for other tasks. Warehouse management systems that optimize operations through automation and real-time data improve picking, packing, and delivery efficiency.

What do you think are the upcoming trends in the food segment in India?

The Indian grocery market is brimming with innovation. One of the key trends is the growing emphasis on value. With rising inflation, price sensitivity is becoming a major factor for consumers. A recent Nielsen report underlines this, stating that over 65 percent of Indian consumers actively seek value for money when shopping for groceries. Grocery stores that can offer competitive prices through private labels, discounts, loyalty programs and automatic price optimization will be well-positioned for success.

Another exciting trend is the rise of hyperlocal delivery. Fast-track players with dark stores and micro-fulfilment centres are meeting the demand for super-fast deliveries. Imagine ordering fresh groceries and having them delivered to your doorstep in 20 minutes – that’s the convenience that hyperlocal offers. Finally, sustainability is becoming a top concern for Indian consumers. Grocery stores that adopt eco-friendly practices like using sustainable packaging and offering local products will attract this growing segment.

What potential does the food sector have to provide growth opportunities for small food retailers?

Kirana, a large chain of small grocery stores in India, has huge potential for growth in this emerging market. One strategy for Kirana stores is to partner with e-commerce platforms. This allows them to expand their customer base by offering online ordering with convenient store pickup or delivery options. For example, they can sell directly, becoming pickup points for larger marketplace partners.

Adopting technology is also key. Inventory management software and point-of-sale systems can streamline Kirana operations and improve customer service. By partnering with an e-commerce or eB2B marketplace, Kirana stores can benefit from a cost-effective yet reliable supply chain.

By focusing on personalized service, offering local products and building relationships with customers, Kirana stores can become an integral part of their communities and continue to thrive.

How can Kirana companies, quick-selling, dark store and micro-fulfilment companies collaborate in the future?

The collaboration between Kirana stores and quick commerce players from dark shops presents a win-win scenario for both parties. Imagine Kirana stores transforming into local fulfillment centers for online orders fulfilled by quick commerce companies. This would leverage the existing infrastructure of Kirana stores while expanding their reach.

Collaboration can also extend to inventory management and sourcing. By collaborating, Kirana stores can leverage the buying power of larger companies to negotiate better deals with suppliers.

Finally, data sharing (with proper customer consent) can be a powerful tool. By sharing anonymized data, both Kirana stores and quick commerce players can personalize their offers and target promotions more effectively, ultimately creating a more satisfying shopping experience for all.

~ Brand Connect Initiative ~

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