Grofers Revamps 100 Kirana Stores As Its Branded Stores: Report

Joining the league of online startups going offline, Gurugram-based online grocery startup Grofers has now revamped nearly 100 kirana and supermarket outlets to Grofers discount stores in Delhi NCR region.

With Grofers converting kirana stores, it will manage backend sourcing, inventory management and technology support on a revenue sharing model.

Albinder Dhindsa, cofounder of Grofers, told ET that this would help in having bigger purchasing power. He also emphasised that these stores will be a subset of its offline delivery system since they already deal with nearly 6,000 partner stores.

Founded in 2013 by IIT graduates Albinder Dhindsa and Saurabh Kumar, Grofers offers products across categories such as grocery, fruits and vegetables. It operates in 13 cities.

The company recently closed a $200 Mn funding round led by SoftBank with participation from existing investors. This brings total funding of the company to $501.8 Mn in multiple rounds from investors such as Sequoia and Tiger Global.

Also, this round put the company closer to the valuation of $1 Bn.

For the Grofers’ model stores, the company reportedly started testing the model in November last year and hopes to have 200 such stores by expanding network to Bengaluru in the next few months.

However, the company has also said that its “physical stores will not cannibalise sales from its online venture since it appeals to an older consumer base compared to a younger demographic online.”

Here are key performance metrics of Grofers:

• The company has been profitable in Delhi
• It is nearing profitability in Kolkata
• Grofers had a top line of $400 Mn and grew 8X in the last two years
• It closed FY 2018 with $129.49 Mn (INR 950 Cr) in sales
• Grofers is now chasing a revenue target of $34 Mn (INR 2,500 Cr) and plans to roll out more than 500 stock keeping units (SKUs) for FY 2019
• In January, Grofers claimed it recorded revenue of INR 310 Cr and crossed INR 300 Cr in monthly sales
• It further claimed 250K new customers on the platform in January
• It has expanded its private labels to offer 250 food and non-food products to its consumers

It is to be noted that players such as Pepperfry, Lenskart, Myntra, etc, Grofers has also continuously focused on building its private label business. With this, it joins the network of offline stores which have brought offline solutions for its private labels.

A Goldman Sachs report has forecasted that the Indian online grocery market is set to reach $40 Mn (INR 270 Cr) by FY19, growing at a CAGR of 62% from 2016 to 2022. Further, there are over 12 Mn small stores in India and account for over 90% share of the Indian food and grocery market.

The local kirana stores contribute 90% of grocery distribution in the country. With Grofers converting kirana stores to expand offline presence against players such as Flipkart, Amazon and BigBasket, the online to offline sector continues the drum roll.