Tata Group Will Shut Down GrocerMax Gurugram Business Post Shut Down
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Business conglomerate Tata Group is reportedly acquiring Gurugram-based GrocerMax to enter the online grocery space. The news comes at a time when Amazon India is in talks to acquire BigBasket to strengthen its online grocery business.
As part of the deal, Tata Group will acquire the management team and technology infrastructure of GrocerMax. This would be used to set up an online platform for Trent Hypermarket.
It is also reported that Tata Group will shut down GrocerMax’s Gurugram business, since it doesn’t have any presence in North India.
Trent Hypermarket is a joint venture between Tata Group and UK retailer – Tesco. Tata Group and Tesco run three formats under the Star banner which include Dailies, Market, and Hyper.
Just last week, Trent Hypermarket launched its first hypermarket store, Star Hyper Hyderabad and disclosed its plans to expand the network of stores across formats from 42 now to 200 over next 2-3 years.
The company has set up its chain across Mumbai, Pune, Bengaluru, and Hyderabad and is focussed on local sourcing for its vegetables and fruits by engaging with more than 150 farmers.
While Tesco has about 6,800 stores globally with about £3 Bn in sales, as per reports.
Gaurav Juneja and K Radhakrishnan launched GrocerMax in 2015. K Radhakrishnan was previously CEO of the value retail format of Reliance Retail Ltd. While Gaurav Juneja was India Executive Director of French investment bank Bryan, Garnier & Co.
GrocerMax is a hybrid platform for the grocery that claims to store only 10% inventory, and sources the rest from supermarkets and provisional stores in real time.
The Online Grocery Market In India And The Players
According to a Goldman Sachs report, “The domestic online retail industry is evolving into a hyperlocal, on-demand market. India’s ecommerce market is estimated to grow 15 times to $300 Bn by 2030.” The Indian online grocery market is estimated to reach $40 Mn (INR 270 Cr) by FY ’19 growing at a CAGR of 62% from 2016 to 2022.
With an aim to cash in on the online grocery opportunity, several players have tightened their seatbelts to enter this space. In April 2017, it was reported that homegrown ecommerce giant Flipkart was planning to enter the grocery category again. It initially entered the space with the launch of Flipkart Nearby in October 2015 which was shut down in February 2016.
Amazon too is looking to tap the maximum share in the online grocery market in the country. Earlier this month, it was reported that Amazon will soon get DIPP approval to invest the proposed $500 Mn amount in a wholly-owned food retail venture in India, over a five-year period. Post approval, Amazon can stock locally produced food items and sell them online.
In February 2016, Amazon launched its grocery delivery app Amazon Now, in India, to allow users to order everyday essentials. It also launched Amazon Pantry in July 2016, a service that offers grocery and household essentials. The company also acquired Whole Foods for $13.7 Bn.
While, BigBasket has reportedly entered into a 60-day exclusivity agreement with Amazon to explore an acquisitio. BigBasket has a presence in over 26 cities in India, and has recently crossed the 5 Mn customers mark. The company offers 20,000 products from over 1000 brands to its customers.
The company claims to receive over 50,000 orders each day and the average monthly customer spend has grown from INR 500 – INR 800 in December 2011 to INR 2,000+ in May 2017 for BigBasket. The company also has a line of private labels that contribute to 35% of the total sales. Some of its private labels include Fresho, BB Royal, BB Popular, Royal Organic, Tasties, and HappyChef.
As per Inc42 Data Labs report of August 2016, out of 74 hyperlocal grocery startups, 20 shut down operations completely, while four startups followed the M&A route for an exit. Companies operating in the online grocery space include – BigBasket, Amazon India, ZopNow, Grofers, etc.
Tata Group’s entry into the online grocery market comes at a time when the rest of the players are battling out to gain the top position. It’s interesting to note that, while one Indian conglomerate (Tata Group) is positive about online retail business, another (Future Group) is taking a break from it.
(The development was first reported by ET.)
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