Tata to Enter Online Grocery Market, Plans to Buy Gurgaon-based GrocerMax
Industry Trends
27-06-2017 00:00:00
Tata to Enter Online Grocery Market, Plans to Buy Gurgaon-based GrocerMax

The online grocery business market in India seems to be gaining momentum of late. Not just traditional e-commerce players, but big corporate entities are also entering the space with the latest being the multi-billion dollar conglomerate Tata Group.


The Tata Group will soon snap up Gurgaon-based GrocerMax in its bid to enter the grocery business, as increasing numbers of people are going online mode to place orders, The Economic Times report said.


As part of the deal, Tata group will be acquiring the management team and technology infrastructure of GrocerMax, which would be used to set up online platform for Trent Hypermarket, a Tata and UK retailer, Tesco joint venture. The move will help the venture take on rivals Amazon and Bigbasket, which are key players in the online grocery business.


Post the acquisition, Tata group will shut down GrocerMax's Gurgaon business as it doesn't have any presence in the North India market, the ET report said.


Despite the likely acquisition of GrocerMax, Tata group also operates Star -- multi-format grocery retail chain, with around 42 stores. These formats under Star are Dailies, Market and Hyper.


Even as the online grocery market is fast gaining acceptance among Indian consumers, big retailers are also adopting the omnichannel strategy to remain in the business.


Recently online retailer Amazon, the world's largest e-commerce company, said it would buy Whole Foods Market Inc for $13.7 billion, embracing brick-and-mortar stores that could turn the high-end grocer into a mass-market merchant and upend the already struggling US retail industry.


The deal represents a dramatic turn in strategy for Amazon, which has offered food delivery through its Fresh service for a decade but has not made a major dent in the $700 billion grocery market.


"If anything, the Amazon acquisition of Whole Foods should provide some answers. Omnichannel is the direction, it may be surmised. Tata may have seen this as a possible way to go. To get a frugal online operation on top of the stores provides an expanded market for every store. This may be the solution," the ET report said quoting a retailer.


However,  the online grocery market has faced quite a few hiccups in recent past, with LocalBaniya and Pepper-Tap suspending their operations, while Grofers shut down in nine cities.


Despite the challenges, Morgan Stanley expects the food and grocery segment to expand at a compounded annual growth rate of 141 per cent by 2020 contributing $15 billion, or 12.5 per cent, of overall retail sales.

-K Ramanathan ram@justransact.com

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