Long Live the Supermarket
This retail format will survive an Amazon-Walkart war
17 May, 2018
SO, ARE SUPERMARKETS going to get leapfrogged as a format by e-tailers even before they get a fair slice of Indian shopping bills? Walmart’s takeover of Flipkart seems to dangle that conclusion, and real-cart veterans of retail wars have done well to offer online delivery options of their own, just in case profitability flies off into cyberspace. Sales have already leapt that way, trends are trends, and few would argue against low-cost convenience as the future of retailing. Whatever the ground conditions, every compass is being reset by Amazon. But then again, are internet retailers really the inevitable masters of all they survey? Amazon has not only opened glass-front stores in the US for people to walk into (and out of without enduring a check-out queue), it has got itself a web of offline tie-ups in India and is scouting for a stake in a local supermarket chain. Also, while Walmart might have had a bad case of Bezos envy, it’s also true that it struck its megadeal only after its plan for megastores got tripped up by an all-Indian jumble of regulatory red tape.
In other words, there may yet be good reason to bet that the classic supermarket won’t get outmoded so easily. What the format seems to be losing as an edge is its offer of lighter bills enabled by bulk buying, an edge that looks increasingly blunt against the cost efficiency and loss tolerance of e-com giants, armed as they are with scare-loads of money. Supermarkets that wave slashed prices around might find this approach falling flat once Amazon and Walkart get into a noisy discount war of attrition in a quest for supremacy. E-com, they say, is a winner-takes-all business.
Price tags are not the be-all and end-all of retail, however, and this means a brick-and-mortar setup may still have plenty going for it. Think of everything an app cannot do. Among the most obvious on this list are custom services that require the customer’s presence. Someone to check one’s eyesight accurately for a pair of spectacles, for example, or snip a pair of jeans just right. Less apparent is the advantage of a credible promise of satisfaction no matter how vague the consumer’s need, a deliverable that algorithms can’t seem to crack. Take a fast-moving perishable like a mango. While a street vendor with a fine nose can be trusted to deliver the fruit at the exact peak of its flavour day after day, online orders still need dollops of luck to be neither too raw nor overripe; well-staffed supermarkets have begun to clone this skill, to my surprise. What has put me off e-tailers, however, is my love of a slow moving savourable called Marmite. Hailed as space-age food once upon a time, this sludgy yeast extract attracts far more grimaces than lip smacks, leaving Indian addicts dependent on an import trickle from the UK. Amazon Prime, which has it in stock, sent me a 125 gm jar overnight for Rs 434 with a ‘Rs 850’ MRP sticker plastered on it, but the Needs store round the corner has the same jar—ditto expiry date too— for Rs 430, while Spencer’s a short drive away has it off the shelf for just Rs 250. ‘Sold by Mahadev Enterprise’ says my Amazon invoice, just in case it’s unclear who to blame for the ripoff. Me, of course. With all the mark-up games that traders play online, ‘Caveat Emptor’ is a mantra one can’t afford to let slip. For relief from this burden, a supermarket is often the best place to go.
While those are gaps that e-com whizkids might still manage to address, what they’ll never be able to do is turn shopping into an outing for the family. Smart supermarkets have begun pressing this point home with inhouse cafes serving good stuff at low prices. To make a go of it, though, the menu would need to be delectably different from the usual, even as other recreational avenues are explored that can engage children. This calls for empowered shopfloor managers, preferably with some skin of their own in the game (via, say, equity options), who could combine a fine reading of the consumer’s pulse with computer data to generate some fun.
That supermarkets thrive is in the shopper’s own long-term interest. The kind of cash that e-com majors are prepared to guzzle can only be justified by the prospect of all-out market command, the sort that would grant a company control of prices once all competitors have been squeezed out, online or otherwise.
Analysts often say India is too vast and diverse a market for anyone to exercise monopoly power. Sure. But the cash-rich aggression on display makes it sound more and more like a pre-internet shibboleth. Disruption is one thing, domination another.
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