admin
June 13, 2025
Hiral Goyal, The Morning Context
13 June 2025
Several smart, well-to-do Indians believe they have an opportunity to build a successful business by selling apparel to affluent people. Armed with this hypothesis and with venture capital in tow, these entrepreneurs are having a go at the market.
Some are building a business just around undergarments, for instance. Others are focusing on premium T-shirts. Or denim wear. There’s also ethnic wear. And work clothes. Even workout clothes. It would appear that every niche in the apparel market is being exploited by someone who believes they have a product that can disrupt the category and create a large, sustainable business.
Amid this sea of ventures, BlissClub stands out.
In only five years of operations, the Bengaluru-based startup has made a name for itself. By simply focusing on premium activewear for women. Now that’s a niche within a niche.
Founded by Minu Margeret in 2020, BlissClub’s story goes something like this. Drawing on her personal experience as a frisbee player, Margeret started BlissClub to address the needs of Indian women who struggled to find comfortable and functional activewear. With inclusive sizing and tiny details such as pockets and wide waistbands in leggings, the startup catered to Indian women with products that were specifically designed for them and their body types.
The idea clicked. Women were willing to experiment with BlissClub’s clothing and, on the back of its early success, the company has grown from zero to revenue of over Rs 85 crore as of 31 March 2024. The startup has also been able to raise capital from VC investors like Elevation Capital, Eight Roads Ventures and Alteria Capital, who’ve come on board hoping that Margeret is onto something. Just last month, the company raised Rs 45 crore (around $5.3 million) in a Series B funding round, a mix of debt and equity. This took its total fundraise to nearly $26 million (Rs 222 crore), according to Entrackr.
Except that’s all the good news there is. Five years in, it looks like BlissClub is at a crossroads. Its revenue growth has slowed-from 360% year-on-year in 2022-23 to just 27% in 2023-24-and its valuation remains flat at $67 million.
Already, women’s activewear as a category is far too niche. It doesn’t help that BlissClub now faces intense competition from legacy players like Page Industries (Jockey’s India licensee), Aditya Birla Group and French sporting goods retailer Decathlon as well as startups like HRX and Clovia. All of them are trying to grow their sales to keep up with the rapidly growing trend of casual attire, where product differentiation is now largely down to marketing. It is another matter altogether that these customers are price-conscious, and disposable income to spend on premium clothing is limited to a few million people in India.
That’s the reality of the market where BlissClub operates. “The greatest challenge for the new athleisure brands, apart from capital and internal execution discipline, is to maintain brand integrity rather than get sucked into price battles and discounting, which is a race to the bottom that only the businesses with large balance sheets can win,” says Devangshu Dutta, founder and chief executive of Third Eyesight, a management consulting firm focused on the retail and consumer goods industry.
Questions sent to Margeret did not elicit a response. But it’s important to ask, what should BlissClub do? It may have had a great start, but is that enough to scale? This is what we’ve set out to explore in this story.
Fighting the big guns
Almost every customer in India who’s out to buy activewear or athleisure-has enough well-known brands to choose from. There’s Jockey, Decathlon, Nike, Puma, Adidas, Asics and Skechers, to name a few. And there’s something for everyone at every possible price point.
So, what particular need is BlissClub trying to fulfill?
Margeret says she started the company because she could never find appropriate activewear in the Indian market. From BlissClub’s website about its origin story: “While some clothes were comfortable, they simply did not stretch enough. Those that did stretch, were too compressive.” With BlissClub, Margeret focused on inclusive sizes and comfortable fabric that was ideally suited to India’s hot climate.
But are inclusivity and quality enough when it comes to having a differentiating factor? Not really.
Nothing, for instance, would stop other brands from copying BlissClub’s designs or offering comparable quality to gain customers. Additionally, BlissClub risks losing customers to other brands if it fails to keep up with its promise of top-most quality products. Some customers have already taken to social media recently to share their grievances (here, here, here and here). Their most common complaint? The quality of BlissClub’s fabric has gone down and there’s a lot of pilling.
On top of this, there is unrelenting competition from legacy players, most of whom have been building their athleisure portfolio for sometime now. Take Page Industries, for example. The company launched its athleisure portfolio in 1995, but it only doubled down on making it a key growth pillar in 2014-15. Just a couple of years later, Aditya Birla Group entered the men’s athleisure business with Van Heusen in 2016 and later expanded into women’s wear as well. Both these brands were quick to identify the shifting fashion trend to casual wear and benefited handsomely when the category finally exploded during the COVID-19 pandemic-as people started working from home and focusing on their physical health. Here’s what Page Industries’ CEO Karthik Yathindra told Mint in 2022 about the company’s decision to focus on athleisure: “So, the timing worked out for us very well. Demand has also been healthy across innerwear for men and women, but athleisure really surged a lot more than what we had anticipated or planned for. I would say, we jumped a year or two in terms of demand with athleisure compared to pre-pandemic days. We literally doubled our business. Whereas, overall, as an organization, we clocked 37-38% jump in revenue in the last financial year.”
It is no surprise then that these companies are well positioned in terms of the distribution network and the range of choices they offer to take on the Indian athleisure market as compared to BlissClub and other small players. Page Industries, for example, has more than 111,000 multi-brand stores and 1,453 exclusive brand stores, besides its digital presence through its own website and third-party marketplaces. BlissClub, on the other hand, has largely been an online player, selling products through its own website or through marketplaces like Myntra and Amazon. At present, it runs 14 retail stores across nine cities.
That’s no small gap, and competition is only going to heat up. So, what options does BlissClub have?
Stretched thin
From where BlissClub stands today, there are only a few ways it can grow its top line. Mostly because the size of India’s athleisure market remains small; it’s even smaller for women. “Athleisure is a $15 billion market with a CAGR of 20%. Of this, women are -30-40%,” says Gaurav Verma, co-founder and head of consumer investments at venture capital fund Ortella Global Capital. This $5-billion market for women’s activewear becomes smaller if we take into account only the premium space. (We couldn’t independently verify this estimate as there are no reliable reports available.)
In a niche market like this, there’s limited room to scale. Unless you cut down prices, introduce more categories, start catering to all genders or open retail stores. Let’s look at each of these options.
First up, the prices. Any premium brand that cuts prices risks diluting itself. Now, BlissClub has been handing out discounts and buy-one-get-one offers more liberally than ever before. For example, its Ultimate Leggings the company’s bestselling product -is priced at Rs 2,299 and sold at Rs 1,399 after discount. But when you compare it with Decathlon or homegrown brands like Hrithik Roshan-backed HRX or Clovia, you’d find that BlissClub remains in the premium segment even after discounts. And while lowering prices further might help BlissClub gain more customers, its margins-already EBITDA-negative-will most likely suffer.
The second strategy is introducing more categories. This is something BlissClub seems to be interested in. The startup entered the innerwear category with sports bras. The latest additions have been swimwear and travel wear. But in these segments, BlissClub is yet to replicate the kind of success it saw with its flagship products-Ultimate Leggings and Ultimate Flare Pants.
There is a bigger problem here. When it comes to athleisure startups, says Verma, “there are growth concerns beyond the top 3-5 SKUs [stock keeping units) like leggings, tops.” He goes on to say, “Unless we see growth in [direct-to-consumer) on higher-priced SKUs like jackets, shoes and accessories, we will continue to see pressure on both top line and bottom line growth.”
To make matters worse for BlissClub, the new categories the company is venturing into are witnessing increased competition. Take innerwear, for example. Influencer Kusha Kapila recently announced her shapewear brand Underneat, backed by Fireside Ventures and Mamaearth co-founder Ghazal Alagh. Besides this, players like Jockey, Clovia and Van Heusen have also been fighting for market share.
The third option, then, is to enter the menswear category. Though a natural extension for any athleisure brand, it does not promise scale. Let’s look at Technosport for some perspective. The A91 Partners-backed company, which sells affordable activewear for men and women across categories, reported a revenue of Rs 382 crore (around $44.5 million) in 2023-24. But that is after 18 years of operations and catering to the mass market with a fairly well-established distribution in the offline channel.
An even bigger challenge for BlissClub here would be to shake off its identity as a brand for women. Take the case of Lululemon. When the Canadian activewear company entered the men’s business in 2014, the biggest concern was that the brand was popularized by women and it would be tough to convince male customers to buy its products. The breakthrough here was the company’s ABC pants-short for anti-ball crushing pants-which helped Lululemon acquire male customers. Still, Lululemon continues to struggle with its identity as a women’s brand. Its latest effort to fight this was by making seven-time Formula 1 champion Lewis Hamilton its brand ambassador.
Finally, there’s the option of opening physical stores to acquire more customers. A digital-first strategy, says Dutta, allows the newer niche brands to directly connect with their target customers and achieve a critical mass. However, to get greater scale, “they need to add offline presence as well,” he notes. “Offline stores are not just a mainstreaming opportunity but also a way to create a brand immersion experience for the consumers, which can strengthen the connect with their core consumer segment.”
However, considering that BlissClub is a premium brand, it only makes sense for the brand to open outlets in high-street markets. But this would entail some serious expenditure. After all, opening retail stores requires capital.
Raising capital, though, does not look like a tall order for BlissClub. Its most recent fundraise, which will be used towards growth and expansion, is a testament to that. Before that, the company had raised $15 million in its Series A round. The credit for this partly goes to Margeret and Vidit Aatrey’s connections in the VC ecosystem. Aatrey, Margeret’s husband, is Meesho’s co-founder and CEO (the e-commerce company itself has raised $1.61 billion in total funding.)
Thanks to the funds it has been able to raise, BlissClub has had a good run so far.
However, with competition brewing in this space, the company risks losing its edge and becoming one of many. To give credit where it’s due, BlissClub has done a great job at building brand equity in the Indian activewear market. To grow beyond where it is today, though, it will need to rethink its strategy.
Perhaps it already is. In the last year, BlissClub has entered into categories beyond activewear; this includes innerwear, swimwear and most recently, travel wear. At the same time, it is also opening retail stores across the country.
How BlissClub scales will leave cues not just for Margeret but everyone else who believes they can build a niche apparel company in India successfully.
(Published in The Morning Context)
admin
May 25, 2025
Gargi Sarkar, Inc42
25 May 2025
SUMMARY: Swiggy and Zomato are scaling back non-core bets such as 10-minute food delivery, private labels, and event logistics to sharpen focus on core businesses and improve profitability. Both companies are betting on platform fees and selective verticals like quick commerce and ticketing, but analysts warn that financial discipline, not endless expansion, is key to long-term sustainability. The foodtech duo is stuck in a balancing act of rationalising what works and doesn’t. However, going ahead, this rationalisation game is only going to get more pronounced as they will strive to shield their core bread and butter businesses
For foodtech giants Swiggy and Zomato (now Eternal), the last few years have been about engaging in a battle for expansion, so much so that it has become difficult to tell them apart.
From quick commerce and cloud kitchens to intercity food delivery and even selling tickets for events and concerts, the two companies appear to be aping each other’s every move to be everything everywhere all at once.
However, what began as a bold bet to dominate every possible vertical falling under the ambit of food, lifestyle and entertainment is now undergoing a major course correction.
For starters, both are reconsidering their blitzkrieg, and while at it, they are gracefully stepping away from non-core bets, diluting underperforming or experimental units to focus on core operations to drive profitability.
For context: Zomato, which once saw the future of food logistics in ultra-fast deliveries, gave up on its 15-minute food delivery service, Quick, four months after its launch in January. It has also pulled the plug on its home-made meal service, Zomato Everyday. Tailored for office-goers and budget-conscious consumers, the service was floated in January 2025.
Swiggy, too, has made similar retreats. It suspended Swiggy Genie, its courier and pick-up-and-drop service that had gained popularity during the pandemic. The company also gave up on its private label food business by entering a strategic agreement with Kouzina, a chain of virtual restaurants, granting it exclusive rights to operate Swiggy’s digital-first food brands.
So, what has triggered this metaphorical fission in strategy?
One possible reason could be the growing realisation that profitability hinges on diversifying smartly rather than untamed expansion.
A market analyst, who did not wish to be named, pointed out that the duo’s attempt to rule their customers’ wallets for everything from food to groceries and entertainment to lifestyle has been quite ambitious. “The course correction was overdue,” the analyst said.
He believes that foodtechs are now forced to burn the visceral fat in the form of non-core businesses because those have been slowing them down, also eating into the revenues of core businesses and impacting operational efficiencies.
“Moreover, the more the segments, the higher the chances of operational hiccups. Managing logistics, customer experience, and quality control across a wide array of verticals inevitably leads to fragmentation and strain on core operations,” he added.
State Of Eternal Affairs: Zomato’s Diversification Saga
Eternal’s push to transform Zomato into a broader lifestyle platform in 2024 was not only about ambition but also a strategic response to a slowing core business — food delivery, according to industry observers.
Also, a glance at the table below reveals how the company has seen a marginal QoQ increase in its monthly transacting users.
In terms of monthly transacting customers, Zomato’s food delivery growth began strong with a 6.84% QoQ jump in Q1, but momentum quickly slowed, and Q2 saw only a 1.97% sequential rise, followed by a slight decline of 0.97% in Q3. This dip signalled stagnation, and although Q4 showed a mild recovery (1.95%), overall FY25 growth of the company’s monthly transacting users (food delivery) was modest at just 2.96%
Interestingly, Eternal founder and CEO Deepinder Goyal, too, acknowledged a slowdown in the company’s food delivery business while announcing the company’s Q4 FY25 results. He said the slowdown was due to rising competition from quick commerce platforms and weak discretionary spending. Goyal added that services like Zepto Cafe, Swiggy Snacc, and Blinkit Bistro, too, were eating into demand for restaurant deliveries.
In terms of Zomato’s food delivery numbers, average monthly transacting numbers grew to 20.9 Mn in Q4 FY25 from 20.5 Mn in Q4 FY24. Net order value (NOV) growth also remained subdued at 14% YoY versus the 20% YoY growth guidance.
Hence, the company was under pressure to unlock new revenue streams. Blinkit’s success became the reference point, and the company started envisioning similar success stories with other verticals too, a former Zomato employee said.
This was when the company got engulfed in the wave of diversification, paving the path for Zomato’s yet another bold move (besides Blinkit) — the INR 2,078 Cr acquisition of Paytm’s movies and events ticketing business, Insider, in August last year.
The acquisition that was planned with the launch of the ‘District’ app meant but one thing — declaration of war against BookMyShow, the lone behemoth in the realm of the entertainment ticketing segment. Even the company knew the path wouldn’t be all rainbows and sunshine.
In its Q4 FY24 earnings call, the management acknowledged that while the gross order value (GOV) of the going-out vertical continues to grow at over 100% YoY, the business still operates at an adjusted EBITDA loss of -2 to -2.5% of net order value (NOV).
Besides, given that the transition of users from Paytm’s ticketing business and Zomato’s dining out platform to the District app requires sustained investment, the company doesn’t expect the business to turn profitable in the near term.
But Zomato expects losses to eventually see stability at current levels.
“However, even with plateauing losses, the company will have to keep spending on creating supply. This means: curating new event experiences, forging partnerships and acquiring new users for the District app… and all of this translates into one thing — prolonged burn,” the market analyst added.
Moving on, Zomato’s ambition to become a lifestyle super app didn’t just manifest into flashy verticals like events, entertainment, and ticketing — it also showed up in its renewed aggression in food delivery, the very space where it first made its name.
Therefore, Zomato began piloting a 15-minute food delivery service in select parts of Mumbai and Bengaluru early this year.
But the company now finds the initiative extremely difficult to operationalise as it has failed to generate incremental demand.
“Customers do not necessarily want food fast, they just want it reliably. A 10-minute turnaround without full control over the supply chain leads to poor customer experiences, operational stress, and negligible upside. Instead of delighting users, it makes the company vulnerable to inconsistent quality and frequent delays,” a Zomato insider added.
Satish Meena, the founder of Datum Intelligence, opined that without controlling the entire supply chain, delivering food items within 10 to 15 minutes cannot be a profitable proposition.
Swiggy’s U-Turns
In 2024, also the year of its public listing, Swiggy aggressively expanded its service offerings, launching several new verticals to diversify beyond its core food delivery business.
Among the most prominent launches was Bolt, a 10-minute food delivery platform. Initially launched in Bengaluru, Chennai and Mumbai, Bolt quickly expanded to over 400 cities, with over 40,000 restaurants, including KFC, McDonald’s and Starbucks.
To complement Bolt, Swiggy introduced Snacc, a separate app for instant delivery of snacks, beverages, and small meals within 15 minutes.
Continuing to diversify its portfolio, Swiggy launched Pyng, an AI-powered platform that bridges users with verified experts like yoga teachers or chartered accountants.
With this, Swiggy marked its entry into the on-demand services marketplace, making professional services easier to access.
Apart from these customer-facing services, Swiggy also entered events via Scenes and the B2B space with Assure, to keep pace with Zomato.
Interestingly, Swiggy, too, has begun consolidating its operations. The company has shut down Genie, its hyperlocal courier business, which competed with Porter, Borzo and Uber.
According to a competitor, sourcing delivery riders specifically for packages is a challenge, particularly in cities like Bengaluru. For Swiggy, which was already managing fleets for food delivery and quick commerce through Instamart, sustaining a separate rider network for Genie only added to the complexity.
In another such move, Swiggy exited its private label food business by transferring exclusive rights for its digital-first brands, including The Bowl Company and Homely, to cloud kitchen operator Kouzina.
Balance Sheet Blues
Imperative to highlight that the rollbacks by Zomato and Swiggy are rooted in the growing pressures on their respective balance sheets.
After diversifying at a breakneck speed, they are now faced with the hard realities of cost structures that don’t always align with revenue potential.
In Q4 FY25, Zomato and Swiggy both reported robust top-line growth. Zomato’s revenue surged to INR 5,833 Cr, largely buoyed by its three core pillars — the food delivery business (INR 1,739 crore), Blinkit’s quick commerce arm (INR 769 Cr), and Hyperpure, its B2B supply chain vertical, which posted a 99% YoY growth in revenue to INR 1,840 Cr.
However, despite the momentum, the company’s net profit declined sharply to INR 39 Cr in the quarter, largely thanks to ongoing investments in Blinkit and newer bets like the ‘District’ lifestyle app.
Meanwhile, Swiggy clocked INR 4,410 Cr in revenue in Q4, up 45% YoY, but saw its net loss nearly double to INR 1,081 Cr. The widening losses were fuelled by surging operational expenses.
“All of this explains the strategic pullbacks witnessed lately, Swiggy exiting Genie and private labels, Zomato pulling the plug on services like Quick and Legends. The rationalisation marks a reset, indicating that while growth via diversification was necessary, financial discipline and profitability are in the spotlight,” the market analyst said.
Platform Fee To The Rescue… But For How Long?
While it won’t be easy for Zomato and Swiggy to suddenly change course, the future of these two foodtech giants is all about heading towards a more focussed set of revenue streams driven by value rather than FOMO.
In the process, both foodtech giants appear to have struck gold with the platform fee, which has grown from just INR 2 in 2023 to INR 10 today.
But the real question is: Can rising platform fee help the duo neutralise the impact of aggressive expansion? Or is rationalisation the only way forward?
Devangshu Dutta, the founder of Third Eyesight, thinks otherwise. He believes that the companies will not stop looking for new revenue streams, even as they will continue to amputate the ones that offer little value.
“All of these companies have to look for growth, which is a given. If their existing businesses are not delivering the kind of growth they need to justify their stock price or valuation, then they have to look at new avenues.”
According to him, we are bound to see a flurry of experiments, trials of different services and new verticals as these companies attempt to expand their addressable markets.
At the end of the day, the foodtech duo is stuck in a balancing act of rationalising what works and doesn’t. However, going ahead, this rationalisation game is only going to get more pronounced as they will strive to shield their core bread and butter businesses.
[Edited by Shishir Parasher]
(Published in Inc42)
admin
May 7, 2025
Shalinee Mishra, Exchange4Media
May 7, 2025
Bollywood’s biggest stars, Katrina Kaif and Deepika Padukone, have reputed beauty businesses to their names — Kay Beauty and 82°East, respectively.
Kay Beauty, launched in late 2019 in partnership with Nykaa, has crossed the ₹200 crore revenue mark in 2024. In contrast, 82°E, launched by Deepika in November 2022, has managed around ₹25 crore, according to industry estimates.
Both actors have massive social media pull, strong brand equity, and sizable fan followings. They are matched in popularity, but the same cannot be said about their respective brands. One clearly has an edge over the other. In this case, it is Kay Beauty.
What went wrong with 82°E?
A core difference between the two brands is pricing.
Kay Beauty’s average product is priced affordably at around ₹299, making it accessible to a large portion of Indian beauty consumers. It hits the sweet spot of mass affordability and aspirational branding.
Katrina seems to have built the line keeping in mind India’s price-sensitive but beauty-conscious audience, especially women who look for functional, everyday products without shelling out a fortune.
On the other hand, 82°E positions itself as a luxury skincare brand, with products starting at ₹2,500 and going up to nearly ₹4,000. While targeting the premium market is a valid strategy, it demands either a very clear value proposition or a unique, standout offering that sets it apart from both domestic and global competitors.
According to multiple marketing and retail experts, 82°E currently lacks such a defining “hero” product. In contrast, top-tier global brands like Estée Lauder (Advanced Night Repair) and L’Occitane (Immortelle Divine Cream) have built their entire portfolio identity around one or two iconic products.
Devangshu Dutta, CEO of retail consultancy Third Eyesight, cautions against overestimating the power of celebrity equity alone. “Celebrity involvement, even with an equity stake, doesn’t automatically ensure brand success,” he says. “What matters is how well the product and brand resonate with the end consumer. Many factors—category selection, pricing, accessibility, and retail strategy—determine scalability.”
He adds, “A high-priced D2C brand with limited-use products will always scale slower than a more affordably priced, high-rotation brand with widespread retail availability.”
Missing the emotional connect
Another crucial area where 82°E falters is brand recall without Deepika. Experts argue that if Deepika’s face were to be removed from the branding, very little would remain to emotionally anchor consumers.
While celebrity-founded brands enjoy the initial boost of recognition, long-term consumer connection demands storytelling, product efficacy, and relevance.
For a product priced between ₹2700–₹3900, the experience and results need to justify the cost. But user feedback suggests the perceived benefits don’t dramatically exceed what one might get from a ₹999 serum in the market.
Katrina’s Kay Beauty, in contrast, positioned itself as a homegrown solution for Indian skin types, with products that worked well for deeper skin tones and humidity-prone weather.
The brand tapped into inclusivity and practicality—two emotional hooks that resonate deeply with Indian consumers. Additionally, it responded to functional needs by launching waterproof and sweat-resistant products, which especially make sense during monsoons.
On Instagram, Katrina actively promotes her products, collaborates with influencers, and shares content that resonates with her target audience. In contrast, Deepika’s brand presence on social media lacks the same level of relatability and consistent engagement, suggesting a need for a more tailored and active digital strategy.
Link: https://www.instagram.com/reel/DI_wjSRoZTM/? utm_source=ig_web_copy_link&igsh=MzRlODBiNWFlZA==
https://www.instagram.com/reel/DIWHG1DSR5f/?utm_source=ig_web_copy_link&igsh=MzRlODBiNWFlZA==
Retail footprint and distribution strategy
Skincare, particularly in the premium category, remains an experiential purchase. Consumers often want to try and test products before committing, especially at a higher price point. 82°E launched as a D2C-only brand, relying heavily on its website and social media advertising for discovery and sales with no store opening.
The strategy meant substantial upfront investment in paid media and influencer partnerships to generate traction, but lacked the physical visibility or tactile experience needed to convert high-end skincare buyers.
In contrast, Kay Beauty quickly became visible across Nykaa’s extensive online and offline retail network, giving shoppers a chance to explore products across price tiers in-store and online. The Nykaa tie-up served not only as a strong distribution engine but also as a brand endorsement in itself, given the platform’s dominant position in Indian beauty retail.
As Kushal Sanghvi, a media and marketing strategist, puts it, “Kay Beauty got its pricing, packaging, promotion, and place—basically the key P’s of marketing—spot on. Deepika’s brand, though elegant, is caught in a niche premium wellness space with limited scale.”
Kay Beauty was developed with a clear understanding of what works in India: colour cosmetics tailored for Indian skin tones and seasonal weather. The brand focused on frequently-used products like lipsticks, kajal, and foundation sticks that had both a functional and emotional appeal, allowing it to drive repeat purchases.
In contrast, 82°E focused on skincare rooted in self-care and holistic wellness, a space that is already crowded with local and international competitors, and where product effectiveness needs to be proven over time. Moreover, Indian consumers still tend to see skincare as utilitarian, rather than indulgent, which makes higher pricing even more of a challenge.
Short-Term Results vs. Long-Term Vision
It’s important to contextualise these figures within brand age. Luxury brands, globally, have often taken decades to establish loyalty. From Estée Lauder to Chanel, brand equity is built slowly through repeated use, reliable results, and consistent positioning.
But time alone won’t change the equation unless the core approach is recalibrated. If Deepika’s brand intends to build a long-lasting business, it will need to think beyond elite appeal and D2C strategy. Offline presence, a wider retail network, and possibly a reimagining of its product portfolio to include lower price points or trial-sized options could open the door to a broader consumer base.
India’s beauty and wellness market is growing at over 15% year-on-year, and opportunities abound at both the premium and affordable ends of the spectrum. But clarity of positioning and accessibility remain critical to long-term success.
(Published in Exchange4Media)
admin
September 16, 2024
Sesa Sen, NDTV Profit
16 September 2024
As India’s economy grows and digital technologies reshape consumer behavior, the future of kirana stores—the quintessential neighbourhood grocery shops—hangs precariously in the balance.
These soap-to-staple sellers, once impervious to change, now confront an existential threat from quick commerce players like Blinkit, Instamart, Zepto, and from modern retailers such as DMart and Star Bazaar, raising a pivotal question: Can kiranas survive the pressure of change, or will they die a slow death?
The All India Consumer Products Distributors Federation, that represents four lakh packaged goods distributors and stockists, has recently raised alarms, urging Union Minister for Commerce and Industry Piyush Goyal to investigate the unchecked proliferation of quick commerce platforms and its potential ramifications for small traders.
Their concerns are not unfounded. Data suggests that the share of modern retail, including online commerce, which is currently below 10%, is set to cross 30% over the next 3-5 years. Much of this growth will come at the cost of traditional retail.
“Unless the government takes on an activist role to support the smallest of business owners, the shift toward large corporate formats is inevitable,” according to Devangshu Dutta, head of retail consultancy Third Eyesight.
Casualties Of The Boom
Madan Sachdev, a second-generation grocer operating Vandana Stores in eastern Delhi, has thrived in the recent years, adapting to the digital age by taking orders via WhatsApp and employing extra hands for home delivery.
Despite having weathered the storm of competition from giants like Amazon and BigBazaar, he now finds himself disheartened, as his monthly sales have halved to about Rs 30,000, all thanks to quick commerce.
Sachdev is worried about meeting expenses such as rent, his children’s education, and other household bills. He finds himself at a crossroads, uncertain about how to modernise his store or adopt new-age strategies in order to attract customers in an increasingly competitive market.
India’s $600 billion grocery market, a cornerstone for quick commerce, is largely dominated by more than 13 million local mom-and-pop stores.
Retailers like Sachdev are also seeing a steep decline in their profit margins from FMCG companies, which now hover around 10-12%, down from the 18-20% margins seen before the Covid-19 pandemic. The consumer goods companies are instead offering higher margins to quick commerce platforms so that they can afford the price tags.
Quick deliveries account for $5 billion, or 45%, of the country’s $11 billion online grocery market, according to Goldman Sachs. It is projected to capture 70% of the online grocery market, forecasted to grow to $60 billion by 2030, as consumers increasingly prioritise convenience and speed.
Many of the mom-and-pop shops are family-run and have been in business for generations. Yet they lack the resources to modernise and compete effectively with larger chains. Modern retail businesses, including quick commerce, begin with significantly more capital, thanks to funding from corporate investors, venture capital, private equity, and public markets.
“They can scale quickly and capture market share due to a superior product-service mix, larger infrastructure, and more robust business processes,” said Dutta.
Moreover, their ability to engage in price competition poses a challenge for small retailers and distributors, making it difficult for them to compete.
“This is something that has happened worldwide, in the largest markets, and I don’t think India will be an exception,” Dutta said, adding that it would be incomplete to single out a specific format of corporate business such as quick commerce as the sole villain in this situation.
“India is a tough, friction-laden environment at any given point in time, including government processes which don’t make it any easier,” he said.
Peer Pressure
Data from research firm Kantar shows that general trade, which comprises kirana and paan-beedi shops, have grown 4.2% on a 12-month basis in June, while quick commerce grew 29% during the same period.
Shoppers are becoming more omnichannel, rather than gravitating towards one particular channel, said Manoj Menon, director- commercial, Kantar Worldpanel, South Asia. “While the growth [for quick commerce and e-commerce] might appear to have declined compared to a year ago, a point to note is that the base for these channels has significantly grown. Therefore, achieving this level of growth is still commendable.”
Consumer goods companies such as Hindustan Unilever Ltd., Dabur India Ltd., Tata Consumer Products Ltd., etc., have acknowledged the salience of quick commerce to their packaged food, personal and homecare products. The platform currently comprises roughly 40% of their digital sales.
“We are working all the major players in the quick commerce space and devising product mix and portfolio. This is a very high growth channel for us,” according to Mohit Malhotra, chief executive officer, Dabur India.
Elara Capital analysts have pointed out that the share of quick commerce is expected to rise to60% in the near future with e-commerce and modern trade turning costlier for FMCG brands than quick commerce. “The larger brands tend to make better margins on quick-commerce platforms versus e-commerce due to lower discounts on the former,” it said in a report.
However, it is too premature to draw a parallel between kirana and quick commerce in terms of competition, given the significant size difference.
The average spend per consumer on FMCG in kirana stores stands at Rs. 21,285 annually while the same is Rs. 4,886 for quick commerce, according to Menon.
Rural Vs Urban Divide
Quick commerce is still an urban phenomenon. In contrast, in rural settings, where internet penetration is still catching up and access to large retail chains is limited, kirana stores continue to thrive.
According to Naveen Malpani, partner, Grant Thornton Bharat, while the growth of quick commerce is undeniable, this channel is not poised to replace traditional retail, which still has a wider reach in the country. “It will complement older models, filling a niche for immediate, smaller purchases. Also, a 10-20-minute delivery may not have a strong market pull in rural markets where distance and time are not much of a concern.”
Yet many others believe, even in these areas, the challenge is palpable.
The small businesses are beginning to feel the sting of same slow decline that once befell the ubiquitous telephone booths in the era of mobile phone, according to Sameer Gandotra, chief executive officer of Frendy, a start-up that is building ‘mini DMart’ in small towns where giants like Reliance and Tatas have yet to establish their presence.
As rural customers slowly start to embrace digital shopping and seek more variety, kirana stores must adapt or risk becoming obsolete, he said.
Besides, the popularity of quick commerce is set to challenge the dominance of incumbent e-commerce platforms, especially in categories such as beauty and personal care, packaged foods and apparel.
“Quick commerce is primarily operational in metros and tier 1 markets, which is impacting the sales of traditional companies in these areas. However, if quick-commerce players were to extend their operations to tier 2 and tier 3, it would even challenge companies such as DMart and Nykaa, and would pare sales and profitability,” noted analysts at Elara Securities.
Frendy’s Gandotra believes the journey for kirana stores is not a lost cause, but it requires strategic interventions. Many kirana store owners struggle to integrate point-of-sale systems, inventory management software, or even digital payment solutions. These stores need to embrace technology.
Another aspect is the need for policy support. Regulations to ensure fair competition can prevent monopolisation by large retailers. Additionally, subsidies, tax benefits, and grants for infrastructure improvements can help small businesses adapt to changing market dynamics. With renewed support, kirana stores can continue to be the backbone of Indian retail.
Nonetheless, there will be some who’ll be left behind during this shift. Analysts at Elara Capital warn that the swift rise of quick-commerce platforms, combined with aggressive discounting, could wipe off 25-30% of traditional grocery stores.
(Published on NDTV Profit)
admin
August 30, 2024
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