SoftBank-funded Grofers is converting dozens of grocery stores into its own branded outlets as the online retail firm looks to broaden its distribution and push own label products to earn better margins. It has changed nearly 100 such kirana and supermarket outlets to Grofers discount stores in the Delhi NCR region where it will manage back-end sourcing, inventory management and technology support on a revenue sharing model. The move helps in having bigger purchasing power. Also, it will be a subset of our offline delivery system since we already deal with nearly 6,000 partner stores.
This model started in November last year and Grofers hopes to have 200 such stores by expanding the network to Bengaluru in the next few months. This is Grofers’ second stint in brick-and-mortar format; in 2017, it had opened tuck shops and small stores at few Oyo properties as a pilot but discontinued it within two months.
Online grocers — Grofers and rival Bigbasket — have an outsized share, but Amazon, Flipkart, and Swiggy are gradually mainstreaming the category. Grofers also joins the league of retailers such as Pepperfry, Myntra, baby products retailer FirstCry and Lenskart that started out solely in the e-commerce space, before branching out with physical stores. Grofers, however, maintained that their physical stores will not cannibalize sales from its online venture since it appeals to an older consumer base compared to a younger demographic online.