Hypermarkets sell a variety of items at one location, including foodstuffs, clothing and travel essentials, creating a one-stop shopping experience for the shoppers
Hypermarkets typically have business models that rely on high-volume, low-margin sales. The pandemic affected their entire business model because the shoppers could not access stores, forcing them to adapt to meet the changing needs.
How did hypermarkets survive the pandemic?
Reliance Retail: Reliance Retail focused on supplying necessities - food, grocery, health & hygiene products through a combination of online-offline channels. They created partnerships with small merchants and digital engagement with consumers, creating an inclusive growth model.
They also focused on scaling up digital commerce and merchant partnerships, which helped alleviate loss of business due to store closures. These streams contributed 20% of retail sales in the quarter. The company's net profit was up by 123% to INR 962 crore after the first quarter.
Revenue from operations for the quarter grew by 22% to INR 38,547 crores.
Big Bazaar: Big Bazaar introduced shopping through phone, WhatsApp and missed calls, delivering products within 2 hrs. Being available locally in 286 stores in 150 cities helped them seamlessly deliver the same experience everywhere.
Future Retail Ltd, the parent company, had its net loss widened to INR 846.92 crore at the end of December 2020, from INR 692.36 crore in the September quarter of the current fiscal year, and a net profit of INR 164.56 crore the year before. Revenue from operations was down 71% to INR 1,506.87 crore during the quarter as operations continued to face Covid-induced disruptions. They lost nearly INR 7,000 crore in revenue during the first few months after the pandemic hit.
DMart: DMart added 43 stores in 2021. Profit grew to well above its pre-pandemic level but the stock took a 7% dip. The concern was the lack of strength shown in the online space.
While competitors were busy shifting to online medium, DMart chose to start DMart Ready. They allow you to place orders using an app and pick up from the nearest DMart Ready service, which usually takes around 8-12 hours.
The future of retail real estate
Consumer behaviour evolved since the COVID-19 pandemic hit India. People are now more focused on meeting their necessities than spending on luxuries. They want to avoid crowded spaces that can be deemed unsafe, making hypermarkets a big risk. Currently, the general sentiment is to create a seamless digital experience for all hypermarket shoppers.
While retail real estate might be impacted in terms of shopping malls and spaces, it creates a demand for retail companies to invest in storage, warehousing and smaller outlets for consumers. The real estate market is starting to adapt with the new environments and needs, while the retail industry focuses on creating a better experience for their users using these alternative channels.
