Keep an eye on long-term consumption trends: Damodar Mall

Invaluable advice and insights for food & grocery retailers from veteran retailer Damodar Mall, CEO, Grocery – Reliance Retail, shared at the India Food Forum 2024

“Today, India is the most action-packed place in the world. People planning long-term growth are confident about the market potential and are putting their money on the table, putting five-year, seven-year bets on the market.”

“In our business, it is easy to focus on short-term consumption trends and miss five and seven-year prospects unlike in the airplane industry which plans for years in advance. About seven-eight years back, Smart Bazaar started selling a strange fruit from a strange part of the world called kiwi. Customers did not know anything about it. They don’t know what to do with this ugly-looking fruit. We shared the conviction that the Indian customer would be ready for it. We did not know how to sell it. In India many fruits are sold either by dozens or by kilos but we started selling it like we sell Kinder Joy—piece by piece. We kept presenting it to our customers. Today, kiwis are available on India’s streets.”

“In the last seven years, the cashews we sell in our stores have grown more than 10 times. All the stores all sell dry fruits in the same catchment, the same population we are serving has more than doubled or tripled. This is the premiumisation trend we see every day. We are selling more detergent liquids, more cookies and digestives than basic districts. Premiumisation of consumption is a long-term trend. And whether we service it from stores or home delivery, what we now call quick commerce, does not matter.”

“The overall Indian consumer is buying more as incomes are higher. This too is a long term trend—a five-year and seven-year trend and that is what we should have in mind while we plan.”

“With rising incomes, not just consumption but service expectations are also changing. Grocery has been home-delivered for 25 years. Today, it is being done by digital platforms. But in the end, these are just channels. As long as on the consumption side, the news is good the pie is growing, how we slice it and how we service it becomes secondary.”

“I don’t talk about e-commerce and quick commerce as the other… that is an opportunity that is available because we are servicing the same customer. Today, the customer does not come to the store, he/she is shopping by other means and those means are available to everyone.”

“Sometimes, it’s funny how we don’t understand our strengths and don’t build on them. Quick commerce leaders are creating this business from scratch and when they talk to us, they say we don’t know the simple things that you guys do in your sleep… we don’t understand category management…our teams don’t understand consumption ratio between staples and home and personal care, the way you guys do. We just find that all purchases on our platform are lopsided and mixed-up… we don’t know how a customer settles down with her neighborhood store on with the supermarket of her choice. 

“It’s for us to figure out how to be more alert, be more responsive, more digital… Accepting payment by credit card a few years back was a big decision. While it added cost, it also ensured that the relatively better-off customers came to us and we ended up with more business. If we look at delivery in this way and don’t do digitally-enabled delivery, the customer will go elsewhere. This is a way of keeping the customer with us. Look at it this way, then the ability to handle that extra servicing cost will come easier.”

“In the end, if you don’t have long-term faith in the fact that with rising incomes people are not going to merely fly more but they’re going to have everyday expressions… they’re going to eat more fruits, they’re going to consume better brands, then you can’t grow. That faith is important because that’s the core of why we as both consumer brands and as retailers will continue to learn and succeed.” 

“Keep an eye on the long-term consumption increase. For a 15 year-old store to get incremental same store growth, if I am smart about premiumisation, I don’t need new consumers as my existing consumers are buying more. For those who believe in premiumisation and consumption, India is a great place to be in.”

An excerpt of Mr Mall’s presentation ‘Chairman’s Address – Building a Palate for Partnerships’ at India Food Forum 2024.

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