Dubai: Dhananjay Datar has acquired a taste for online… and he’s in no mood to give it up.
The owner of Al Adil, the supermarket chain specializing in Indian spices and foodstuffs, has gone live with an upgraded ecommerce portal, with online expected to generate nearly 30 per cent of sales this year. That’s against the 10 per cent it had from online last year.
“We got into online late, and even then it was only a small component of our retail presence,” said Datar. “Now, we realise that attitude – of thinking online is Plan B – will not work any longer. It’s front and centre and will remain so even after COVID-19 vanishes.
“Our traffic at the stores prove it – during the shutdown, the supermarkets had seen a 50 per cent decline. With the stores open, it’s gone up to 25 per cent lower than pre-COVID-19. Clearly, a lot of shoppers still want deliveries at their doorstep.”
This is the same takeaway most retailers in the UAE – and everywhere else – is the new fact of life. Nowhere is it more apparent than in the grocery and supermarket space, with LuLu and Carrefour among the biggest beneficiaries from the switch.
During the COVID-19 enforced shutdown from late March and through April, topline grocery/supermarket sales spiked 4-5x as customers went in for contactless buying, according to RedSeer, the retail focused consultancy. The e-grocery category is estimated to have touched $2 billion on an annualized basis during this time, RedSeer estimates.
“To put the growth in perspective, online grocery/supermarket as a percentage of total online retail was less than 10 per cent pre-lockdown… and increased to 34 per cent,” said Sandeep Ganediwalla, Managing Partner at RedSeer. "Given the high growth, egrocery and last-mile delivery services have seen many players enter the market - Talabat, Careem, Spinneys, Sharaf DG and Kitopi. Also, marketplaces such as Amazon and Noon have ramped up their egrocery offerings."
Now, that’s heavy by any measure.
“During the lockdown phase, online sales were averaging Dh125 per transaction for us,” said Datar. “Now, with the shops re-opening, that average has come down to Dh100 per each invoice, which in the supermarket business is quite significant. More so, since such orders are repeated more frequently.
“Until now, most of our online sales were coming through third-party portals, such as noon, Amazon, Insta and Elgrocer. We had links on these platforms that would lead a shopper directly to Al Adil e-store.
“We did have our own dedicated online store, but it was in need of a serious upgrade to give the same sort of experience, speed and feel other portals had. We have finished that project and went live with it this week. It will help us pick an additional traffic load.
“A sizeable number of shoppers in the UAE are no longer going to make those frequent trips to supermarkets or grocery stores. We had to have the online means to reach them – we have that now.”
The upgraded software will also help Al Adil launch a loyalty programme, something that Datar feels will be just as vital to get online shoppers coming back.
Retail industry sources say that more change will happen in the next six- to 12 months in their interaction with consumers than what was achieved over recent years. It will not be limited to get more shoppers purchasing from online.
Contactless payments will be a fact of life, and more stores will experiment and deploy self-checkout counters. What was once a novelty at a flagship store will become commonplace.
On the delivery side, Al Adil is deploying a mix of its own fleet as well as third-party providers such as Careem. “We couldn’t handle all of the delivery requirements ourselves, it was quite clear early on that it would be a struggle to meet the one- or two-hour delivery promises,” said Datar.
“Yes, the cost to us is higher when a third-party is involved. As per our estimates, it would be Dh8 a delivery if done internally, and which rises to Dh12 when done through a dedicated provider. But’s that a cost we can live with.”
But this year, he plans to give the Rolls a miss.
Datar is sponsoring chartered flights to repatriate Indians back to the home country. “We had one for workers and will soon fly out a plane load of families,” he said. “My funds will come in handy to get those flights in and out. The Rolls can wait.”