For most people “retail at your doorstep” means online shopping + free home delivery. The biggest reason for this model’s existence is accessibility of the online retail stores from the comfort of homes. But for daily use items such as vegetables and perishables, the online shopping may not be a practical option. I have observed a new trend of ‘near home retail’ that will make traditional retail more accessible but yet avoid the impalpable experience of online retail.
Many large apartments now have pre-determined area for commercial establishments such as grocery store etc. The challenge for these grocery retailers is the volume of business from the apartment complex. Consumers outside the apartment complex usually cannot access the in-house shops due to security reasons. Hence the target market for ‘in apartment retain stores’ is very limited. But the margins can be higher. From a retailer perspective, what if you can have best of both options?
In my apartment complex in Bangalore, twice a week we host a mini-market from Heritage Foods. The market mainly comprises of vegetables, juice and other sundry kitchen items. The area earmarked for this market is usually in the space common to different blocks of the apartment complex. A large supply van arrives on designated days and retail employees use folding tables to set up the market.
I believe this model of ‘near home retail’ solves some key challenges faced by retailers:
- Costly real estate: Apartments make revenue by allowing small scale targeted marketing campaigns to utilize the common areas. The rental charged for this is purely based on time spent and there is no upfront fixed costs involved. For retail shops, the prime real estate is usually in the vicinity of apartment complex but the costs are prohibitive. By moving the market inside the apartment complex, the real estate cost saving is tremendous.
- Captive market yet flexible: Residents of apartment complexes form a reasonable captive market but unlike permanent shops inside complexes, these ‘near home retail’ have the flexibility to address markets outside the apartment complex.
- Supply chain optimization: The captive markets of apartment allows the retailer to sell products based on the purchasing capacity, volume and tastes of the apartment residents. With this approach wastage could be avoided and yet be able to sell higher margin products.
For the apartment residents, the retailers at doorstep provide accessibility and convenience. They can opt for multiple vendors on different days of the week and afford more choice. This could be a good win-win situation for retailers as well as consumers.