Kishore Biyani‘s Future Group is looking to invest ₹500-800 crores in the coming four years to strengthen its food supply chain network. The company is looking to create a network of refrigerated trucks and temperature controlled distribution centres, in order to manage the entire supply chain through this network.
The new food distribution chain is expected to help the Mumbai-based company’s retail and brand distribution business, according to Biyani.
Recently, the Indian food and grocery segment has attracted a lot of attention with Walmart-owned Flipkart launching its own online grocery store and Amazon eyeing stakes in grocery retailers.
At the moment, Future Group’s retail chain Big Bazaar follows a hybrid supply chain model, where food and FMCG products are mostly supplied its stores by companies like Hindustan Unilever and Colgate-Palmolive, with a small number of supplies coming from its own distribution centres.
The company is trying to change the entire model by supplying its entire food and FMCG from distribution centres by locating them within a 200 km range of each of its retail outlets.
These distribution centres will be technology-enabled, giving real-time inventory levels in stores to help them replenish stocks at regular intervals.
The new model is expected to be similar to the one followed by Walmart around the world. It is expected to help the company reduce costs and also save around 1,000 sq ft of space in every Big Bazaar retail outlet, as it was used to stock a significant amount of supplies, which won’t be needed, owing to the close proximity of distribution centres.
“We are moving from the direct-tostore model to DC-based model and all the replenishment will be done through DCs,” said Mayur Toshniwal, CEO at Future Supply Chain Solutions, the logistics arm of Future Group. “The replenishments will be much faster and more frequent.”
Other players in the online grocery business with a strong market presence include Alibaba-backed BigBasket, Google-backed Dunzo, Softbank-backed Grofers, and Flipkart Supermart, among other new and upcoming players.