Will Big Basket be the proverbial dark horse in India’s retail race?

But within days, the Tata group fired a warning shot across Reliance’s bow, signaling its intention to not allow Reliance uncontested market dominance. Online grocery e-tailer Big Basket, part of India’s most diversified conglomerate after Tata Digital acquires 64 per cent stake in the e-tailer in 2021, just opened its first large-format, physical grocery retail store in Hyderabad is introduced.

The first store stocks fruits and vegetables as well as dry groceries and FMCG items and features Big Basket’s proprietary, cashier-less self-billing system. While this isn’t Big Basket’s first foray into physical retail — it opened experimental “click and pick” physical outlets for the fruits and vegetables section in Bengaluru more than two years ago — this time, it’s looking to expand physically. Seems more serious about grocery retail locations to complement its dominant online presence in e-tail.

Big Basket co-founder VS Sudhakar has been quoted in media reports as saying that the company plans to open 24 stores by the end of the March quarter this year. There are plans to increase this to 400 stores within the next three years.

While significant, this is still a drop in the ocean compared to Reliance Retail’s impressive presence in the physical retail space, which has 2,700 Reliance Fresh large format grocery retail stores. In fact, the collapse of Big Bazaar had left a huge void in India’s big box retail space, which Reliance acted swiftly to fill.

Although digital retail rival Amazon was able to stop it 24,000 crore bid to buy all retail assets of Future Group, yet managed to hold on to the store locations operated by Reliance Retail Cream – Big Bazaar. In a blistering move in February last year, Reliance had “taken over” hundreds of stores operated by Kishore Biyani’s Big Bazaar chain overnight by plugging lease agreements on these stores, citing payment defaults by Big Bazaar.

Reliance had managed to acquire 342 large format stores such as Big Bazaar and Fashion Big Bazaar (FBB) as well as 493 small format stores such as Easyday and Heritage stores. The properties in which these outlets were located were either acquired outright or leased by Reliance and subsequently sub-rented to Big Bazaar. When the struggling Future Group failed to meet the lease terms, Reliance canceled the lease and moved in.

With its closest competitor out for good, it has proved to be an uphill task for others to even get close to Reliance Retail. The Tata group, despite having a fairly strong presence in lifestyle, electronics and durables retail, was also foraying into grocery retail with its Star Bazaar hypermarket chain.

The 2021 acquisition of Big Basket has clearly changed the game plan. With over 40,000 stock-holding units in its online inventory, Big Basket has managed to compete with larger rivals such as Amazon’s ‘Pantry’ and ‘Fresh’ brands and Flipkart’s Supermart in online grocery retail. Despite an initial scare, it has managed to hang in the quick delivery space alongside Swiggy’s Insta-Mart and Reliance-backed Dunzo.

Big Basket’s tech savvy, as well as the deep insights it has developed into the Indian consumer through terabytes of data on their shopping preferences, pushes it into the uncharted waters of physical grocery retailing , then will give it an edge. The effort – as it was with its pilot fruit and vegetable stores – will eventually be meant to attract millions of Indians who are either not tech-savvy enough to shop online, or have reservations about online transactions.

Big Basket has managed a high degree of vertical integration—it sources more than 85 percent of its perishable groceries directly from farmers and the collection centers also double as stores in many centers—also causing Tata may have decided to take a hedge bet on physical grocery retail through the Big Basket brand while keeping Trent’s Star Bazaar hypermarts running.

Whichever horse the Tata group backs, one thing is clear – the battle for India’s retail market is far from over.