HYPERLOCAL demystified pre and post COVID-19

There’s quite a hullabaloo around the word hyperlocal ever since the COVID-19 pandemic took off. Ironically it is the only retail model apart from essential service stores  that can feasibly operate during the nationwide lockdown. But nobody really explained it to you in a manner that would conduce understanding. Let me clear the haze for you.

Well, what does ‘hyperlocal’ refer to?

In layman’s terms, hyperlocal is anything confined to a particular limited geography. Therefore, a hyperlocal business is a geography-restricted, on-demand marketplace. It is a local ecosystem that leverages technology to enable consumers to avail service of the stores in their vicinity. A hyperlocal business operates on 2 basic principles of geography and time. E.g. Zomato, Swiggy, Dunzo, etc.

What makes a business hyperlocal?

The answer is ‘a fusion of one of the largest e-commerce retailers on the planet with an elaborate & already established large scale distribution network in a large market’. This unique marriage results in massive capacity and wide outreach. Of course we’re referring to Amazon acquiring 49% stake in Future Retail, a retail business which sprawls across a massive space of 24 million square feet over 400 towns and cities.

How does a hyperlocal enterprise thus benefit?

In the above mentioned merger, Amazon put cutting edge technology on the table, over and above its robust analytical capabilities and a brand reputation of being the largest e-commerce retailer that precedes it. On the other hand, Future Retail creates millions of customer interactions with Future Group brands on a daily basis. A combination of both lets Amazon expand its foray into the Indian foods & grocery business, at the same time creating a behemoth competitor for Walmart backed Flipkart & Reliance Retail which has deep pockets.

What changed with the onslaught of COVID-19?

Pre-COVID:

With the growth curve of e-commerce flattening in Tier 1 cities, further expansion into lesser known geographies was curtailed by logistical challenges. Then came the Ambani led Reliance Retail to announce a unique offline to online model offering to connect 30 million neighbourhoods as if it were a child’s play.

Post-COVID onslaught:

Physical retail suffered severe blows as the nationwide lockdown continued to deplete their capital and resulted in blocked inventory. The demand for hyperlocal service of essential goods peaked up to 3-5 times of the pre-COVID numbers during this period, said ShadowFax co-founder Praharsh Chandra.

The lockdown has influenced seller-buyer behaviour immensely and this may have long term repercussions for businesses that remain offline. COVID has turned out to be an epochal moment with consumers beginning to rely upon hyperlocal service for their needs across all categories. The user base is burgeoning and the demand for capital is rising with the dawn of this new era in business.

As warehouses become redundant, the Pick-Up & Drop-Off model is gaining prominence after graduating from food delivery. Kirana stores may well become the warehouses of tomorrow and dead spaces will rise. Logistics and distribution networks will see increased focus and even assistance from AI and automation.

However, as of this moment with the exodus of migrant workers, there is a severe shortage of blue-collar help across sectors. Without the lowest rung in the business, the supply chains have been disrupted as organisations are groping in the dark for a workforce to rely upon. The only way to beat it is to streamline the supply chains and debottleneck logistics such that goods do not get stuck anywhere. Redundancies in the system will have to be addressed to free up manpower during this crunch.

And this is where hyperlocal businesses have an edge – their workforce and labour is locally sourced, thus leaving them unperturbed through the worker crisis. The pandemic has annihilated all physical retail opportunities and paved the way for hyperlocal services. Hyperlocal start-ups are the coming wave!