Sarvodaya is your flagship store. Tell us about it.
I currently own three stores: Sarvodaya in Dadar, another one in Sangli and now the recently opened one in Center Bazaar. The flagship store is a 2,500 sqft convenience store located in the market area, where major sales are of food. It is a traditional shop that was set up by my father in 1972. In fact, most of our clientele is from the third generation of loyal customers who have been visiting us since ages. Since the store is located very close to the Dadar station, we have a daily infl ow of customers who come shopping for their regular, basic food and grocery items before reaching home. We converted the store into a modern format in 2000, when we saw the growth of Big Bazaar.
How did the transformation come about?
Like any other brand we wanted to stand out, and be seen as unique. Even before transforming into a modern format, my father had ensured that we developed more modern sensibilities. For instance, he started offering extra services at a premium. To give an example, in those days, food grains were not cleaned before being sold. We decided to make the extra effort to do this. We also started a free home delivery service, which was unheard of at that time. Another unique concept that I too helped develop was that of the directory. We had observed customers coming to the store with long lists of what to pick up. So, we created the directory which had a generic list of the items sold at the store, and this was followed by blank pages where people could list out their requirements. It was then left to us to deliver them at their homes. So while we took care of their basic daily needs they would just have to pick up items like personal care products, etc.
We also started creating and meeting demand for products that were not readily available in other stores. For instance, we started selling products like nachni, jowar, bajra atta; upvaas items; instant foods like farsan, etc. These we began selling under our private label. Another special product that we introduced was organic jaggery powder, which we are sourcing from a scientist in Pune. We also sell unique varieties of rice like Krishnakamoth, which is mainly found in Gujarat, or Indrayani from Nasik.
We also started product sampling at the store. When I joined the store in 1991 we brought about minor changes in the packaging as well; we began pre-packing loose products. The store became fully computerized and machines were bought for cleaning and packaging. While initially we did have some apprehensions about changing to a modern format, but by 2000 we decided to offer selfservice, thereby giving customers the freedom of choice while shopping.
How has the business grown?
Our business has grown multi-fold and our turnover has quadrupled. The customer response has been great, especially with regard to our express counter, which was inspired by the McDonald’s counter. Here, customers who want just a few itmes, can pick them up from the express counter without the hassle of looking for them in the entire store and then queuing up at the cashier’s. I thinkthe reason behind our success has simply been availability and quality. Yes, convenience and ambience are important too, but what’s their use if the right products are not available to meet consumer demand?
You have now expanded to a large format with Center Bazaar?
Center Bazaar gave us the opportunity to grow from a small shop to a big one. Along with size (it measures 10,000 sqft), we have also increased our skus. If the customer is to buy his/her monthly requirements from us, we should make annual needs like utensils, footwear, clothes, etc, also available. We chose Vashi because, firstly, we were being given the opportunity to be present in a mall thanks to the management, and, secondly, I have been trying to grow in Dadar for the past ten years. While space is available, the rentals are just too high, which is not conducive for a business such as ours where we have to work on low margins and keep overhead expenses in check.
Who is your target customer at Center Bazaar?
At Center Bazaar we are looking at nuclear families and the working class as our target audience, whereas in Dadar, whole families and generations are our customers. Center Bazaar will specifi cally target the middle class segment. Customer at Center Bazaar have responded really well to both our food and non-food sections. The value-for-money and instore offers have also received a tremendous response. These are the advantages of modern trade.
Give us an overview of the product categories at Center Bazaar.
In the supermarket area, we have 28 categories and in non-food we have five: plastics, utensils, luggage, garments and footwear. Within garments, we have subcategories like inner wear. Food and grocery comprises 4,500 skus, while footwear has seven skus, and garments, six. Footwear, opticals, and fruits and vegetables are all shop-in-shop formats. We have limited then number of categories because we want to simplify our understanding of consumer demand, their expectations, and also about the various categories and their extensions/ variants, so that we are better able to keep a track of things. Overall, food and grocery is the fastest selling category.
As regards footfalls, in Centre Bazaar, we have a growth rate of 5-7% every month; currently it is 21,000. In terms of price range, the cheapest product in garments comes at Rs 99, while the range in footwear is between Rs 250-1100. The average bill usually comes to Rs 600 per customer.
Do you sell niche products like organic at Center Bazaar?
Well, we have organic products, which is a growing category, but we prefer to stock products that sell more, as organic is still a niche category – not for the masses. Price is more important for the middle class consumers. They don’t have disposable incomes, and their mindset is still about value-for-money.
Our target is the middle class and while we have incorporated some changes like frozen foods, ready-to-eat, etc, we still have to lookat percentages. Now that the government has imposed restrictions on the use of plastic bags, we have placed re-usable bags that customers can buy and bring back on their next visit, and get a refund if they wish to return them.
How do you engage the customer?
Every weekend, we offer tastings and samples of upcoming categories like frozen foods, ready-to-eat, etc. We have offers such as one month’s groceries free to customers who buy groceries for twelve months straight. That is the loyalty programme we have put in place. We also give out free products depending on the purchases they make. I don’t believe in loyalty cards or point systems; for me, instant gratifi cation is what works.
How do you maintain an edge over competitors?
Consumption is growing, and India needs a lot more shops. Modern trade format only forms 10 per cent of stores in India, and it is in the interest of both the shopper and the grocer to upgrade his store by changing from general trade to modern trade. Space is not the only criteria, quality is important, too, and that is what we are trying to maintain consistently. The customer looks for value for money, and this is what we bank on. Our products, services and facilities are geared towards meeting or even exceeding customer expectations from our stores. Marketing and advertising also helps. We advertise on hoardings and billboards and with other media. We distribute flyers and promotional materials like vouchers in the mall, and have promotional activities like lucky draws, etc.
How different is it working in a mall from a standalone store?
At Center Bazaar, we had the chance to try out something new. Unlike the Dadar store, where we have a continuous flow of people, the mall draws in the crowd mostly on weekends. The customers don’t have time to go to malls on weekdays. This is probably the biggest difference. In terms of display, it is almost the same, but the layout may differ. So at Vashi the idea is to attract impulse buyers on weekdays; hence, we display products like icecreams, cold drinks, chips, chocolates, etc, to grab their attention. At Dadar, the groceries are most prominently displayed because the customer does not have the time to wait, so the express model works very well here.
What are your views on the FSSAI Act?
I think the Act is good; but let me qualify this by saying that though the intention is good – the timing is not. Agriculture is a huge base in India, and we won’t have an economic slowdown anytime soon. The problem is that the market is not developed or mature enough and there is no consistency. Localised products won’t work on a national level – they might actually result in loss. A lot of the products we stock come from small scale set-ups. Food safety regulations will not work in the country overnight; they will only work in the long term. A lot of factors serve as a Hindrance.
The Act is specific – there is clarity, but the ground reality is not taken into consideration – it has not been applied to the Indian scenario. The government doesn’t even have the staff to monitor all this. The small scale industry is also huge. With such laws, people from these industries will not survive. And it’s not that we don’t care about safety. Has it not been maintained over the years?
What is the biggest challenge in this business?
While you might think that customers pose the biggest challenge, it is space and management that we have to deal with. Today, there are so many brands and products that it makes it diffi cult to manage and accommodate them within a limited space. Another big challenge is labour. While there is a dearth in number, there is also a dearth in skill. Twelfth pass people refuse to do labour work like lifting goods, etc. This is a problem that is simply going to increase.
What kind of training do you give your staff?
We have category-wise training. During induction the floor staff is assigned a specific category like tea/juices/grocery, etc. He/she is taught about the product, its labels, the MRP, expiry, etc. Then the categories are rotated, so in a month, he/she might be put on to grocery where the understanding of the product range would be completely different. As a result, within a year, the staff gets an idea of all the products and we can observe their method of working. Currently, we would have 40 staff members at Center Bazaar.
I have managers who oversee and coordinate between all my stores. In order to inculcate a sense of ownership, I give my managerial staff a variable salary where they grow as the business grows. Also, I don’t believe in hierarchy and every staff member is responsible for everything. For me, people are assets, not properties.
What kind of support do your receive from suppliers and distributors?
Suppliers and distributors support us differently. Our supplier, for instance, Pepsico, always aims to increase its category, and hence, it delivers its products to both general and modern trade. In general trade, the target is small shops, hotels, cafeterias, etc. In modern trade, a store like ours is the target, wherein the supplier aims to exhaust a specific amount of funds through orders.
But, today, only 30-40 percent suppliers provide shops like ours with some support. The reason being that they do not consider us to be part of modern trade. They consider only national chains like a Star Bazaar or Reliance to be part of modern trade. Unilever pioneered the approach of supporting stores like us long back and that has helped us grow. Similarly, other companies must accept people like me in pockets of India who intend to be in this trade for many many years.
What changes would you like to see in the food and grocery retail environment?
I think brands should put in more thought to help consumers understand and recognise products better. For instance, today’s generation is not even aware that there is a difference between the atta used for chapatti and that for phulkas. Nomenclature should be easy for the customer to understand. Moreover, there is no channel where companies take feedback from retailers; they are only concerned with their bottomlines. For instance, if I give a particular brand business of Rs 2 lakh, it compares me with a Magnet Mall, which gives a business of Rs 4 lakh. But then, Magnet is much larger in area so one must look at the sales per sqft. But that’s not important; what’s important is the Bottomline.
Apart from this, staff loyalty and commitment is a thing of the past. You never know when a staff member will change his job for a better salary.
What is the way forward for your company?
Currently, Center Bazaar has a turnover of Rs 1.25 crore, while at Sarvodaya it is Rs 24 crore per year. I intend to continue to grow in a similar format, that is, not too big nor too small. The plan is to open at least three shops every year. Given the number of failed business set -ups in this sphere, it is difficult for people to invest in this segment, more so because returns are slow too.