Ramesh Chand Agarwal, Founder, Balaji Grand Bazar, expanded the family business from a single 450 sq. ft. shop to a chain of 9 stores; he also pioneered the concept of private labels, finds Juhi Sharma
Since 1958 many generations of Ramesh Agarwal were running a food and grocery retail business in Hyderabad. Leveraging on the goodwill built over the years, in 1977, Agarwal opened a small 450 sq.ft. shop in the city’s Basheer Bagh area, and named it Balaji Grand Bazar.
In 1982, barely five years after the opening of the first store, Agarwal opened another at Banjara Hills Road No1. Over the following years, he opened several more in strategic locations. Today, three generations of the family are actively engaged in running the business that has expanded to a chain of nine stores that together cover 38,000 sq.ft. area of retail space, and are spread across seven locations.
Of the nine stores, five are large format covering 6,000 sq.ft. area, and two smaller ones are of 2,500 sq.ft.; these seven are department stores. Of the other two, one is a dry fruits and confectionery store measuring 150 sq.ft., and the other a 1,000 sq.ft.
wholesale store selling rice and edible oils.
“To serve the larger catchments of Hyderabad, we opened bigger stores at Basheer Bagh, Banjara Hills Road No1, Mehedipatnam, Attapur, and Kondapur. The two smaller stores in L&T Serene County Residential Township (Gachi Bowli), and Lanco Hills (Manikonda), cater to the residences in the area,” informs Agarwal, and adds: “We realised that the confectionery and dry fruit segment requires a special focus and visibility; also the consumers coming to purchase these products were more A-class buyers, so we opened a specialty store at Basheer Bagh, where we already had a department store. We opened our rice and oil wholesale store at Mehedipatnam because we saw demand for these products in the area.”
Balaji Grand Bazar offers products across various categories such as food, groceries, fruits, vegetables, medical items, household cleaners, personal care, cosmetics, herbal and organic products. These include leading Indian and international brands.
Informs Agarwal: “We offer over 13,000 SKUs across food and non-food categories. The food section comprises 60 per cent of the merchandise mix, and the rest is non-food. The revenue generated by each is in the same ratio.”
Ready-to-eat and frozen foods, pastas and noodles, confectionery, chocolates and nachos in the snacks section are some of the largest selling categories at Balaji Grand Bazar. “With the growing inclination for healthy eating among Indian consumers, green and other teas, diet foods, herbal juices, quinoa and dried nuts are growing in demand, and going by the current trend, these products will grow more in the future,” observes Agarwal. “In fact, there are a lot of other categories that are set to grow, and we will create more shelf space for them.”
The retailer has given 15 per cent shelf space to imported products. “We have paid heed to the growing demand for international products, hence 15 per cent merchandise consists of imported brands. The revenue generated by these is also 15 per cent of the overall revenue,” Agarwal states.
In fact, the retailer was felicitated with the FIFI Award for excellence’ in the foreign food and grocery segment. The Awards honour regional retailers for their contribution in growing the imported food business in the country. The awards were held at Coca Cola Golden Spoon awards function at the premium Food and Grocery Forum India (FGFI) 2014. Held annually in Mumbai. “We are very thankful to the importers who have helped us meet demand in the market, thus, helping us grow,” acknowledges Agarwal.
When Agarwal took over the family business, shops were selling loose food grains; the private label was unheard of. Agarwal introduced cleaning and packaging of food grains in his store. Today, the retailer offers private label food grains, along with a few major brands under the Balaji label.
“When I started the shop, I realised that food grains being sold loose were not of a good quality, so I began sourcing grains and nuts. We have our own packaging section within the stores, where the grains and nuts are hand cleaned and packaged. We also offer garam masala, milk masala, almond oil made from Mamra (Irani) almonds, and coconut oil,” says Agarwal.
From start, Balaji Grand Bazar has been a self-service store, and had a billing counter too. With time, Agarwal modernised operations further by incorporating technology. “In 1999, we installed CCTV cameras in our stores, and in 2003, computerised billing was introduced when manufacturers started using barcodes on their products,” says Agarwal. Today, the bigger stores have four check-outs each, and the smaller formats have two.
“Managing staff, dearth of skilled people, and cost of hiring experienced people is a challenge,” says Agarwal. Enumerating the other challenges, he adds, “Another challenge is FMCG companies asking to reduce margins. This is more with the bigger brands as their products are so popular that they know retailers need to stock them. These companies spend huge sums on advertisement and promotions but want to save money by decreasing the retailers’ margins.”
“A lot of companies introduce offers and schemes through TV commercials but they do not do so at the stores. Customers on seeing the ads start asking for the promotional offers, which we are not able to provide. This impacts our business and brand name. High operational costs and overheads such as high electricity bills and real estate costs, add to our burden,” he says.
The retailer has been growing at the rate of 7 per cent in the last two years, but Agarwal believes in slow but steady growth; he will increase his store count only when he sees demand rise. “We will increase our presence locally once we see that we can serve more customers. Going by the current market scenario, sustainability is more important. So, we will expand slowly and steadily. And if the markets improve, we will target yearly growth of 10 to12 per cent,” he says.